<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
REGISTRATION NO.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
ISLE OF CAPRI BLACK HAWK L.L.C.
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
(EXACT NAME OF REGISTRANTS AS SPECIFIED IN ITS CHARTER)
COLORADO 799302 84-1422931
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL 91-1842691
JURISDICTION OF CLASSIFICATION NUMBER) (I.R.S. EMPLOYER
INCORPORATION OR IDENTIFICATION NUMBER)
ORGANIZATION)
ISLE OF CAPRI BLACK HAWK L.L.C.
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
C/O CASINO AMERICA, INC., AS MANAGER
711 WASHINGTON LOOP
BILOXI, MISSISSIPPI 39530
601-436-7000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
ALLAN B. SOLOMON, SECRETARY
ISLE OF CAPRI BLACK HAWK L.L.C.
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
C/O CASINO AMERICA, INC., AS MANAGER
711 WASHINGTON LOOP
BILOXI, MISSISSIPPI 39530
601-436-7000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
WITH A COPY TO:
PAUL W. THEISS
MAYER, BROWN & PLATT
190 SOUTH LASALLE STREET
CHICAGO, ILLINOIS 60603
(312) 701-7843
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE 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
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
13% Series B First Mortgage Notes
Due 2004........................ $75,000,000 100% $75,000,000 $22,727.27
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED , 1997
PROSPECTUS
ISLE OF CAPRI BLACK HAWK L.L.C.
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
----------
OFFER TO EXCHANGE 13% SERIES B FIRST MORTGAGE NOTES DUE 2004
WITH CONTINGENT INTEREST WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, FOR ANY AND ALL OF ITS OUTSTANDING
13% SERIES A FIRST MORTGAGE NOTES DUE 2004
Isle of Capri Black Hawk L.L.C., a Colorado limited liability company (the
"Company"), and Isle of Capri Black Hawk Capital Corp., a Colorado corporation
and wholly owned subsidiary of the Company ("Capital" and, together with the
Company, the "Issuers"), hereby offer, upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal (the "Letter of Transmittal") (which together constitute the
"Exchange Offer"), to exchange up to $75 million aggregate principal amount of
13% Series B First Mortgage Notes due 2004 with Contingent Interest (the "New
Notes") of the Issuers for a like principal amount of the Issuers' issued and
outstanding 13% Series A First Mortgage Notes due 2004 with Contingent Interest
(the "Old Notes" and, together with the New Notes, the "Notes") with the
holders (each holder of Old Notes a "Holder") thereof. The terms of the New
Notes are substantially identical to the terms of the Old Notes that are to be
exchanged therefor. See "Description of the New Notes." The Company is using
the net proceeds of the offering of the Old Notes to finance the development,
construction, equipping and operation of the Isle of Capri Casino and related
amenities (the "Isle-Black Hawk") to be located in Black Hawk, Colorado. The
Company is a newly formed limited liability company in which Casino America of
Colorado, Inc., a wholly owned subsidiary of Casino America, Inc. ("Casino
America"), owns a 59.2% interest and Blackhawk Gold, Ltd., a wholly owned
subsidiary of Nevada Gold & Casinos, Inc. ("Nevada Gold"), owns a 40.8%
interest.
Fixed Interest on the New Notes is payable at the rate of 13% per annum,
semiannually on February 28 and August 31 of each year, commencing February 28,
1998. The New Notes will mature on August 31, 2004. Contingent Interest (as
defined herein) is payable on the New Notes on each interest payment date, in
an aggregate amount equal to 5% of the Company's Consolidated Cash Flow (as
defined herein) for the two fiscal quarter period ending during the January or
July immediately preceding such interest payment date (each a "Semiannual
Period"); provided that no Contingent Interest shall be payable with respect to
any period prior to the date that the Isle-Black Hawk is first Operating (as
defined herein). The Issuers, at their 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 the New Notes--
Principal, Maturity and Interest." The Issuers will not be required to make any
mandatory redemption or sinking fund payments with respect to the New Notes
prior to maturity. The New Notes will be redeemable at the option of the
Issuers, in whole or in part, at any time on or after August 31, 2001 at the
redemption prices set forth herein, plus accrued and unpaid interest and
Liquidated Damages (as defined herein), if any, to the date of redemption.
Notwithstanding the foregoing, at any time prior to August 31, 2000, the
Issuers may redeem up to 35% of the original principal amount of the New Notes
at a redemption price equal to 113% of the principal amount thereof, plus
accrued and unpaid interest and Liquidation Damages, if any, to the date of
redemption with the net proceeds of a Public Equity Offering (as defined
herein). Upon a Change in Control (as defined herein), each holder of the New
Notes will have the right to require the Issuers to repurchase such holder's
New Notes at 101% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, to the date of repurchase. Beginning
with the first Operating Year (as defined herein) after the Isle-Black Hawk
becomes Operating, the Issuers will be required to offer to purchase, at a
price equal to 101% of the aggregate principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, the maximum principal amount of
New Notes that may be purchased with 50% of the Company's Excess Cash Flow (as
defined herein) in respect of the Operating Year then ended.
Prior to the Exchange Offer, there has been no established trading market for
the Old Notes or the New Notes. The Issuers do not intend to apply for listing
or quotation of the New Notes on any securities exchange or stock market.
Therefore, there can be no assurance as to the existence or liquidity of any
trading market for the New Notes or that an active public market for the New
Notes will develop. Any Old Notes not tendered and accepted in the Exchange
Offer will remain outstanding. To the extent that Old Notes are tendered and
accepted in the Exchange Offer, a Holder's ability to sell untendered, or
tendered but unaccepted, Old Notes could be adversely affected. Following the
consummation of the Exchange Offer, the Holders of Old Notes will continue to
be subject to the existing restrictions on transfer thereof and the Company
will have no further obligations to such Holders to provide for the
registration of the Old Notes under the Securities Act. See "Exchange Offer--
Consequences of Not Exchanging Old Notes."
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 199 , UNLESS EXTENDED.
----------
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS OF
OLD NOTES WHO TENDER THEIR OLD NOTES IN THE EXCHANGE OFFER, SEE "RISK
FACTORS" ON PAGE OF THIS PROSPECTUS.
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 , 1997
<PAGE>
The New Notes will be senior secured obligations of the Issuers and will
rank pari pasu in right of payment with any existing and future senior
Indebtedness (as defined herein) of the Issuers and will rank senior in right
of payment to all subordinated Indebtedness of the Issuers. After giving
effect to the Capitalization Transactions (as defined herein), and the Old
Notes Offering (as defined herein), the Notes were the only outstanding senior
Indebtedness of the Issuers. The New Notes will be secured by a first priority
lien, subject to Permitted Liens (as defined herein), in substantially all of
the existing and future assets of the Issuers, including, without limitation
(i) a pledge of the net proceeds from the Old Notes Offering deposited and
held as collateral in the Cash Collateral Accounts pending disbursement
pursuant to the Cash Collateral and Disbursement Agreement, (ii) a security
interest in substantially all of the assets that will comprise the Isle-Black
Hawk and (iii) an assignment of certain agreements pursuant to which the Isle-
Black Hawk will be constructed and managed and certain licenses and permits
relating thereto. The New Notes will not be secured by furniture, fixtures and
equipment financed by FF&E Financing or any gaming or liquor licenses. See
"Description of the New Notes--Security."
The Issuers will accept for exchange any and all Old Notes that are validly
tendered and not withdrawn on or prior to 5:00 p.m., New York City time, on
, 199 , or such later time and date to which the Exchange Offer is
extended (the "Expiration Date"). Tenders of Old Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time, on the Expiration Date. The
Exchange Offer is not conditioned upon any minimum principal amount of Old
Notes being tendered for exchange. However, the Exchange Offer is subject to
certain customary conditions which may be waived by the Issuers. The Issuers
have agreed to pay the expenses of the Exchange Offer. There will be no cash
proceeds to the Issuers from the Exchange Offer. See "Use of Proceeds."
The Old Notes were issued and sold (the "Old Notes Offering") on August 20,
1997 (the "Closing Date") in a transaction that was not registered under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance upon
the exemption provided in Section 4(2) of the Securities Act. Accordingly, the
Old Notes may not be reoffered, resold or otherwise pledged, hypothecated or
transferred in the United States unless so registered or unless an applicable
exemption from the registration requirements of the Securities Act is
available. The New Notes are being offered for exchange in order to satisfy
certain obligations of the Issuers under Registration Rights Agreements (as
defined herein) between the Issuers and the Initial Purchasers (as defined
herein). The New Notes will be obligations of the Issuers evidencing the same
indebtedness as the Old Notes and will be entitled to the benefits of the same
Indenture which governs both the Old Notes and the New Notes. The form and
terms (including principal amount, interest rate, dividend payment, maturity
and ranking) of the New Notes are the same as the form and terms of the Old
Notes except that the New Notes (i) have been registered under the Securities
Act and therefore are not subject to certain restrictions on transfer
applicable to the Old Notes; (ii) will not be entitled to registration rights;
and (iii) will not provide for any Liquidated Damages (as defined herein). See
"The Exchange Offer--Registration Rights; Liquidated Damages."
The Issuers are making the Exchange Offer pursuant to the registration
statement of which this Prospectus is a part in reliance upon the position of
the staff of the Securities and Exchange Commission (the "Commission") set
forth in certain no-action letters addressed to other parties in other
transactions. However, the Issuers have not sought their own no-action letter
and there can be no assurance that the staff of the Commission would make a
similar determination with respect to the Exchange Offer. Based on these
interpretations by the staff of the Commission, the Issuers believe that the
New Notes issued pursuant to the Exchange Offer may be offered for resale,
resold and otherwise transferred by holders thereof (other than (i) any such
holder that is an "affiliate" of the Issuers within the meaning of Rule 405
under the Securities Act; (ii) an Initial Purchaser or Holder who acquired the
Old Notes directly from the Issuers solely in order to resell pursuant to Rule
144A of the Securities Act or any other available exemption under the
Securities Act; or (iii) a broker-dealer who acquired the Old Notes as a
result of market making or other trading activities) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Notes are acquired in the ordinary
course of such holder's business and such holder is not participating and has
no arrangement or understanding with any person to participate in a
distribution (within the meaning of the
i
<PAGE>
Securities Act) of such New Notes. Each broker-dealer that receives New 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 New 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 New Notes received in exchange for Old
Notes where such Old Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Issuers have agreed
that, for a period of 120 days after the Expiration Date, they will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."
AVAILABLE INFORMATION
The Issuers have filed with the Commission a registration statement on Form
S-4 (the "Registration Statement") pursuant to the Securities Act, and the
rules and regulations promulgated thereunder, covering the New 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. For further information with
respect to the Issuers and the New Notes, reference is hereby made to the
Registration Statement. 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 the effectiveness of the Registration Statement, the Issuers will be
subject to the reporting requirements of the Exchange Act and the
interpretations issued thereunder by the staff of the Commission. The
Registration Statement, such reports and other information can be inspected and
copied at the offices of the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, as well as the following regional
offices of the Commission: Seven World Trade Center, Suite 1300, New York, New
York 10048; and Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Such material also may be accessed
electronically by means of the Commission's home page on the Internet
(http://www.sec.gov).
ii
<PAGE>
SUMMARY
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and financial
statements, including the notes thereto, appearing elsewhere in this
Prospectus. As used herein, the term "Black Hawk Market" means the combined
gaming markets of the adjacent cities of Black Hawk and Central City, Colorado.
Prospective investors are urged to read this Prospectus in its entirety,
including, without limitation, the "Risk Factors" beginning on page 12.
THE COMPANY
The Company plans to develop, own and operate the Isle-Black Hawk as a
premier casino gaming facility to be located in the Black Hawk Market
approximately 40 miles west of Denver. The Isle-Black Hawk will be one of the
first gaming facilities encountered by customers traveling from Denver to the
Black Hawk Market. Upon completion, the Isle-Black Hawk will be one of the
largest gaming facilities in Colorado. Plans for the Isle-Black Hawk include a
55,000 square foot, single-floor gaming facility featuring approximately 1,100
slot machines, 24 table games and 1,000 on-site parking spaces, a fine dining
restaurant, a delicatessen, a full service buffet and other related amenities.
The Isle-Black Hawk will be designed and constructed pursuant to a bonded,
"guaranteed maximum price" design/build agreement (the "Design/Build
Agreement"), which also provides for the addition of a hotel at the option of
the Company for an agreed-upon increase to the guaranteed maximum price.
The Black Hawk Market includes many small, privately held gaming facilities
that the Company believes offer limited amenities and are characterized by a
shortage of convenient on-site parking. In addition, there are several larger
gaming facilities in the Black Hawk Market that provide varying levels of
services and amenities. Management believes that the Isle-Black Hawk's large
and modern gaming facility, superior location, convenient on-site covered
parking and extensive amenities will afford it a significant competitive
advantage. The Isle-Black Hawk is expected to include the largest single-floor
gaming facility in Colorado and will offer a broad array of amenities,
including what is expected to be the largest buffet in the Black Hawk Market.
The Company believes that the customer convenience afforded its patrons by
providing ample on-site, covered self-parking spaces will significantly
differentiate the Isle-Black Hawk from its competitors. Management believes
that, upon completion, parking at the Isle-Black Hawk will represent in excess
of 25% of the total covered parking spaces in the Black Hawk Market. The Isle-
Black Hawk will be designed and operated under a distinctive Caribbean theme as
an "Isle of Capri Casino," further differentiating it from other gaming
facilities in the area, which primarily stress Victorian and western themes. In
addition, the Company will utilize database marketing techniques used by Casino
America at its existing facilities.
Casino gaming in Colorado is restricted to the three towns of Black Hawk,
Central City and Cripple Creek and two Native American gaming facilities
located in the southwest corner of the state. The Black Hawk Market, which
includes both Black Hawk and Central City, primarily attracts drive-in or "day
trip" customers from the population centers of Denver, Boulder, Fort Collins
and Golden, Colorado as well as Cheyenne, Wyoming. These population centers are
located within a 100-mile radius of the Black Hawk Market. The population
within this 100-mile radius has experienced steady growth from a population of
2.8 million in 1990 to 3.2 million in 1996. Gaming revenues generated in the
Black Hawk Market have grown from $127.6 million in 1992, the first full year
of gaming operations, to $308.8 million in 1996. For the twelve-month period
ended May 31, 1997, gaming revenues in the city of Black Hawk, which accounted
for 72.1% of gaming revenues in the Black Hawk Market, grew at a rate of 9.2%
compared to the prior twelve-month period.
The total cost for the Isle-Black Hawk is estimated to be $103.6 million,
which includes approximately (i) $14.4 million in contributed value for a 9.12-
acre site upon which the Isle-Black Hawk will be developed, (ii) $47.3 million
for the estimated development and construction budget for the Isle-Black Hawk
pursuant to the Design/Build Agreement, which is a bonded "guaranteed maximum
price" contract, (iii) $10.3 million for furniture, fixtures and equipment not
included within the guaranteed maximum price under the Design/Build Agreement,
(iv) $5.4 million for project development costs, fees and permits, (v) $2.8
million for pre-opening
1
<PAGE>
costs and opening bankroll, (vi) $19.1 million for a completion reserve and an
interest reserve and (vii) $4.3 million for fees and expenses related to the
Offering. The design/build team under the Design/Build Agreement includes
Haselden Construction, Inc. ("Haselden"), a large Denver-based general
contractor with experience in constructing facilities in the mountain towns of
Colorado, including Black Hawk, as well as Parkhill-Ivins Architects, a Denver-
based architectural firm that has designed several other facilities in the
Black Hawk Market. The Company expects to commence excavation and other site
preparation activities in August 1997, which are anticipated to be
substantially completed within approximately six months of their commencement.
Following the completion of site preparation, on-site construction activities
will commence and are expected to take approximately twelve-months to complete.
Accordingly, the Company expects to open the Isle-Black Hawk in late 1998 or
early 1999. Under the terms of the Design/Build Agreement and the Cash
Collateral and Disbursement Agreement, the Company has the option, which must
be exercised by March 1, 1998, to add a hotel which, if exercised, would add
$6.3 million to the "guaranteed maximum price" under the Design/Build Agreement
(the "Hotel Option"). In the event that the Company exercises the Hotel Option,
the Company expects to fund the construction of the hotel within the project
budget described herein. See "Material Agreements--Design/Build Agreement."
Casino America will manage and implement a business and marketing strategy
for the Isle-Black Hawk. The Isle-Black Hawk will be designed and operated
under the theme of an "Isle of Capri Casino," a theme used by Casino America at
its existing gaming facilities that emphasizes a tropical island atmosphere and
offers value-oriented gaming facilities and complementary amenities. Casino
America will license the use of the "Isle of Capri(R)" name to the Company,
together with other service marks and trade names utilized at its existing
gaming facilities. Casino America has developed, constructed, and currently
operates gaming facilities at four locations and has developed two hotels, a
367-room hotel at its Biloxi, Mississippi facility and a 241-room hotel
scheduled to open in September 1997 at its Lake Charles, Louisiana facility.
Casino America, as manager of the Isle-Black Hawk (the "Manager"), intends to
utilize database marketing techniques previously developed and implemented at
its existing gaming facilities. Database marketing is intended to identify a
facility's core customers by tracking visits and levels of play, and that
information is then used to foster increased customer loyalty and promote
repeat visits through, among other things, various promotional activities and
special events. The Company intends to use its promotional programs,
particularly the Island Gold Players Club, to build its database of core
customers. The Company also intends to use bus programs to promote group visits
and other promotional programs designed to increase customer volume, track
customer trends and develop its customer database.
CAPITALIZATION TRANSACTIONS
The Company was formed in April 1997 and is owned 59.2% by Casino America of
Colorado, Inc. and 40.8% by Blackhawk Gold, Ltd. Simultaneously with the
consummation of the Old Notes Offering, (i) Casino America of Colorado, Inc.
assigned to the Company the contractual right to purchase a portion of the
property (the "Casino America Parcel") upon which the Isle-Black Hawk will be
developed, $100,000 of the purchase price of which was previously paid by
Casino America on behalf of Casino America of Colorado, Inc., (ii) Casino
America of Colorado, Inc. contributed sufficient cash to the Company to enable
the Company to purchase the Casino America Parcel for the unpaid balance of the
purchase price of $6.4 million, (iii) Blackhawk Gold, Ltd. transfered, or
caused to be transferred, to the Company the remaining portion of the property
upon which the Isle-Black Hawk will be developed (the "Blackhawk Gold Parcel"),
(iv) the Company exercised and closed the purchase right referred to in clause
(i) above and (v) Casino America of Colorado, Inc. contributed to the Company
additional cash equal to the difference between $1.0 million and the aggregate
amount of third party development costs incurred by it on behalf of the Company
prior to the date of the consummation of the Old Notes Offering (collectively,
the "Capitalization Transactions").
Until the completion of the Isle-Black Hawk, the executive offices of the
Company will be located in care of the Manager at 711 Washington Loop, Biloxi,
Mississippi 39530 (telephone number (601) 436-7000).
2
<PAGE>
CASINO AMERICA
Casino America is a leading developer, owner and operator of dockside and
riverboat casinos and related facilities in emerging gaming markets in the
United States, owning and operating five dockside or riverboat casinos at four
facilities. All of Casino America's gaming facilities are based on a tropical
island theme and operate under the "Isle of Capri Casino" name. Casino America
owns and operates a dockside riverboat casino and hotel in Bossier City,
Louisiana, two riverboat casinos at a single facility on a site one mile from
Lake Charles, Louisiana where it is presently constructing a 241-room hotel, a
dockside casino and 367-room hotel in Biloxi, Mississippi and a dockside casino
and recreational vehicle park in Vicksburg, Mississippi. Casino America also
owns and operates Pompano Park, a harness racing track in Pompano Beach,
Florida. For the fiscal year ended April 27, 1997, Casino America had total
revenues of $375.6 million and Adjusted EBITDA (as defined herein) of $69.2
million. See "Business--Casino America."
Casino America's business strategy, which has been implemented in its
existing operations, emphasizes the development and operation of value-oriented
gaming facilities and complementary amenities with a tropical island theme
using the "Isle of Capri Casino" brand name. Casino America believes that the
use of the "Isle of Capri Casino" brand name and associated theme creates a
readily identifiable brand image connoting excitement, quality and value, which
Casino America complements by emphasizing customer service and non-gaming
entertainment amenities. Casino America believes that this strategy fosters
customer loyalty, enhances the ability to compete effectively in existing
markets and facilitates the efficient and cost-effective development of gaming
facilities in new markets. Casino America, as Manager of the Isle-Black Hawk,
intends to tailor and implement this business strategy for the Black Hawk
Market.
3
<PAGE>
SOURCES AND USES OF FUNDS
(DOLLARS IN MILLIONS)
The Company will not receive any proceeds in connection with the Exchange
Offer. The net proceeds received by the Company from the Old Notes Offering
(after the deduction of discounts and commissions, fees and other expenses in
connection with the Old Notes Offering) were approximately $72.0 million. The
net proceeds from the Old Notes Offering, together with contributions received
in the Capitalization Transactions and certain FF&E Financing, are being used
to finance the development, construction, equipping and operation of the Isle-
Black Hawk.
The sources and uses of funds for the development, construction, equipping
and operation of the Isle-Black Hawk are as follows:
<TABLE>
<CAPTION>
SOURCES
-------
<S> <C>
First Mortgage Notes........ $ 75.0
FF&E Financing.............. 13.2
Equity contributions(1)(2).. 15.4
------
Total Sources........... $103.6
======
</TABLE>
<TABLE>
<CAPTION>
USES
----
<S> <C>
Land(1)........................... $ 14.4
Construction costs(3)(4).......... 44.4
Furniture, fixtures and equipment. 13.2
Permits, fees and other(5)........ 5.4
Working capital(6)................ 2.8
Interest reserve(7)............... 14.1
Estimated offering fees and
expenses......................... 4.3
Completion Reserve(8)............. 5.0
------
Total Uses.................... $103.6
======
</TABLE>
- -------
(1) Reflects the contribution to the Company (a) by Casino America of Colorado,
Inc. of a contractual right to purchase the Casino America Parcel, $0.1
million of the purchase price of which was previously paid by Casino
America on behalf of Casino America of Colorado, Inc., (b) by Casino
America of Colorado, Inc. of $6.4 million in cash to enable the Company to
purchase the Casino America Parcel for the unpaid balance of the purchase
price and (c) by Blackhawk Gold, Ltd. of the Blackhawk Gold Parcel, valued
at $7.9 million (a portion of which secured $0.4 million of mortgage
indebtedness repaid with the proceeds of the Old Notes Offering). See "--
Capitalization Transactions," "Material Agreements--Members Agreement" and
"Material Agreements--Land Purchase Contract."
(2) Includes a $1.0 million contribution to the Company by Casino America of
Colorado, Inc. consisting of (a) development costs paid by Casino America
of Colorado, Inc. to third parties in an amount not exceeding $1.0 million
and (b) cash, if any, in an amount equal to the difference between (i) $1.0
million and (ii) the aggregate amount of the third party costs referenced
in clause (a) above. See "Material Agreements--Operating Agreement."
(3) Represents the bonded "guaranteed maximum price" set forth in the
Design/Build Agreement of $47.3 million, less $2.9 million of non-gaming
furniture, fixtures and equipment. This price includes a contingency
allowance of $2.2 million. Such price is subject to increase if plans and
specifications change or the project encounters certain unforeseen
geological or excavation conditions, changes in law, delays caused by the
Company or other contingencies. The price also will be increased or
decreased based upon the amount that the actual costs to complete certain
allowance items, in the aggregate, are above or below $2.6 million. The
Design/Build Agreement also provides contractor incentives for early
completion and construction cost savings as well as liquidated damages
payable to the Company for certain unexcused delays. Although the Company
believes that the site preparation and construction budget is reasonable,
actual costs may be higher given the risks inherent in the site preparation
and construction process. See "Risk Factors--Construction Budget and Site
Risks," "Risk Factors--Permits and Approvals," "Risk Factors--Adverse
Weather and Road Conditions; Seasonality," "Risk Factors--Environmental
Matters" and "Material Agreements--Design/Build Agreement."
(4) Assumes that the Company does not exercise the Hotel Option, which is
exercisable on or before March 1, 1998. If the Company exercises the Hotel
Option, the "guaranteed maximum price" set forth in the Design/Build
Agreement will increase by $6.3 million. If the Company exercises the Hotel
Option, it intends to fund the increased costs of construction through cost
savings achieved through value engineering, the availability of
contractor's funds represented by the contractor's contingency allowance
and the sources identified in footnote 8 below.
(5) Includes approximately $3.9 million in permits and impact fees, $1.1
million for operating supplies and $0.4 million used to repay mortgage
indebtedness on a portion of the Blackhawk Gold Parcel.
(6) Includes pre-opening costs and opening bankroll for the Isle-Black Hawk
currently estimated to be $1.8 million and $1.0 million, respectively.
(7) Reserve established for the payment of the first three interest payments on
the Notes. The amount set forth is an estimate and is subject to change
based on the actual interest rate payable on the Notes and the yield rate
of the Government Securities purchased with the proceeds of the Offering
and deposited in the Interest Reserve Account.
(8) Represents the Company's $5.0 million deposit of Offering proceeds into the
Completion Reserve Account. Excludes interest earnings on amounts deposited
in the Construction Disbursement Account and the Completion Reserve
Account, which the Company will invest in Investment Grade Securities.
Pursuant to the Cash Collateral and Disbursement Agreement, the Company may
use amounts in the Completion Reserve Account to fund increases to the
construction budget, subject to certain limitations. Also excludes the
Completion Capital Commitment of Casino America, pursuant to which Casino
America will commit to contribute to the Company up to $5.0 million in the
event that such amounts are necessary to cause the Isle-Black Hawk to
become Operating on or before April 1, 1999, or if the Isle-Black Hawk is
not Operating by such date. See "Description of the New Notes--Completion
Capital Commitment."
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THE EXCHANGE OFFER
Securities Offered...... $75,000,000 principal amount of 13% Series B First
Mortgage Notes due 2004 with Contingent Interest. The
terms of the New Notes are identical in all material
respects to those of the Old Notes except for certain
transfer restrictions and registration rights
relating to the Old Notes and except for certain
Liquidated Damages provisions relating to the Old
Notes described below under "--Summary Description of
the New Notes."
Issuance of Old Notes;
Registration Rights....
The Old Notes were issued on August 20, 1997 to
Jefferies & Company, Inc. (the "Initial Purchaser"),
which placed the Old Notes with "qualified
institutional buyers" (as such term is defined in
Rule 144A promulgated under the Securities Act). In
connection therewith, the Issuers executed and
delivered for the benefit of the holders of Old Notes
a certain registration rights agreement (the
"Registration Rights Agreement"), pursuant to which
the Issuers agreed (i) to file a registration
statement on or prior to October , 1997 with
respect to the Exchange Offer and (ii) to use its
best efforts to cause such registration statement to
be declared effective by the Commission on or prior
to December , 1997. In certain circumstances, the
Issuers will be required to provide a shelf
registration statement (the "Shelf Registration
Statement") to cover resales of the Old Notes. If the
Issuers does not comply with their obligations under
the Registration Rights Agreements, they will be
required to pay Liquidated Damages to holders of the
Old Notes under certain circumstances. See "The
Exchange Offer--Registration Rights; Liquidated
Damages."
The Exchange Offer...... The New Notes are being offered in exchange for a
like principal amount of Old Notes. The issuance of
the New Notes is intended to satisfy the obligations
of the Issuers contained in the Registration Rights
Agreements. Based upon the position of the staff of
the Commission set forth in no-action letters issued
to third parties in other transactions substantially
similar to the Exchange Offer, the Issuers believe
that the New Notes issued pursuant to the Exchange
Offer may be offered for resale, resold and otherwise
transferred by holders thereof (other than (i) any
such holder that is an "affiliate" of the Issuers
within the meaning of Rule 405 under the Securities
Act, (ii) the Initial Purchaser or any holder who
acquired the Old Notes directly from the Issuers
solely in order to resell pursuant to Rule 144A of
the Securities Act or any other available exemption
under the Securities Act, or (iii) a broker-dealer
who acquired the Old Notes as a result of market
making or other trading activities) without further
compliance with the registration and prospectus
delivery requirements of the Securities Act, provided
that such New Notes are acquired in the ordinary
course of such holder's business and such holder is
not participating and has no arrangement with any
person to participate in a distribution (within the
meaning of the Securities Act) of such New Notes.
Each broker-dealer that receives New Notes for its
own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in
connection with any resale for such New Notes.
Although there has been no indication of any change
in the staff's
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position, there can be no assurance that the staff of
the Commission would make a similar determination
with respect to the resale of the New Notes. See
"Risk Factors."
Procedures for Tendering holders of Old Notes must complete and sign
Tendering.............. the Letter of Transmittal in accordance with the
instructions contained therein and forward the same
by mail, facsimile or hand delivery, together with
any other required documents, to the Exchange Agent,
either with the Old Notes to be tendered or in
compliance with the specified procedures for
guaranteed delivery of Old Notes. Holders of the Old
Notes desiring to tender such Old Notes in exchange
for New Notes should allow sufficient time to ensure
timely delivery. Certain brokers, dealers, commercial
banks, trust companies and other nominees may also
effect tenders by book-entry transfer. Holders of Old
Notes registered in the name of a broker, dealer,
commercial bank, trust Issuers or other nominee are
urged to contact such person promptly if they wish to
tender Old Notes pursuant to the Exchange Offer.
Letters of Transmittal and certificates representing
Old Notes should not be sent to the Issuers. Such
documents should only be sent to the Exchange Agent.
Questions regarding how to tender and requests for
information should be directed to the Exchange Agent.
See "The Exchange Offer--Procedures for Tendering Old
Notes."
Tenders, Expiration
Date; Withdrawal ......
The Exchange Offer will expire on 5:00 p.m., New York
City time, on , 199 , or such later date
and time to which the Exchange Offer is extended. The
tender of Old Notes pursuant to the Exchange Offer
may be withdrawn at any time prior to the Expiration
Date. Any Old Note 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. See "The Exchange Offer--Terms of the Exchange
Offer; Period for Tendering Old Notes" and "--
Withdrawal Rights."
Certain Conditions to
the Exchange Offer.....
The Exchange Offer is subject to certain customary
conditions, all of which may be waived by the
Issuers, including the absence of (i) threatened or
pending proceedings seeking to restrain the Exchange
Offer or resulting in a material delay to the
Exchange Offer; (ii) a general suspension of trading
on any national securities exchange or in the over-
the-counter market; (iii) a banking moratorium; (iv)
a commencement of war, armed hostilities or other
similar international calamity directly or indirectly
involving the United States; and (v) change or
threatened change in the business, properties,
assets, liabilities, financial condition, operations,
results of operations or prospects of the Issuers and
its subsidiaries taken as a whole that, in the sole
judgment of the Issuers, is or may be adverse to the
Issuers. The Issuers shall not be required to accept
for exchange, or to issue New Notes in exchange for,
any Old Notes, if at any time before the acceptance
of such Old Notes for exchange or the exchange of the
New Notes for such Old Notes, any of the foregoing
events occurs which, in the sole judgment of the
Issuers, make it inadvisable to proceed with the
Exchange Offer and/or with such
6
<PAGE>
acceptance for exchange or with such exchange. If the
Issuers fail to consummate the Exchange Offer because
the Exchange Offer is not permitted by applicable law
or Commission policy, they will file with the
Commission a Shelf Registration Statement to cover
resales of the Transfer Restricted Securities (as
defined herein) by the holders thereof who satisfy
certain conditions. If the Issuers fail to consummate
the Exchange Offer or file a Shelf Registration
Statement in accordance with the Registration Rights
Agreements, the Issuers will pay Liquidated Damages
to each holder of Transfer Restricted Securities
until the cure of all defaults. The Exchange Offer is
not conditioned upon any minimum aggregate principal
amount of Old Notes being tendered for exchange. See
"The Exchange Offer--Registration Rights; Liquidated
Damages" and "--Certain Conditions to the Exchange
Offer."
Federal Income Tax For Federal income tax purposes, the exchange
Consequence............ pursuant to the Exchange Offer will not result in any
income, gain or loss to the Holders or the Issuers.
See "Certain Federal Income Tax Considerations."
Use of Proceeds......... There will be no proceeds to the Issuers from the
exchange pursuant to the Exchange Offer.
Exchange Agent.......... IBJ Schroder Bank & Trust Company is serving as
Exchange Agent in connection with the Exchange Offer.
CONSEQUENCES OF NOT EXCHANGING THE OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old 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 Old 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 Issuers do not currently anticipate that
they will register the Old Notes under the Securities Act. See "Risk Factors--
Consequences of Exchange and Failure to Exchange" and "The Exchange Offer--
Consequences of Exchanging Old Notes."
THE NEW NOTES
Securities Offered ..... $75.0 million aggregate principal amount of 13%
Series B First Mortgage Notes due 2004 With
Contingent Interest (the "New Notes").
Issuers ................ The New Notes will be the joint and several
obligations of Isle of Capri Black Hawk L.L.C. and
its wholly owned subsidiary, Isle of Capri Black Hawk
Capital Corp.
Maturity Date .......... August 31, 2004.
Fixed Interest Rate .... The New Notes will bear fixed interest at 13% per
annum.
Interest Payment Dates Interest on the New Notes will be payable semi-
....................... annually on each February 28 and August 31,
commencing February 28, 1998.
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<PAGE>
Contingent Interest .... Contingent Interest is payable on the New Notes,
on each interest payment date, in an aggregate
principal amount equal to 5% of the Company's
Consolidated Cash Flow for the two fiscal quarter
period ending during the January or July
immediately preceding such interest payment date
(each, a "Semiannual Period"); provided that no
Contingent Interest shall be payable with respect
to any period prior to the date that the Isle-
Black Hawk is first Operating. 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 (i)
the payment of such portion of Contingent
Interest will cause the Company's Adjusted Fixed
Charge Ratio (as defined herein) for the
Company's most recently completed Semiannual
Period prior to such interest payment date to be
less than 1.5 to 1.0 on a pro forma basis after
giving effect to the assumed payment of such
Contingent Interest and (ii) the principal amount
of the New Notes corresponding to such Contingent
Interest has not then matured or become due and
payable (at stated maturity, upon acceleration,
upon redemption, upon maturity of repurchase
obligation or otherwise). The aggregate amount of
Contingent Interest payable in a Semiannual
Period will be reduced pro rata for reductions in
the outstanding principal amount of New 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 the New Notes--Principal,
Maturity and Interest."
Ranking ................ The New Notes will be senior secured obligations of
the Issuers and will rank pari pasu in right of
payment with any existing and future senior
Indebtedness of the Issuers and will rank senior in
right of payment to all subordinated Indebtedness of
the Issuers. After giving effect to the
Capitalization Transactions and the Old Notes
Offering, the New Notes were the only outstanding
senior Indebtedness of the Issuers.
Security................ The New Notes will be secured by a first priority
lien, subject to Permitted Liens, in substantially
all of the existing and future assets of the Issuers,
including, without limitation, (i) a pledge of the
net proceeds from the Old Notes Offering deposited
and held as collateral in the Cash Collateral
Accounts pending disbursement pursuant to the Cash
Collateral and Disbursement Agreement, (ii) a
security interest in substantially all of the assets
that will comprise the Isle-Black Hawk and (iii) an
assignment of certain agreements pursuant to which
the Isle-Black Hawk will be constructed and managed
and certain licenses and permits relating thereto.
The New Notes will not be secured by furniture,
fixtures and equipment financed by FF&E Financing. In
addition, the Company's Colorado gaming and liquor
licenses are not pledgeable or transferable. See
"Description of the New Notes--Security." All rights
and remedies with respect to the security interest
are expressly subject to all laws, statutes,
regulations and orders affecting gaming. See
"Description of the New Notes--Security--Certain
Gaming Law Limitations."
No Recourse Against The New Notes are without recourse to the members of
Affiliates............. the Company or their respective parent or affiliate
entities.
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<PAGE>
Completion Capital Casino America delivered a completion capital
Commitment............. commitment (the "Completion Capital Commitment")
pursuant to which it committed to contribute to the
Company up to $5.0 million in the event that there
are insufficient funds available to complete the
development, construction and equipping of the Isle-
Black Hawk, so that the Isle-Black Hawk is Operating
on or before April 1, 1999, or in the event that the
Isle-Black Hawk is not Operating on or before April
1, 1999; provided, however, that if the Isle-Black
Hawk is not Operating by such date, Casino America
will contribute to the Company $5.0 million in cash
less any amounts previously contributed to the
Company pursuant to the Completion Capital
Commitment.
Optional Redemption..... The New Notes will be redeemable at the option of the
Issuers, in whole or in part, on or after August 31,
2001, at the redemption prices set forth herein, plus
accrued and unpaid interest and Liquidated Damages,
if any, to the redemption date. Notwithstanding the
foregoing, at any time prior to August 31, 2000, the
Issuers may redeem up to 35% of the original
principal amount of the New Notes at a redemption
price equal to 113% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of redemption with the
net proceeds of a Public Equity Offering; provided
that at least $48.75 million of the aggregate
principal amount of the New Notes remains outstanding
immediately thereafter and that the call for such
redemption occurs within 45 days of the date of the
closing of such offering. See "Description of the New
Notes--Optional Redemption."
Gaming Redemption....... The New Notes will be subject to mandatory
disposition and redemption requirements following
certain determinations by any Gaming Authority (as
defined herein). See "Description of the New Notes--
Gaming Redemption."
Offers to Purchase
Change of Control......
Upon a Change of Control, the Issuers will be
required to offer to repurchase all of the
outstanding New Notes at a price equal to 101% of the
principal amount thereof, together with accrued and
unpaid interest and Liquidated Damages, if any, to
the date of purchase. See "Description of the New
Notes--Repurchase at Option of the Holders--Change of
Control."
Excess Cash Purchase Beginning with the first Operating Year after the
Offer.................. Isle-Black Hawk becomes Operating, the Issuers will
be required to offer to purchase, at a price equal to
101% of the aggregate principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages,
if any, the maximum principal amount of the New Notes
that may be purchased with 50% of the Company's
Excess Cash Flow in respect of the Operating Year
then ended. See "Description of the New Notes--Excess
Cash Purchase Offer."
Asset Sales and Events In addition, under certain circumstances, the Issuers
of Loss................ may be required to use proceeds from Asset Sales (as
defined herein) or Events of Loss (as defined herein)
to offer to purchase a portion of the New Notes. See
"Description of the New Notes--Repurchase at the
Option of Holders--Asset Sales" and "Description of
the New Notes--Repurchase at the Option of Holders--
Event of Loss."
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<PAGE>
Certain Covenants....... The Indenture pursuant to which the New Notes will be
issued will contain certain covenants that will limit
the ability of the Company and its subsidiaries to,
among other things, (i) make restricted payments,
(ii) incur additional indebtedness and issue
preferred stock, (iii) incur liens, (iv) pay
dividends, (v) enter into mergers or consolidations,
(vi) enter into certain transactions with affiliates,
(vii) sell assets and (viii) issue and sell capital
stock of subsidiaries. In addition, the Indenture
will provide that Capital will not hold any assets,
become liable for any other obligations or engage in
any business activities. See "Description of the New
Notes--Certain Covenants."
Cash Collateral and
Disbursement
Agreement..............
All of the net proceeds from the Old Notes Offering
were initially deposited by the Company in the Cash
Collateral Accounts as described below. The Cash
Collateral Accounts will be pledged to the Trustee
for the benefit of the Holders as security for the
New Notes. The proceeds of the Cash Collateral
Accounts will be disbursed in accordance with the
terms of the Cash Collateral and Disbursement
Agreement. See "Description of the New Notes--Cash
Collateral and Disbursement Agreement."
Construction
Disbursement Account...
Of the net proceeds from the Old Notes Offering,
approximately $52.9 million was deposited in the
Construction Disbursement Account pending
disbursement for the development, construction and
opening of the Isle-Black Hawk and for other expenses
of the Company, in each case upon satisfaction of
certain conditions set forth in the Cash Collateral
and Disbursement Agreement. Pending disbursement from
the Construction Disbursement Account, such proceeds
will be invested in Investment Grade Securities.
Completion Reserve Of the net proceeds from the Old Notes Offering, $5.0
Account................ million was deposited in the Completion Reserve
Account pending disbursement in the event there are
insufficient funds in the Construction Disbursement
Account to complete the Isle-Black Hawk. Pending
disbursement from the Completion Reserve Account,
such proceeds will be invested in Investment Grade
Securities.
Investment Reserve Of the net proceeds from the Old Notes Offering,
Account................ approximately $14.1 million was deposited in the
Interest Reserve Account and used to purchase
Government Securities representing funds sufficient
to pay the first three Fixed Interest payments on the
New Notes.
Isle of Capri Black
Hawk Capital Corp......
Isle of Capri Black Hawk Capital Corp. is a wholly
owned subsidiary of the Company whose sole purpose is
to serve as a co-issuer of the New Notes in order to
facilitate the Offering.
For a more detailed discussion of the terms of the New Notes, see
"Description of the New Notes."
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<PAGE>
SUMMARY DESCRIPTION OF THE OLD NOTES
The terms of the New Notes and the Old Notes are identical in all material
respects, except for certain transfer restrictions and registration rights
relating to the Old Notes and except that if the Exchange Offer is not
consummated by , 199 , subject to certain exceptions, with respect
to the first 90-day period immediately following thereafter, the Issuers will
be obligated to pay Liquidated Damages to each Holder of Old Notes in an amount
equal to $.05 per week for each $1,000 principal amount of Old Notes held by
such Holder.
RISK FACTORS
Holders of the Old Notes should consider carefully all of the information set
forth in this Prospectus and, in particular, should evaluate the factors set
forth under "Risk Factors."
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<PAGE>
RISK FACTORS
This Prospectus contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act. Discussions containing such forward-looking
statements may be found in the material set forth under "Summary,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources," "Business" and "Description of
the New Notes," as well as within this Prospectus generally. Actual results
may differ materially from those projected in the forward-looking statements.
Holders of the Old Notes should carefully consider the following matters,
together with other information contained herein, before purchasing tendering
their Old Notes in the Exchange Offer.
SUBSTANTIAL LEVERAGE AND ABILITY TO SERVICE DEBT
Following the consummation of the Offering, the Company will be highly
leveraged, with substantial debt service in addition to construction and
operating expenses. As of the Closing Date, after giving effect to the
Capitalization Transactions, the Offering and the application of the net
proceeds therefrom, the Notes will be the only outstanding senior Indebtedness
of the Company. In addition, the Indenture permits the Company to incur up to
$15.0 million of FF&E Financing outstanding at any time, approximately $13.2
million of which the Company intends to incur in connection with the opening
of the Isle-Black Hawk. See "Capitalization."
The Issuers' ability to meet the debt service obligations on the Notes is
entirely dependent upon the successful completion of the Isle-Black Hawk and
the Company's future operating performance, which is itself dependent on a
number of factors, many of which are outside of the Company's control,
including prevailing economic conditions and financial, business, regulatory
and other factors affecting the Company's operations and business. Any
significant increases in the construction budget for the Isle-Black Hawk or
delays in completing the construction and commencing the operation of the
Isle-Black Hawk would adversely affect the operating results of the Company
and could result in the Company's not being able to make required payments on
its debt obligations, including the Notes. Assuming timely completion of the
Isle-Black Hawk and its successful operation thereafter, management believes
that the Company's operating cash flow will be sufficient to meet its
expenses, including interest costs. There can be no assurance, however, that
the Company will be profitable or will generate sufficient operating cash flow
to enable the Company to (i) service its Indebtedness, including the Notes, or
(ii) purchase any Notes required to be purchased by the terms of the
Indenture. Since operations at the Isle-Black Hawk have not yet commenced and
the Black Hawk Market has few, if any, facilities directly comparable to the
Isle-Black Hawk, it is difficult to formulate estimates of the Isle-Black
Hawk's potential earnings.
If the Company is unable to generate sufficient cash flow, it could be
required to adopt one or more alternatives, such as reducing or delaying
planned capital expenditures, selling assets, restructuring debt or obtaining
additional equity capital. There can be no assurance that any of these
alternatives could be effected on satisfactory terms or at all. None of Casino
America, Nevada Gold, Casino America of Colorado, Inc. or Blackhawk Gold, Ltd.
will have any obligation under the Notes nor does any such party have any
obligation to provide any financing to or on behalf of the Company, except for
Casino America's obligation to pay up to $5.0 million pursuant to, and subject
to the conditions in, the Completion Capital Commitment. In addition, Casino
America will be limited, subject to certain exceptions, in its ability to
provide additional capital to the Company (other than pursuant to the
Completion Capital Commitment) even should it desire to do so, by the terms of
certain debt agreements to which it is subject, including the indenture
governing the $315.0 million aggregate principal amount of its outstanding 12
1/2% Senior Secured Notes due 2003.
The degree to which the Company is leveraged could have important
consequences to the holders of the Notes, including, but not limited to, the
following: (i) the Company's increased vulnerability to adverse general
economic and industry conditions, (ii) the dedication of a substantial portion
of the Company's operating cash flow to the payment of principal and interest
on Indebtedness, thereby reducing the funds available for operations and
further development of the Isle-Black Hawk and (iii) the Company's impaired
ability to obtain additional
12
<PAGE>
financing for future working capital, capital expenditures, acquisitions or
other general corporate purposes. There can be no assurance that any such
additional financing will be available in the future on terms satisfactory to
the Company, if at all. Failure by the Company to obtain any required
additional financing in the future could have a material adverse effect on its
financial condition and results of operations.
CONSTRUCTION BUDGET AND SITE RISKS
The Company has entered into the Design/Build Agreement with Haselden to
design and construct the Isle-Black Hawk and perform all necessary excavation
and other site work, as well as provide certain non-gaming furniture, fixtures
and equipment, for a "guaranteed maximum price" to the Company of $47.3
million. The $47.3 million price is a guaranteed maximum price for
construction of the casino to be completed within approximately 15.5 months
from the date the Company issues a notice to proceed with construction. The
price may be increased if plans or specifications change or the project
encounters unforeseen geological or excavation conditions, certain delays
caused by the Company, certain changes in law or certain other contingencies.
See "Material Agreements--Design/Build Agreement." The construction of Isle-
Black Hawk and the hotel (if applicable) may be delayed without any cost to
Haselden if such delays result from (i) certain delays caused by the Company,
(ii) certain force majeure events, (iii) unforeseen environmental, excavation
or geological problems, (iv) weather delays which exceed 15 days or (v)
certain changes in law. Construction projects such as the Isle-Black Hawk
entail significant construction risks, including, but not limited to, cost
overruns, delay in receipt of governmental approvals, changes in laws
applicable to the project, shortages of materials or skilled labor, labor
disputes, unforeseen environmental or engineering conditions, work stoppages,
natural disasters, construction scheduling problems and weather interferences,
any of which, if they occurred, could delay construction or result in a
substantial increase in costs to the Company. Such risks may be compounded by
the Company's decision to construct the Isle-Black Hawk on an accelerated
schedule under which construction will be in progress while final plans are
being completed and which will include the use of multiple shifts, early
ordering of materials and fast-tracking. An accelerated construction schedule
may cause actual construction costs to exceed budgeted amounts.
Of the net proceeds from the Offering, approximately $52.9 million will be
deposited in the Construction Disbursement Account pending disbursement upon
satisfaction of certain conditions, including certain conditions subject to
the satisfaction of an independent construction consultant (the "Independent
Construction Consultant"). The primary purpose of the Independent Construction
Consultant is to monitor the construction process and provide independent
verification that the construction time line and budget are within specified
parameters. Pursuant to the Cash Collateral and Disbursement Agreement, the
Disbursement Agent (as defined herein) will require certain certifications
from the Independent Construction Consultant to determine the satisfaction of
conditions for disbursements. There can be no assurance that the Independent
Construction Consultant will discharge its responsibilities in a manner that
will ensure that funds will not be disbursed prior to satisfaction of all
applicable requirements.
Because the site for the Isle-Black Hawk is located in an area previously
used for mining, the risk exists that mine tunnels or other structural
aberrations at or near the site will be uncovered or exacerbated in the
excavation process. If such matters were uncovered or exacerbated, additional
measures would be required to remediate and stabilize the site. Such measures
can increase the costs of excavation significantly and also cause considerable
delay to the excavation and construction process. Pursuant to the Design/Build
Agreement, the Company has assumed the risk of any cost increases resulting
from any unforeseen excavation problems, including the existence of any mine
tunnels or other structural abberations at or near the site. In addition to
the foregoing concerns, excavation is an inherently dangerous and
unpredictable process and no assurance can be given against unforeseen events
or circumstances that could result in delays or increased cost.
PERMITS AND APPROVALS
The opening of the Isle-Black Hawk will be contingent upon, among other
things, the Company's receipt of all required licenses, permits and
authorizations. The scope of the approvals required for a project of this
nature
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is extensive, including, without limitation, gaming and liquor licenses, pre-
opening permits from gaming authorities, state and local land-use permits,
excavation, building and zoning permits, architectural approvals, approval of
street and traffic signal improvements and health and safety permits. In
addition, unexpected changes or concessions required by local, regulatory and
state authorities, or challenges from local or special interest groups, could
involve significant additional costs and could delay or prevent the completion
of construction or the opening of all or part of the Isle-Black Hawk. There
can be no assurance that the Company will receive the necessary permits,
licenses and approvals for the construction and operation of the Isle-Black
Hawk that it has not yet obtained, or that such permits, licenses and
approvals will be obtained within the anticipated time frame. Unexpected
changes or concessions required by local, state or federal regulatory
authorities could involve significant additional costs and delay or prevent
the scheduled openings of the facilities. Any failure to receive any required
approvals could have a material adverse effect on the Company and its ability
to pay amounts due under the Notes.
COMPETITION
Competition in the Black Hawk Market is intense. Certain of the Company's
current and future competitors, particularly the larger gaming facilities,
have or may have more gaming experience than the Company or Casino America and
significantly greater financial resources than the Company. For instance,
Colorado Gaming & Entertainment Co., owner and operator of Bullwhackers Black
Hawk, Bullwhackers Central City and Silver Hawk Casino, recently announced
that it signed a letter of intent to be acquired by a division of Ladbroke
Group PLC of England, a multi-national operator of the U.K.'s largest chain of
betting shops and approximately 160 Hilton International hotels.
Of the 31 gaming facilities currently operating in the Black Hawk Market,
seven have over 400 gaming positions and two offer varying types of hotel
accommodations. These larger gaming facilities all have on-site parking and
have high-profile brand names established in the local market, such as Gilpin
Hotel Casino, Colorado Central Station, Fitzgeralds Black Hawk, Bullwhackers
Black Hawk and Harvey's Wagon Wheel Hotel/Casino. In addition to the existing
gaming facilities, several new development projects and expansion plans have
been announced or are in process. Riviera Holdings Corporation recently
announced that it has executed a letter of intent to purchase land in Black
Hawk, Colorado, on which it intends to construct a large casino. The site for
the Riviera project is an undeveloped site directly across Main Street from
the Isle-Black Hawk. In addition, a joint venture between Jacobs
Entertainment, Ltd. and the owner/operator of Gilpin Hotel Casino is currently
constructing a gaming facility in Black Hawk. The Jacobs Entertainment, Ltd.
casino is located near Colorado Central Station. Other projects have also been
announced, proposed, discussed or rumored for the Black Hawk Market, such as a
large "Country World" casino and a "Black Hawk Brewery" casino. The Company is
not aware of whether these or other announced, proposed, discussed or rumored
projects are proceeding and therefore only the proposed number of slots, table
games and parking at the Riviera and Jacobs projects have been factored into
the comparisons contained in this Offering Circular.
The gaming facilities located at or near the intersection of Main and Mill
Streets are expected to provide significant competition to the Isle-Black
Hawk. Colorado Central Station, one of the larger gaming facilities in the
Black Hawk Market, is located across the intersection from the Isle-Black Hawk
and has approximately 700 slot machines, approximately 20 gaming tables, other
amenities such as a food court and a bar and among the most parking of any
gaming property in Black Hawk with approximately 690 valet parking spaces.
Riviera has announced that the plans for its gaming facility in Black Hawk
include 1,000 slot machines and a 500 space covered parking garage. The
developers of the Jacobs facility have announced that it will have 800 slot
machines, 22 table games, underground parking for 500 vehicles and 50 hotel
rooms. In addition, construction is proceeding on a third major intersection
off State Highway 119 in between the two current access points onto Main
Street in Black Hawk which will provide access directly to the Jacobs
Entertainment, Ltd. casino from State Highway 119, thereby allowing traffic
the option to bypass the Isle-Black Hawk.
Historically, Black Hawk has enjoyed an advantage over Central City because
customers have to drive by and, in part, through Black Hawk to reach Central
City. Central City has proposed the development of a road
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directly connecting Central City and Black Hawk with Interstate 70 which could
result in the elimination of this particular advantage, since customers would
be able to reach Central City without driving by or through Black Hawk.
The Isle-Black Hawk will compete, to a limited extent, with the casinos
located in Cripple Creek, since both the Black Hawk Market and Cripple Creek
compete for customers from Denver. The Isle-Black Hawk will also compete with
other forms of gaming, including lottery gaming, and horse and dog racing as
well as other forms of entertainment.
The market data and certain information, including parking data, contained
in this Offering Circular with respect to the current Black Hawk Market is
based on information supplied by the city of Black Hawk and various public
announcements and filings made by certain of the larger casinos in the Black
Hawk Market, in addition to other sources the Company believes to be reliable.
The Company has not independently verified any such information, announcements
or filings. Accordingly, investors should not place undue reliance on such
data, as there can be no assurance that such data is accurate in all material
respects. The Black Hawk Market and the gaming market in Colorado generally
are subject to changes, including changes due to facilities expanding or
closing or new facilities opening. The data contained in this Offering
Circular, including data regarding the Isle-Black Hawk's expected position in
the Black Hawk Market (in terms of size, comparable amenities, parking,
proximate competition and other relevant factors), could be rendered
inaccurate by such changes.
RISK OF NEW VENTURE; LACK OF PRIOR OPERATING HISTORY
To date, the Company's activities have been limited to development
activities and certain excavation and site preparation activities and, as a
result, the Company has had no earnings or operations. Although certain
members of Casino America's management have had experience constructing and
operating dockside, riverboat and land-based gaming facilities outside of
Colorado, neither the Company nor Casino America, which will manage the
Company's gaming operations, have previously been involved in constructing or
operating a land-based gaming facility or any facility in the Black Hawk
Market. Moreover, the Isle-Black Hawk is a start-up development and, as such,
will be subject to all of the risks inherent in establishing a new business
enterprise, including, but not limited to, unanticipated site-related,
construction, licensing, permitting or operating problems, as well as having
no proven ability to market and operate a land-based gaming facility or any
new venture in the Black Hawk Market. There can be no assurance that the
Company or Casino America will be able to market successfully the Isle-Black
Hawk or that the operations thereof will be profitable or will generate
sufficient operating cash flow to enable the Company to make payments of
principal and interest on the Notes.
DEPENDENCE UPON SINGLE GAMING SITE
The Company does not currently anticipate having operations other than the
Isle-Black Hawk and is entirely dependent upon the Isle-Black Hawk for its
revenues. Accordingly, the Company will be subject to greater risks than a
geographically diversified gaming operation, including, but not limited to,
risks related to local economic and competitive conditions, complications
caused by weather or road closure, road construction on primary access routes,
changes in local and state governmental laws and regulations (including
changes in laws and regulations affecting gaming operations and taxes) and
natural and other disasters. Any decline in the number of residents near or
visitors to the Black Hawk Market, a downturn in the overall economy of the
area served by the Black Hawk Market, a decrease in gaming activities in the
Black Hawk Market or an increase in competition could have a material adverse
effect on the Company.
ADVERSE WEATHER AND ROAD CONDITIONS; SEASONALITY
The city of Black Hawk is located in the Colorado Rocky Mountains, which can
be subject to inclement weather. Wind, blizzard, flood or other severe weather
conditions could (i) cause significant physical damage to the Isle-Black Hawk
or (ii) result in reduced hours of operation or access to the Isle-Black Hawk,
or the complete closure of the Isle-Black Hawk for a period of time, any of
which may have a material adverse effect on the
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Company. In addition, the city of Black Hawk is serviced by winding mountain
roads that require extremely cautious driving, particularly in bad weather.
These roads have tunnels that are subject to closure. In addition, congestion
on the roads leading to Black Hawk is not uncommon during the peak summer
season, holidays and other times of year and may discourage potential
customers from traveling to the Isle-Black Hawk, particularly if road
construction is in process.
The Company expects the highest level of customer visits to occur during the
summer months, due to more favorable weather conditions. Therefore, a poor
summer season, due to any cause, including causes outside the Company's
control, would have a material adverse effect on the Company.
ABILITY TO REALIZE ON COLLATERAL; BANKRUPTCY CONSIDERATIONS
The Notes will be secured by a first priority lien, subject to Permitted
Liens, on substantially all of the assets of the Company, including the Isle-
Black Hawk and the components thereof, the real property on which the Isle-
Black Hawk will be developed and improvements to be constructed thereon. The
Notes will not be secured by furniture, fixtures and equipment financed by
FF&E Financing. The Company's Colorado gaming license is not pledgeable or
transferable. Under Colorado gaming laws and the regulations promulgated
thereunder, the Trustee may be precluded from or otherwise limited or delayed
in exercising certain powers of attorney contained in the Collateral Documents
(as defined herein) or selling collateral, including, without limitation, slot
machines, at a foreclosure sale since only a person licensed by the Colorado
gaming authorities may have slot machines in their possession. In addition,
the Trustee may be delayed in its efforts to sell collateral due to various
legal restrictions, including, without limitation, requirements that an
operator of a gaming facility be licensed by state authorities or that prior
approval of a sale or disposition of collateral be obtained. Licensing
restrictions would also apply to the Trustee and its agents, if the Trustee
sought to operate, or retain an operator for, the Isle-Black Hawk. In such a
case, the Trustee or its agent, as the case may be, would have to be licensed
as an operator of the casino. Without the ability to operate or transfer the
gaming operations and related assets, the improved real estate at the Isle-
Black Hawk would be of diminished value. Licensing restrictions may also
adversely affect the number of bidders, and quality of bids submitted, at any
sale of the collateral.
In addition to gaming law restrictions, the Trustee's ability to foreclose
upon and sell collateral will be subject to the procedural and other
restrictions of state real estate law and commercial law. The right of the
Trustee under the Indenture, as the secured party under the Collateral
Documents, to foreclose upon and sell the collateral subject thereto upon an
acceleration after any Event of Default is likely to be significantly impaired
by applicable bankruptcy laws if a bankruptcy proceeding were to be commenced
by or against the Company prior to or possibly even after the Trustee has
foreclosed upon and sold the collateral. In view of the broad discretionary
powers of a bankruptcy court, it is impossible to predict if payments under
the Notes would be made following commencement of and during a bankruptcy
case, whether or when the Trustee could foreclose upon or sell the collateral,
whether the term of the Notes could be altered in a bankruptcy case or whether
or to what extent holders of the Notes would be compensated for any delay in
payment or loss of value of the collateral. Furthermore, to the extent a
bankruptcy court were to determine that the value of the collateral is not
sufficient to repay all amounts due on the Notes, the holders of the Notes
would hold "undersecured claims" with respect to any such deficiency.
Applicable federal bankruptcy laws do not permit the payment and/or accrual of
interest, costs and attorneys' fees for "undersecured claims" during the
debtor's bankruptcy case.
In the event the holders of the Notes are undersecured, the Trustee may be
entitled to a deficiency judgment under certain circumstances after
application of any proceeds from any foreclosure sale. There can be no
assurance, however, that the Trustee would be successful in obtaining any
deficiency judgment, what the amount of any such judgment if obtained might
be, or that the Company would be able to satisfy any such judgment, if
obtained.
Certain of the Company's affiliates are involved in activities that are
related to the Company's business and assets. In addition, the Company and its
affiliates have overlapping officers and directors. In the event that an
affiliate of the Company is the subject of a proceeding under the United
States Bankruptcy Code ("Bankruptcy
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Code"), the creditors of such affiliated entity or the trustee in bankruptcy
may argue that the assets and liabilities of the various entities, including
the Company, should be consolidated so as to cause the assets of the Company
to be available for satisfaction of claims against the bankrupt affiliate.
Although the Company believes that it is a distinct and separate legal entity
from its affiliates, there can be no assurance that in the event of a
bankruptcy of one of its affiliated entities a bankruptcy court would not
order consolidation of the assets of the Company and its affiliates.
CERTAIN BANKRUPTCY CONSIDERATIONS--LIMITED LIABILITY COMPANIES
The Company is a limited liability company organized under the laws of the
State of Colorado. Limited liability companies ("LLCs") are relatively recent
creations not only under the laws of the State of Colorado but also under the
laws of other jurisdictions. Generally stated, LLCs are intended to provide
both the limited liability of the corporate form for their members and certain
advantages of partnerships, including "pass-through" income tax treatment for
members, and thus have attributes of both corporations and partnerships. Given
their recent creation, LLCs and their members have been involved in relatively
few bankruptcy cases as debtors, and there has been little reported judicial
authority addressing bankruptcy issues as they pertain to LLCs. Moreover, the
existing judicial authority on such issues in bankruptcies of analogous
entities (e.g., partnerships) is not well settled. Consequently, a bankruptcy
of the Company, its members or any of their affiliates, may be litigated and
decided in the absence of dispositive judicial precedent, and thus, no
assurance can be made as to any particular outcome.
Pursuant to the provisions of the Operating Agreement, the bankruptcy of a
member of the Company is intended to have little, if any, effect on the
Company or its business operations. Among other things, the Operating
Agreement provides that bankruptcy of a member will not cause automatically
the Company's dissolution provided that there remains at least one member that
is not bankrupt, and the Company is to continue in business and is to continue
to be managed by the Managers. The foregoing provisions are expressly
permitted by the provisions of the Colorado statutory law, although there has
been little, if any, reported judicial authority interpreting such provisions
under the Colorado statutory law or similar provisions under the LLC statutes
of other jurisdictions. Moreover, even if the foregoing provisions would be
enforceable under state law, the enforceability of any or all of such
provisions under the Bankruptcy Code is not assured. In particular, in the
event of the bankruptcy of a member, the member as a debtor-in-possession in a
Chapter 11 case, any trustee appointed for the member's bankruptcy estate, or
any creditor or other party in interest of the member may challenge the
enforceability of such provisions under various Bankruptcy Code provisions and
the Bankruptcy Code may preempt such provisions and their enforceability under
state law. As indicated, there is no definitive judicial authority that
addresses these issues in the context of LLCs, and there is conflicting
authority that addresses similar issues arising in possibly analogous
partnership bankruptcies. Any of such challenges, even if ultimately
unsuccessful, could lead to a disruption of the Company's business and an
alteration in the manner in which that business is managed and, ultimately,
could have a material adverse effect on the ability of the Issuers to meet
their obligations under the Notes.
Steps have been taken to make the bankruptcy of either member remote as a
practical matter. For example, the members themselves are subsidiaries that
are restricted under their respective charter documents from having any
business other than the ownership of their membership interests in the
Company. Also, with respect to Nevada Gold, which owns all of the outstanding
stock of Blackhawk Gold, Ltd., its bankruptcy is intended to be made remote
through the payment on the Closing Date of substantially all of Nevada Gold's
known indebtedness and the limitation contained in a promissory note between
Nevada Gold and Casino America on Nevada Gold's ability to incur indebtedness
for three years after the Closing Date. In its most recently filed report on
Form 10-K for the year ended March 31, 1997, the audited financial statements
for Nevada Gold were qualified by a "going concern" opinion of its auditors.
Nevada Gold expects, and has been advised by its auditors, that such "going
concern" qualification will be removed from their audit opinion upon payment
of substantially all of its outstanding debts, which payment is expected to
take place concurrent with the closing of the Old Notes Offering. However,
there can be no assuring that these steps will prove successful; for example,
there can be no assurance that the members will never be collapsed or
otherwise legally consolidated with their shareholders in
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the event of the latter's financial difficulties or that Nevada Gold will
never have future creditors that will render it insolvent or otherwise cause
it financial difficulties. Consequently there can be no assurance that these
steps will ensure that no member will ever become a debtor in a bankruptcy
case or otherwise subject to the jurisdiction of a bankruptcy court. See
"Business--Nevada Gold."
FRAUDULENT CONVEYANCE CONSIDERATIONS
In connection with the issuance of the Notes, the Issuers will grant
security interests in the collateral to the Trustee, including, without
limitation, certain after acquired property. Various fraudulent conveyance and
revocatory laws have been enacted for the protection of creditors (including,
in some instances, parties who were not creditors at the time of the
challenged transfer but who subsequently became creditors ("future
creditors")) and may permit a court of competent jurisdiction to avoid, i.e.,
nullify, any transfer of a property interest (such as an outright transfer of
ownership of property or the granting of a security interest or other lien in
property) or any obligation incurred (collectively, a "transfer") by any of
the parties involved in the transactions described in this Offering Circular.
Generally, however, if a court were to find that (a) the debtor made or
incurred the challenged transfer or obligation with the intent of hindering,
delaying or defrauding its present or future creditors or (b)(i) the debtor
received less than reasonably equivalent value or fair consideration for
incurring the challenged obligation or making the challenged transfer and (ii)
the debtor (A) was insolvent or was rendered insolvent by reason of incurring
the challenged obligation or making the challenged transfer, (B) was engaged
or about to engage in a business or transaction for which its assets
constituted unreasonably small capital, or (C) intended to incur, or believed
that it would incur, debts beyond its ability to pay as such debts matured (as
all of the foregoing terms are defined in or interpreted under the applicable
fraudulent transfer law and each a "Financially Non-Viable Condition"), such
court could, subject to applicable statutes of limitations, avoid in whole or
in part the challenged obligation or transfer or subordinate claims with
respect to the challenged obligation or transfer to all other debts of the
debtor. The determination of whether the debtor was a Financially Non-Viable
Condition at the relevant time will vary depending upon the law applied in any
such proceeding. Generally, however, a debtor will be considered insolvent if
the sum of its debts was greater than the fair saleable value of all of its
assets at a fair valuation or if the present fair saleable value of its assets
was less than the amount that would be required to pay its probable liability
on its existing debts, as they become fixed in amount and nature. Also, a
debtor generally will be considered to have been left with unreasonably small
capital if its remaining capital, including its reasonably projected cash
flow, was reasonably likely to be insufficient for its foreseeable needs,
taking into account its foreseeable business operations and reasonably
foreseeable economic conditions.
With respect to the members and their shareholders, the most significant
possible fraudulent transfer issues are likely to pertain to the transfers
made by such entities in connection with the capitalization of the Company,
which consist principally of real estate upon which the Isle-Black Hawk is to
be constructed. See "Capitalization Transactions." However, with respect to a
challenge based on actual fraud, the Issuers intend and believe that each of
such transferors is making its capital contributions (and is entering into the
related transactions) for legitimate business purposes and without the intent
to hinder, delay or defraud any of its creditors.
The Issuers intend and believe that the transfers made in connection with
the capitalization of the Company will not constitute actual or constructive
fraudulent transfers as to the transferors' creditors. For example, the
formation of the Company was the product of arms-length negotiation between
unrelated parties, and the allocation of the percentages of member interests
between the transferors based upon their initial capital contributions is
intended to reflect the ratio that the fair market value of the property
contributed by such transferor bears to the fair market value of the combined
contributed property. Consistent with the foregoing, the member interests to
be received by Casino America of Colorado, Inc. and Blackhawk Gold, Ltd. in
exchange for their respective contributions are intended to have a value that
is essentially the equivalent of the fair market value of the property
contributed. Moreover, it is intended that the value of the outstanding
capital stock of Casino America of Colorado, Inc. and Blackhawk Gold, Ltd.
will have value essentially equivalent to the value of their respective
membership interests in the Company because all the assets contributed to
Casino America of
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Colorado, Inc. and Blackhawk Gold, Ltd., respectively, will in turn be
contributed to the Company. Consequently, the Issuers believe that each of
such transferors will have received at least reasonably equivalent value (if
not equivalent value) in return for the contributed property within the
meaning of general fraudulent transfer principles. Moreover, each such
transfer would not be a constructive fraudulent transfer, regardless of
whether the transferor received reasonably equivalent value or fair
consideration in return therefor, if such transferor was not in a Financially
Non-Viable Condition at the time of or as a result of the transfer. The
Issuers believe that this will be the case.
Notwithstanding the foregoing, there can be no assurance that a transferor's
contribution of its property will not be found to have constituted either an
actual or a constructive fraudulent transfer. Any such possible fraudulent
transfer challenges, even if ultimately unsuccessful, could lead to a
disruption of the Company's business and an alteration in the manner in which
that business is managed and, ultimately, could have a material adverse effect
on the ability of the Issuers to meet their obligations under the Notes.
In connection with the issuance of the Notes, the Issuers and any future
subsidiaries of the Company will grant security interests in collateral to the
Trustee, including, without limitation, in certain after-acquired property of
the Company and any of its subsidiaries. The Issuers intend and believe that
the Issuers, and any of the future subsidiaries of the Company, are and will
be undertaking the transactions described in this Offering Circular, including
the issuance and collateralization of the Notes, for legitimate business
purposes and without the intent to hinder, defraud or delay their creditors.
Substantially all of the collateral to be pledged by the Issuers and any
future subsidiaries of the Company to secure the Notes is expected to be
acquired or improved, in whole or in part, with the proceeds received from the
sale of the Notes, and each of the Issuers and any future subsidiaries of the
Company are not expected to be in a Financially Non-Viable Condition at the
time of the granting of the security interest and other liens in substantially
all of the collateral. However, there can be no assurance that the security
interests and liens granted in the material portion of the collateral will
never be avoided as having constituted fraudulent conveyances as to the
creditors of the Issuers or of any subsidiaries of the Company.
MECHANIC'S LIENS
Colorado law provides contractors, subcontractors and material suppliers
with a lien on the real property being improved by their services or materials
in order to secure their right to be paid. Following compliance with
applicable Colorado law, such parties may foreclose their liens if they are
not paid in full. The priority of all mechanic's liens arising out of a
particular construction project relates back to the date on which construction
of the project first commenced. Construction of the Isle-Black Hawk (for
purposes of Colorado law) will commence prior to the recordation of the Deed
of Trust that will secure the repayment of the Notes. Accordingly, all
contractors, subcontractors and material suppliers who provide services or
material in connection with the Isle-Black Hawk, including parties providing
services or materials prior to this Offering, after this Offering and/or near
the end of the construction period, and who otherwise comply with the
applicable requirements of Colorado law, will have a lien on the project,
senior in priority to the lien of the Deed of Trust.
The Company has taken steps to minimize the possibility that mechanic's
liens may be filed, including requiring that Haselden procure a performance
and payment bond to ensure performance under the Design/Build Agreement. The
bond, however, may not cover costs resulting from defaults by the Company
under the Design/Build Agreement or other defenses Haselden may have to
performance thereunder. In addition, the Cash Collateral and Disbursement
Agreement will require that no periodic payments be released unless lien
releases are obtained from all contractors, subcontractors and suppliers being
paid with the proceeds of such periodic payments (subject only to retainage
amounts).
Notwithstanding the foregoing, there can be no assurance that enforceable
mechanic's liens will not be senior to the lien of the Deed of Trust under
certain circumstances, including for work performed or materials supplied (i)
within 120 days prior to the recording of the Deed of Trust (which will be,
without limitation, concurrent with the consummation of the Old Notes
Offering) by contractors, subcontractors or suppliers who have not been
identified or paid or (ii) by unpaid contractors, subcontractors or suppliers
who are not covered by the performance bond. The Company has not obtained
payment or performance collateral to satisfy any such liens nor has it
obtained title insurance protection against such liens.
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ENVIRONMENTAL MATTERS
The Isle-Black Hawk will be located in an area that has been designated by
the Environmental Protection Agency ("EPA") as a National Priorities List
("NPL") area under the Comprehensive Environmental Response, Compensation and
Liability Act, as a result of hazardous substance contamination caused by
historical mining activity in the Black Hawk Market. The EPA can require
owners or operators of property to remediate contamination on or from their
property in a NPL area or to reimburse costs incurred by the government in
connection with such remediation. However, the property upon which the Isle-
Black Hawk will be developed has already been remediated by an affiliate of
the Company that was responsible for disposing of waste tailings and rock
located on the property that were generated during the construction and
operation of the National Tunnel. This remediation was performed under a
consent order with the EPA, and the EPA has issued a notification that no
further action is required to remediate known contamination on the parcel.
Nevertheless, there can be no assurance that the EPA or another governmental
entity, including the State of Colorado, might not require additional
remediation for other contaminated soil that might be uncovered during
excavation or construction at the parcel or for contamination in the
groundwater which sampling has disclosed. In addition, the EPA requires the
maintenance and monitoring of drainage pipes installed in a tunnel, the
opening of which is located on property which is owned by Nevada Gold and is
adjacent to the parcel on which the Isle-Black Hawk will be developed, in
order to prevent the backup of heavily mineralized, acidic water. In the event
of an unexpected water discharge from the tunnel, the Company's property and
access roads to the Isle-Black Hawk could suffer damage and require
remediation or repair.
GAMING REGULATION
The Company and the operation of the Isle-Black Hawk will be subject to
comprehensive and stringent governmental regulation, including the restriction
of permissible gaming to slot machines and card games of blackjack and poker,
each with a maximum single bet of five dollars, and the restrictions that no
more than 35% of the square footage of any building and no more than 50% of
any one floor of such building may be used for gaming.
Gaming licensees (including the Company) have a continuing duty to report to
the gaming authorities information concerning persons with a financial or
equity interest in the licensee, including, without limitation, persons who
loan money to the licensee. Persons found unsuitable by the Colorado
authorities may be required immediately to terminate any interest in a
licensee. Holders of the Notes may be subject to the regulatory review
process. In the event a holder of a New Note is found unsuitable by the
appropriate gaming authorities, the Company may, at its option, (a) require
such holder to transfer the New Note to an acceptable party or (b) redeem the
New Note at a redemption price equal to the lesser of the principal amount
thereof or the price at which the holder acquired the New Note, together with,
in either case, accrued and unpaid interest and Liquidated Damages, if any.
See "Description of the Notes--Gaming Redemption." Additionally, if Casino
America reasonably determines, based on communications with regulatory
authorities, that Blackhawk Gold, Ltd.'s interest in the Company will cause
Casino America or its affiliates (including the Company) a licensing problem
in any jurisdiction including Colorado, and such licensing problem cannot be
resolved, Casino America can require Blackhawk Gold, Ltd. to sell its
ownership interest in the Company to Casino America of Colorado, Inc. or to
any other party acceptable to Casino America. In the event of a sale to Casino
America of Colorado, Inc., the purchase price shall equal the capital account
balance of Blackhawk Gold, Ltd. in the Company. See "Material Agreements--
Members Agreement--Members."
LACK OF GAMING LICENSES
Applicable Colorado law requires each of the Company, Casino America of
Colorado, Inc., Blackhawk Gold, Ltd., Casino America, Nevada Gold and their
respective officers, directors, members and significant shareholders to submit
to a background regulatory review process prior to the licensing of the Isle-
Black Hawk. The review process includes submission of a gaming application, an
investigation and submission of a personal history and financial information.
In addition, all employees of the Company engaged in gaming operations will
have to be separately licensed. The applicant for the gaming license has the
burden of proving its qualification
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for license. There can be no assurance that all necessary licenses will be
issued, or issued on a timely basis. Any license issued or other approval
granted is a revocable privilege, and must be renewed, as a general rule, on
an annual basis. The Colorado gaming authorities have broad discretion to
condition, suspend, revoke, limit, restrict or deny renewal of any gaming
license at any time. Persons found unsuitable by the Colorado gaming
authorities may be required immediately to terminate any interest in,
association or agreement with or relationship to a licensee. A finding of
unsuitability with respect to any officer, director, employee, associate,
lender or beneficial owner of a licensee or applicant also may jeopardize the
licensee's license or the applicant's license application. A license grant may
be conditioned upon the termination of any relationship with unsuitable
persons.
While the Company believes that it will be able to obtain all requisite
licenses, no assurances can be given that all such licenses will be issued or
granted, or, if issued and granted, not subject to additional material
restrictions or subsequently revoked. The failure or inability to obtain any
such licenses in a timely manner, the imposition of additional material
restrictions in connection therewith, or the subsequent revocation of any such
license, would materially and adversely affect the Company.
Unless properly licensed, no person is permitted to collect gaming revenues.
In addition, no person is permitted to act as an attorney in fact for any
licensee. Gaming licenses are not saleable, otherwise transferable or subject
to nominee arrangements. Only properly licensed persons may own or sell any
slot machine or other gaming device. The foregoing limitations may impair the
ability of the holders of the Notes to realize upon the collateral. See "--
Ability to Realize on Collateral; Bankruptcy Considerations," "Gaming and
Liquor Regulatory Matters" and "Description of the Notes."
LEGISLATIVE ISSUES
The legalization of gaming in or near any area from which the Isle-Black
Hawk is expected to draw customers would have a material adverse effect on the
Isle-Black Hawk's business. Additionally, the legalization of various types of
gaming, such as video lottery terminals, in existing venues such as airports,
race tracks or drinking establishments, would have a material adverse effect
on the Isle-Black Hawk's business. See "Gaming and Liquor Regulatory Matters."
Colorado law requires statewide voter approval for any expansion of limited
gaming into additional locations and, depending on the authorization approved
by the statewide vote, requires, in addition, voter approval from the locality
in question.
In 1994, Colorado voters refused by a margin of 93% to 7% to permit gaming
in Manitou Springs (located near Colorado Springs and Cripple Creek) or slot
machines in airports. On November 5, 1996, Colorado voters defeated by a
margin of 69% to 31% a proposal to allow gaming in the community of Trinidad,
located on the New Mexico border. Recently, the state legislature passed, but
the Governor vetoed, a bill that would have permitted video lottery terminals
in dog and horse race tracks under certain terms and conditions. Several
cities within Colorado have active citizens' lobbies that were able to place
gaming initiatives on recent statewide ballots. Although these initiatives
have failed, new initiatives could be introduced on future statewide ballots
to allow expansion of gaming in Colorado or prohibit gaming in the Black Hawk
Market. Future initiatives, if passed, could significantly increase the
competition for gaming customers, thereby adversely affecting business in the
Black Hawk Market. Additionally, there can be no assurance against future
legislation that would impose additional restrictions or prohibitions on, or
assess additional fees with respect to, the Company's business.
Currently, Colorado law does not authorize video lottery terminals. However,
Colorado law permits the legislature, with executive approval, to authorize
new types of lottery gaming at certain locations, such as video lottery
terminals. As used herein, "video lottery terminals" mean games of chance,
similar to slot machines, in which the player pushes a button that causes a
random set of numbers or characters to be displayed on a video screen.
Depending on the display, the player may be awarded a ticket, which can be
exchanged for cash or playing credit. Certain lottery gaming could compete
with slot machine gaming.
In August 1996, President Clinton signed a bill creating the National
Gambling Impact and Policy Commission to conduct a comprehensive study of all
matters relating to the economic and social impact of gaming in the United
States. The legislation provides that, not later than two years after the
enactment of such
21
<PAGE>
legislation, the commission must issue a report to the President and to
Congress containing its findings and conclusions, together with
recommendations for legislation and administrative actions. Any such
recommendations, if enacted into law, could adversely impact the gaming
industry and have a material adverse effect on the Company's business or
results of operations.
Additionally, from time to time, certain federal legislators have proposed
the imposition of a federal tax on gaming revenues. Any such tax could have a
material adverse effect on the Company's financial condition or results of
operations.
STATE GAMING TAX ISSUES
The amendment to the Colorado Constitution that legalized limited gaming
also subjects casinos in Colorado to a gaming tax of up to 40% of adjusted
gross proceeds of gaming operations ("AGP"). AGP is generally defined as the
total amounts wagered less all payments to players. With respect to games of
poker, AGP means those sums wagered in a hand retained by the licensee as
compensation. Currently, the gaming tax on AGP is: 2% on the first $2 million
of AGP; 4% on AGP from $2 million to $4 million; 14% on AGP from $4 million to
$5 million; 18% on AGP from $5 million to $10 million; and 20% on AGP over $10
million. In 1992, the citizens of Colorado passed Amendment No. 1 to the
Colorado Constitution that requires any change in tax rates or any new tax to
be voted on by the electorate. Nevertheless, in 1996, the Colorado Commission,
by promulgation of a regulation, raised the tax rate on AGP. There can be no
assurance that tax rates or fees applicable to the Isle-Black Hawk will not be
increased in the future, either by the Colorado electorate, legislation or
action by the Colorado Commission, resulting in an adverse effect on the
Company's operations. Effective October 1 of each year, the Colorado
Commission establishes the gaming tax for the following 12 months.
DEPENDENCE ON KEY PERSONNEL
The success of the Company is largely dependent upon the efforts and skills
of the Manager and key executive officers of the Company and the Manager. The
loss of the services of the Manager or any key executive officers could have a
material adverse effect on the Company. There can be no assurance that the
Company would be able to attract and hire suitable replacements in the event
of any such loss of services.
DIFFICULTY IN ATTRACTING AND RETAINING QUALIFIED EMPLOYEES
The operation of the Company's business requires qualified executives,
managers and skilled employees with gaming industry experience and
qualifications to obtain the requisite licenses. The Company believes that a
shortage of skilled labor which exists in the gaming industry will make it
increasingly difficult and expensive to attract and retain qualified
employees. Increasing competition in the Black Hawk Market may lead to higher
costs in order to retain and attract qualified employees. The Company may
incur higher labor costs to attract qualified employees from existing gaming
facilities. While the Company believes that it will be able to attract and
retain qualified employees, there can be no assurance that the Company will be
able to do so.
RISK OF ADVERSE TAX TREATMENT
The Notes provide for payment of both Fixed Interest and Contingent
Interest, which Contingent Interest is based on a percentage of the Company's
Consolidated Cash Flow after the Isle-Black Hawk becomes Operating. The 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 Issuers and the Holders. The Company intends
to treat the 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 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 Notes and (ii) the Company
might 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
22
<PAGE>
a material adverse effect on the Company's after-tax cash flow. Moreover, such
a recharacterization would cause all or a portion of the interest payments on
the 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 Holder's income. In order to mitigate the
risk to the Company described in (ii) above, the Indenture provides that the
Company may not distribute to the Company's equity holders tax payment
distributions in certain circumstances as described under "Description of the
Notes--Certain Covenants--Restricted Payments" unless the equity holder has
provided Financial Assurances (as defined herein) to the Trustee or unless
there has been obtained a Favorable Private Letter Ruling (as defined herein)
or Favorable Tax Opinion (as defined herein) with respect to such risk. See
"Description of the Notes--Certain Covenants--Restricted Payments" and
"Certain Federal Income Tax Considerations."
NO RECOURSE AGAINST AFFILIATES
No direct or indirect member, manager, employee, officer, director, or
affiliate whether past, present or future, of the Issuers, Casino America of
Colorado, Inc., Blackhawk Gold, Ltd., Casino America or Nevada Gold will have
any liability in respect of the obligations of the Issuers under the Notes.
Capital will not have any substantial operations or assets of any kind and
will not have any revenues. Prospective investors in the Notes should not
expect Capital to participate in servicing the principal, interest and other
payment obligations on or with respect to the Notes.
POSSIBLE CONFLICT OF INTEREST OF CASINO AMERICA
Casino America owns undeveloped real estate in Cripple Creek, Colorado.
Casino America may decide to develop this real estate for gaming, possibly
with an "Isle of Capri Casino" theme, in which case Casino America would be in
competition, to a limited extent, with the Isle-Black Hawk. Some of the
individuals involved in the management of any such Cripple Creek casino might
also be involved in the management of the Isle-Black Hawk.
ABSENCE OF PUBLIC MARKET
The Notes are a new issue of securities for which there is currently no
active trading market. If the Notes are traded after their initial issuance,
they may trade at a discount from their initial offering price, depending upon
prevailing interest rates, the market for similar securities and other
factors, including general economic conditions and the financial condition of,
performance of and prospects for the Company. The Initial Purchaser has
advised the Company that it currently intends to make a market in the Notes.
However, it is not obligated to do so, and any market making activity with
respect to the Notes may be discontinued at any time without notice. The
Company does not intend to list the Notes on any securities exchange or to
seek approval for quotation of the Notes through any automated quotation
system. The Company has made application to have the Old Notes designated for
trading in the Private Offerings, Resales and Tradings through Automated
Linkages ("PORTAL") System of the National Association of Securities Dealers.
There can be no assurance that an active trading market for the Notes will
develop.
CONSEQUENCES OF EXCHANGE AND FAILURE TO EXCHANGE
Issuance of the Notes in exchange for the Old Notes pursuant to the Exchange
Offer will be made only after timely receipt by the Exchange Agent of such Old
Notes, a properly completed and duly executed Letter of Transmittal and all
other required documents. Therefore, holders of the Old Notes desiring to
tender such Old Notes in exchange for Notes should allow sufficient time to
ensure timely delivery. The Issuers are under no duty to give notification of
defects or irregularities with respect to tenders of Old Notes for exchange.
Holders of Old Notes who do not exchange their Old Notes for Notes pursuant to
the Exchange Offer will continue to be subject to the restrictions on transfer
of such Old Notes as set forth in the legend thereon. In general, the Old
Notes may not be offered or sold, unless registered under the Securities Act,
except pursuant to an exemption
23
<PAGE>
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 Old Notes under the Securities Act. In addition, upon the
consummation of the Exchange Offer holders of Old Notes which remain
outstanding will not be entitled to any rights to have such Old Notes
registered under the Securities Act or to any rights under the Registration
Rights Agreements. To the extent that Old Notes are tendered and accepted in
the Exchange Offer, a Holder's ability to sell untendered, or tendered but
unaccepted, Old Notes could be adversely affected. See "The Exchange Offer--
Consequences of Not Exchanging Old Notes."
Based on interpretations by the staff of the Commission, the Issuers believe
that the Notes issued pursuant to the Exchange Offer in exchange for Old Notes
may be offered for resale, resold and otherwise transferred by a holder
thereof (other than (i) an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act, (ii) the Initial Purchaser or any Holder
who acquired the Old Notes directly from the Company solely in order to resell
pursuant to Rule 144A of the Securities Act or any other available exemption
under the Securities Act, or (iii) a broker-dealer who acquired the Old Notes
as a result of market making or other trading activities) without further
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such Notes are acquired in the ordinary course
of such holder's business and that such holder is not participating and has no
arrangement or understanding with any person to participate, in a distribution
(within the meaning of the Securities Act) of such Notes. The Issuers have
not, however, sought their own no-action letter from the staff of the
Commission. Although there has been no indication of any change in the staff's
position, there can be no assurance that the staff of the Commission would
make a similar determination with respect to the resale of the Notes. Any
holder that cannot rely upon such prior staff interpretations must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction, unless such sale is made
pursuant to an exemption from such requirements. See "The Exchange Offer--
Purpose of the Exchange Offer."
24
<PAGE>
USE OF PROCEEDS
The Issuers will not receive any proceeds in connection with the Exchange
Offer. The net proceeds received by the Issuers from the Old Notes Offering,
after deducting discounts and commissions, were $72.0 million, which were
deposited in the Cash Collateral Accounts. The proceeds deposited in the Cash
Collateral Accounts were comprised of (i) approximately $52.9 million
deposited in the Construction Disbursement Account to be used, together with
FF&E Financing to be obtained by the Company, to finance the cost of
developing, constructing, equipping and operating the Isle-Black Hawk, repay
the outstanding indebtedness secured by a lien on the Blackhawk Gold Parcel,
and to pay certain other operating expenses of the Company, (ii) $5.0 million
deposited in the Completion Reserve Account to be held as a reserve with
respect to the completion of the Isle-Black Hawk and (iii) approximately $14.1
million to be deposited in the Interest Reserve Account and used to purchase
Government Securities representing funds sufficient to pay the first three
Fixed Interest payments on the Notes.
The net proceeds from the Old Notes Offering were deposited in the Cash
Collateral Accounts and assigned to the Trustee as collateral security for the
Notes. Funds will be disbursed from the Cash Collateral Accounts only upon
satisfaction of certain conditions set forth in the Cash Collateral and
Disbursement Agreement. Pending disbursement of the net proceeds deposited in
the Cash Collateral Accounts, such proceeds will be invested in Investment
Grade Securities, other than amounts held in the Interest Reserve Account,
which will be invested in Government Securities. See "Description of the New
Notes--Cash Collateral and Disbursement Agreement."
SOURCES AND USES OF FUNDS
(DOLLARS IN MILLIONS)
The sources and uses of funds for the development, construction, equipping
and operation of the Isle-Black Hawk are as follows:
<TABLE>
<CAPTION>
SOURCES
-------
<S> <C>
First Mortgage Notes........ $ 75.0
FF&E Financing.............. 13.2
Equity contributions(1)(2).. 15.4
------
Total Sources........... $103.6
======
</TABLE>
<TABLE>
<CAPTION>
USES
----
<S> <C>
Land(1)........................... $ 14.4
Construction costs(3)(4).......... 44.4
Furniture, fixtures and equipment. 13.2
Permits, fees and other(5)........ 5.4
Working capital(6)................ 2.8
Interest reserve(7)............... 14.1
Estimated offering fees and
expenses......................... 4.3
Completion Reserve(8)............. 5.0
------
Total Uses.................... $103.6
======
</TABLE>
- --------
(1) Reflects the contribution to the Company (a) by Casino America of
Colorado, Inc. of a contractual right to purchase the Casino America
Parcel, $0.1 million of the purchase price of which was previously paid by
Casino America on behalf of Casino America of Colorado, Inc., (b) by
Casino America of Colorado, Inc. of $6.4 million in cash to enable the
Company to purchase the Casino America Parcel for the unpaid balance of
the purchase price and (c) by Blackhawk Gold, Ltd. of the Blackhawk Gold
Parcel, valued at $7.9 million (a portion of which secured $0.4 million of
mortgage indebtedness repaid with the proceeds of the Old Notes Offering).
See "Business--Capitalization Transactions," "Material Agreements--Members
Agreement" and "Material Agreements--Land Purchase Contract."
(2) Includes a $1.0 million contribution to the Company by Casino America of
Colorado, Inc. consisting of (a) development costs paid by Casino America
of Colorado, Inc. to third parties in an amount not exceeding $1.0 million
and (b) cash, if any, in an amount equal to the difference between (i)
$1.0 million and (ii) the aggregate amount of the third party costs
referenced in clause (a) above. See "Material Agreements--Operating
Agreement."
(3) Represents the bonded "guaranteed maximum price" set forth in the
Design/Build Agreement of $47.3 million, less $2.9 million of non-gaming
furniture, fixtures and equipment. This price includes a contingency
allowance of $2.2 million. Such price is subject to increase if plans and
specifications change or the project encounters certain unforeseen
geological or excavation conditions, changes in law, delays caused by the
Company or other contingencies. The price also will be increased or
decreased based upon the amount that the actual costs to complete certain
allowance items, in the aggregate, are above or below $2.6 million. The
Design/Build Agreement also provides contractor incentives for
25
<PAGE>
early completion and construction cost savings as well as liquidated
damages payable to the Company for certain unexcused delays. Although the
Company believes that the site preparation and construction budget is
reasonable, actual costs may be higher given the risks inherent in the site
preparation and construction process. See "Risk Factors--Construction
Budget and Site Risks," "Risk Factors--Permits and Approvals," "Risk
Factors--Adverse Weather and Road Conditions; Seasonality," "Risk Factors--
Environmental Matters" and "Material Agreements--Design/Build Agreement."
(4) Assumes that the Company does not exercise the Hotel Option, which is
exercisable on or before March 1, 1998. If the Company exercises the Hotel
Option, the "guaranteed maximum price" set forth in the Design/Build
Agreement will increase by $6.3 million. If the Company exercises the
Hotel Option, it intends to fund the increased costs of construction
through cost savings achieved through value engineering, the availability
of contractor's funds represented by the contractor's contingency
allowance and the sources identified in footnote 8 below.
(5) Includes approximately $3.9 million in permits and impact fees, $1.1
million for operating supplies and $0.4 million used to repay mortgage
indebtedness on a portion of the Blackhawk Gold Parcel.
(6) Includes pre-opening costs and opening bankroll for the Isle-Black Hawk
currently estimated to be $1.8 million and $1.0 million, respectively.
(7) Reserve established for the payment of the first three interest payments
on the Notes. The amount set forth is an estimate and is subject to change
based on the actual interest rate payable on the Notes and the yield rate
of the Government Securities purchased with the proceeds of the Offering
and deposited in the Interest Reserve Account.
(8) Represents the Company's $5.0 million deposit of Offering proceeds into
the Completion Reserve Account. Excludes interest earnings on amounts
deposited in the Construction Disbursement Account and the Completion
Reserve Account, which the Company will invest in Investment Grade
Securities. Pursuant to the Cash Collateral and Disbursement Agreement,
the Company may use amounts in the Completion Reserve Account to fund
increases to the construction budget, subject to certain limitations. Also
excludes the Completion Capital Commitment of Casino America, pursuant to
which Casino America will commit to contribute to the Company up to $5.0
million in the event that such amounts are necessary to cause the Isle-
Black Hawk to become Operating on or before April 1, 1999, or if the Isle-
Black Hawk is not Operating by such date. See "Description of the New
Notes--Completion Capital Commitment."
26
<PAGE>
SELECTED FINANCIAL DATA
The Company was organized in April 1997 for the purpose of developing,
constructing, equipping and operating the Isle-Black Hawk. Since that time,
the Company has been in the development stage, and its activities have been
limited to applying for necessary permits, licenses and approvals, arranging
for the design, construction and financing of the Isle-Black Hawk, and
arranging for the contribution to the Company of the property upon which the
Isle-Black Hawk is being developed and other capital contributions as
described herein under "Business--Capitalization Transactions." 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, including the Notes thereto, and
other financial information included elsewhere herein.
<TABLE>
<CAPTION>
AUGUST 24, 1997
----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
INCOME STATEMENT DATA:
Net loss........................................... $ (53)
BALANCE SHEET DATA:
Cash............................................... 682
Total assets....................................... 90,082
Long-term debt, including current maturities....... 75,000
Total liabilities.................................. 75,131
Members' equity.................................... 14,952
</TABLE>
27
<PAGE>
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, including
the notes thereto, and the other financial information included elsewhere in
this Prospectus.
DEVELOPMENT ACTIVITIES
The Company was organized in April 1997 and was initially capitalized with
cash contributions from its members in the aggregate amount of $1,000. Since
that time, the Company's activities have been limited to applying for certain
necessary permits, licenses and approvals to enable it to construct and
operate the Isle-Black Hawk; arranging for the design, construction and
financing of the Isle-Black Hawk; coordinating the contribution to the Company
of the property on which the Isle-Black Hawk will be developed and other
capital contributions on the Closing Date as described herein under "Use of
Proceeds" and conducting excavation at the site in preparation for
construction. It is anticipated that the Isle-Black Hawk will be a 55,000
square foot gaming facility featuring approximately 1,100 slot machines, 24
table games and on-site parking for approximately 1,000 vehicles, and various
other amenities. Subject to the delays inherent in construction projects of
the magnitude of the Isle-Black Hawk, and subject to obtaining the necessary
gaming licenses, other permits and financing, the Company expects to open the
Isle-Black Hawk in late 1998 or early 1999.
RESULTS OF OPERATIONS
The Company is in the development stage and does not have any historical
operating results other than interest expense on the Company's outstanding
indebtedness, interest income on the Company's restricted cash, the receipt of
certain capital contributions and the capitalization of certain costs. The
capitalized costs have consisted primarily of license and permit application,
design, construction and financing fees. Future operating results are 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 Isle-Black Hawk, if completed and opened, will
be able to attract a sufficient number of patrons and achieve the level of
activity and revenues necessary to permit the Company to meet its payment
obligations, including with respect to the Notes, there can be no assurance
that the Company will be able to achieve these results. Capital is a wholly
owned subsidiary of the Company and was incorporated for the sole purpose of
serving as co-issuer of the Notes in order to facilitate the Offering. Capital
will not have any operations or material assets and will not have any
revenues.
LIQUIDITY AND CAPITAL RESOURCES
The Company's development expenses were borne by its members as provided in
the Members Agreement and capitalized on the Closing Date. The Company expects
to fund the development of the Isle-Black Hawk from a combination of (i)
equity contributions (primarily real estate and up to $1.0 million of cash and
third party development costs) valued at approximately $15.4 million, (ii) net
proceeds of $72.0 million from the Old Notes Offering, which were deposited
and invested as set forth in the Cash Collateral and Disbursement Agreement
and (iii) furniture, fixtures and equipment financing in the amount of up to
$15.0 million. In addition, Casino America provided the Completion Capital
Commitment, pursuant to which it committed to contribute up to $5.0 million to
the Company in the event that amounts in the Construction Disbursement Account
and the Completion Reserve Account are insufficient to cause the Isle-Black
Hawk to become Operating on or before April 1, 1999, or if the Isle-Black Hawk
is not Operating by such date. If the Company exercises the Hotel Option, it
intends to fund the increased costs of construction, which are anticipated to
be a $6.3 million increase to the "guaranteed maximum price" set forth in the
Design/Build Agreement, through cost savings achieved through value
engineering, the availability of contractor's funds represented by the
contractor's contingency allowance and interest earnings on amounts deposited
in the Construction Disbursement Account and the
28
<PAGE>
Completion Reserve Account. The funds provided by these sources are expected
to be sufficient to develop and commence operations of the Isle-Black Hawk
and, if the Hotel Option is exercised, a hotel, assuming no delays or
construction cost overruns beyond amounts in the Completion Reserve Account
and the Completion Capital Commitment. See "Risk Factors--Construction Budget
and Site Risks."
Following the commencement of operations of the Isle-Black Hawk, the Company
expects to fund its operating and capital needs from operating cash flows. The
Company intends to establish initial working capital reserves to provide for
reasonably anticipated short-term liquidity needs. However, there can be no
assurance that any additional financing, if needed to meet its liquidity
needs, will be available to the Company in the future, or that, if available,
any such financing will be on terms favorable to the Company. There can be no
assurance that the Company's estimate of its reasonably foreseeable liquidity
needs is or will be accurate or that new business developments or other
unforeseen events will not occur, resulting in the need to raise additional
funds. The Company expects that the adequacy of its operating cash flow will
depend, among other things, upon customer acceptance of the Isle-Black Hawk,
the continued development of the Black Hawk Market as a gaming destination,
the intensity of the Company's competition, the efficiency of operations,
depth of customer demand, the effectiveness of the Company's marketing and
promotional efforts and the performance by the Manager of its
responsibilities.
29
<PAGE>
BUSINESS
OVERVIEW
The Company plans to develop, own and operate the Isle-Black Hawk as a
premier casino gaming facility to be located in the Black Hawk Market
approximately 40 miles west of Denver. The Isle-Black Hawk will be one of the
first gaming facilities encountered by customers traveling from Denver to the
Black Hawk Market. Upon completion, the Isle-Black Hawk will be one of the
largest gaming facilities in Colorado. Plans for the Isle-Black Hawk include a
55,000 square foot, single-floor gaming facility featuring approximately 1,100
slot machines, 24 table games and 1,000 on-site parking spaces, a fine dining
restaurant, a delicatessen, a full service buffet and other related amenities.
The Isle-Black Hawk will be designed and constructed pursuant to the
Design/Build Agreement, which also provides for the addition of a hotel at the
option of the Company for an agreed-upon addition to the guaranteed maximum
price.
The Black Hawk Market includes many small, privately held gaming facilities
that the Company believes offer limited amenities and are characterized by a
shortage of convenient on-site parking. In addition, there are several larger
gaming facilities in the Black Hawk Market that provide varying levels of
services and amenities. Management believes that the Isle-Black Hawk's large
and modern gaming facility, superior location, convenient on-site covered
parking and extensive amenities will afford it a significant competitive
advantage. The Isle-Black Hawk is expected to include the largest single-floor
gaming facility in Colorado and will offer a broad array of amenities
including what is expected to be the largest buffet in the Black Hawk Market.
The Company believes that the customer convenience afforded its patrons by
providing ample on-site covered self-parking spaces will significantly
differentiate the Isle-Black Hawk from its competitors. Management believes
that, upon completion of the Isle-Black Hawk, its covered parking spaces will
represent in excess of 25% of the total covered parking spaces in the Black
Hawk Market. The Isle-Black Hawk will be designed and operated under a
distinctive Caribbean theme as an "Isle of Capri Casino," further
differentiating it from other gaming facilities in the area, which primarily
stress Victorian and western themes. In addition, the Company will utilize
database marketing techniques used by Casino America at its existing
facilities.
THE ISLE-BLACK HAWK
The Company believes that the location of the Isle-Black Hawk, as well as
the extensive covered on-site self-parking, the use of the "Isle of Capri
Casino" brand name and associated promotions, the number of slot machines and
varied amenities will establish the Isle-Black Hawk as one of the preeminent
casino gaming facilities in the Black Hawk Market. The Isle-Black Hawk will be
situated immediately adjacent to the southeast corner of Mill and Main Streets
in Black Hawk, Colorado, the first intersection to the Black Hawk Market
reached by customers arriving from Denver. This location makes the Isle-Black
Hawk one of the first gaming facilities encountered when arriving from Denver.
The Company's plans include a 55,000 square foot facility featuring
approximately 1,100 slot machines and 24 table games (blackjack and poker)
which is expected to constitute one of the largest number of gaming positions
and the largest single floor gaming facility in the Black Hawk Market. The
interior of the Isle-Black Hawk will emphasize a relaxed, Caribbean theme
through the use of water features, rock formations, foliage and bright
Caribbean colors. The exterior of the building will be distinctive, subtly
stressing the Caribbean theme while conforming to local architectural
requirements. The Company believes that the interior and exterior features,
along with the use of the branded "Isle of Capri Casino" name and theme will
further serve to distinguish it from the other establishments in the area,
which primarily stress Victorian and western themes.
The Isle-Black Hawk will be designed to coordinate efficiently bus, car and
pedestrian traffic. Patrons arriving by bus will enter through a separate,
covered drop off point with a bus turnaround to facilitate clearing the area
of bus traffic. Customers arriving by car will have the choice to use the two
lane valet parking or self- parking directly into the garage. The Company
believes that the self-park option will make the Isle-Black Hawk's parking
facility more convenient and easily accessed by customers and distinguish it
from gaming facilities with valet parking only. The entrance to the Isle-Black
Hawk is situated such that bus, valet, self-park and pedestrian
30
<PAGE>
traffic may enter and exit independent of each other. The Company expects this
design to maximize customer traffic to the Isle-Black Hawk by minimizing
traffic congestion. The Isle-Black Hawk will have a four-level on-site parking
garage with approximately 1,000 parking spaces, directly accessible by
elevator to the casino. The majority of these parking spaces will be covered.
Based on existing and announced casinos in the Black Hawk Market, the Company
believes that this parking complex is expected to be the largest on-site
parking in the Black Hawk Market, and will constitute over 25% of the covered
parking spaces in the Black Hawk Market. The Company expects its extensive on-
site parking facility, with the self park option, to give it a competitive
advantage over other casinos in the area that do not have as extensive parking
facilities or that require the use of a valet service.
In addition to the Company's plans to offer customers among the largest
number of gaming positions, the largest single-floor gaming facility in
Colorado and among the most on-site parking in the market, the Isle-Black Hawk
will provide extensive amenities for its customers. The Company expects its
300-seat buffet restaurant to be the largest buffet in the Black Hawk Market.
Customers will also have the option of dining at an 80-seat Farradday's steak
house offering more upscale dining. Farradday's steak house is Casino
America's own branded dining concept and emphasizes wood and nautical
detailing to promote an atmosphere of exploration and adventure. The Isle-
Black Hawk will also include an events center, with the ability to seat up to
350 people, that will be used for meetings, concerts, parties and promotions.
Plans call for a delicatessen, a VIP lounge, a video arcade and a gift shop
offering items specific to the "Isle of Capri Casino" theme. The Design/Build
Agreement permits the Company, by notice delivered to the general contractor
no later than March 1, 1998, to include the construction of a hotel under that
agreement for an increase of $6.3 million to the "guaranteed maximum price"
under the Design/Build Agreement. See "Material Agreements--Design/Build
Agreement."
THE BLACK HAWK MARKET
General. The Black Hawk Market consists of the cities of Black Hawk and
Central City which are located approximately 40 miles west of Denver and
approximately ten miles from Interstate 70, the main east-west artery from
Denver. Historically, these two gold mining communities were popular tourist
towns, especially during the summer months. However, since the inception of
casino gaming in October 1991, many of the former tourist-related businesses
have been displaced by gaming establishments. Casino customers to Black Hawk
and Central City are primarily "day trippers" from within a 100-mile radius of
Black Hawk and Central City, which includes the major population centers of
Denver, Boulder, Fort Collins and Golden, Colorado and Cheyenne, Wyoming.
Demographics. At December 31, 1996, approximately 1.6 million adults lived
within 50 miles of the Black Hawk Market, and approximately 2.3 million adults
lived within 100 miles. Average income for households within 100 miles of the
Black Hawk Market was $48,384 in 1996, 3.4% above the national average of
$46,797. Average income for households within 50 miles of the Black Hawk
Market was 8.0% above the national average, with an average household income
of $50,563 in 1996.
31
<PAGE>
Gaming. The following table sets forth gaming statistics for the Black Hawk
Market as well as the individual cities of Black Hawk and Central City all of
which were derived from information obtained from the Colorado Division of
Gaming:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, TWELVE MONTHS
-------------------------------------------- ENDED
1992 1993 1994 1995 1996 MAY 31, 1997
BLACK HAWK MARKET: -------- -------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gaming revenues (in
thousands)............. $127,565 $191,104 $243,405 $290,325 $308,781 $315,424
Number of gaming posi-
tions(1)(2)............ 7,252 8,467 8,737 8,732 8,706 8,832
Number of casinos(1).... 42 39 36 32 31 31
Average gaming positions
per
casino................. 173 217 243 273 281 285
Win per gaming posi-
tion(3)................ $ 73.66 $ 74.86 $ 85.36 $ 90.12 $ 97.84 $ 98.83
BLACK HAWK:
Gaming revenues (in
thousands)............. $ 56,201 $112,140 $173,703 $195,857 $219,911 $227,496
Number of gaming posi-
tions(1)(2)............ 3,276 4,779 4,334 4,990 5,387 5,463
Number of casinos(1).... 21 23 19 19 19 19
Average gaming positions
per
casino................. 156 208 228 263 284 288
Win per gaming posi-
tion(3)................ $ 81.41 $ 85.12 $ 104.97 $ 110.68 $ 116.10 $ 116.36
CENTRAL CITY:
Gaming revenues (in
thousands)............. $ 71,364 $ 78,964 $ 69,702 $ 94,468 $ 88,870 $ 87,928
Number of gaming posi-
tions(1)(2)............ 3,976 3,688 4,403 3,742 3,319 3,369
Number of casinos(1).... 21 16 17 13 12 12
Average gaming positions
per
casino................. 189 231 259 288 277 281
Win per gaming posi-
tion(3)................ $ 68.24 $ 63.92 $ 58.20 $ 65.06 $ 70.43 $ 71.11
</TABLE>
- --------
(1) As of December 31 for each period shown, except 1997 data which is shown
at May 31, 1997.
(2) According to the Colorado Division of Gaming, each table game is counted
as one gaming position.
(3) Calculated based on average number of positions during the period
presented.
Gaming revenues (excluding gaming on Native American lands) for the state of
Colorado were approximately $412 million in 1996, of which revenues from the
Black Hawk Market constituted over 75%. As with other new gaming markets, the
early years following legalization of gaming represented periods of rapid
expansion. The first casinos opened in the state in October 1991, and by year
end there were 14 casinos in the Black Hawk Market. In 1992, the number of
casinos peaked at 42 in the Black Hawk Market. While the number of casinos has
since declined to 31, the total supply of gaming devices has increased as a
result of a trend towards larger casinos. Since 1992, the number of gaming
positions in an average casino in the Black Hawk Market has grown
approximately 65% from 173 positions to 285 positions as of May 31, 1997.
Currently, 23 casinos operate with less than 300 gaming positions while only
seven operate with more than 400 gaming positions.
Win per gaming position per day in the Black Hawk Market has continued to
grow despite the increases in the number of gaming devices. This growth has
been largely due to gaming revenue growth in the city of Black Hawk. For
example, from 1992 to 1996, win per gaming position in the city of Black Hawk
increased approximately 43% while total gaming positions grew by over 64%.
Revenue growth in Central City has been moderate compared to that of Black
Hawk, with an approximately 3% growth in win per gaming position from 1992 to
1996, but a nearly 17% decline in total gaming positions over the same period.
Colorado's constitution currently permits a maximum single bet of $5 which
results in most casinos emphasizing slot machine play. Approximately 94% of
the Black Hawk Market's total gaming revenues are generated by slot machines.
By comparison, in the developed gaming markets of New Jersey and Nevada slot
32
<PAGE>
machines generate between 63% and 67% of total revenues while slot revenues in
emerging markets such as Iowa and Indiana account for approximately 70% of
total revenues.
The information contained in this discussion of the Black Hawk Market was
derived from publicly available data, except where stated otherwise. While the
Company regards these sources as reasonably reliable, no assurances can be
made regarding the accuracy of such information. See "Risk Factors--
Competition."
MARKETING STRATEGY
The Company plans to attract customers to the Isle-Black Hawk by designing
and implementing marketing strategies and promotions that emphasize value-
oriented gaming and the tropical island theme and promote repeat visits and
customer loyalty. For example, the Isle-Black Hawk plans to offer membership
in the Island Gold Players Club to its customers and "V.I.P." services to
repeat gaming customers. The Island Gold Players Club is a promotion that
rewards casino play and repeat visits to the casino with various privileges
and amenities. Casino America has used the Island Gold Players Club promotion
in other locales and, in its capacity as Manager of the Isle-Black Hawk, will
tailor it for the Black Hawk Market and implement it at the Isle-Black Hawk.
The Company also intends to emphasize distinctive food and entertainment
amenities to enhance its customer-friendly atmosphere with a view toward
attracting repeat customers. To encourage group visits, and as a service to
its customers, the Company intends to utilize bus programs to facilitate
customer visits.
The Company also intends to utilize database marketing techniques previously
implemented by Casino America at its existing gaming facilities in other
markets. The database will be primarily derived from information supplied by
the Island Gold Players Club, which will help the Company identify its best
customers by reference to levels of play and frequency of visits. The Company
plans to rely on database marketing in order to best identify the segments of
the population that are most likely to be attracted to the Isle-Black Hawk,
and to tailor its theme, promotions and amenities to its core group of
customers.
COMPETITION
The Company believes that the primary competitive factors in the Black Hawk
Market are location, availability and convenience of parking, number of slot
machines and table games, types and pricing of amenities, name recognition,
customer service and overall atmosphere. Although the Company believes that
the Black Hawk Market is primarily characterized by numerous small, privately
held gaming facilities, the Company considers its main competition to be the
larger gaming facilities located in Black Hawk and Central City, and
particularly those with considerable on-site parking and established brand
names and reputations in the local market. The largest casinos in the Black
Hawk Market in terms of number of gaming positions are Harvey's Wagon Wheel
Casino Hotel, Colorado Central Station, Bullwhackers Black Hawk, Canyon Casino
(formerly operated by Harrah's), Fitzgeralds Black Hawk and Gilpin Hotel
Casino. Each of these casinos also offers on-site parking.
The Company believes that its primary competition will be from casinos
located in the immediate proximity of the Isle-Black Hawk. Colorado Central
Station, a well-established casino, is located closest to the Isle-Black Hawk
across the intersection of Mill Street and Main Street. Colorado Central
Station has approximately 700 slot machines, approximately 20 table games,
amenities such as a food court and a bar and among the most parking spaces of
any gaming facility in the city of Black Hawk with approximately 690 valet
parking spaces. In terms of operating performance, Colorado Central Station
generated an estimated $240 win per gaming position per day over the twelve-
month period ended March 31, 1997.
In addition to the existing competition, plans for two new casinos have been
either publicly announced or are already under construction in Black Hawk.
Riviera has announced that the plans for its gaming facility in Black Hawk
include a facility containing 1,000 slot machines and a 500 space covered
parking garage. The site for the Riviera project is an undeveloped site
directly across Main Street from the Isle-Black Hawk. Jacobs
33
<PAGE>
Entertainment, Ltd. has begun construction on a 50,000 square foot facility,
which the developer has announced will accommodate 800 slot machines, 22 table
games, underground parking accommodating 500 vehicles, and 50 hotel rooms.
This facility is expected to be completed by May 1998 and will be located
approximately 0.3 miles from Isle-Black Hawk.
The 24 casinos in Cripple Creek (located a driving distance of 110 miles to
the south of the Black Hawk Market) and the Native American casinos located in
the southwestern corner of the state, constitute the only other casino gaming
communities in the state of Colorado. Management believes that Cripple Creek,
located 45 miles west of Colorado Springs, provides only limited competition
to the Black Hawk Market given its distance from the Black Hawk Market and its
relatively smaller facilities with fewer amenities. Management also believes
that the Native American casinos are too removed from the Black Hawk Market to
provide any significant competition. The Isle-Black Hawk will also compete
with other forms of gaming including lottery gaming, and horse and dog racing,
among others, and compete for entertainment dollars generally with other forms
of entertainment. See "Risk Factors--Competition." The information contained
in this discussion of competition were derived from publicly available data,
except where stated otherwise. While the Company regards these sources as
reasonably reliable, no assurances can be made regarding the accuracy of such
information. See "Risk Factors--Competition."
CONSTRUCTION SUMMARY
The development and construction of the Isle-Black Hawk will consist of: (a)
excavation, including any remediation or reinforcement of structural
abnormalities or other problems uncovered in or caused by the excavation
process, (b) construction of the foundation and superstructure of the Isle-
Black Hawk, (c) interior finish of the Isle-Black Hawk, (d) the widening of
the Mill Street bridge and construction of a pedestrian bridge (as required by
the city of Black Hawk), (e) construction of the parking facilities and (f)
other aesthetic enhancements, including landscaping. The Isle-Black Hawk is
expected to be substantially completed 15.5 months after the date that the
Company gives notice to Haselden to proceed with design and construction (the
"Casino Substantial Completion Date").
The Design/Build Agreement provides that Haselden, itself and through
various subcontractors, has agreed to design and construct the Isle-Black Hawk
and perform all necessary excavation and other site work as well as provide
certain non-gaming furniture, fixtures and equipment. The Isle-Black Hawk will
be constructed to allow a hotel to be developed on top of the facility which
meets the design requirements set forth in the Design/Build Agreement.
Pursuant to the terms of the Design/Build Agreement, the Company may elect to
add a hotel to the Isle-Black Hawk by providing Haselden with written notice
on or prior to March 1, 1998. If such notice is delivered, the scheduled
completion date for the hotel (the "Hotel Substantial Completion Date") will
be 120 days after the Casino Substantial Completion Date and is not expected
to materially disrupt the operations of the Isle-Black Hawk. The construction
of the Isle-Black Hawk (and the hotel if applicable) may be delayed without
any cost to Haselden if such delays result from Excusable Events. See
"Material Agreements--Design/Build Agreement."
The Design/Build Agreement provides for a "guaranteed maximum price" of
$47.3 million (exclusive of construction of a hotel) which is fully supported
by a payment and performance bond from Haselden and a site specific errors and
omissions policy in the amount of $5.0 million, subject to a $25,000
deductible payable by Haselden which covers errors and omissions of all
professional architects and engineers working on the project. The payment and
performance bond does not cover professional design or engineering errors or
omissions. The "guaranteed maximum price" is subject to increases if plans or
specifications change or if the project (i) encounters certain unforeseen
geological or excavation conditions, (ii) is delayed by the Company without
the fault or negligence of Haselden, (iii) is delayed because of a change in
law or (iv) is delayed because a notice to proceed is issued by the Company on
or after August 30, 1997. The "guaranteed maximum price" may also be decreased
if changes in design and specifications provide cost savings. Additionally, to
discourage delays, liquidated damages will be payable by Haselden for each day
that substantial completion of the Isle-Black Hawk
34
<PAGE>
is delayed (other than by an Excusable Event) past the Casino Substantial
Completion Date by (i) $0 per day for the first fourteen days of the delay,
(ii) $12,000 per day for the next fourteen days and (iii) $18,000 for each day
thereafter. To encourage early completion of the Isle-Black Hawk, incentive
fees will be payable to Haselden in the amount of $10,000 for each day that
the Isle-Black Hawk is substantially completed before the seventh day prior to
the Casino Substantial Completion Date. The Design/Build Agreement also
provides incentives for Haselden to limit construction costs by sharing cost
savings between the Company and Haselden as follows: (i) the first $500,000 of
savings accrues entirely to the Company, (ii) the next $500,000 of savings are
split 80% to the Company and 20% to Haselden, (iii) the next $1,000,000 of
savings are split 70% to the Company and 30% to Haselden and (iv) any
additional savings are split 60% to the Company and 40% to Haselden.
If the Company elects to have Haselden build the hotel, the "guaranteed
maximum price," exclusive of other price adjustments, will increase to $53.6
million. The payment and performance bond to be provided by Haselden, which
will not cover professional design or engineering errors or omissions, is
required to be increased by Haselden to fully support the $53.6 million price.
In addition to the possible increases and decreases referred to above, the
"guaranteed maximum price" will be increased or decreased based upon the
aggregate amount that the actual cost to complete certain allowance items is
above or below $2.6 million. To discourage delays of completion of the hotel,
liquidated damages will be payable by Haselden in the amount of $1,000 for
each day that substantial completion of the hotel is delayed (other than by an
Excusable Event) beyond the Hotel Substantial Completion Date. Similarly, to
encourage early completion of the hotel, incentive fees of $1,000 for each day
that the hotel is substantially completed prior to the Hotel Substantial
Completion Date will be payable to Haselden. The Company will not exercise the
Hotel Option unless the Company believes that it is able to complete
construction of the hotel within the overall project budget, the sources for
which may include other sources of funds. Such sources may include cost
savings achieved through value engineering, interest earned from the
investment of amounts in the Construction Disbursement Account and the
Completion Reserve Account and the availability of contractor's funds
represented by the contractor's contingency allowance due to favorable site
and construction conditions which would be verifiable in part by the Company
prior to the Hotel Option being exercised. The Company has also budgeted for
the acquisition of $10.3 million of furniture, fixtures and equipment in
addition to $2.9 million of furniture, fixtures and equipment acquired under
the Design/Build Agreement. Such $13.2 million of furniture, fixtures and
equipment is expected to be separately financed with FF&E Financing and such
financing is expected to be secured by the furniture, fixtures and equipment
purchased. See "Use of Proceeds--Sources and Uses of Funds" and "Material
Agreements--Design/Build Agreement."
The scope of permits and approvals required for the construction of the
Isle-Black Hawk is extensive and includes state and local land use permits,
excavation, building and zoning permits, architectural approvals and approval
of street and traffic signals. To date, the Company has received concept
approval by the Historic Architectural Review Committee and has submitted all
required documentation for the excavation permits.
DESIGN AND CONSTRUCTION TEAM
The Company has assembled what it believes to be a highly qualified team to
design and construct the Isle-Black Hawk.
Edward F. Reese, Casino America's Vice President--Construction and Design,
is managing project development and construction for the Isle-Black Hawk. Over
the past 30 years, Mr. Reese has been responsible for the project management
of complex, mixed use building projects, and most recently, riverboat casino
projects (including adjacent land based hotels). Mr. Reese has experience
negotiating specialty design and construction contracts. Mr. Reese currently
serves as the Vice Chairman of the Executive Committee of the American Society
of Civil Engineers--Construction Division.
Haselden Construction, Inc., the design/builder for the Isle-Black Hawk, is
a large Denver-based general contractor with experience in constructing
facilities in the mountain towns of Colorado, including Black Hawk. Haselden
was general contractor for the design and construction of Colorado Central
Station.
35
<PAGE>
Parkhill-Ivins Architects ("Parkhill-Ivins"), pursuant to the Design/Build
Agreement, will serve as the architect for the design, development and
construction of the Isle-Black Hawk. Parkhill-Ivins has significant experience
in the design and construction of casinos in Colorado's mountain towns,
including Colorado Central Station, Bullwhackers Black Hawk and Bullwhackers
Central City.
CAPITALIZATION TRANSACTIONS
The Company was organized as a limited liability company under the laws of
Colorado in April 1997, by Casino America of Colorado, Inc. and Blackhawk
Gold, Ltd. Since its organization, the Company has been in the development
stage, and its activities have been limited to applying for necessary permits,
licenses and approvals; arranging for the design and construction of the Isle-
Black Hawk; arranging for the financing for the Isle-Black Hawk; coordinating
the contribution to the Company of certain real estate parcels and other
capital contributions and conducting excavation at the site in preparation for
construction. Simultaneously with the consummation of the Old Notes Offering,
(a) Casino America of Colorado, Inc. assigned to the Company the contractual
right to purchase the Casino America Parcel, $100,000 of the purchase price of
which was previously paid by Casino America on behalf of Casino America of
Colorado, Inc., (b) Casino America of Colorado, Inc. contributed sufficient
cash to the Company to enable the Company to purchase the Casino America
Parcel for the remaining unpaid purchase price of $6.4 million, (c) Blackhawk
Gold, Ltd. transferred to the Company the Blackhawk Gold Parcel, (d) the
Company exercised and closed the purchase right referred to in clause (a)
above and (e) Casino America of Colorado, Inc. contributed to the Company
additional cash equal to the difference between $1.0 million and the aggregate
amount of third party development costs incurred by it on behalf of the
Company prior to the Closing Date. Casino America of Colorado, Inc. owns 59.2%
of the Company and Blackhawk Gold, Ltd. owns 40.8% of the Company. See
"Material Agreements--Operating Agreement."
CASINO AMERICA
Casino America is a leading developer, owner and operator of dockside and
riverboat casinos and related facilities in the United States, owning and
operating five dockside or riverboat casinos at four facilities. All of Casino
America's properties are based on a tropical island theme and operate under
the "Isle of Capri Casino" name. Casino America owns and operates a dockside
casino and 367-room hotel in Biloxi, Mississippi, a dockside casino and
recreational vehicle park in Vicksburg, Mississippi, a dockside riverboat
casino and hotel in Bossier City, Louisiana, and two riverboat casinos
operating from a single facility on a site one mile from Lake Charles,
Louisiana where it is presently constructing a 241-room hotel. Casino America
also owns and operates Pompano Park, a harness racing track in Pompano Beach,
Florida, midway between Miami and West Palm Beach off of Interstate 95. For
the fiscal year ended April 27, 1997, Casino America had total revenues of
$375.6 million, earnings before net interest, income taxes, depreciation and
amortization, pre-opening expenses, settlement expenses, valuation charges,
extraordinary items and equity in income of unconsolidated joint ventures
("Adjusted EBITDA") of $69.2 million, and a net loss of $21.1 million, which
included certain settlement expenses and valuation charges. Excluding these
expenses, fees and charges, and also excluding certain pre-opening costs for
the Lake Charles operation and an extraordinary after-tax charge resulting
from the refinancing of debt, Casino America would have had a net loss of $0.2
million for the fiscal year ended April 27, 1997.
Casino America's business strategy, which has been implemented in its
existing operations, emphasizes the operation and development of value-
oriented gaming facilities and complementary amenities with a tropical island
theme using the "Isle of Capri Casino" brand name. Casino America believes
that the use of the "Isle of Capri Casino" name and associated theme creates a
readily identifiable brand image connoting excitement, quality and value,
which Casino America complements by emphasizing customer service and non-
gaming entertainment amenities. Casino America seeks to encourage repeat
visitors to its gaming facilities by identifying slot-oriented customers and
active casino patrons through its use of database marketing. Casino America
believes that its strategy fosters customer loyalty, enhances Casino America's
ability to compete effectively in its existing markets, and facilitates the
efficient and cost-effective development of gaming facilities in new markets.
The Company will rely on Casino America, in its capacity as the Manager of the
Isle-Black Hawk, to implement a
36
<PAGE>
business strategy for the Isle-Black Hawk consistent with Casino America's
other operations and tailored for the Black Hawk Market.
The following summarizes the casino properties owned and managed by Casino
America at June 29, 1997:
<TABLE>
<CAPTION>
CASINO
SQUARE SLOT TABLE HOTEL
FOOTAGE MACHINES GAMES ROOMS
------- -------- ----- -----
<S> <C> <C> <C> <C>
Biloxi....................................... 32,500 1,160 42 367
Vicksburg.................................... 24,000 802 43 --
Bossier City................................. 30,000 1,052 48 225
Lake Charles(1).............................. 48,900 1,834 93 241
------- ----- --- ---
Total...................................... 135,400 4,848 226 833
======= ===== === ===
</TABLE>
--------
(1) Represents two casino vessels.
NEVADA GOLD
Nevada Gold was originally formed in 1977 for the principal purpose of
operating and managing mining activities primarily in the western United
States. During 1993, in connection with the acquisition of a controlling
interest in Nevada Gold by affiliates of its management, Nevada Gold's primary
focus was redirected toward the assembly and development of gaming and real
estate properties in Colorado. Nevada Gold's current business activities
consist of its ownership of Blackhawk Gold, Ltd. (which, on the Closing Date,
will hold a 40.8% interest in the Company), the development of residential
real estate in and around Black Hawk and the leasing to third parties of
certain mining property.
In its audited financial statements for the fiscal year ended March 31,
1997, Nevada Gold reported total assets of $5.0 million and total liabilities
of $2.2 million and a net loss from operations of $1.6 million. The report of
Nevada Gold's independent accountants on its financial statements contains a
qualification regarding Nevada Gold's ability to continue as a going concern.
However, in connection with the Old Notes Offering, Nevada Gold and Blackhawk
Gold, Ltd. have agreed not to incur any additional indebtedness, and
concurrently with the consummation of the Old Notes Offering, Nevada Gold and
Blackhawk Gold were to repay substantially all of their outstanding
indebtedness, financed primarily by borrowings from Casino America of
Colorado, Inc., certain sales of Blackhawk Gold, Ltd.'s interest to Casino
America of Colorado, Inc. and payment of $0.4 million in mortgage note
indebtedness from the proceeds of the Old Notes Offering. Assuming those
conditions are met to its auditor's satisfaction, Nevada Gold expects, and has
been advised by its auditors, that such "going concern" qualification will be
removed from their audit opinion. See "Risk Factors--Certain Bankruptcy
Considerations" and "Material Agreements--Members Agreement--Transactions at
Closing."
INTELLECTUAL PROPERTY
Pursuant to a license agreement, Casino America will license the use at the
Isle-Black Hawk of (a) the following trademarks: Isle of Capri(R), Island
Gold(R), Calypso's(R), Farradday's(TM) and Isle Style(TM) and (b) the
trademark Isle of Capri parrot logo. In addition, the license agreement will
provide that additional trademarks acquired or developed by Casino America and
used at its other facilities will be subject to the license agreement. Each of
the foregoing names and logo are registered trademarks of Casino America,
except for Farradday's(TM), and Isle Style(TM), each of which is covered by a
trademark application filed by Casino America.
37
<PAGE>
PROPERTY
The Company is the owner of a 9.12 acre undeveloped parcel at the southeast
section of the intersection of Mill and Main Street in Black Hawk, Colorado.
EMPLOYEES
The Company anticipates having an average of approximately 825 full-time
equivalent employees subject to seasonal fluctuation, with the highest number
of employees during the summer season.
LEGAL PROCEEDINGS
Neither of the Issuers is subject to any legal proceedings.
38
<PAGE>
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 in preliminary or
executed form are available upon request to the Company.
OPERATING AGREEMENT
The rights and obligations of Casino America of Colorado, Inc. ("Casino
Colorado") and Blackhawk Gold, Ltd. ("Blackhawk Gold") (collectively, the
"Members") are governed in part by the Amended and Restated Operating
Agreement of the Company ("Operating Agreement") dated as of July 29, 1997.
The Operating Agreement provides that it will become effective upon
consummation of the Capitalization Transactions.
Members and Membership Interests. As of the Closing Date and after giving
effect to the Capitalization Transactions and certain other transactions,
Casino Colorado and Blackhawk Gold will respectively hold 59.2% and 40.8% of
the membership interests (the "Membership Interests") in the Company. Each
corporation that serves as a Member must designate one or more individuals to
act as such Member's representative. Casino Colorado has selected John M.
Gallaway as its representative and Blackhawk Gold has selected H. Thomas Winn
as its representative.
Any transfer of a Membership Interest must be approved by Colorado gaming
authorities and such transferee must obtain a license to hold an ownership
interest in a gaming license in Colorado. Any transfer in violation of such
law is void unless the Company is no longer subject to such law or the
applicable gaming commission waives such noncompliance. If the applicable
gaming commission determines that a Member is unsuitable to own an interest in
the Company, then the Company may buy, and the Member is required to sell,
such Member's Membership Interest.
In addition to Colorado gaming restrictions, the Operating Agreement sets
forth other transfer restrictions. A Member may transfer all or any part of
its Membership Interests to (i) its affiliates, (ii) another Member, (iii) the
Company, (iv) an entity or person approved by all the Members, (v) to another
person as part of a merger, reorganization, consolidation or sale of all or
substantially all of the assets of a person or entity that controls such
Member or (vi) a creditor as a pledge securing an obligation (collectively,
"Permitted Transferees"). If a Member wishes to transfer its Membership
Interest to persons or entities other than Permitted Transferees, it must
obtain a bona fide offer and then offer its Membership Interests to the
Company upon the same terms. If the Company accepts the offer, it must
purchase all, but not less than all, of the offered Membership Interest within
30 days of the offer. If the Company does not accept the offer, the other
Members (not including previous transferees not admitted as substitute Members
discussed below) have the right to purchase, in whole and not in part, such
offered Membership Interest pro rata in proportion to their Ownership
Interests within 60 days of the date of offer to the Company.
A transferee of a Membership Interest (including a Permitted Transferee) may
only become a substitute Member upon the written approval of all remaining
Members. If a transferee does not obtain such approval, such transferee will
not have the right to participate in the management of the business and
affairs of the Company or become a Member. Such transferee will only be
entitled to receive the share of profits or other compensation by way of
return of contribution to which a Member would otherwise be entitled. Except
as otherwise provided in the Members Agreement, no Member is required to make
an additional capital contribution. See "--Members Agreement--Contributions."
Management. The Company will be managed by its managers (the "Managers").
The initial Managers are designated in the Operating Agreement as John M.
Gallaway and Allan B. Solomon of Casino America and H. Thomas Winn of Nevada
Gold. Generally, each Member may elect one Manager. However, so long as Casino
Colorado or its affiliates own more than 50% of the Membership Interests of
all the Members of the Company (a
39
<PAGE>
"Majority in Interest"), Casino Colorado or its affiliates will be entitled to
elect a majority of the Managers. Managers are elected at annual meetings of
Members for one-year terms. Each Member may remove, replace, fill a vacancy or
designate a temporary replacement for the Manager or Managers elected by it.
Except as provided in the next sentence, actions of the Managers will be by a
majority vote of the Managers present at duly convened meetings at which a
quorum (i.e., a majority of the Managers) is present. A vote of all the
Members and Managers is required for certain events including the addition of
a substitute Member, any non-pro rata distribution to Members, material
amendments to the Operating Agreement, a merger or a sale of all or
substantially all the assets of the Company.
Dissolution and Liquidation. The Company will be dissolved upon the earliest
to occur of: (i) an event of withdrawal with respect to a Member which,
pursuant to the Operating Agreement, terminates such Member's Ownership
Interest, unless there is at least one remaining Member; (ii) the unanimous
agreement of the Members; or (iii) December 31, 2096. Events of withdrawal
include certain unapproved membership interest transfers, voluntary
withdrawals and certain other events described in the Operating Agreement. The
Operating Agreement also states that the bankruptcy of a Member will only be
an event of withdrawal of a Member if there is at least one solvent member
remaining. The Operating Agreement provides that the Company will be
liquidated upon the occurrence of any event requiring dissolution of the
Company.
Indemnification. No member has any liability for the debts and obligations
of the Company. Each member, manager, employee or agent of the Company is
entitled to indemnification from the Company with respect to any proceeding
asserted against such member, manager, employee or agent due to his or its
status as such other than for certain violations of the Operating Agreement by
such Person member. Each Member agreed to indemnify the Company and each
Member for damages resulting from its violation of the Operating Agreement.
MEMBERS AGREEMENT
On July 29, 1997, Casino Colorado, Casino America, Blackhawk Gold, and
Nevada Gold entered into a members agreement (the "Members Agreement")
regarding certain matters relating to the development of the Isle-Black Hawk,
management of the Company, additional capital contributions and other matters.
Contributions. Upon consummation of the Offering, Blackhawk Gold will
contribute to the Company the Blackhawk Gold Parcel and Casino Colorado will
contribute to the Company: (i) the right to acquire the Casino America Parcel
($0.1 million of the purchase price of which was previously paid by Casino
America on behalf of Casino Colorado), (ii) cash necessary to purchase the
Casino America Parcel, (iii) a plan for the development of the Isle-Black
Hawk, (iv) cash in the amount of $1.0 million less the aggregate amount of
development costs incurred by Casino America on behalf of Casino Colorado and
(v) the benefit to the Company of the Completion Capital Commitment and the
Managers Subordination Agreement. In addition, Casino Colorado will be deemed
to have contributed an amount equal to development costs paid by Casino
America on behalf of Casino Colorado to third parties not to exceed $1.0
million. No additional capital contributions are permitted to be made unless
agreed by all Members, except for payments under the Completion Capital
Commitment and except that the Company may require by a vote of a Majority in
Interest additional contributions to the Company, (i) if required by law, (ii)
as reasonably required in connection with the development and construction of
a hotel, but only to the extent that the funds available from the Completion
Capital Commitment and the proceeds of the Offering are insufficient, (iii)
for the replacement of furniture, fixtures and equipment or (iv) to implement
the development plan or other reasonable capital expenditures for Isle-Black
Hawk not to exceed an aggregate of $4.0 million. If a member fails to make a
Capital Contribution the remaining Members may either increase their own
capital contribution to make up such deficiency and receive additional
Membership Interests or loan such deficiency to the Company at a rate of
interest equal to the higher of 14.5% or Casino America's highest cost of
funds plus two percentage points. Blackhawk Gold will have the option to
purchase from Casino Colorado any Membership Interest acquired by Casino
Colorado as a result of an additional capital contribution at a purchase price
equal to the amount that Casino Colorado paid for such Membership Interest
plus interest at a rate equal to the higher of 14.5% or Casino America's
highest cost of funds plus two percent from the date that Casino
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Colorado acquired such Membership Interest, provided that this option may be
exercised only if, after giving effect to such purchase, Casino Colorado would
continue to hold a 55% or greater Membership Interest in the Company.
Transactions at Closing. Effective on the Closing Date, Casino Colorado will
loan Blackhawk Gold $0.5 million cash in exchange for a promissory note from
Nevada Gold and Blackhawk Gold, as co-obligors. The note will bear interest at
the higher of 14.5% or Casino America's highest cost of funds plus two
percentage points and all principal and interest will be due and payable three
years from the Closing Date. This note will be secured by a pledge of
Blackhawk Gold's entire Membership Interest and will contain a covenant
prohibiting Blackhawk Gold and Nevada Gold from incurring any indebtedness
other than this $0.5 million loan and accounts payable in the ordinary course
of business. See "Business--Nevada Gold." Additionally, Blackhawk Gold will
sell 4.2% of its Membership Interests to Casino Colorado for $0.7 million
cash. Blackhawk Gold will have the option to buy back such 4.2% Membership
Interest within 180 days for $0.7 million plus interest to the date of
repurchase at the rate of the higher of 14.5% or Casino America's highest cost
of funds plus two percent if, after giving effect to such purchase, Casino
Colorado would continue to hold a 55% or greater Membership Interest in the
Company. Substantially all the $1.2 million proceeds from the $0.5 million
loan and the $0.7 million sale of membership interests will be paid directly
to creditors of Nevada Gold in full payment of Nevada Gold's outstanding
obligations to such creditors. Blackhawk Gold will also have the right to sell
an additional 4.8% of its Membership Interests for $0.8 million. Blackhawk
Gold will have the option for 180 days thereafter to buy back such 4.8%
Membership Interest for $0.8 million plus interest through the date of
repurchase at the rate of the higher of 14.5% or Casino America's highest cost
of funds plus two percent if, after giving effect to such purchase, Casino
Colorado would continue to hold a 55% or greater Membership Interest in the
Company. The Company anticipates that the foregoing transactions will allow
Nevada Gold's independent auditors to remove the "going concern" qualification
set forth in such independent auditor's report accompanying Nevada Gold's
recently filed annual financial statements.
Mandatory Distributions. Subject to the term of the Indenture, the Company
will make quarterly distributions of cash from operations subject to certain
adjustments, to the Members in proportion to their Membership Interests from
cash available for distribution (which excludes certain reserves that the
Company is required to maintain under the Operating Agreement) in an amount
equal to the maximum amount that may be distributed pursuant to the terms of
the Indenture. If Casino America is required to make any capital contributions
under the Completion Capital Commitment, Casino Colorado will receive
additional Membership Interests and, except as provided in the next sentence,
Casino Colorado will be entitled to receive all distributions with respect to
all Membership Interests up to the aggregate amount of such payments before
any distributions are made to any other Member. Blackhawk Gold may exercise
its rights to purchase a portion of such additional Membership Interest from
Casino Colorado, as provided under the Members Agreement, the proceeds from
which will reduce the amount of priority distributions to which Casino
Colorado would otherwise by entitled.
Transfer of Membership Interests. If Casino America reasonably determines,
based on communications with regulatory authorities, that Blackhawk Gold's
interest in the Company will cause Casino America or its affiliates (including
the Company) a licensing problem in any jurisdiction including Colorado, and
such licensing problem cannot be resolved, Casino America can require
Blackhawk Gold to sell its ownership interest in the Company to an acceptable
party or to Casino Colorado. In the event of a sale to Casino Colorado, the
purchase price will equal the capital account balance of Blackhawk Gold in the
Company.
Non-competition. During the term of the Agreement, no member or any of its
Affiliates will seek to manage, develop or engage in casino gaming operations
in Gilpin County, Colorado, except in connection with the Isle-Black Hawk.
Each member and their affiliates are permitted to continue existing gaming
operations and (subject to the foregoing) develop new gaming operations, and
in so doing may solicit customers in competition with the gaming market in
Gilpin Country, Colorado. Blackhawk Gold and its affiliates are expressly
permitted to pursue commercial and residential real estate activities in, or
in the vicinity of, the gaming district of Black Hawk, Colorado, provided that
certain of such activities do not include any state regulated gaming
activities. Casino
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Colorado has the right to participate in such activities upon satisfaction of
certain notice and contribution requirements.
Other. In connection with any liquidation of the Company's assets, the
Members have agreed to cause the real property of the Company to be listed for
sale at its book value as reflected on the Company's books and records. Each
member has a right of first refusal to purchase such real property, for cash,
on the same terms as proposed by a third party purchaser in such liquidation.
Management. The Members Agreement provides that the parties thereto will
cause the Managers appointed by them not to cause the Company to effect any of
the following actions without the unanimous consent of each of the other
Managers and the unanimous consent of the Members: (i) the making of material
changes to the development plan; (ii) the adoption of any annual budget
following the opening of the casino calling for capital expenditures for such
budgeted year of greater than $4.0 million; (ii) a call for additional capital
contributions in excess of those described under the caption "--
Contributions," or (iv) the approval of the principal terms of any refinancing
of the Notes or the incurrence of indebtedness outside of the normal operating
requirements of the project in an outstanding amount which at any time exceeds
$1.0 million, subject to certain exceptions.
MANAGEMENT AGREEMENT
Casino America (the "Manager") and the Company entered into a Management
Agreement dated as of April 25, 1997 which was subsequently amended and
restated (the "Management Agreement"), and which will become effective upon
the consummation of the Capitalization Transactions.
Duties of the Manager. Prior to the opening of the Isle-Black Hawk, the
Manager will be responsible for developing and implementing all pre-opening
activities. After the Isle-Black Hawk commences operations, the Manager will
manage the daily operations of the Isle-Black Hawk, including among other
things, the (i) exclusive supervision and direction of the activities of the
Isle-Black Hawk; (ii) development and effectuation of an annual plan for the
Isle-Black Hawk, consisting of forecasts of monthly income and expenses,
monthly cash flow projections and working capital requirements, a budget
covering estimated capital expenditures, and an annual marketing plan; (iii)
development of an operating policy; (iv) supervision of advertising, sales and
business promotion; (v) supervision, hiring and discharge of all personnel;
(vi) maintenance of the property; and (vii) maintenance of all books of
accounts of the Isle-Black Hawk and the submission of all requisite
informational and/or tax returns.
Compensation. The Manager will be paid an annual management fee equal to 2%
of Revenues (as defined herein) plus 10% of Operating Income (as defined
herein); provided that such management fee shall not exceed 4% of Revenues.
"Revenues" means all revenues, less sales tax on such revenues, determined on
an annual basis received from the following sources: (i) gross gaming receipts
from the Isle-Black Hawk, less 50% of applicable gaming and admission taxes
from the operation of the Isle-Black Hawk; (ii) hotel operations (if any);
(iii) food and beverage operations; (iv) parking fees; (v) revenues generated
from gift shops and arcades; and (vi) other revenues, fees and income, which
are attributable to the Isle-Black Hawk. "Operating Income" means the income
of the Isle-Black Hawk before any management fee paid to the Manager,
distributions to Members, interest, depreciation, amortization and write-off
of start-up and pre-opening expenses and income taxes. The management fee will
be paid ten days after the end of each month. The Manager may withhold funds
received for the Company's account in payment of the management fee. The
Management Agreement provides that the Company shall reimburse the Manager for
any tax liability incurred by the Manager in respect of any accrued but unpaid
management fees (which reimbursements shall be deducted from the amount of
such accrued but unpaid fees). All amounts due to Casino America under the
Management Agreement will be subordinated to all obligations under the Notes.
In addition, the Manager will be entitled to receive reimbursement for certain
expenses incurred by it as the actual cost or fair market value thereof,
including, subject to certain limitations, compensation paid to employees of
the Manager that perform services in connection with the Isle-Black Hawk.
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Term. The Management Agreement will terminate upon the earliest to occur of
(i) the election of either party if the other party fails to perform any
material obligation under the Management Agreement, (ii) the mutual agreement
of the parties, (iii) the inability of either party to obtain or maintain
licenses necessary to carry out their obligations under the Management
Agreement, (iv) the occurrence of certain bankruptcy events with respect to
the Manager or (v) December 31, 2096.
Indemnification; Casualty. The Manager agrees to indemnify the Company
against all losses, liabilities, claims, demands, legal proceedings or costs
not covered by insurance and which the Company may sustain, incur or assume as
a result of any allegation, claim, civil or criminal action to the extent
arising out of (i) claims by employees of the Manager, (ii) the breach of the
Management Agreement by the Manager or its agents, or (iii) the acts of
failures to act of the Manager or its agents in a manner consistent with
commercial standards of reasonableness required by the Management Agreement,
provided that such loss, liability or cost did not result from the negligence
of the Company, its agents (other than the Manager) or employees and provided
further that no indemnification is provided for consequential or punitive
damages.
If the property used in the Isle-Black Hawk is damaged or destroyed, the
Company is required to repair or restore such property, to the extent of
insurance proceeds. If insurance proceeds are insufficient and the Company no
longer wishes to operate the Isle-Black Hawk, the Manager has the option to
obtain a license to operate the Isle-Black Hawk. If the Isle-Black Hawk itself
is damaged or destroyed, the Company may either restore or repair the Isle-
Black Hawk to the extent of insurance proceeds, or refuse to do so, in which
case the Management Agreement terminates.
Proprietary Information; Trademark. All specifically identifiable
proprietary information developed by the Manager for the Company shall be the
property of both the Manager and the Company. All proprietary information
previously developed by the Manager at the Manager's expense, including
without limitation, customer lists, gaming and marketing strategies and other
similar information shall remain the property of the Manager.
LICENSE AGREEMENT
Casino America and the Company entered into a License Agreement dated July
29, 1997 pursuant to which Casino America will license to the Company the use
at the Isle-Black Hawk of the trademarks Isle of Capri(R), Island Gold(R),
Calypso's(R), Farradday's(TM) and Isle Style(TM) and the registered trademark
Isle of Capri parrot logo and any future trademarks utilized by the Manager at
its other gaming facilities. No license fee is payable thereunder. See
"Material Agreements--License Agreements." The license is non-exclusive, non-
sublicensable and non-transferable other than to the Trustee. The marks
subject to the license must be used solely in connection with the operation of
the Isle-Black Hawk. All use of the marks inures to the benefit of Casino
America, and Casino America retains all right, title and interest to the
marks. The right to use the marks terminates upon the termination of the
Management Agreement except that if the termination of the Management
Agreement occurs after the institution of foreclosure proceedings by the
Trustee, the right to use the marks terminates six months after the
termination of the Management Agreement. The right to use the marks may be
terminated earlier if the use of the marks does not conform to quality
standards.
LAND PURCHASE CONTRACT
On June 5, 1997, Roman Entertainment Corporation of Colorado ("Roman") and
Casino America entered into a Purchase and Sale Agreement (the "Land Purchase
Contract") providing for the purchase by Casino America of the Casino America
Parcel which consists of two contiguous parcels of real estate comprising an
aggregate of 2.87 acres. The Casino America Parcel constitutes a portion of
the land on which the Isle-Black Hawk will be constructed. The Land Purchase
Contract provides that Casino America's rights thereunder may be assigned to
the Company.
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The purchase price for the Casino America Parcel is $6.5 million in cash,
payable (a) $0.1 million on execution and delivery of the Land Purchase
Contract (which amount has been paid), and (b) the balance at the closing. If
the closing has not occurred by September 2, 1997, Casino America has the
right to extend its option to purchase the Casino America Parcel to and
including December 30, 1997, by the payment of $0.9 million, which amount
would be applied to the purchase price if the closing subsequently occurs. In
addition to the purchase price, the buyer (i.e., the Company) is required to
pay all transfer, sales and use taxes (if any), all recording fees, document
preparation fees and similar fees, and to procure its own title insurance and
surveys. Escrow fees and costs are shared equally between the parties.
Except as set forth in the special warranty deed to be delivered at closing,
the purchase and sale of the Casino America Parcel is on an "as is, where is"
basis. Roman disclaims all representations and warranties with respect to, and
specifically places the buyer on notice of, any environmental matters
affecting the Casino America Parcel.
EXCHANGE COMMITMENT LETTER
By letter dated June 5, 1997, the city of Black Hawk agreed to exchange a
8,169 square foot parcel of frontage property where a portion of the Isle-
Black Hawk is to be developed, for a 2,657 square foot parcel owned by Nevada
Gold. Upon the consummation of the Offering, Blackhawk Gold, Ltd. will effect
the parcel exchange. The city of Black Hawk's obligation to effect the
exchange is conditioned on (a) the exchange occurring on or before December
31, 1997, (b) the Blackhawk Gold parcel being conveyed to the city of Black
Hawk by special warranty deed free and clear of all liens and encumbrances and
other title defects affecting merchantability, as determined by the city of
Black Hawk in its sole discretion and (c) the completion of the contribution
of real estate parcels as contemplated by the Capitalization Transactions.
DESIGN/BUILD AGREEMENT
The Design/Build Agreement provides that Haselden, itself and through
various subcontractors, has agreed to design and construct the Isle-Black Hawk
and perform all necessary excavation and other site work as well as provide
certain non-gaming furniture, fixtures and equipment. The Isle-Black Hawk will
be constructed to allow a hotel to be developed on top of the facility which
meets the design requirements set forth in the Design/Build Agreement.
Pursuant to the terms of the Design/Build Agreement, the Company may elect to
add a hotel to the Isle-Black Hawk by providing Haselden with written notice
on or prior to March 1, 1998. If such notice is delivered, the scheduled
completion date for the hotel (the "Hotel Substantial Completion Date") will
be 120 days after the Casino Substantial Completion Date and is not expected
to materially disrupt the operations of the Isle-Black Hawk. The construction
of the Isle-Black Hawk (and the hotel if applicable) may be delayed without
any cost to Haselden if such delays result from Excusable Events.
The Design/Build Agreement provides for a "guaranteed maximum price" of
$47.3 million (exclusive of construction of a hotel) which is fully supported
by a payment and performance bond from Haselden and a site specific errors and
omissions policy in the amount of $5.0 million, subject to a $25,000
deductible payable by Haselden which covers errors and omissions of all
professional architects and engineers working on the project. The payment and
performance bond does not cover professional design or engineering errors or
omissions. The "guaranteed maximum price" is subject to increases if plans or
specifications change or if the project (i) encounters certain unforeseen
geological or excavation conditions, (ii) is delayed by the Company without
the fault or negligence of Haselden, (iii) is delayed because of a change in
law or (iv) is delayed because a notice to proceed is issued by the Company on
or after August 30, 1997. The "guaranteed maximum price" may be also decreased
if changes in design and specifications provide cost savings. Additionally, to
discourage delays, liquidated damages will be payable by Haselden for each day
that substantial completion of the Isle-Black Hawk is delayed (other than by
an Excusable Event) past the Casino Substantial Completion Date by (i) $0 per
day for the first fourteen days of the delay, (ii) $12,000 per day for the
next fourteen days and (iii) $18,000 for each day thereafter. To encourage
early completion of the Isle-Black Hawk, incentive fees will be payable to
Haselden in
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the amount of $10,000 for each day that the Isle-Black Hawk is substantially
completed before the seventh day prior to the Casino Substantial Completion
Date. The Design/Build Agreement also provides incentives for Haselden to
limit construction costs by sharing costs savings between the Company and
Haselden as follows: (i) the first $500,000 of savings accrues entirely to the
Company, (ii) the next $500,000 of savings are split 80% to the Company and
20% to Haselden, (iii) the next $1,000,000 of savings are split 70% to the
Company and 30% to Haselden and (iv) any additional savings are split 60% to
the Company and 40% to Haselden.
If the Company elects to have Haselden build the hotel, the "guaranteed
maximum price," exclusive of other price adjustments, will increase to $53.6
million. The payment and performance bond to be provided by Haselden, which
will not cover professional design or engineering errors or omissions, will be
increased to fully support the $53.6 million price. In addition to the
possible increases and decreases referred to above, the "guaranteed maximum
price" will be increased or decreased based upon the aggregate amount that the
actual cost to complete certain allowance items is above or below $2.6
million. To discourage delays of completion of the hotel, liquidated damages
will be payable by Haselden in the amount $1,000 for each day that substantial
completion of the hotel is delayed (other than by an Excusable Event) beyond
the Hotel Substantial Completion Date. Similarly, to encourage early
completion of the hotel, incentive fees of $1,000 for each day that the hotel
is substantially completed prior to the Hotel Substantial Completion Date will
be payable to Haselden. The Company will not exercise the Hotel Option unless
the Company believes that it is able to complete construction of the hotel
within the overall project budget, the sources for which may include other
sources of funds. Such sources may include cost savings achieved through value
engineering, interest earned from the investment of amounts in the
Construction Disbursement Account and the Completion Reserve Account and the
availability of contractor's funds represented by the contractor's contingency
allowance due to favorable site and construction conditions which would be
verified in part by the Company prior to the Hotel Option being exercised. The
Company has also budgeted for the acquisition of $10.3 million of furniture,
fixtures and equipment in addition to $2.9 million of furniture, fixtures and
equipment acquired under the Design/Build Agreement. Such $13.2 million of
furniture, fixtures and equipment is expected to be separately financed with
FF&E Financing and such financing is expected to be secured by the furniture,
fixtures and equipment purchased. See "Use of Proceeds--Sources and Uses of
Funds."
No subcontract will be awarded by Haselden unless such subcontract is
competitively bid upon by at least three bona fide bidders and the lowest
bidder is selected. All subcontracts must be written on a "lump sum basis" and
not on a "cost plus", "cost of work" or "reimbursable" basis. If Haselden
becomes aware of any circumstances that may cause a delay in the construction
schedule, it must immediately notify the Company. The Company then, at no
additional cost to the Company, may require Haselden to exert its best efforts
to avoid any delay in the construction schedule. If Haselden is not in default
under the contract, the Company may, at its own expense, direct Haselden to
require multiple shifts and overtime to expedite completion of construction.
Development and construction costs will be funded from draws against the Cash
Collateral Account in accordance with the terms of the Cash Collateral and
Disbursement Agreement. All contracts relating to the construction of the
Isle-Black Hawk including the Design/Build Agreement, will be assigned as
security for the Notes. See "Description of the New Notes--Security." In turn,
any subcontractors with subcontracts greater than $100,000, will post a bond
with Haselden guaranteeing timely completion of their respective
subcontracting work.
SUBDIVISION AGREEMENT
As a condition to the issuance of a building permit for the project, the
Company will be required to execute a Subdivision Agreement (the "Subdivision
Agreement") with the city of Black Hawk pursuant to which the Company will be
required to make certain improvements to the portion of Main Street that
adjoins the Company's property and to Mill Street.
On July 16, 1997, the city council of Black Hawk resolved that it will
approve the Subdivision Agreement and the final plat for the property in the
form submitted by the Company, provided certain conditions are met on
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or before December 31, 1997, including the acquisition by the Company of the
Casino America Parcel and the Blackhawk Gold Parcel. Accordingly, the Company
anticipates that it will enter into the Subdivision Agreement with the city of
Black Hawk, substantially in the form of the submitted agreement, following
the Closing Date. The principal terms of the Subdivision Agreement are as
follows:
Public Improvements. The Subdivision Agreement requires the Company to
construct certain improvements to Mill Street which include, but are not
limited to, the construction of an additional lane to the existing bridge and
other necessary improvements as determined by the city of Black Hawk. The
Company is also required to construct an approximately 700 foot long, three-
lane concrete road on the portion of Main Street that abuts the property, a
cul-de-sac at the east end of the road and related curbs, gutters, street
lighting, signage, retaining walls, landscaping and other improvements to Main
Street as determined by the city of Black Hawk. The Company will also be
responsible for constructing the conduits for and bringing in all required
utilities along the portion of Main Street that abuts the property, and for
necessary traffic signals. Upon completion of the improvements, the Company
must convey marketable title to such improvements to the city of Black Hawk,
free and clear of all liens or encumbrances, including the Indenture. The
Company will be required to warrant the improvements for one year after
completion (except water improvements, which the Company will warrant for
three years). Subject to a provision for force majeure, the Company is
required to complete the improvements by January 1, 1999.
Estimated Costs of the Improvements. The Subdivision Agreement requires the
Company to bear the costs of the improvements, which the Company estimates to
be approximately $1.8 million. In addition, the Company will be required to
reimburse the city of Black Hawk for certain costs in connection with the
project and to pay $60,000 for a traffic study. The Company is exploring the
possibility of financing the improvements through the issuance of municipal
bonds by the Black Hawk Business Improvement District, which financing may
provide for a portion of the costs to be assessed to other property owners
whose properties abut the portion of Main Street to be improved. However, no
assurances can be given that the Company will be successful in obtaining any
such financing or in having a portion of the costs assessed to others.
Performance Guarantee. The Subdivision Agreement requires that the Company's
obligations be secured by an irrevocable letter of credit, which the Company
is required to provide within 90 days after execution of the Subdivision
Agreement and prior to commencement of work on the improvements. The amount of
the letter of credit is 110% of the estimated costs of the improvements
(approximately $2.0 million), but the city of Black Hawk may require that the
amount be increased based on the final construction documents or to take into
account any increases in prices to which the improvements may be subject. The
city of Black Hawk may draw down on the letter of credit to complete the
improvements in the event the Company does not complete them by January 1,
1999, subject to the provision for force majeure. Upon completion of the
improvements, the city of Black Hawk will retain for one year the portion of
the letter of credit covering at least 20% of the costs of improvements.
Miscellaneous. The city of Black Hawk's remedies for breach of the
Subdivision Agreement include, but are not limited to, refusing to issue a
building permit or certificate of occupancy, the revocation of a building
permit previously issued or the drawing down of the letter of credit. The
Company is required to indemnify the city of Black Hawk and its
representatives against any claims arising from acts of the Company or its
agents.
GAMING AND LIQUOR REGULATORY MATTERS
Operating Restrictions. Colorado gaming law permits legalized limited gaming
in the cities of Central City, Black Hawk and Cripple Creek, Colorado.
"Limited gaming" is defined as the use of slot machines and the card games of
blackjack and poker, each with a maximum single bet of five dollars. Gaming is
confined to the commercial districts of Black Hawk, Central City and Cripple
Creek as those commercial districts are defined in city ordinances. Gaming is
restricted to structures that conform to the architectural styles and designs
that were common to the areas prior to World War I, as determined by the
municipal governing bodies. No more than
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35% of the square footage of any building and no more than 50% of any one
floor of such building may be used for gaming. Gaming operations are
prohibited between the hours of 2:00 a.m. and 8:00 a.m. No limits are imposed
on total patron losses and casinos are not allowed to extend credit to the
patrons. Persons under the age of 21 are prohibited from participating in
gaming or lingering in gaming areas of a casino. Colorado law requires
licensees to maintain detailed books and records that accurately account for
all monies and business transactions. Books and records must be furnished upon
demand to the Colorado authorities. Detailed and extensive playing procedures,
standards, requirements and rules of play are established for poker, blackjack
and slot machines. Licensees must, in addition, adopt comprehensive internal
control procedures governing their gaming operations. Such procedures must be
approved in advance by the Colorado authorities and include the areas of
accounting, surveillance, security, cashier operations, key control and fill
and drop procedures, among others. No gaming may be conducted in Colorado
unless all appropriate licenses are approved by and obtained from the Colorado
Limited Gaming Control Commission (the "Colorado Commission"). Violations of
Colorado gaming laws or regulations are criminal offenses and the person or
entity violating the same may, in addition, be subject to fines and have its
gaming license suspended or revoked.
License Information Requirements. The Colorado Commission may issue the
following five types of licenses: (i) slot machine manufacturer or
distributor; (ii) operator; (iii) retail gaming; (iv) support; and (v) key
employee. The first three licenses are issued for a one-year period and
require annual renewal. However, support licenses and key employee licenses
are issued for two year periods and are renewable. The Colorado Commission has
broad discretion to condition, suspend, revoke, limit or restrict a license at
any time and also has the authority to impose fines.
A slot machine manufacturer or distributor license is required for all
persons who manufacture, import or distribute slot machines in Colorado, or
who otherwise act as slot machine manufacturers or distributors. No
manufacturer or distributor may have an interest in an operator, allow its
officers or others with a substantial interest in it to have an interest in an
operator, employ any person who is employed by an operator or allow an
operator or any person with a substantial interest in the operator to have an
interest in it. An operator license is required for all persons who permit
slot machines on their premises or who engage in the business of placing and
operating slot machines on the premises of a retailer. A retail gaming license
is required for all persons permitting or conducting gaming on their premises
and such license may be granted only to a retailer. No person may have an
ownership interest in more than three retail licenses. All natural persons
employed in the field of gaming must hold either a support or key employee
license. Every retail gaming licensee must have a key employee licensee in
charge of all gaming activities available at all times when gaming is being
conducted. The Colorado Commission may determine that any employee of a
licensee is a key employee and, therefore, require that such person apply for
licensing as a key employee.
An applicant for any type of Colorado license must provide the following
information: (i) personal background information; (ii) financial information;
(iii) participation in legal or illegal activities in Colorado or other
jurisdictions, including foreign countries; (iv) criminal record information;
(v) information concerning all pecuniary and equity interests in the
applicant; and (vi) other information as requested or required. Prior to
licensure, applicants must satisfy the Colorado Commission that they are
suitable for licensing and are of good moral character. The Colorado
legislature has defined unsuitability or unsuitable in relation to a person as
the inability to be licensed by the Colorado Commission because of prior acts,
associations or financial conditions, and, in relation to acts or practices,
those which violate or would violate the statutes or rules or are or would be
contrary to the declared legislative purposes of the Colorado Act. Without
limiting the foregoing, a person cannot be licensed if such person has served
a sentence upon conviction of a felony or fraud-related misdemeanor within ten
years or has been convicted of a gambling-related offense, or is currently
under a prosecution or is associated with organized crime or has refused to
cooperate in certain governmental investigations. Applicants have the burden
of proving their qualifications to the Colorado Commission and must submit to
and pay the full cost of any background investigations as may be ordered by
the Colorado Commission. There is no limit on the cost of such background
investigations and no guaranty that any applicant will receive licensing from
the Colorado Commission.
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The current practice of the Colorado authorities is to require the following
persons and entities to complete background investigation forms, and to
provide comprehensive information and to submit to a full background
investigation: (a) persons or entities owning (either directly or on a pass-
through basis) 5% or more of a privately traded entity licensee, (b) persons
or entities owning (either directly or on a pass-through basis) 10% or more of
a publicly traded entity licensee, (c) directors and officers of the licensees
and (d) in certain circumstances, directors and officers of entities described
at (a) and (b) above. But, the Colorado authorities retain the discretion to
require any person or entity with an interest in a licensee (directly or on a
pass-through basis) to submit such information and undergo such investigation.
The purpose of the investigation is to determine each such person's or
entity's qualifications and suitability for licensure. In addition, all
persons loaning monies, goods or real or personal property to a licensee or
applicant, or having any interest in a licensee or applicant, or entering into
any agreement with a licensee or applicant, must provide any information if so
requested by the Colorado authorities, including submission to a full
background investigation if ordered by the Colorado authorities.
Persons found unsuitable by the Colorado Commission may be required
immediately to terminate any interest in, association or agreement with or
relationship to a licensee. A finding of unsuitability with respect to any
officer, director, employee, associate, lender or beneficial owner of a
licensee or applicant also may jeopardize the licensee's license or the
applicant's license application. A license grant may be conditioned upon the
termination of any relationship with unsuitable persons.
Licensees have a continuing duty to report to the Colorado Commission
information concerning persons with a financial or equity interest in the
licensee, or who have the ability to control or exercise a significant
influence over the licensee, or who loan money to the licensee. Therefore, the
requisite information regarding the holders of the Notes will have to be
periodically reported to the Colorado authorities.
As a general rule, under the Colorado law and regulations, it is a criminal
violation for any person to have a legal, beneficial, voting or equitable
interest, or right to receive profits, in more than three retail gaming
licenses in Colorado. The Colorado Commission has ruled that a person does not
have an interest in a licensee for purposes of the multiple-license
prohibition if: (i) such person has less than a 5% interest in an
institutional investor which has an interest in a publicly traded licensee or
publicly traded company affiliated with a licensee (such as the Company); (ii)
a person has a 5% or more financial interest in an institutional investor, but
the institutional investor has less than a 5% interest in a publicly traded
licensee or publicly traded company affiliated with a licensee; (iii) an
institutional investor has less than 5% financial interest in a publicly
traded licensee or publicly traded company affiliated with a licensee; (iv) an
institutional investor possesses securities in a fiduciary capacity for
another person, and does not exercise voting control over 5% or more of the
outstanding voting securities of a publicly traded licensee or of a publicly
traded company affiliated with a licensee; (v) a registered broker or dealer
retains possession of securities of a publicly traded licensee or of a
publicly traded company affiliated with a licensee for its customers in street
name or otherwise, and exercises voting rights for less than 5% of the
publicly traded licensee's voting securities or of a publicly traded company
affiliated with licensee; (vi) a registered broker or dealer acts as a market
maker for the stock of a publicly traded licensee or of a publicly traded
company affiliated with a licensee and possesses a voting interest in less
than 5% of the stock of the publicly traded licensee or of a publicly traded
company affiliated with a licensee; (vii) an underwriter is holding securities
of a publicly traded licensee or of a publicly traded company affiliated with
a licensee as part of an underwriting for no more than 90 days if it exercises
voting rights with respect to less than 5% of the outstanding securities of a
publicly traded licensee or a publicly traded company affiliated with a
licensee; (viii) a stock clearinghouse holds voting securities for third
parties, if it exercises voting rights with respect to less than 5% of the
outstanding securities of a publicly traded licensee or of a publicly traded
company affiliated with a licensee; or (ix) a person owns less than 5% of the
voting securities of the publicly traded licensee or publicly traded company
affiliated with a licensee. Hence, the business opportunities of the Company
and its stockholders in Colorado are limited to such interests that comply
with the statute and Commission's rules.
Conveyance of Licensor. With limited exceptions applicable to licensees that
are publicly traded entities, no person may sell, lease, purchase, convey or
acquire any interest in a retail gaming or operator license or business
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<PAGE>
without the prior approval of the Colorado Commission. Also, no person may own
gaming equipment without being licensed. Such prohibition could impair the
ability of the holders of the Notes to liquidate the assets of the Company
upon any foreclosure of the liens securing the Notes.
There cannot be a change in control of the Company without the Colorado
Commission's prior approval. Also, there can be no change in the membership
interests of the Company without the Colorado Commission's prior approval.
All agreements, contracts, leases or arrangements in violation of applicable
Colorado law or regulations are void and unenforceable. The Colorado
Commission or Division Director may require changes in gaming contracts (which
are any agreements with a licensee, such as the Notes) or termination of a
gaming contract.
Rule 4.5. In addition to the other requirements of the gaming laws, the
Colorado Commission has enacted a special rule, Rule 4.5, which imposes
additional requirements on publicly traded corporations holding gaming
licenses in Colorado and on gaming licensees in Colorado owned directly or
indirectly by publicly traded corporations. The term "publicly traded
corporation" is a specially defined term and may include limited liability
companies, trusts, partnerships and other business organizations, and may even
include entities exempted from the registration requirements of the securities
laws under certain circumstances.
Under Rule 4.5, licensees to whom Rule 4.5 applies must include in their
articles of organization or similar charter documents certain specified
provisions that: restrict the rights of the licensee to issue voting interests
or securities except in accordance with the Colorado gaming laws; limit the
rights of persons to transfer voting interests or securities of a licensee
except in accordance with the Colorado gaming laws; and provide that holders
of voting interests or securities of a licensee found unsuitable by the
Colorado Commission may be required to sell their interests or securities back
to the issuer at the lesser of, in general terms, the holder's investment or
the market price as of the date of the finding of unsuitability.
Alternatively, and with authorization by the Colorado Commission, the holder
may in limited circumstances transfer the voting interests or securities to a
suitable person (as determined by the Colorado Commission). Until the voting
interests or securities are held by suitable persons, the issuer may not pay
dividends or interest on them, the interests or securities may not be voted,
or entitled to any vote, and they may not be included in the voting or
securities of the issuer, and the issuer may not pay any remuneration in any
form to the holder of the securities or interests.
Pursuant to Rule 4.5, persons who acquire direct or indirect beneficial
ownership of (i) 5% or more of any class of a publicly traded corporation
involved in gaming in Colorado or (ii) 5% or more of the beneficial interest
in a gaming licensee directly or indirectly through any class of voting
securities of any holding company or intermediary company of a licensee (all
such persons hereinafter referred to as "qualifying persons"), must notify the
Colorado authorities within 10 days of such acquisition, are required to
submit all requested information and are subject to a finding of suitability.
Licensees also must notify any qualifying persons of these requirements. A
qualifying person whose interests equal 10% or more must apply to the Colorado
Commission for a finding of suitability within 45 days after acquiring such
securities. Licensees must also notify any qualifying persons of these
requirements. Whether or not notified, qualifying persons are responsible for
complying with these requirements.
A qualifying person who is an institutional investor under Rule 4.5 and
whose interests equal 15% or more must apply to the Colorado Commission for a
finding of suitability within 45 days after acquiring such interests. A
qualifying person who is an institutional investor and whose interests equal
10% or more, but less than 15%, may not be required to apply for suitability,
provided such person fulfills certain reporting requirements.
Pursuant to Rule 4.5, persons found unsuitable by the Colorado Commission
must be removed from any position as an officer, director, or employee of a
licensee, or from a holding or intermediary company thereof. Such unsuitable
persons also are prohibited from any beneficial ownership of the voting
securities of any such entities. Licensees, or affiliated entities of
licensees, are subject to sanctions for paying dividends to persons found
unsuitable by the Colorado Commission, or for recognizing voting rights of, or
paying a salary or any
49
<PAGE>
remuneration for services to, unsuitable persons. Licensees or their
affiliated entities also may be sanctioned for failing to pursue efforts to
require unsuitable persons to relinquish their interests. The Colorado
Commission may determine that anyone with a material relationship to a
licensee, or affiliated company, must apply for a finding of suitability.
Taxes. The Colorado Amendment further provides that, in addition to any
other applicable license fees, up to a maximum of 40% of the adjusted gross
proceeds of gaming operations ("AGP") may be payable by a licensee for the
privilege of conducting gaming. AGP is generally defined as the total amounts
wagered less all payments to players. With respect to games of poker, AGP
means those sums wagered in a hand retained by the licensee as compensation,
which must be consistent with the minimum and maximum amounts established by
the Colorado Commission. Currently, the gaming tax on AGP is: 2% on the first
$2 million of AGP; 4% on AGP from $2 million to $4 million; 14% on AGP from $4
million to $5 million; 18% on AGP from $5 million to $10 million; and 20% on
AGP over $10 million. The gaming tax is paid monthly, with licensees required
to file returns by the 15th of the following month. Effective October 1 of
each year, the Colorado Commission establishes the gaming tax for the
following 12 months.
Annual Device Fees. The Colorado Commission requires all gaming licensees to
pay an annual device fee for each slot machine, blackjack table and poker
table. The current annual state device fee, established October 1, 1996, is
$75. The municipalities of Central City, Black Hawk and Cripple Creek also
assess and collect their own device fees. The current annual device fee in
Black Hawk is $750 per device. There is no statutory limit on state or city
device fees, which may be increased at the discretion of the state or city.
The state device fee is not prorated; a device used at any time during the
year is assessed the full state fee. Local device fees may be prorated
according to device usage; the city of Black Hawk currently prorates device
fees such that any device used at any time during a calendar quarter is
subject to the device fee for such calendar quarter. In addition, a business
improvement fee of $100 per device and a transportation impact fee of $77 per
device also may apply depending upon the location of the licensed premises.
The Isle-Black Hawk is currently not subject to the business improvement fee
of $100 per device.
Alcohol. The sale of alcoholic beverages in gaming establishments is subject
to strict licensing, control, and regulation by state and local authorities.
Alcoholic beverage licenses are revocable and non-transferable. State and
local licensing authorities have full power to deny, limit, condition, suspend
or revoke any such licenses. Persons or entities which directly or on a pass-
through basis own 10% or more of a licensee will be required to complete
applications and submit certain personal and financial information, and be
subject to investigation. Violation of the state alcoholic beverage laws may
constitute a criminal offense, and violators may be subject to criminal
prosecution, incarceration and fines.
There are various classes of alcoholic beverage licenses under the Colorado
Liquor Code. A retail gaming tavern license or a hotel and restaurant liquor
license may be issued to persons who are licensed pursuant to Colorado law. A
retail gaming tavern licensee may sell malt, vinous or spirituous liquors only
by individual drinks for consumption on the premises and must also make
available sandwiches or light snacks or contract with concessionaires to
provide food services within the same building as the licensed premises. A
hotel and restaurant liquor license requires the service of meals and that
meals equal a fixed minimum percent of food and beverage sales. In no event
may any person hold more than or have an interest in more than three retail
gaming tavern licenses. Also, a person may not have an interest in more than
one type of liquor license. An application for an alcoholic beverage license
in Colorado requires notice, posting and a public hearing before the local
liquor licensing authority. The Department's Liquor Enforcement Division also
must approve the application.
Recent Developments. In 1994, Colorado voters refused by a margin of 93% to
7% to permit gaming in Manitou Springs (located near Colorado Springs and
Cripple Creek) or slot machines in airports. On November 5, 1996, Colorado
voters defeated by a margin of 69% to 31% a proposal to allow gaming in the
community of Trinidad, located on the New Mexico border. There can be no
assurance, of course, that additional gaming will not be authorized.
50
<PAGE>
In 1997 the state legislature passed, but the Governor vetoed, a bill that
would have permitted video lottery terminals in dog and horse race tracks
under certain terms and conditions. Video lottery terminals are games of
chance, similar to slot machines, in which the player pushes a button that
causes a random set of numbers or characters to be displayed on a video
screen. Depending on the display, the player may be awarded a ticket, which
can be exchanged for cash or playing credit. There can be no assurance that
similar legislation permitting video lottery terminals in dog and horse race
tracks or other venues will not be considered in the future.
Federal legislation was recently enacted that established a National
Gambling Impact and Policy Commission to study the economic impact of gambling
on the United States, the individual states and Native American tribes.
Additional federal regulation may occur due to the initiation of hearings by
the Commission. Any new Federal or state legislation could have a material
adverse effect on the Company.
The Company currently holds no gaming or liquor licenses and will therefore
have to make applications for both types of licenses in connection with the
opening and operation of the Isle-Black Hawk. While the Company believes that
it will be able to obtain such licenses, no assurances can be given that such
licenses will be issued or granted, or, if issued and granted, not subject to
additional material restrictions or subsequently revoked. The failure or
inability to obtain any such licenses in a timely manner, the imposition of
additional material restrictions in connection therewith, or the subsequent
revocation of any such license, would materially and adversely affect the
Isle-Black Hawk and the Issuers.
51
<PAGE>
MANAGEMENT
The Company has hired the Manager to manage its operations. Certain officers
and employees of the Company and the Manager must be licensed by the Colorado
authorities to determine suitability. There can be no assurance that any or
all of the necessary officers and employees of the Company and the Manager
will be deemed suitable for licensing. Subject to such approval, set forth
below are the managers and the executive officers of the Company and the
directors and executive officers of Capital, together with their respective
ages as of the date of this Prospectus.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ---- --- ---------------------------------------------------------
<S> <C> <C>
Bernard Goldstein....... 67 Chief Executive Officer of the Company and of Capital
John M. Gallaway........ 59 President and Chief Operating Officer of the Company and
of Capital; Manager of the Company; Director of Capital
Allan B. Solomon........ 61 Executive Vice President, General Counsel and Secretary
of the Company and of Capital; Manager of the Company;
Director of Capital
H. Thomas Winn.......... 57 Vice President of the Company and of Capital; Manager of
the Company; Director of Capital
Rexford A. Yeisley...... 50 Vice President, Chief Financial Officer, Treasurer and
Assistant Secretary of the Company and of Capital
Timothy M. Hinkley...... 42 Senior Vice President of Operations of the Company and of
Capital
</TABLE>
Bernard Goldstein. Mr. Goldstein has been Chairman of the Board of Casino
America since June 1992 and Chief Executive Officer of Casino America since
September 1995. From June 1992 until February 1993 and from September 1995
until December 1995, Mr. Goldstein was also President and Chief Executive
Officer of Casino America. Mr. Goldstein has been active in the development of
the riverboat gaming industry in a number of states and was Chairman of the
Board of Steamboat Development Corporation and Steamboat Southeast, Inc., both
of which were involved in the first legalized riverboat gaming ventures in the
United States. In addition to his involvement in the riverboat gaming
industry, Mr. Goldstein has been involved in scrap metal recycling since 1951
and barge-line transportation since 1960.
John M. Gallaway. Mr. Gallaway has been President of Casino America since
December 1995 and Chief Operating Officer of Casino America since July 1996.
From July 1995 to November 1995, Mr. Gallaway was a professor at the
University of Houston. Mr. Gallaway was Deputy Managing Director, Gaming, of
Sun International, a company engaged in owning and operating casinos and
resorts, from September 1992 to August 1994. Prior to that, from 1984 to 1992,
Mr. Gallaway was President and General Manager of TropWorld Casino Resort in
Atlantic City and, from 1981 to 1984, he was President and General Manager of
the Tropicana Hotel in Las Vegas.
Allan B. Solomon. Mr. Solomon has been Secretary and a director of Casino
America since June 1992, served as the Chief Financial Officer and Treasurer
of Casino America from June 1992 to October 6, 1993, and was Chairman of its
Executive Committee from January 1993 to April 1995. Mr. Solomon became
General Counsel of Casino America in May 1994 and became Executive Vice
President in April 1995. Mr. Solomon is President of Allan B. Solomon, P.A.,
and was a partner in the Florida law firm of Broad and Cassel from 1986 to May
1994.
H. Thomas Winn. Mr. Winn has been the Chairman, CEO and President of Nevada
Gold since January 1994. He has also been a Director of Nevada Gold since
1994. Mr. Winn served as Chairman of Aaminex Capital Corporation from 1983
through 1994. Aaminex Capital Corporation is a financial consulting and
venture capital firm, involved in real estate, mining and environmental
activities. Mr. Winn has formed numerous investment limited partnerships and
capital formation ventures.
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<PAGE>
Rexford A. Yeisley. Mr. Yeisley has been Chief Financial Officer of Casino
America since December 1995. Mr. Yeisley was Senior Vice President and Chief
Financial Officer of Six Flags Theme Parks, Inc. from 1991 to 1995, and from
1987 to 1991, Mr. Yiesley was Vice President and Chief Financial Officer of
that company.
Timothy M. Hinkley. Mr. Hinkley has been Senior Vice President of Operations
for Casino America since April 1997. Mr. Hinkley was General Manager and Vice
President of the Isle of Capri Casino Crowne Plaza Resort in Biloxi,
Mississippi from May 1992 to April 1997. Prior to that, from 1990 to 1992, Mr.
Hinkley was Vice President of Food and Beverage and Entertainment of Steamboat
Development Corporation, a riverboat gaming company in Iowa.
CERTAIN TRANSACTIONS
Casino America and the Company entered into an Amended and Restated
Management Agreement dated as of July 29, 1997 which became effective upon the
consummation of the Capitalization Transactions. The term of the Management
Agreement expires on December 31, 2096, unless terminated earlier in
accordance with its terms. In consideration of the services provided under the
Management Agreement, the Company has agreed to pay Casino America, as
Manager, a fee equal to 2% of Revenues (as defined in the Management
Agreement) plus 10% of Operating Income (as defined in the Management
Agreement), up to a maximum of 4% of Revenues. See "Material Agreements--
Management Agreement."
Casino America and the Company entered into a License Agreement dated July
29, 1997 which will become effective on the Closing Date and pursuant to which
Casino America licensed to the Company the use of the trademarks Isle of
Capri(R), Island Gold(R), Calypso's(R), Farradday's(TM) and Isle Style(TM),
the trademark Isle of Capri parrot logo and any future trademarks utilized by
the Manager at its other gaming facilities. No license fee is payable
thereunder. The license terminates upon the occurrence of certain events, such
as termination of the Management Agreement. See "Material Agreements--License
Agreements."
Of the net proceeds of the Old Notes Offering, $0.4 million was used to
discharge mortgage indebtedness secured by a portion of the Blackhawk Gold
Parcel. Nevada Gold was the obligor under the mortgage indebtedness. On the
Closing Date, Nevada Gold beneficially owned a 40.8% interest in the Company.
See "Principal Security Holders." H. Thomas Winn, a Manager and Vice President
of the Company, is the Chief Executive Officer and a stockholder of Nevada
Gold.
The Company presently expects, at a future date in connection with the
equipping of the Isle-Black Hawk, to purchase up to 300 slot machines from the
inventory of Casino America, provided that such purchase is permitted by
applicable gaming law. The terms of such purchase are expected to be no less
favorable to the Company than if the purchase were made from unaffiliated
parties. See also "Business--Capitalization Transactions."
53
<PAGE>
PRINCIPAL SECURITY HOLDERS
Casino America and Nevada Gold beneficially own a 59.2% and a 40.8%
interest, respectively, in the Company. For a period of six months after the
Closing Date, Nevada Gold will have an option to purchase up to 4.2% of Casino
America of Colorado, Inc.'s interests in the Company pursuant to the terms of
the Members Agreement. See "Material Agreements--Members Agreement." The
following table sets forth certain information, as of July 25, 1997, with
respect to the beneficial ownership of Casino America common stock by (i) each
manager of the Company, (ii) each executive officer of the Company and (iii)
all executive officers and Managers of the Company as a group:
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
CASINO
AMERICA PERCENTAGE OF
COMMON STOCK CASINO AMERICA
BENEFICIALLY COMMON STOCK
NAME OF BENEFICIAL OWNER OWNED OUTSTANDING
- ------------------------ ------------ --------------
<S> <C> <C>
Bernard Goldstein................................. 2,986,501(1) 12.8%
John M. Gallaway.................................. 69,000(2) *
Allan B. Solomon.................................. 438,670(3) 1.9%
Rexford A. Yeisley................................ 16,000(4) *
Timothy M. Hinkley................................ 33,374(5) *
All current executive officers and Managers as a
group (five persons)............................. 3,543,545 15.2%
</TABLE>
The Company is the sole shareholder of Capital.
- --------
*Less than one percent.
(1) Includes 40,000 shares that are issuable upon the exercise of stock
options that are exercisable within 60 days.
(2) Includes 60,000 shares that are issuable upon the exercise of stock
options that are exercisable within 60 days.
(3) Includes 156,250 shares that are issuable upon the exercise of stock
options that are exercisable within 60 days.
(4) Includes 15,000 shares that are issuable upon the exercise of stock
options that are exercisable within 60 days.
(5) Consists of 33,374 shares that are issuable upon the exercise of stock
options that are exercisable within 60 days.
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<PAGE>
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Exchange Offer is being made by the Issuers to satisfy their obligations
pursuant to the Registration Rights Agreements. See "--Registration Rights."
The Issuers are making the Exchange Offer in reliance upon the position of
the staff of the Commission set forth in certain no-action letters addressed
to other parties in other transactions. However, the Issuers have not sought
their own no-action letter and there can be no assurance that the staff of the
Commission would make a similar determination with respect to the Exchange
Offer as in such other circumstances. Based on these interpretations by the
staff of the Commission, the New Notes issued pursuant to the Exchange Offer
may be offered for resale, resold and otherwise transferred by holders thereof
(other than (i) any such holder that is an "affiliate" of the Company within
the meaning of Rule 405 under the Securities Act, (ii) the Initial Purchaser
or any Holder who acquired the Old Notes directly from the Company solely in
order to resell pursuant to Rule 144A of the Securities Act or any other
available exemption under the Securities Act, or (iii) a broker-dealer who
acquired the Old Notes as a result of market making or other trading
activities) without compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such New Notes are acquired
in the ordinary course of such holder's business and such holder is not
participating and has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of
such New Notes. Any Holder who tenders Old Notes in the Exchange Offer for the
purpose of participating in a distribution of the New Notes could not rely on
such interpretations 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 such sale is made
pursuant to an exemption from such requirements.
Holders of Old Notes not tendered will not have any further registration
rights and the Old Notes not exchanged will continue to be subject to certain
restrictions on transfer. Accordingly, the liquidity of the markets for the
Old Notes could be adversely affected.
NEITHER THE MANAGERS OF THE COMPANY, THE BOARD OF DIRECTORS OF CAPITAL NOR
EITHER OF THE ISSUERS MAKES ANY RECOMMENDATION TO HOLDERS OF OLD NOTES AS TO
WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY PORTION OF THEIR OLD
NOTES PURSUANT TO THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN AUTHORIZED
TO MAKE ANY SUCH RECOMMENDATION. HOLDERS OF OLD NOTES MUST MAKE THEIR OWN
DECISION WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE
AGGREGATE AMOUNT OF OLD NOTES TO TENDER AFTER READING THIS PROSPECTUS AND THE
LETTER OF TRANSMITTAL AND CONSULTING THEIR ADVISERS, IF ANY, BASED ON THEIR
OWN FINANCIAL POSITION AND REQUIREMENTS.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
In connection with the issuance of the Old Notes, the Issuers and the
Initial Purchaser entered into the Registration Rights Agreement. Holders of
the New Notes (other than as set forth below) are not entitled to any
registration rights with respect to the New Notes.
Pursuant to the Registration Rights Agreement, the Issuers agreed to file
with the Commission the Exchange Offer Registration Statement on the
appropriate form under the Securities Act with respect to the New Notes. Upon
the effectiveness of the Registration Statement, the Issuers will offer to the
Holders of Transfer Restricted Securities pursuant to the Exchange Offer who
are able to make certain representations the opportunity to exchange their
Transfer Restricted Securities (as defined herein) for New Notes. If (i) the
Issuers are not required to file the Exchange Offer Registration Statement or
permitted to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy or (ii) any Holder of
Transfer
55
<PAGE>
Restricted Securities notifies the Issuers prior to the 20th day following
consummation of the Exchange Offer that (A) it is prohibited by law or
Commission policy from participating in the Exchange Offer or (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 owns New Notes acquired directly from
the Issuers or an affiliate of the Issuers, the Issuers will file with the
Commission a Shelf Registration Statement to cover resales of the New Notes by
the Holders thereof who satisfy certain conditions relating to the provision
of information in connection with the Shelf Registration Statement, and keep
the same effective for a period of two years after effectiveness (or for such
shorter period that will terminate when all of the New Notes covered by the
Shelf Registration Statement have been sold pursuant thereto or cease to be
outstanding). The Issuers will use their best efforts to cause the applicable
registration statement to be declared effective as promptly as practicable by
the Commission. For purposes of the foregoing, "Transfer Restricted
Securities" means each Note until (i) the date on which such Note has been
exchanged by a person other than a broker-dealer for a New Note in the
Exchange Offer, (ii) following the exchange by a broker-dealer in the Exchange
Offer of a Note for a New Note, the date on which such New 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, (iii) the date on which such Note has been effectively registered
under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iv) the date on which such Note is distributed to
the public pursuant to Rule 144 under the Act. The Registration Rights
Agreement provides that the company may, on one occasion, by notice to all
persons to whom it has provided a copy of the resale prospectus contained in
the Shelf Registration Statement, suspend the use thereof for a period not to
exceed 20 consecutive days in the event that, in the opinion of counsel to the
Company, there are material non-public circumstances that would render such
resale prospectus materially inaccurate or misleading.
The Registration Rights Agreement provides that (i) the Issuers will file
the Registration Statement with the Commission on or prior to 60 days after
the Closing Date, (ii) the Issuers will use their best efforts to have the
Registration Statement declared effective by the Commission on or prior to 120
days after the Closing Date, (iii) unless the Exchange Offer would not be
permitted by applicable law or Commission policy, the Issuers will commence
the Exchange Offer and use their best efforts to issue on or prior to 45
business days after the date on which the Registration Statement was declared
effective by the Commission, New Notes in exchange for all Old Notes tendered
prior thereto in the Exchange Offer and (iv) if obligated to file the Shelf
Registration Statement, the Issuers will use their best efforts to file the
Shelf Registration Statement with the Commission on or prior to 45 days after
such filing obligation arises and to cause the Shelf Registration to be
declared effective by the Commission on or prior to 120 days after such
obligation arises. If (i) the Issuers fail to file any of the Registration
Statements required by the Registration Rights Agreement on or before the date
specified for such filing, (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 Issuers fail
to consummate the Exchange Offer within 45 business days of the Effectiveness
Target Date with respect to the Exchange Offer Registration Statement or (iv)
the Shelf Registration Statement or the 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 the
Registration Rights Agreement (each such event referred to in clauses (i)
through (iv) above, a "Registration Default"), then the Issuers will pay
Liquidated Damages to each Holder, with respect to the first 90-day period
immediately following the occurrence of the first Registration Default in an
amount equal to $.05 per week per $1,000 principal amount of the Notes held by
such Holder; provided, however, upon the occurrence of an event described in
clause (iv) above with respect to the failure of a Shelf Registration
Statement to be effective or usable in connection with resales of Transfer
Restricted Securities, only those holders whose Notes were registered pursuant
to such Shelf Registration Statement will be entitled to collect Liquidated
Damages. The amount of the Liquidated Damages will increase by an additional
$.05 per week per $1,000 principal amount of 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 $.25 per week per $1,000
principal amount of Notes. All accrued Liquidated Damages will be paid by the
Issuers on each Interest Payment Date in the same
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manner as interest payments are made. Following the cure of all Registration
Defaults, the accrual of Liquidated Damages will cease.
The Holders will be required to make certain representations to the Issuers
(as described in the Registration Rights Agreement) in order to participate in
the Exchange Offer and will be required to deliver information to be used in
connection with the Shelf Registration Statement and to provide comments on
the Shelf Registration Statement within the time periods set forth in the
Registration Rights Agreement in order to have their Notes included in the
Shelf Registration Statement and benefit from the provisions regarding
Liquidated Damages set forth above.
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Issuers will accept for exchange Old Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m.,
New York time, on , 199 ; provided, however, that if the Issuers,
in the Company's sole discretion, have extended the period of time for which
the Exchange Offer is open, the term "Expiration Date" means the latest time
and date to which the Exchange Offer is extended. The Issuers may extend the
Exchange Offer at any time and from time to time by giving oral or written
notice to the Exchange Agent and by timely public announcement. Without
limiting the manner in which the Issuers may choose to make any public
announcement and subject to applicable law, the Issuers shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a release to an appropriate news agency.
During any extension of the Exchange Offer, all Old Notes previously tendered
pursuant to the Exchange Offer will remain subject to the Exchange Offer. The
Issuers intend to conduct the Exchange Offer in accordance with the applicable
requirements of the Exchange Act and the rules and regulations thereunder.
As of the date of this Prospectus, $75,000,000 aggregate principal amount of
the Old Notes is outstanding. This Prospectus, together with the Letter of
Transmittal is first being sent on or about , 1997, to all Holders
of Old Notes known to the Issuers. The Issuers' obligation to accept Old Notes
for exchange pursuant to the Exchange Offer is subject to certain conditions
as set forth under "--Certain Conditions to the Exchange Offer" below.
The terms of the New Notes and the Old Notes are identical in all material
respects, except for certain transfer restrictions and registration rights
relating to the Old Notes and rights to receive Liquidated Damages. See "--
Registration Rights; Liquidated Damages." The Old Notes were, and the New
Notes will be, issued under the Exchange Indentures and all such New Notes are
entitled to the benefits of the Indenture.
Old Notes tendered in the Exchange Offer must be in denominations of the
principal amount of $1,000 and any integral multiple thereof. Any Old 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 Issuers expressly reserve the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted
for exchange, upon the occurrence of any of the conditions of the Exchange
Offer specified below under "--Certain Conditions to the Exchange Offer." The
Issuers will give oral or written notice of any amendment, nonacceptance or
termination to the Holders of the Old Notes as promptly as practicable. Any
amendment to the Exchange Offer will not limit the right of Holders to
withdraw tendered Old Notes prior to the Expiration Date. See "--Withdrawal
Rights."
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PROCEDURES FOR TENDERING OLD NOTES
The tender to the Issuers of Old Notes by a Holder thereof as set forth
below and the acceptance thereof by the Issuers will constitute a binding
agreement between the tendering Holder and the Issuers upon the terms and
subject to the conditions set forth in this Prospectus and in the Issuing
Letter of Transmittal. Except as set forth below, a Holder who wishes to
tender Old Notes for exchange pursuant to the Exchange Offer must transmit a
properly completed and duly executed Letter of Transmittal, including all
other documents required by such Letter of Transmittal, to
(the "Exchange Agent") at one of the
addresses set forth below under "Exchange Agent" on or prior to the Expiration
Date. In addition, either (i) certificates for such Old Notes must be received
by the Exchange Agent along with the Letter of Transmittal, or (ii) a timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such
Old Notes, if such procedure is available, into the Exchange Agent's account
at The Depository Trust Issuers (the "Book-Entry Transfer Facility") pursuant
to the procedure for book-entry transfer described 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. THE METHOD OF
DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS
IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS
RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE
TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE
ISSUERS.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered Holder of the Old Notes 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 (as defined below). In the event that signatures on a
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm which is a member
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust
Issuers having an office or correspondent in the United States (collectively,
"Eligible Institutions"). If Old Notes are registered in the name of a person
other than the signer of the Letter of Transmittal, the Old Notes surrendered
for exchange must be endorsed by, or be accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by the
Issuers in its sole discretion, duly executed by the registered Holder with
the signature thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined
by the Issuers in their sole discretion, which determination shall be final
and binding. The Issuers reserve the absolute right to reject any and all
tenders of any particular Old Notes not properly tendered or to not accept any
particular Old Notes which acceptance might, in the judgment of the Issuers or
its counsel, be unlawful. The Issuers also reserve the absolute right to waive
any defects or irregularities or conditions of the Exchange Offer as to any
particular Old Notes either before or after the Expiration Date (including the
right to waive the ineligibility of any Holder who seeks to tender Old Notes
in the Exchange Offer). The interpretation of the terms and conditions of the
Exchange Offer as to any particular Old Notes either before or after the
Expiration Date (including the Letter of Transmittal and the instructions
thereto) by the Issuers shall be final and binding on all parties. Unless
waived, all defects or irregularities in connection with tenders of Old Notes
for exchange must be cured within such reasonable period of time as the
Issuers shall determine. Neither the Issuers, the Exchange Agent nor any other
person shall be under any duty to give notification of any defect or
irregularity with respect to any tender of Old Notes for exchange, nor shall
any of them incur any liability for failure to give such notification. The
Exchange Agent intends to use reasonable efforts to give notification of such
defects and irregularities.
If the Letter of Transmittal is signed by a person or persons other than the
registered Holder or Holders of Old Notes, such Old Notes must be endorsed or
accompanied by appropriate powers of attorney, in either case signed exactly
as the name or names of the registered Holder or Holders that appear on the
Old Notes.
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If the Letter of Transmittal or any Old Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of a corporation or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Issuers, proper evidence satisfactory to the Issuers of their authority to
so act must be submitted.
By tendering, each Holder will represent to the Issuers that, among other
things, the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the Holder and such person has no
arrangement with any person to participate in the distribution of the New
Notes. If any Holder or any such other person is an "affiliate," as defined
under Rule 405 of the Securities Act, of the Issuers, is engaged in or intends
to engage in or has an arrangement or understanding with any person to
participate in a distribution of such New Notes to be acquired pursuant to the
Exchange Offer, or acquired the Old Notes as a result of market making or
other trading activities, such Holder or any such other person (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 any resale transaction. Each broker-dealer
that receives New 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 New 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.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Issuers will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly after acceptance of
the Old Notes. See "--Certain Conditions to the Exchange Offer." For purposes
of the Exchange Offer, the Issuers shall be deemed to have accepted properly
tendered Old Notes for exchange when, as and if the Issuers has given oral or
written notice thereof to the Exchange Agent, with written confirmation of any
oral notice to be given promptly thereafter.
For each Old Note accepted for exchange, the Holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. Accordingly, registered Holders of New Notes on the relevant record
date for the first interest payment date following the consummation of the
Exchange Offer will receive interest accruing from the most recent date to
which interest has been paid on the Old Notes, or, if no interest has been
paid on the Old Notes, from the Closing Date. Old Notes accepted for exchange
will cease to accrue interest from and after the date of consummation of the
Exchange Offer. Holders of Old Notes whose Old Notes are accepted for exchange
will not receive any payment in respect of accrued interest or Liquidated
Damages, if any, on such Old Notes otherwise payable on any interest payment
date the record date for which occurs on or after consummation of the Exchange
Offer.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of (i) certificates for such Old Notes or a timely Book-
Entry Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, (ii) a properly completed and duly executed
Letter of Transmittal and (iii) all other required documents. If any tendered
Old Notes are not accepted for any reason set forth in the terms and
conditions of the Exchange Offer, or if Old Notes are submitted for a greater
amount than the Holder desires to exchange, such unaccepted or nonexchanged
Old Notes will be returned without expense to the tendering Holder thereof
(or, in the case of Old Notes tendered by book-entry transfer into the
Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the
book-entry procedures described below, such nonexchanged Old Notes will be
credited to an account maintained with such Book-Entry Transfer Facility)
designated by the tendering Holder as promptly as practicable after the
expiration or termination of the Exchange Offer.
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BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old 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 systems may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer 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 one of the
addresses set forth below under "--Exchange Agent" on or prior to the
Expiration Date or the guaranteed delivery procedures described below must be
complied with.
GUARANTEED DELIVERY PROCEDURES
If a registered Holder of the Old Notes desires to tender such Old Notes and
the Old Notes are not immediately available, or time will not permit such
Holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is
made through an Eligible Institution, (ii) prior to the Expiration Date, the
Exchange Agent has received from such Eligible Institution a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) and
Notice of Guaranteed Delivery, substantially in the form of the corresponding
exhibit to the Registration Statement of which this Prospectus constitutes a
part (by telegram, telex, facsimile transmission, mail or hand delivery),
setting forth the name and address of the Holder of Old Notes and the amount
of Old Notes tendered, stating that the tender is being made thereby and
guaranteeing that within three New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Old Notes, in proper form for
transfer, 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 (iii) the certificates for
all physically tendered Old 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
NYSE trading days after the date of execution of the Notice of Guaranteed
Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to 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 Old Notes to be withdrawn, identify the Old Notes
to be withdrawn (including the amount of such Old Notes), and (where
certificates for Old Notes have been transmitted) specify the name in which
such Old Notes are registered, if different from that of the withdrawing
Holder. If certificates for Old 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 Old 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 Old 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 Issuers, whose determination shall be final and binding on all parties.
Any Old Notes so withdrawn will be deemed not to have been validly tendered
for exchange for purposes of the Exchange Offer. Any Old 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
Old Notes tendered by book-entry transfer into the Exchange Agent's account at
the Book-Entry Transfer Facility pursuant to the book-entry
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transfer procedures described above, such Old Notes will be credited to an
account with such Book-Entry Transfer Facility specified by the Holder) as
soon as practicable after withdrawal, rejection of tender or termination of
the Exchange Offer. Properly withdrawn Old Notes may be retendered by
following one of the procedures described under "--Procedures for Tendering
Old Notes" above at any time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Issuers shall
not be required to accept for exchange, or to issue New Notes in exchange for,
any Old Notes and may terminate or amend the Exchange Offer, if at any time
before the acceptance of such Old Notes for exchange or the exchange of the
New Notes for such Old Notes, any of the following events shall occur:
(a) there shall be threatened, instituted or pending any action or
proceeding before, or any injunction, order or decree shall have been
issued by, any court or governmental agency or other governmental
regulatory or administrative agency or commission, (i) seeking to restrain
or prohibit the making or consummation of the Exchange Offer or any other
transaction contemplated by the Exchange Offer, or assessing or seeking any
damages as a result thereof, or (ii) resulting in a material delay in the
ability of the Issuers to accept for exchange or exchange some or all of
the Old Notes pursuant to the Exchange Offer; or any statute, rule,
regulation, order or injunction shall be sought, proposed, introduced,
enacted, promulgated or deemed applicable to the Exchange Offer or any of
the transactions contemplated by the Exchange Offer by any government or
governmental authority, domestic or foreign, or any action shall have been
taken, proposed or threatened, by any government, governmental authority,
agency or court, domestic or foreign, that in the sole judgment of the
Issuers might directly or indirectly result in any of the consequences
referred to in clauses (i) or (ii) above or, in the sole judgment of the
Issuers, might result in the holders of New Notes having obligations with
respect to resales and transfers of New Notes which are greater than those
described in the interpretation of the Commission referred to on the cover
page of this Prospectus, or would otherwise make it inadvisable to proceed
with the Exchange Offer; or
(b) there shall have occurred (i) any general suspension of or general
limitation on prices for, or trading in, securities on any national
securities exchange or in the over-the-counter market, (ii) any limitation
by any governmental agency or authority which may adversely affect the
ability of the Issuers to complete the transactions contemplated by the
Exchange Offer, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or any
limitation by any governmental agency or authority which adversely affects
the extension of credit or (iv) a commencement of a war, armed hostilities
or other similar international calamity directly or indirectly involving
the United States, or, in the case of any of the foregoing existing at the
time of the commencement of the Exchange Offer, a material acceleration or
worsening thereof; or
(c) any change (or any development involving a prospective change) shall
have occurred or be threatened in the business, properties, assets,
liabilities, financial condition, operations, results of operations or
prospects of the Issuers and its subsidiaries taken as a whole that, in the
sole judgment of the Issuers, is or may be adverse to the Issuers, or the
Issuers shall have become aware of facts that, in the sole judgment of the
Issuers, have or may have an adverse effect on the value of the Old Notes
or the New Notes.
Holders of Old Notes will have registration rights and the right to Liquidated
Damages as described under "--Registration Rights; Liquidated Damages" if the
Issuers fails to consummate the Exchange Offer.
To the knowledge of the Issuers as of the date of this Prospectus, none of
the above events has occurred.
The foregoing conditions are for the sole benefit of the Issuers and may be
asserted by the Issuers regardless of the circumstances giving rise to any
such condition or may be waived by the Issuers in whole or in part at any time
and from time to time in their sole discretion. The failure by the Issuers 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.
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In addition, the Issuers will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old 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 of
the qualification of the Indenture under the Trust Indenture Act of 1939.
EXCHANGE AGENT
IBJ Schroder Bank & Trust Company has been appointed as the Exchange Agent
for the Exchange Offer. All executed Letters for Transmittal and Notices of
Guaranteed Delivery should be directed to the Exchange Agent at the addresses
set forth below. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notices of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
By Mail, Overnight Courier or Hand:
IBJ SCHRODER BANK & TRUST COMPANY
One State Street
New York, New York 10004
Attn: _________________________
Telephone Number:
(212) 858-2000
By Facsimile:
(212) 858-2952
DELIVERY OF A LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
FEES AND EXPENSES
The Issuers will not make any payment to brokers, dealers or others
soliciting acceptances of the Exchange Offer.
The Issuers will, however, pay the Exchange Agent reasonable and customary
fees for its services and will reimburse it for reasonable out-of-pocket
expenses in connection therewith. The Issuers will also pay brokerage houses
and other custodians, nominees and fiduciaries the reasonable out-of-pocket
expenses incurred by them in forwarding copies of this Prospectus and related
documents to the beneficial owners of Old Notes, and in handling tenders for
their customers. The expenses to be incurred in connection with the Exchange
Offer, including the fees and expenses of the Exchange Agent and printing,
accounting, registration, and legal fees, will be paid by the Issuers and are
estimated to be approximately $ .
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to pay
any transfer taxes in connection therewith, except that holders who instruct
the Issuers to register New Notes in the name of, or request that Old 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.
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CONSEQUENCES OF NOT EXCHANGING OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old 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 Old 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 Issuers do not
currently anticipate that will register the Old Notes under the Securities
Act. Based upon no-action letters issued by the staff of the Commission to
third parties, the Issuers believe the New Notes issued pursuant to the
Exchange Offer in exchange for the Old Notes may be offered for resale, resold
or otherwise transferred by a Holder thereof (other than any (i) Holder which
is an "affiliate" of the Issuers within the meaning of Rule 405 under the
Securities Act), (ii) the Initial Purchaser or any Holder who acquired the Old
Notes directly from the Issuers solely in order to resell pursuant to Rule
144A of the Securities Act or any other available exemption under the
Securities Act or (iii) a broker-dealer who acquired the Old Notes as a result
of market making or other trading activities) without compliance with the
registration and prospectus delivery requirements of the Securities Act,
provided that such New Notes are acquired in the ordinary course of such
holder's business and such holder is not participating and has no arrangement
or understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such New Notes. However, the Issuers have
not sought their own no-action letter and there can be no assurance that the
staff of the Commission would make a similar determination with respect to the
Exchange Offer as in such other circumstances. Each Holder, other than a
broker-dealer, must acknowledge that it is not engaged in, and does not intend
to engage in, a distribution of New Notes, and has no arrangement or
understanding to participate in a distribution of New Notes. If any Holder is
an affiliate of the Issuers, is engaged in or intends to engage in or has any
arrangement or understanding with respect to the distribution of the New Notes
to be acquired pursuant to the Exchange Offer, or acquired the Old Notes as a
result of market or other trading activities, such Holder (i) could not rely
on the relevant determinations of the staff of the Commission and (ii) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any secondary resale transaction. Each
broker-dealer that receives New Notes for its own account in exchange for Old
Notes must acknowledge that such Old Notes were acquired by such broker-dealer
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 New Notes.
See "Plan of Distribution." In addition, to comply with the securities laws of
certain jurisdictions, if applicable, the New Notes may not be offered or sold
unless they have been registered or qualified for sale in such jurisdiction or
an exemption from registration or qualification is available and is complied
with. The Issuers has agreed to register or qualify the sale of the New Notes
in such jurisdictions only in limited circumstances and subject to certain
conditions.
ACCOUNTING TREATMENT
The exchange of the New Notes for the Old Notes will have no impact on the
Issuers's accounting records on the date of the exchange. Accordingly, no gain
or loss for accounting purposes will be recognized. Expenses of the Exchange
Offer and expenses related to the Old Notes will be amortized, pro rata, over
the term of the New Notes.
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DESCRIPTION OF THE NEW NOTES
GENERAL
The terms of the 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"). The Notes
are subject to all such terms, and Holders of 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, including the
definitions therein of certain terms used below. The definitions of certain
terms used in the following summary are set forth below under "--Certain
Definitions."
The New Notes will be senior secured obligations of the Issuers, will rank
pari passu in right of payment with any existing and future senior
Indebtedness of the Issuers and will rank senior in right of payment to all
subordinated Indebtedness of the Issuers. The New Notes will be without
recourse to the Members.
Capital is a wholly owned subsidiary of the Company and was incorporated
solely for the purpose of serving as a co-issuer of the Notes in order to
facilitate the Offering. Capital will not have any substantial operations or
assets and will not have any revenues. As a result, prospective investors
should not expect Capital to participate in servicing the principal, interest,
Liquidated Damages, if any, premium or any other payment obligations on the
Notes. See "--Certain Covenants--Restrictions on Activities of Capital."
PRINCIPAL, MATURITY AND INTEREST
The New Notes will be limited in aggregate principal amount to $75.0 million
and will mature on August 31, 2004. Fixed Interest on the New Notes will
accrue at the rate of 13% per annum ("Fixed Interest") and will be payable
semi-annually in arrears on February 28 and August 31 of each year, commencing
on February 28, 1998, to Holders of record on the immediately preceding
February 15 and August 15, respectively. Fixed Interest on the New Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of original issuance. Fixed Interest
will be computed on the basis of a 360-day year comprised of twelve 30-day
months.
In addition, the New Notes will bear Contingent Interest, calculated as
described below, from the date on which Isle-Black Hawk becomes Operating to
the date of payment of the New Notes. Installments of accrued or deferred
Contingent Interest will become due and payable semi-annually on each February
28 and August 31 after the date on which the Isle-Black Hawk becomes Operating
to the Holders of record at the close of business on the preceding February 15
or August 15; unless all or a portion of such installment of Contingent
Interest is permitted to be deferred on such date; and provided, that no
Contingent Interest is payable with respect to any period prior to the date on
which the Isle-Black Hawk becomes Operating. 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 New Notes
that matures (whether at stated maturity, upon acceleration, upon redemption,
upon maturity of repurchase obligation or otherwise) upon such maturity of
such principal amount of the New 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, (i) the payment of such portion of Contingent Interest will cause
the Company's Adjusted Fixed Charge Coverage Ratio for the Company's most
recently completed Semiannual Period prior to such interest payment date to be
less than 1.5 to 1.0 on a pro forma basis after giving effect to the assumed
payment of such Contingent Interest (but may not defer such portion, which, if
paid, would not cause such Adjusted Fixed Charge Coverage Ratio to be less
than 1.5 to 1.0) and (ii) the principal amount of the Notes corresponding to
such Contingent Interest has not then matured and become due and payable (at
stated maturity, upon acceleration, upon redemption, upon maturity of
repurchase obligation or otherwise). The aggregate amount of Contingent
Interest payable in a Semiannual Period will be reduced pro rata for
reductions
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in the outstanding principal amount of the Notes prior to the close of
business on the record date immediately preceding such payment of Contingent
Interest. 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 Notes (whether at stated maturity, upon acceleration,
upon redemption, 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 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 date on which the
Isle-Black Hawk becomes Operating 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
Notes has not become due and payable or (b) the date of payment if the
corresponding principal amount of the Notes has become due and payable
(whether at stated maturity or upon acceleration, redemption or maturity of
repurchase obligation or otherwise). With respect to each Accrual Period,
interest will accrue daily on the principal amount of each 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, 1/180th of the 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, 1/180th of the Contingent Interest with respect
to such principal amount for the Semiannual Period that began and last ended
after the date on which the Isle-Black Hawk becomes Operating.
Any reference in this Prospectus to "accrued and unpaid interest" on the
Notes includes the amount of Fixed Interest, unpaid Contingent Interest and
Liquidated Damages, if any, due and payable thereon.
Principal of and premium, if any, interest and Liquidated Damages, if any,
on the Notes will be payable at the office or agency of the Issuers maintained
for such purpose within the City and State of New York or, at the option of
the Issuers, payment of interest and Liquidated Damages, if any, may be made
by check mailed to the Holders of Notes at their respective addresses set
forth in the register of Holders of Notes; provided that all payments with
respect to Notes the Holders of which have given wire transfer instructions to
the Company will be required to be made by wire transfer of immediately
available funds to the accounts specified by the Holders thereof. Until
otherwise designated by the Issuers, the Issuers' office or agency in New York
will be the office of the Trustee maintained for such purpose. The Notes will
be issued in denominations of $1,000 and integral multiples thereof.
SECURITY
The Notes will be secured by a first lien on the Note Collateral owned by
the Issuers or any of their respective subsidiaries, whether now owned or
hereafter acquired. The Note Collateral will include, without limitation and
subject to Permitted Liens, (i) a pledge of the Government Securities and any
funds deposited and held in the Interest Reserve Account until such time as
such funds are disbursed in accordance with the terms of the Cash Collateral
and Disbursement Agreement, (ii) a pledge of the funds held in the
Construction Disbursement Account, including, without limitation,
approximately $52.9 million of the net proceeds of the Old Notes Offering, and
a pledge of the funds held in the Completion Reserve Account, including,
without limitation, approximately $5.0 million of the net proceeds of the Old
Notes Offering, which proceeds will be invested in Investment Grade Securities
and held in such accounts until disbursed in accordance with the terms of the
Cash Collateral and Disbursement Agreement, (iii) the fee simple interest in
all of the real property comprising the Isle-Black Hawk, additions and
improvements and component parts related thereto, issues and profits
therefrom, and, except as set forth below, furniture, fixtures, machinery and
equipment forming a part thereof or used in connection therewith, (iv) all of
the Issuers' and their respective subsidiaries' accounts receivable, general
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intangibles, inventory and other personal property and (v) to the extent
permitted by law, certain construction contracts (including the Design/Build
Agreement), operating agreements, the Management Agreement, other agreements,
licenses and permits entered into by, or granted to, the Issuers and their
respective subsidiaries in connection with the development, construction,
ownership and operation of the Isle-Black Hawk. Such liens and security
interests may be subordinate or junior to mechanic's liens, which under
applicable Colorado law may have priority over the lien on the real property
comprising the Isle-Black Hawk in favor of the Trustee and additions,
improvements and component parts relating thereto. The Company will not be
obtaining title insurance to insure against losses from the enforcement of
such mechanic's liens. See "Risk Factors--Mechanic's Liens." In addition, the
Holders of the Notes will not have a lien on FF&E acquired with or leased
through FF&E Financing or any Gaming License or Liquor Licenses.
If an Event of Default occurs and is continuing, the Trustee, on behalf of
the Holders, in addition to any rights or remedies available to it under the
Indenture and the Collateral Documents, may take such action as it deems
advisable to protect and enforce its rights in the Note Collateral, including
the institution of sale or foreclosure proceedings. The proceeds received by
the Trustee from any such sale or foreclosure will be applied by the Trustee
first to pay the expenses of such sale or foreclosure and fees or any other
amounts then payable to the Trustee under the Indenture or to the Disbursement
Agent under the Cash Collateral and Disbursement Agreement, and thereafter to
pay amounts due and payable with respect to the Notes.
The proceeds of any sale of the Note Collateral pursuant to the Indenture
and the related Collateral Documents following an Event of Default may not be
sufficient to satisfy payments due on the Notes. In addition, the ability of
the Holders to realize upon the Note Collateral may be limited pursuant to
gaming laws, in the event of a bankruptcy and pursuant to other applicable
laws, including securities laws, all as described below. See "--Remedies Upon
Default Under Notes"; "Risks Factors--Ability to Realize on Collateral;
Bankruptcy Considerations"; and "Risk Factors--Fraudulent Conveyance
Considerations."
Certain Gaming Law Limitations
The Trustee's ability to foreclose upon the Note Collateral will be limited
by relevant gaming laws, which generally require that persons who own or
operate a casino or purchase, possess or sell gaming equipment hold a valid
gaming license. No person can hold a gaming license in the State of Colorado
unless the person is found qualified or suitable by the relevant Gaming
Authorities. This prohibition may restrict the Trustee's ability to enforce
certain provisions contained in, or take certain actions permitted by, the
Collateral Documents, which the Trustee would otherwise be authorized to do by
serving as the Issuers' attorney-in-fact or otherwise, as provided in the
Collateral Documents. In addition, in order for the Trustee or a purchaser at
or after foreclosure to be found qualified or suitable, such Gaming
Authorities would have discretionary authority to require the Trustee, any or
all of the Holders and any such purchaser to file applications, be
investigated and be found qualified or suitable as an owner or operator of
gaming establishments. The applicant for qualification, a finding of
suitability or licensing must pay filing fees and all costs of any such
investigation. If the Trustee is unable or chooses not to qualify, be found
suitable, or be licensed to own, operate or sell such assets, it would have to
retain or sell to an entity licensed to operate or sell such assets. In any
case, only an operator licensed by the relevant Gaming Authority may operate a
Gaming Facility and such operator must have a right to possession of the
premises. Otherwise, the gaming activities must cease until the operator is
appropriately licensed. In addition, in any foreclosure sale or subsequent
resale by the Trustee, licensing requirements under the relevant gaming laws
may limit the number of potential bidders and may delay any sale, either of
which events would have an adverse effect on the sale price of the Note
Collateral. Therefore, the practical value of realizing on the Note Collateral
may, without the appropriate approvals, be limited.
Certain Bankruptcy Limitations
The right of the Trustee to repossess and dispose of the Note Collateral
upon the occurrence of an Event of Default is likely to be significantly
impaired by applicable bankruptcy law if a bankruptcy proceeding were to be
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commenced by or against the Issuers prior to the Trustee having repossessed
and disposed of the Note Collateral. Under the Bankruptcy Code, a secured
creditor such as the Trustee is prohibited from repossessing its security from
a debtor in a bankruptcy case, or from disposing of security repossessed from
such debtor, without bankruptcy court approval. Moreover, the Bankruptcy Code
permits the debtor to continue to retain and to use collateral, including
making asset sales under certain circumstances (and the proceeds, products,
offspring, rents or profits of such collateral) even though the debtor is in
default under the applicable debt instruments, provided that the secured
creditor is given "adequate protection." The meaning of the term "adequate
protection" may vary according to circumstances, but it is intended in general
to protect the value of the secured creditor's interest in the collateral and
may include, if approved by the court, cash payments or the granting of
additional security for any diminution in the value of the collateral as a
result of the stay of repossession or the disposition or any use of the
collateral by the debtor during the pendency of the bankruptcy case. The court
has broad discretionary powers in all these matters, including the valuation
of the Note Collateral or other Collateral that may be substituted therefor.
In addition, since the enforcement of the Lien of the Trustee in cash, deposit
accounts and cash equivalents may be limited in a bankruptcy proceeding, the
Holders may not have any consent rights with respect to the use of those funds
by the Issuers or any of their Subsidiaries during the pendency of the
proceeding. In view of these considerations, it is impossible to predict how
long payments under the Notes could be delayed following commencement of a
bankruptcy case, whether the terms of the Notes could be altered in a
bankruptcy case, whether or when the Trustee could repossess or dispose of the
Note Collateral or whether or to what extent Holders of the Notes would be
compensated for any delay in payment or loss of value of the Note Collateral.
COMPLETION CAPITAL COMMITMENT
Pursuant to a Completion Capital Commitment entered into by Casino America
in favor of the Trustee for the benefit of the Holders (the "Completion
Capital Commitment"), Casino America agreed for the benefit of Casino America
of Colorado, Inc. that, upon the occurrence of each Contribution Event (as
defined herein), Casino America will pay into the Construction Disbursement
Account an amount in cash as determined by the Trustee, based upon the
Construction Disbursement Budget, to be reasonably necessary to cause a
Contribution Event to no longer exist; provided, however, that the aggregate
amount of all such payments shall not exceed $5.0 million; and provided,
further, that upon the occurrence of the Contribution Event described in
clause (iv) of the definition thereof, Casino America will pay $5.0 million in
cash into the Construction Disbursement Account, less any amounts previously
paid into the Construction Disbursement Account pursuant to the occurrence of
other Contribution Events. "Contribution Event" means that (i) there are
insufficient Available Funds (as defined herein) to complete the development,
construction and equipping of the Isle-Black Hawk so that the Isle-Black Hawk
is Operating on or before April 1, 1999, subject only to Permitted Liens; (ii)
the Company, or any of its representatives or agents, has provided the Trustee
with a written notice that it is unlikely that there will be sufficient
Available Funds to complete the development, construction and equipping of the
Isle-Black Hawk so that the Isle-Black Hawk is Operating on or before April 1,
1999, subject only to Permitted Liens; (iii) (a) the Independent Construction
Consultant, or any of its representatives or agents, has provided the Trustee
and the Company with a written notice that it is unlikely that there will be
sufficient Available Funds (without giving effect to the amount of Additional
Revenues (as defined herein)), to complete the development, construction and
equipping of the Isle-Black Hawk so that the Isle-Black Hawk is Operating on
or before April 1, 1999, subject only to Permitted Liens and (b) within ten
days of the Company receiving notice thereof, the Company has not provided
evidence satisfactory to the Trustee that there shall be sufficient Additional
Revenues, together with the other Available Funds, to complete the
development, construction and equipping of the Isle-Black Hawk so that the
Isle-Black Hawk is Operating on or before April 1, 1999, subject only to
Permitted Liens; or (iv) the Isle-Black Hawk is not Operating on or before
April 1, 1999. In addition, Casino America will be required to pay $5.0
million, less any amounts previously paid pursuant to one or more Contribution
Events described above, into the Construction Disbursement Account upon the
commencement of any voluntary bankruptcy case by the Company, or within 60
days after the commencement of an involuntary bankruptcy case against the
Company, if such involuntary case is not dismissed in its entirety by a final,
non-appealable court order during such 60-day period or if the Company
consents to the entry of an order for relief commencing a bankruptcy case
prior to the commencement of such 60-day period; and Casino America shall not
assert any
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defenses or setoffs to the payment of such funds. "Additional Revenues" means
revenue (including, without limitation, investment income (loss) less any
losses or costs associated therewith, earned on amounts in the Cash Collateral
Accounts other than the Interest Reserve Account) generated by, or other funds
of, the Company (other than from disposition of its assets), but only to the
extent that such revenue or funds are held by the Company, free and clear of
any claims of any other parties whatsoever, other than the Trustee and
Holders; provided, however, that as of any date of measurement, Additional
Revenue also shall include investment income (loss), less any losses or costs
associated therewith, which the Company reasonably determines will be earned
on funds in the Cash Collateral Accounts (other than the Interest Reserve
Account) until the date that the Isle-Black Hawk becomes Operating. "Available
Funds" means, at any time, (i) the amounts initially deposited in the
Construction Disbursement Account and the Completion Reserve Account, less
disbursements made from the Construction Disbursement Account and the
Completion Reserve Account, (ii) so long as there is no Default or Event of
Default, Additional Revenue, and (iii) Realized Savings (as defined herein)
theretofore achieved. "Realized Savings" means the excess of the amount
budgeted in the Construction Disbursement Budget for a line item over the
amount of funds expended or owed by the Company to complete the tasks set
forth in such line item and for the materials and services used to complete
such tasks, so long as the terms for such tasks are final and unconditional
(other than satisfactory completion of such tasks); provided, however, that
Realized Savings (a) for any line item shall be deemed to be zero if such
savings are obtained in a manner that materially detracts from the overall
value, quality and amenities of the Isle-Black Hawk, and (b) shall be reduced
to the extent previously reallocated in the Construction Disbursement
Agreement. The Completion Capital Commitment will expire upon the later of (i)
the final disbursement of amounts in the Cash Collateral Accounts in
accordance with the Cash Collateral and Disbursement Agreement and (ii) April
1, 1999, if the Isle-Black Hawk is Operating on such date.
OPTIONAL REDEMPTION
Except as described below, the Notes will not be redeemable at the Issuers'
option prior to August 31, 2001. Thereafter, the Notes will be subject to
redemption at the option of the Issuers, 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 and Liquidated Damages, if any, thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on August 31 of the
years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001.......................... 106.500%
2002.......................... 103.250%
2003.......................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to August 31, 2000, the
Issuers may redeem up to 35% in aggregate principal amount of Notes originally
issued under the Indenture (including any Notes exchanged therefor) at a
redemption price of 113% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon, to the redemption
date, with the net proceeds of a Public Equity Offering; provided that at
least $48.75 million in aggregate principal amount of Notes remains
outstanding immediately after the occurrence of each such redemption; and
provided, further, that the call for such redemption shall occur within 45
days of the date of the closing of such Public Equity Offering.
GAMING REDEMPTION
Notwithstanding any other provision hereof, if any Gaming Authority requires
that a Holder or beneficial owner of Notes must be licensed, qualified or
found suitable under any applicable gaming law and such 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 Authority (or
such lesser period that may be required by such Gaming Authority), or if such
Holder or such beneficial owner is notified by such Gaming Authority that such
Holder or
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beneficial owner will not be so licensed, qualified or found suitable, the
Issuers will have the right, at their option, (i) to require such Holder or
beneficial owner to dispose of such Holder's or beneficial owner's Notes
within 30 days (or such earlier date as may be ordered by such Gaming
Authority) of (x) the termination of the period described above for such
Holder or beneficial owner to apply for a license, qualification or finding of
suitability or (y) receipt of the notice from such Gaming Authority that such
Holder or beneficial owner will not be licensed, qualified or found suitable
by such Gaming Authority or (ii) to redeem 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
such Notes, together with, in either case, accrued and unpaid interest and
Liquidated Damages, if any, thereon to the earlier of the date of redemption
or such earlier date as may be required by such Gaming Authority or the date
of the finding of unsuitability by such Gaming Authority, which may be less
than 30 days following the notice of redemption, if so ordered by such Gaming
Authority. Immediately upon a determination by any Gaming Authority that a
Holder or beneficial owner of Notes will not be licensed, qualified or found
suitable by such Gaming Authority, such Holder or beneficial owner shall have
no further rights with respect to the Notes (i) to exercise, directly or
indirectly, through any trustee, nominee or any other Person or entity, any
right conferred by the Notes or (ii) to receive any interest or any other
distribution or payment with respect to the Notes, or any remuneration in any
form from the Issuers for services rendered or otherwise, except the
redemption price of the Notes. Under the Indenture, the Issuers are not
required to pay or reimburse any Holder or beneficial owner of Notes who is
required to apply for such license, qualification or finding of suitability
for the costs of the licensure or investigation for such qualification or
finding of suitability. Such expense will, therefore, be the obligation of
such Holder or beneficial owner. See "Risk Factors--Gaming Regulation" and
"Gaming and Liquor Regulatory Matters."
MANDATORY REDEMPTION
Except as set forth below under "--Repurchase at the Option of Holders," the
Issuers are not required to make mandatory redemption or sinking fund payments
with respect to the Notes.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which
the Notes are listed, or, if the Notes are not so listed, on a pro rata basis,
by lot or by such method as the Trustee shall deem fair and appropriate;
provided that no Notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than
60 days before the redemption date (except in the case of redemption required
by any Gaming Authority, which may be less than 30 days) to each Holder of
Notes to be redeemed at its registered address. Notices of redemption may not
be conditional. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Note. On and after the redemption date,
interest ceases to accrue on Notes or portions of them called for redemption.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, each Holder will have the right
to require the Issuers to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of
repurchase (the "Change of Control Payment"). Within ten days following any
Change of Control, the Issuers will mail a notice to each Holder describing
the transaction or transactions that constitute the Change of Control and
offering to repurchase Notes on the date specified in such notice, which date
shall be no earlier
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than 30 days and no later than 60 days from the date such notice is mailed
(the "Change of Control Payment Date"), pursuant to the procedures required by
the Indenture and described in such notice. The Issuers 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 and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control.
On the Change of Control Payment Date, the Issuers will, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being purchased by
the Issuers. The Paying Agent will promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Issuers 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 Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the Holders to require that the Issuers
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction.
The source of funds for any repurchase of Notes upon a Change of Control
will be the Issuers' cash or cash generated from operations or other sources,
including borrowings (if available and permitted pursuant to the terms of the
Indenture) or sales of assets; however, there can be no assurance that
sufficient funds will be available at the time of any Change of Control to
make any required purchases of Notes. Any failure by the Issuers to repurchase
Notes tendered pursuant to a Change of Control Offer will constitute an Event
of Default. See "Risk Factors--Substantial Leverage and Ability to Service
Debt."
Notwithstanding the foregoing, the Issuers will not be required to make a
Change of Control Offer upon a Change of Control if a third party makes the
Change of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in the Indenture applicable to a
Change of Control Offer made by the Issuers and purchases all Notes validly
tendered and not withdrawn under such Change of Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Issuers and their Subsidiaries, taken as a whole.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder to require the
Issuers to repurchase Notes as a result of a sale, lease, transfer, conveyance
or other disposition of less than all of the assets of the Issuers and their
Subsidiaries, taken as a whole, to another Person or group may be uncertain.
Asset Sales
Subject to the terms of the Collateral Documents, the Indenture will provide
that the Company will not, and will not permit any of its Subsidiaries to,
consummate an Asset Sale, unless (i) the Company (or the Subsidiary, as the
case may be) receives consideration at the time of such Asset Sale at least
equal to the fair market value (evidenced by a resolution of the Managers set
forth in an Officers' Certificate delivered to the Trustee) of the assets or
Equity Interests issued or sold or otherwise disposed of and (ii) at least 80%
of the consideration therefor received by the Company or such Subsidiary is in
the form of Cash Equivalents; provided that the amount of (x) any liabilities
(as shown on the Company's or such Subsidiary's most recent balance sheet) of
the Company or any Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes) that are
assumed by the transferee of any such assets pursuant to a customary novation
agreement
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that releases the Company or such Subsidiary from further liability and (y)
any securities or other obligations received by the Company or any such
Subsidiary from such transferee that are promptly (but in any event within 30
days) converted by the Company or such Subsidiary into cash (to the extent of
the cash received), shall be deemed to be Cash Equivalents for purposes of
this provision.
Within 180 days after the receipt of any Net Proceeds from an Asset Sale,
the Company or such Subsidiary, as the case may be, may (i) apply such Net
Proceeds to the making of a capital expenditure or the acquisition of long-
term assets, in either case, which shall be owned by the Company or such
Subsidiary and be used by or useful to the Company or such Subsidiary in any
line of business in which the Company or such Subsidiary is permitted to be
engaged pursuant to the covenant described under "--Certain Covenants--Line of
Business" or (ii) contractually commit to apply such Net Proceeds to the
payment of the costs of construction of real property improvements or the
costs of capital expenditures which, in each case, shall be Note Collateral
and shall be owned by the Company or such Subsidiary and be used by or useful
to the Company or such Subsidiary in any line of business in which the Company
or such Subsidiary is permitted to be engaged pursuant to the covenant
described under "--Certain Covenants--Line of Business"; provided, that the
Company or such Subsidiary, as the case may be, grants to the Trustee, on
behalf of the Holders, a first priority perfected security interest on any
such properties or assets acquired or constructed with the Net Proceeds of any
such Asset Sale on the terms set forth in the Indenture and the Collateral
Documents. Pending the final application of any such Net Proceeds, the Company
or such Subsidiary shall invest such Net Proceeds in Cash Equivalents which
shall be pledged to the Trustee as security for the Notes. Any Net Proceeds
from Asset Sales that do not constitute Note Collateral and that are not
applied or 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 $5.0 million, the Issuers will be required to make an offer
to all Holders (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes that may be purchased out of the Excess Proceeds, at an offer
price in cash in an amount equal to 100% of the principal amount thereof plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
date of purchase, which date shall be no less than 30 nor more than 60 days
after the date of the Asset Sale Offer, in accordance with the procedures set
forth in the Indenture. To the extent that the aggregate amount of Notes
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Company may, subject to the provisions of the Indenture and the Collateral
Documents, use any remaining Excess Proceeds for general corporate purposes.
If the aggregate principal amount of Notes surrendered by Holders thereof
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes to
be purchased in the manner described above under "--Selection and Notice."
Upon completion of such Asset Sale Offer, the amount of Excess Proceeds shall
be reset at zero.
Event of Loss
The Indenture will provide that within 360 days after any Event of Loss with
respect to any Note Collateral comprising the Isle-Black Hawk with a fair
market value (or replacement cost, if greater) in excess of $1.0 million, the
Company or the affected Subsidiary of the Company, as the case may be, may
apply the Net Loss Proceeds from such Event of Loss to the rebuilding, repair,
replacement or construction of improvements to the Isle-Black Hawk, 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 Isle-Black Hawk with at least the
Minimum Facilities can be rebuilt, repaired, replaced or constructed and
Operating within 180 days of such Event of Loss, (ii) an Officers' Certificate
certifying that the Company has available from Net Loss Proceeds or other
sources sufficient funds to complete such rebuilding, repair, replacement or
construction and (iii) the Net Loss Proceeds are less than $25.0 million. If
the Net Loss Proceeds to be used for such rebuilding, repair, replacement or
construction exceed $12.0 million, then such Net Loss Proceeds shall be
deposited in the Construction Disbursement Account and disbursed in accordance
with the Cash Collateral and Disbursement Agreement. Any Net Loss Proceeds
from an Event of Loss with respect to any Note Collateral comprising the Isle-
Black Hawk on the date that it becomes Operating that are not reinvested or
not permitted to be reinvested as provided in the first sentence of this
paragraph will be deemed "Excess Loss Proceeds." When the aggregate amount of
Excess Loss Proceeds exceeds $10.0 million, the Issuers shall
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make an offer to all Holders (an "Event of Loss Offer") to purchase the
maximum principal amount of Notes that may be purchased out of the Excess Loss
Proceeds, at a purchase price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase, which date shall not be less
than 30 nor more than 60 days from the date of such Event of Loss Offer, in
accordance with the procedures set forth in the Indenture. If the aggregate
principal amount of Notes tendered pursuant to an Event of Loss Offer exceeds
the Excess Loss Proceeds, the Trustee will select the Notes to be purchased in
the manner described above under "--Selection and Notice." To the extent that
the aggregate amount of Notes tendered pursuant to any Event of Loss Offer is
less than the Excess Loss Proceeds, the Company may, subject to the other
provisions of the Indenture and the Collateral Documents, use any remaining
Excess Loss Proceeds for general corporate purposes. 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, replacement or construction or
the completion of any Event of Loss Offer, the Company or the affected
Subsidiary, as the case may be, shall pledge to the Trustee as additional Note
Collateral any Net Loss Proceeds or other cash on hand required for such
permitted rebuilding, repair, replacement or construction pursuant to the
terms of the Collateral Documents relating to the Isle-Black Hawk. Such
pledged funds will be released to the Company to pay for or reimburse the
Company for the actual cost of such permitted rebuilding, repair, replacement
or construction, or such Event of Loss Offer, pursuant to the terms of the
Collateral Documents relating to the Isle-Black Hawk. Pending the final
application of the Net Loss Proceeds, such proceeds shall be invested in Cash
Equivalents which shall be pledged to the Trustee as security for the Notes.
The Indenture will also require the Company or such Subsidiary to grant to the
Trustee, on behalf of the Holders, a first priority lien, subject to Permitted
Liens, on any properties or assets rebuilt, repaired, replaced or constructed
with such Net Loss Proceeds on the terms set forth in the Indenture and the
Collateral Documents.
The Indenture will also provide 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 $5.0 million, the
Company (or the affected Subsidiary, as the case may be) will be required to
receive consideration (i) at least equal to the fair market value (evidenced
by a resolution of the Managers set forth in an Officers' Certificate
delivered to the Trustee) of the assets subject to an Event of Loss and (ii)
at least 90% of which is in the form of Cash Equivalents.
Excess Cash Purchase Offer
The Indenture will provide that within 120 days after each Operating Year of
the Company, beginning with the first Operating Year after the Isle-Black Hawk
becomes Operating, the Issuers shall make an offer to all Holders (an "Excess
Cash Flow Offer") to purchase the maximum principal amount of Notes that is an
integral multiple of $1,000 that may be purchased with 50% of the Company's
Excess Cash Flow in respect of the Operating Year then ended (the "Excess Cash
Flow Offer Amount"), at a purchase price in cash equal to 101% of the
principal amount of Notes to be purchased, plus accrued and unpaid interest
and Liquidated Damages, if any, to the date fixed for the closing of such
Excess Cash Flow Offer (the "Excess Cash Flow Purchase Price"), in accordance
with the procedures set forth in the Indenture. The Excess Cash Flow Offer
will be required to remain open for 20 Business Days following its
commencement and no longer, except to the extent that a longer period is
required by applicable law. Upon the expiration of such period, the Company
will apply the Excess Cash Flow Offer Amount to the purchase of all Notes
tendered at the Excess Cash Flow Purchase Price. If the aggregate principal
amount of Notes tendered pursuant to any Excess Cash Flow Offer exceeds the
Excess Cash Flow Offer Amount with respect thereto, the Trustee will select
the Notes to be repurchased in the manner described below under the caption
"--Selection and Notice." To the extent that the aggregate principal amount of
Notes tendered pursuant to any Excess Cash Flow Offer is less than the Excess
Cash Flow Offer Amount with respect thereto, the Company may, subject to the
other provisions of the Indenture, use any remaining Excess Cash Flow for
general corporate purposes.
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CERTAIN COVENANTS
Restricted Payments
The Indenture will provide 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 other payment or distribution on account of the Company's
or any of its Subsidiaries' Equity Interests (including, without limitation,
any payment in connection with any merger or consolidation involving the
Company) or to the direct or indirect holders of the Company's or any of its
Subsidiaries' Equity Interests in any capacity (other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock) of
the Company or dividends or distributions payable to the Company by a Wholly
Owned Subsidiary or a Substantially Owned Subsidiary); (ii) purchase, redeem
or otherwise acquire or retire for value (including, without limitation, in
connection with any merger or consolidation involving the Company) any Equity
Interests of the Company or any direct or indirect parent of the Company or
other Affiliate of the Company (other than any such Equity Interests owned by
the Company or any Wholly Owned Subsidiary of the Company); (iii) make any
payment on or with respect to, or purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness that is pari passu with or
subordinated to the Notes (other than Notes), in each case except a payment of
interest (other than interest payable in Indebtedness incurred pursuant to
clause (x) of the second paragraph of the covenant described below under "--
Incurrence of Indebtedness and Issuance of Preferred Stock") or a payment of
principal on Indebtedness on or after the due date thereof in accordance with
the payment provisions thereof in each case as such Indebtedness was permitted
pursuant to the covenant described below under "--Incurrence of Indebtedness
and Issuance of Preferred Stock"; or (iv) make any Restricted Investment (all
such payments and other actions set forth in clauses (i) through (iv) above
being collectively referred to as "Restricted Payments"), unless, at the time
of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the Company's most recently completed four full fiscal
quarters, have been permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in
clause (ii) of the first paragraph of the covenant described below under
"--Incurrence of Indebtedness and Issuance of Preferred Stock," except that
with respect to any Restricted Payment made to Casino America as a
repayment of amounts advanced to the Company by Casino America pursuant to
the Completion Capital Commitment, the Fixed Charge Coverage Ratio
applicable to such Restricted Payment shall be 2.0 to 1.0 and shall
otherwise be calculated in accordance with the provisions of clauses (i)
and (ii) of the first paragraph of the covenant described below under "--
Incurrence of Indebtedness and Issuance of Preferred Stock"; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Subsidiaries after
the date of the Indenture (excluding Restricted Payments permitted by
clause (ii) of the next succeeding paragraph), is less than the sum of (i)
50% of the Consolidated Net Income of the Company for the period (taken as
one accounting period) from the beginning of the first fiscal quarter
commencing prior to the date of the Indenture to the end of the Company's
most recently ended fiscal quarter for which internal financial statements
are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (ii) 100% of the aggregate net cash proceeds received by the
Company from the issue or sale since the date of the Indenture of Equity
Interests of the Company (other than Disqualified Stock) or of Disqualified
Stock or debt securities of the Company that have been converted into such
Equity Interests (other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Subsidiary of the Company and other
than Disqualified Stock or convertible debt securities that have been
converted into Disqualified Stock), plus (iii) to the extent that any
Restricted Investment that was made after the date of the Indenture is sold
for cash or otherwise liquidated or repaid for cash, the lesser of (A) the
cash return of capital with respect to such Restricted Investment (less the
cost of disposition, if any) and (B) the initial amount of such Restricted
Investment.
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The foregoing provisions will not prohibit (i) the payment of any dividend
or distribution within 60 days after the date of declaration thereof, if at
such date of declaration such payment would have complied with the provisions
of the Indenture; (ii) the redemption, repurchase, retirement, defeasance or
other acquisition of any pari passu or subordinated Indebtedness or Equity
Interests of the Company in exchange for, or out of the net cash proceeds of
the substantially concurrent sale (other than to a Subsidiary of the Company)
of, other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for
any such redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (c)(ii) of the preceding paragraph; (iii) so
long as no Default or Event of Default has occurred and is continuing, the
defeasance, redemption, repurchase or other acquisition of pari passu or
subordinated Indebtedness, including the Notes; (iv) so long as the Company is
treated as a pass through entity for United States federal income tax
purposes, distributions to equity holders of the Company in an amount not to
exceed the Tax Amount for such period and so long as the Tax Distribution
Condition is satisfied at the time of such distributions; (v) so long as no
Default or Event of Default has occurred and is continuing, payment to Casino
America of amounts owing to it pursuant to the Management Agreement as in
effect on the date of the Indenture (other than amounts owing to it pursuant
to Section 11 thereof, "Indemnification"), subject to the terms of the Manager
Subordination Agreement relating thereto between Casino America and the
Trustee; and (vi) any redemption required pursuant to the provisions of the
Indenture described under "--Gaming Redemption" above.
The amount of all Restricted Payments (other than cash) shall be the fair
market value (evidenced by a resolution of the Managers set forth in an
Officers' Certificate delivered to the Trustee) on the date of the Restricted
Payment of the assets or securities proposed to be transferred or issued by
the Company or such Subsidiary, as the case may be, pursuant to the Restricted
Payment. Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by the covenant "Restricted Payments" were computed,
together with a copy of any fairness opinion or appraisal required by the
Indenture.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture will provide that the Company will not, and will not permit
any of its Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise (collectively, "incur"), with respect to any
Indebtedness (including Acquired Debt) and that the Company will not issue any
Disqualified Stock and will not permit any of its Subsidiaries to issue any
shares of Disqualified Stock; provided, however, that, so long as no Default
or Event of Default has occurred and is continuing, the Company may incur
Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock
if:
(i) the Isle-Black Hawk 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 on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have
been at least 2.25 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 Stock had been issued,
as the case may be, at the beginning of such four-quarter period; and
(iii) the Weighted Average Life to Maturity of such Indebtedness is
greater than the remaining Weighted Average Life to Maturity of the Notes.
So long as no Default or Event of Default has occurred and is continuing,
the foregoing provisions under this covenant will not apply to:
(i) the incurrence by the Company and its Subsidiaries of Indebtedness
represented by the Notes or obligations arising under the Collateral
Documents, to the extent that such obligations would constitute
Indebtedness;
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(ii) the incurrence by the Company of Permitted Refinancing Indebtedness
in exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease or refund, Indebtedness that was
permitted by the Indenture to be incurred;
(iii) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Substantially Owned Subsidiaries; provided, however, that (a) such
Indebtedness is expressly subordinate to the payment in full of all
Obligations with respect to the Notes, (b)(1) any subsequent issuance or
transfer of Equity Interests that results in any such Indebtedness being
held by a Person other than the Company or a Substantially Owned Subsidiary
and (2) any sale or other transfer of any such Indebtedness to a Person
that is not either the Company or a Substantially Owned Subsidiary shall be
deemed, in each case, to constitute an incurrence of such Indebtedness by
the Company or such Subsidiary, as the case may be, and (c) if any
Subsidiary is the obligor on such Indebtedness, such Indebtedness is
represented by a Subsidiary Intercompany Note that is pledged to the
Trustee as security for the Notes;
(iv) the incurrence by the Company of Hedging Obligations that are
incurred for the purpose of fixing or hedging interest rate risk with
respect to any floating rate Indebtedness that is permitted by the terms of
the Indenture to be outstanding;
(v) the incurrence by the Company of Indebtedness (in addition to
Indebtedness permitted by any other clause of this paragraph) in an
aggregate principal amount (or accreted value, as applicable) at any time
outstanding not to exceed $5.0 million for working capital or other
corporate purposes;
(vi) the incurrence by the Company of Indebtedness solely in respect of
standby letters of credit or surety bonds (a) required to be issued under
the Subdivision Agreement in an amount not to exceed 110% of the cost of
the work to be performed thereunder or (b) required to be issued pursuant
to excavation activities to be undertaken pursuant to the Design/Build
Agreement in an amount not to exceed $1.1 million;
(vii) the incurrence by the Company of Indebtedness solely in respect of
performance or similar bonds or standby letters of credit; provided that
any such bond or standby letter of credit is incurred in the ordinary
course of the Company's business in an aggregate amount not to exceed $2.0
million at any one time outstanding; and provided, further, that any such
bond or standby letter of credit is incurred on terms customary for
operations similar to the Company's;
(viii) the incurrence by the Company of FF&E Financing; provided,
however, that (a) the principal amount of such Indebtedness does not exceed
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) of the FF&E purchased or leased
with the proceeds thereof, (b) no Indebtedness incurred under the Notes is
utilized for the purchase or lease of such FF&E and (c) the aggregate
principal amount of such Indebtedness does not exceed $15.0 million
outstanding at any time;
(ix) bond or surety obligations posted by the Company or any of its
Subsidiaries in order to prevent the loss or material impairment of or to
obtain a Gaming License or as otherwise required by an order of any Gaming
Authority to the extent required by applicable law and consistent in
character and amount with customary industry practice so long as such
Indebtedness does not result in, and is not secured by, a Lien on any of
the Note Collateral;
(x) the incurrence by the Company of Indebtedness in an aggregate
principal amount not to exceed $10.0 million in original principal amount
("PIK Debt") which is expressly subordinate to the payment in full of all
Obligations with respect to the Notes; provided that any interest which is
payable on account of such PIK Debt shall be paid solely in the form of
additional PIK Debt until the first time that the Company is able to
satisfy the Fixed Charge Coverage Ratio test set forth in clause (ii) of
the first paragraph of this covenant, calculated after giving pro forma
effect to the incurrence of such PIK Debt and any PIK Debt payable in
respect of such PIK Debt as if all such amounts had been outstanding at the
beginning of the four-quarter period applicable to such Indebtedness
pursuant to such clause (ii); provided, further, that the Weighted Average
Life to Maturity of such Indebtedness is greater than the remaining
Weighted Average Life to Maturity of the Notes; and provided, further, that
the Company may not incur Indebtedness pursuant
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to the terms of this paragraph (x) prior to the time that Casino America
has fulfilled all of its obligations under the Completion Capital
Commitment or the Completion Capital Commitment shall have expired in
accordance with the terms thereof; and
(xi) the incurrence by the Company of Indebtedness in an aggregate
principal amount not to exceed $2.0 million, the proceeds of which are to
be used to purchase a 0.25 acre parcel of property located on the corner of
Mill Street and Main Street in Black Hawk, Colorado adjacent to the site of
the Isle-Black Hawk, provided that such property shall be conveyed free and
clear of Liens and, upon the acquisition thereof, shall constitute Note
Collateral promptly upon the purchase thereof pursuant to the Collateral
Documents.
Liens
The Indenture will provide 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 on any asset now owned or hereafter acquired, or any
proceeds, income or profits therefrom or assign or convey any right to receive
income therefrom, except Permitted Liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture will provide 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 Subsidiary to (i)(a) pay dividends or make any other
distributions to the Company or any of its Subsidiaries (1) on its Capital
Stock or (2) with respect to any other interest or participation in, or
measured by, its profits, or (b) pay any indebtedness owed to the Company or
any of its Subsidiaries, (ii) make loans or advances to the Company or any of
its Subsidiaries or (iii) transfer any of its properties or assets to the
Company or any of its Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (a) the Indenture, the Notes or
the Collateral Documents, (b) applicable law, (c) by reason of customary non-
assignment provisions in leases entered into in the ordinary course of
business and (d) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive than those contained in the agreements
governing the Indebtedness being refinanced.
Merger, Consolidation or Sale of Assets
The Indenture will provide that neither Issuer may consolidate or merge with
or into (whether or not such Issuer is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially
all of its properties or assets in one or more related transactions, to
another corporation, Person or entity unless (i) such Issuer is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than such Issuer) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United
States, any state thereof or the District of Columbia; (ii) the entity or
Person formed by or surviving any such consolidation or merger (if other than
such Issuer) or the entity or Person to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made assumes all the
obligations of such Issuer under the Notes, the Collateral Documents and the
Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction no
Default or Event of Default exists; (iv) such transaction would not result in
the loss or suspension or material impairment of any Gaming License unless a
comparable replacement Gaming License is effective prior to or simultaneously
with such loss, suspension or material impairment; (v) except in the case of a
merger of such Issuer with or into a Wholly Owned Subsidiary of such Issuer,
such Issuer or the entity or Person formed by or surviving any such
consolidation or merger (if other than such Issuer), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made (a) will have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of such Issuer immediately
preceding the transaction and (b) will, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at
the beginning of the applicable four-quarter period, be permitted to incur at
least $1.00 of additional
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Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of the covenant described above under "--Incurrence of
Indebtedness and Issuance of Preferred Stock"; and (vi) such transaction would
not require any Holder or beneficial owner of Notes to obtain a Gaming License
or be qualified or found suitable under the law of any applicable gaming
jurisdiction; provided that such Holder or beneficial owner would not have
been required to obtain a Gaming License or be qualified or found suitable
under the laws of any applicable gaming jurisdiction in the absence of such
transaction. Neither the foregoing restrictions nor any other provision in the
Indenture shall restrict or prohibit the Company from engaging in a
transaction solely constituting a Permitted C-Corp. Conversion.
Transactions with Affiliates
The Indenture will provide that the Company will not, and will not permit
any of its Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate (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) the Company delivers to the
Trustee (a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $1.0
million, a resolution of the Managers set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested Managers and (b) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate consideration in
excess of $5.0 million, an opinion as to the fairness to the Holders of such
Affiliate Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing; provided that (w)
payments made pursuant to the Management Agreement as in effect on the date of
the Indenture, (x) any employment or indemnification agreement entered into by
the Company or any of its Subsidiaries in the ordinary course of business on
terms customary in the gaming industry, (y) transactions between or among the
Issuers and/or their Subsidiaries and (z) Restricted Payments that are
permitted by the provisions of the Indenture described above under "--
Restricted Payments," in each case, shall not be deemed Affiliate
Transactions.
Construction
The Indenture will provide that the Company will cause construction of the
Isle-Black Hawk, 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 Contracts to which the Company
is a party and within the budget for the project set forth in the Cash
Collateral and Disbursement Agreement.
Limitations on Use of Proceeds
The Indenture will provide that the Company will cause the net proceeds of
the Offering to be deposited in the Cash Collateral Accounts, of which
approximately $14.1 million will be deposited in the Interest Reserve Account
and invested solely in Government Securities, approximately $52.9 million will
be deposited in the Construction Disbursement Account and invested solely in
Investment Grade Securities and $5.0 million will be deposited in the
Completion Reserve Account and invested solely in Investment Grade Securities,
in each case, to be disbursed only in accordance with the Cash Collateral and
Disbursement Agreement.
Limitation on Status as Investment Company
The Indenture will prohibit the Issuers and their 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.
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Sale and Leaseback Transactions
The Indenture will provide that the Company will not, and will not permit
any of its Subsidiaries to, enter into any sale and leaseback transaction;
provided that the Company may enter into a sale and leaseback transaction if
(i) the Company could have (a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction pursuant to
the first paragraph of the covenant described above under "--Incurrence of
Additional Indebtedness and Issuance of Preferred Stock" and (b) incurred a
Lien to secure such Indebtedness pursuant to the covenant described above
under "--Liens," (ii) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the fair market value (as determined in good
faith by the Managers and set forth in an Officers' Certificate delivered to
the Trustee) of the property that is the subject of such sale and leaseback
transaction and (iii) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Company applies the proceeds of such
transaction in compliance with, the covenant described above under "--
Repurchase at the Option of Holders--Asset Sales."
Restrictions on Preferred Stock of Subsidiaries
The Indenture will provide that the Company will not permit any of its
Subsidiaries to issue any preferred stock, or permit any Person to own or hold
an interest in any preferred stock of any such Subsidiary, except for
preferred stock issued to the Company or a Wholly Owned Subsidiary of the
Company.
Limitation on Issuances and Sales of Capital Stock of Wholly Owned
Subsidiaries
The Indenture will provide that the Issuers (i) will not, and will not
permit any of their Wholly Owned Subsidiaries to, transfer, convey, sell,
lease or otherwise dispose of any Capital Stock of any Wholly Owned Subsidiary
of the Issuers to any Person (other than the Issuers or a Wholly Owned
Subsidiary of the Issuers), unless (a) such transfer, conveyance, sale, lease
or other disposition is of all the Capital Stock of such Wholly Owned
Subsidiary and (b) the cash Net Proceeds from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with the covenant
described above under "--Asset Sales" and (ii) will not permit any of their
Wholly Owned Subsidiaries to issue any of its Equity Interests (other than, if
necessary, shares of its Capital Stock constituting directors' qualifying
shares) to any Person other than to the Issuers or a Wholly Owned Subsidiary
of the Issuers.
Line of Business
The Indenture will provide that the Company will not, and will not permit
any Subsidiary to, engage in any business or investment activities other than
the Gaming Business. Neither the Company nor any of its Subsidiaries will be
permitted by the Indenture to conduct a Gaming Business in any gaming
jurisdiction in which the Company or such Subsidiary is not licensed on the
date of the Indenture if the holders of the Notes would be required to be
licensed as a result thereof; provided that the provisions described in this
sentence will not prohibit the Company or any of its Subsidiaries from
conducting a Gaming Business in any jurisdiction that does not require the
licensing or qualification of all the Holders, but reserves the discretionary
right to require the licensing or qualification of any Holders.
Notwithstanding any other provision of the Indenture, the Company shall not,
and shall not permit any of its Subsidiaries to, engage in any business,
development or investment activity other than at or in conjunction with the
Isle-Black Hawk until the Isle-Black Hawk is Operating.
Restrictions on Activities of Capital
The Indenture will provide that Capital may not hold any assets, become
liable for any obligations or engage in any business activities; provided,
that Capital may be a co-obligor of the Notes pursuant to the terms of the
Indenture and any activities directly related or necessary in connection
therewith.
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Provision of Certificate Regarding Gaming Licensing Issues and Liquor
Licensing Issues
The Indenture will provide that, upon the earlier of (i) substantial
completion of site preparation activities, including excavation, on the real
property comprising the Isle-Black Hawk or (ii) March 1, 1998, the Company
will provide to the Trustee an Officer's Certificate certifying that, after
due inquiry, such Officer is not aware of any issues raised by any Gaming
Authority or Liquor Licensing Authority which could have a material adverse
effect on the ability of any applicant for a Gaming License or a Liquor
License required for the Company to own, operate or conduct the Gaming
Business or any business related thereto, including liquor distribution, at
the Isle-Black Hawk to become licensed, qualified or found suitable by the
applicable Gaming Authority or Liquor Licensing Authority.
Advances to Subsidiaries
The Indenture will provide that all advances to Subsidiaries made by the
Company from time to time after the date of the Indenture will be evidenced by
unsecured Subsidiary Intercompany Notes in favor of the Company that will be
pledged to the Trustee as Note Collateral to secure the Notes. Each Subsidiary
Intercompany Note will be payable upon demand and will bear interest at the
same rate as the Notes. A form of Subsidiary Intercompany Note will be
attached as an exhibit to the Indenture. Repayments of principal with respect
to any Subsidiary Intercompany Note will be required to be pledged to the
Trustee as Note Collateral to secure the Notes until such amounts are advanced
to a Subsidiary in accordance with the Indenture.
Reports
The Indenture will provide that, whether or not required by the rules and
regulations of the Commission, beginning with respect to the Company's fiscal
quarter ended October 26, 1997, and continuing for so long as any Notes are
outstanding, the Issuers will furnish to the holders (i) all consolidated
quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the
Issuers were required to file such Forms, including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" that describes
the financial position and results of operations of the Company and its
Subsidiaries and, with respect to the annual information only, a report
thereon by the Issuers' certified independent accountants and (ii) all current
reports that would be required to be filed with the Commission on Form 8-K if
the Issuers were required to file such reports. In addition, whether or not
required by the rules and regulations of the Commission, the Issuers will file
a copy of all such information and reports with the Commission for public
availability (unless the Commission will not accept such a filing) and make
such information available to securities analysts and prospective investors
upon request. In addition, the Issuers have agreed that, for so long as any
Notes remain outstanding, they will furnish to the Holders and to securities
analysts and prospective investors, upon their request, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.
Insurance
The Indenture will provide that, until the Notes have been paid in full, the
Company will, and will cause its Subsidiaries to, 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, with respect to insurance on the Note Collateral, shall have
provided insurance certificates evidencing such insurance to the Trustee on or
prior to the Closing Date and shall thereafter 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. 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;
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(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;
(iv) business interruption insurance at all times on and after the Isle-
Black Hawk is Operating; and
(v) 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 the amount of 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 customarily insured consistent with industry
standards and with a deductible no greater than 2% of the insured value of
the Isle-Black Hawk 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 worker's compensation)
shall name the Company and the Trustee as additional insureds or loss payees,
as the case may be, 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 insurance policies will 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 X, 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 Indenture will provide that the Company
will deliver to the Trustee on the Closing Date and each anniversary
thereafter a certificate of an insurance agent stating that the insurance
policies obtained by the Company and its Subsidiaries comply with this
covenant and the related applicable provisions of the Collateral Documents.
Collateral Documents
The Indenture will provide that neither the Issuers nor any of their
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 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 Plans and contracts to which the Company is a
party and the Construction Disbursement 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 below under "--Amendment, Supplement and Waiver."
Restriction on Payment of Management Fees
The Company shall not, directly or indirectly, pay to Casino America or any
of its Affiliates any Management Fees except pursuant to the Management
Agreement as in effect on the date of, and in accordance with, the Indenture.
Amounts payable pursuant to the Management Agreement shall not be prepaid, and
no payment of Management Fees, either current or accrued, shall be made if at
the time of payment of such Management Fees (i) a Default or an Event of
Default shall have occurred and be continuing or shall occur as a result
thereof or (ii) the Company's Fixed Charge Coverage Ratio for its most
recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
Management Fee is proposed to be paid would have been less than 1.5 to 1.0
(calculated on a pro forma basis after deducting Management Fees to the extent
paid in cash and not deferred and any Management Fees deferred from a prior
period proposed to be paid in cash during such period, but excluding any
Management Fees deferred
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or accrued and not paid in cash during such period). With respect to periods
following the date the Isle-Black Hawk first becomes Operating and prior to
the time when internal financial statements are available for four full fiscal
quarters following the date the Isle-Black Hawk first becomes Operating, such
Fixed Charge Coverage Ratio shall be calculated only with respect to the
number of full fiscal quarters (but in no event less than one full fiscal
quarter) for which internal financial statements are available following the
date the Isle-Black Hawk first becomes Operating. Any Management Fees not
permitted to be paid pursuant to this covenant will be deferred and will
accrue and may be paid only at such time that they would otherwise be
permitted to be paid hereunder. The right to receive payment of the Management
Fee shall be subordinate in right of payment to the right of the Holders to
receive payments pursuant to the Notes. The terms of the Management Agreement
cannot be amended to increase amounts to be paid thereunder, or in any other
manner which would be adverse to the Company or the Holders, including without
limitation, to amend the method of computing the Management Fee; provided,
however, that the foregoing shall not prohibit any amendment required under
any Gaming Law or by any Gaming Authority.
Additional Subsidiary Guarantees
The Indenture will provide that if either of the Issuers shall acquire or
create a Subsidiary after the date of the Indenture, then such newly acquired
or created Subsidiary shall execute a Guarantee and deliver an opinion of
counsel, in accordance with the terms of the Indenture.
Further Assurances
The Indenture will provide that the Issuers will (and will cause each of
their Subsidiaries to) do, execute, acknowledge, deliver, record, re-record,
file, re-file, register and re-register, as applicable, 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 interests required to be encumbered thereby, (iii)
to perfect and maintain the validity, effectiveness and priority of any of the
Collateral Documents and the Liens intended to be created thereby and (iv) to
better assure, convey, grant, assign, transfer, preserve, protect and confirm
to the Trustee any of the rights granted now or hereafter intended by the
parties thereto to be granted to the Trustee or under any other instrument
executed in connection therewith or granted to the Issuers under the
Collateral Documents or under any other instrument executed in connection
therewith.
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
Pursuant to the Cash Collateral and Disbursement Agreement entered into
among the Issuers, the Trustee, the Independent Construction Consultant and
the Disbursement Agent in connection with the Isle-Black Hawk, the net
proceeds of the Old Notes Offering in the amount of approximately $72.0
million was placed into the Cash Collateral Accounts to be invested in
Investment Grade Securities or Government Securities, to be disbursed by the
Disbursement Agent pursuant to the Cash Collateral and Disbursement Agreement.
Interest Reserve Account
Of such net proceeds of the Old Notes Offering deposited in the Cash
Collateral Accounts, approximately $14.1 million was deposited in the Interest
Reserve Account. Funds and other assets held in the Interest Reserve Account
will be pledged to the Trustee for the benefit of itself and the Holders. Such
funds will be in an amount sufficient to purchase Government Securities which,
upon receipt of scheduled interest and principal payments therefrom, as set
forth in an Officer's Certificate delivered by the Company's Chief Financial
Officer, will provide for payment in full of the interest payments due on the
Notes through February 28, 1999. The Disbursement Agent shall purchase
Government Securities with such funds and the Issuers shall pledge such
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Government Securities to the Trustee, for the benefit of itself and the
Holders pursuant to the Cash Collateral and Disbursement Agreement. The
precise amount of securities to be acquired, however, will depend upon the
interest rates on Government Securities prevailing on the Closing Date. The
Government Securities will be held by the Disbursement Agent in the Interest
Reserve Account. Pursuant to the Cash Collateral and Disbursement Agreement,
immediately prior to the date of each of the first three interest payments due
on the Notes, the Disbursement Agent shall release from the Interest Reserve
Account funds sufficient to pay interest then due. In the event that any funds
remain in the Interest Reserve Account after all such interest payments are
made, the Trustee will release such funds to the Construction Disbursement
Account.
Interest earned on the Government Securities will be added to the Interest
Reserve Account. In the event that the aggregate amount of funds and
Government Securities held in the Interest Reserve Account exceeds the amount
sufficient in the opinion of the Chief Financial Officer of the Company as set
forth in an Officer's Certificate to provide for payment in full of the
interest payments due on the Notes through February 28, 1999, the Disbursement
Agent will deposit such excess amount into the Construction Disbursement
Account.
The Indenture will provide that the Disbursement Agent may, pursuant to the
terms of the Cash Collateral and Disbursement Agreement, (i) invest up to $5.0
million of the funds deposited into the Interest Reserve Account in Government
Securities having a maturity date on or before the date which is one business
day prior to February 28, 1998, (ii) invest up to $4.6 million of the funds
deposited into the Interest Reserve Account in Government Securities having a
maturity date on or before the date which is one business day prior to August
31, 1998 and (iii) invest up to $4.5 million of the funds deposited into the
Interest Reserve Account in Government Securities having a maturity date on or
before the date which is one business day prior to February 28, 1999.
Completion Reserve Account
Approximately $5.0 million of the net proceeds of the Old Notes Offering was
deposited in the Completion Reserve Account. Funds held in the Completion
Reserve Account will be pledged to the Trustee for the benefit of itself and
the Holders and invested in Investment Grade Securities by the Disbursement
Agent in accordance with the Company's instructions until needed from time to
time in the event there are insufficient funds to complete the construction of
the Isle-Black Hawk, including if the Company exercises the Hotel Option. All
such funds will be held in the Completion Reserve Account until disbursed in
accordance with the Cash Collateral and Disbursement Agreement. The
Disbursement Agent will authorize the disbursement of funds from the
Completion Reserve Account to the Construction Disbursement Account only upon
the satisfaction of the disbursement conditions set forth in the Cash
Collateral and Disbursement Agreement. Such conditions generally include the
requirement that the Company deliver to the Disbursement Agent and the
Independent Construction Consultant a certificate certifying (i) that the
funds will be applied in accordance with the terms of the Indenture, (ii) that
such funds will be used for the sole purposes allowed pursuant to the Cash
Collateral and Disbursement Agreement with respect to funds in the
Construction Disbursement Account, (iii) the circumstances causing the cost of
completing the Isle-Black Hawk to exceed the amounts previously forecast in
the Construction Disbursement Budget therefor, and that such circumstances
were not reasonably expected as of the last date of amendment of the
Construction Disbursement Budget (or if none, the date of issuance of the
Notes), (iv) to an amendment to the Construction Disbursement Budget that
confirms the revised estimated costs to complete the Isle-Black Hawk (which
amendment shall satisfy the conditions for Construction Disbursement Budget
amendments as provided below), (v) that, after giving effect to the requested
disbursements, the funds in the Construction Disbursement Account will be
sufficient to complete the Isle-Black Hawk in accordance with the Construction
Disbursement Budget, as amended, on or before the Operating Deadline without
giving effect to the hotel, if the Company has not exercised the Hotel Option,
and, if the Company exercises the Hotel Option, by the Hotel Substantial
Completion Date and (vi) that no Default or Event of Default under the Cash
Collateral and Disbursement Agreement or the Indenture have occurred and are
continuing. In addition, the Disbursement Agent shall have received from the
Independent Construction Consultant a certification stating that the
Independent Construction Consultant has reviewed such disbursement request,
that the Independent Construction
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Consultant has inspected the Isle-Black Hawk during the previous month and
that the Independent Construction Consultant concurs with certain of the
certifications made by the Company in such disbursement request. Following
disbursement of funds from the Completion Reserve Account to the Construction
Disbursement Account, the Company must comply with all requirements of the
Cash Collateral and Disbursement Agreement relating to disbursement of funds
from the Construction Disbursement Account.
Construction Disbursement Account
Approximately $52.9 million of the net proceeds of the Old Notes Offering
was deposited in the Construction Disbursement Account, to be held in escrow
and invested in Investment Grade Securities by the Disbursement Agent in
accordance with the Company's instructions until needed from time to time to
fund the development, construction and opening of the Isle-Black Hawk and to
pay other operating expenses of the Company. All such funds will be held in
the Construction Disbursement Account and pledged to the Trustee for the
benefit of itself and the Holders, until disbursed in accordance with the Cash
Collateral and Disbursement Agreement. Subject to certain exceptions set forth
in the Cash Collateral and Disbursement Agreement, the Disbursement Agent will
disburse funds from the Construction Disbursement Account for the payment of
such costs only upon the satisfaction of the disbursement conditions set forth
in the Cash Collateral and Disbursement Agreement. Such conditions generally
include the requirements that the Company deliver to the Disbursement Agent
and the Independent Construction Consultant a certificate certifying (i) that
no Default or Event of Default exists under the Indenture or the Cash
Collateral and Disbursement Agreement, (ii) that such request is in compliance
with the Cash Collateral and Disbursement Agreement, as then in effect, (iii)
the conformity with the Plans of the construction undertaken to the date of
the request, (iv) with respect to Hard Costs (as defined in the Cash
Collateral and Disbursement Agreement), that such disbursements are
appropriate based on invoices tendered for work that has been completed and
the amount of stored materials, and that the lien releases accompanying the
certificate are all of the lien releases required by the Cash Collateral and
Disbursement Agreement, (v) the purposes to which the requested funds will be
applied following disbursement (which may include operating expenses and other
working capital requirements of the Company), (vi) that the Construction
Disbursement Budget as in effect continues to portray accurately in all
material respects all costs to be incurred in completing the Isle-Black Hawk
(giving effect to the exercise of the Hotel Option, if made) and (vii) that,
after giving effect to the requested disbursement, the funds in the
Construction Disbursement Account will be sufficient to complete the Isle-
Black Hawk in accordance with the aggregate amounts (and line items) set forth
in the Construction Disbursement Budget, as amended to date, on or before the
Operating Deadline. In addition, the Disbursement Agent shall have received
from the Independent Construction Consultant (without giving effect to the
hotel, and, if the Company exercises the Hotel Option, by the Hotel
Substantial Completion Date) a certification stating that the Independent
Construction Consultant has reviewed such disbursement request, that the
Independent Construction Consultant has inspected the Isle-Black Hawk during
the previous month and that the Independent Construction Consultant concurs
with certain of the certifications made by the Company in such disbursement
request.
The Cash Collateral and Disbursement Agreement will permit advance
disbursements up to $1.5 million in the aggregate outstanding at any time,
notwithstanding the fact that not all certifications or lien releases have
been obtained or other disbursement conditions have not been so satisfied. The
conditions for such advance disbursements generally include the requirements
that the Company deliver to the Disbursement Agent and the Independent
Construction Consultant a certificate certifying (i) that no Default or Event
of Default exists under the Indenture or the Cash Collateral and Disbursement
Agreement, (ii) the purposes to which the requested funds will be applied
following disbursement, (iii) that, after giving effect to the requested
disbursement, the remaining amounts in the line item not yet disbursed are
sufficient to cover all costs within such line item to be paid or incurred on
or before the Operating Deadline (without giving effect to the hotel, and, if
the Company exercises the Hotel Option, by the Hotel Substantial Completion
Date) and (iv) that, after giving effect to the requested disbursement, no
more than $1.5 million of such advances shall be outstanding. In addition, the
Disbursement Agent shall have received from the Independent Construction
Consultant a certification stating that the Independent Construction
Consultant has reviewed such disbursement request, that the Independent
Construction
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Consultant has inspected the Isle-Black Hawk during the previous month and
that the Independent Construction Consultant concurs with certain of the
certifications made by the Company in such disbursement request. Advance
disbursements may remain outstanding so long as there is no Default or Event
of Default under the Cash Collateral and Disbursement Agreement or the
Indenture.
The Cash Collateral and Disbursement Agreement will provide that the
Construction Disbursement Budget may be amended only upon the satisfaction of
certain conditions set forth in the Cash Collateral and Disbursement
Agreement, including in connection with an exercise of the Hotel Option. Such
conditions generally include that the Company deliver to the Disbursement
Agent and the Independent Construction Consultant a certificate certifying (i)
as to a description of the circumstances giving rise to the amendment, and
that (except with respect to the exercise of the Hotel Option) the
circumstances were not reasonably expected as of the date of the last
amendment of the Construction Disbursement Budget (or if none, the date of
issuance of the Notes), (ii) that after giving effect to the amendment, the
Construction Disbursement Budget will in all material respects accurately
portray all costs to be incurred in completing the Isle-Black Hawk, including
in connection with any exercise of the Hotel Option, (iii) that after giving
effect to the amendment, the funds in the Construction Disbursement Account
(together with, in the case of the exercise of the Hotel Option, the funds in
the Completion Reserve Account) will be sufficient to complete the Isle-Black
Hawk in accordance with the aggregate amounts (and line items) set forth in
the Construction Disbursement Budget on or before the Operating Deadline
(without giving effect to the hotel, and, if the Company exercises the Hotel
Option, by the Hotel Substantial Completion Date) and (iv) that no Default or
Event of Default exists or will exist under the Cash Collateral and
Disbursement Agreement. In addition, the Disbursement Agent shall have
received from the Independent Construction Consultant a certification stating
that the Independent Construction Consultant has reviewed such proposed
Construction Disbursement Budget amendment, that the Independent Construction
Consultant has inspected the Isle-Black Hawk during the previous month and
that the Independent Construction Consultant concurs with certain of the
certifications made in the Construction Disbursement Budget amendment
certification submitted by the Company to the Disbursement Agent and the
Independent Construction Consultant. In addition, the Cash Collateral and
Disbursement Agreement will provide that construction line items may only be
reduced upon delivery to the Disbursement Agent, in form satisfactory to the
Disbursement Agent, of evidence that the completion of the work represented by
such line item will be completed for a total cost less than the amount set
forth in the Construction Disbursement Budget, and that any such savings (i)
are not obtained in a manner that materially detracts from the overall value,
quality or amenities of the Isle-Black Hawk and (ii) shall be reallocated (by
amendment to the Construction Disbursement Budget) to other line items. The
Cash Collateral and Disbursement Agreement provides for the amendment of the
Construction Disbursement Budget upon the exercise of the Hotel Option in the
event that the Company demonstrates that sufficient funds are available
therefor.
In making the certifications called for above, the Independent Construction
Consultant may rely (so long as such reliance is in good faith) upon
certificates from the material contractors, architects and engineers involved
in the construction of the Isle-Black Hawk confirming the fundamental facts
necessary for such certifications. In addition, except to the extent the
Independent Construction Consultant has actual knowledge, the Independent
Construction Consultant shall not be responsible for matters pertaining to:
Historical Architectural Review Commission, Gaming Authorities, Gaming
Licenses, Liens encumbering the Isle-Black Hawk (except in connection with the
responsibilities of the Independent Construction Consultant set forth in the
Cash Collateral and Disbursement Agreement, and whether the Isle-Black Hawk is
in a condition to receive customers in the ordinary course of business.
The Cash Collateral and Disbursement Agreement also will provide that if any
funds remain in the Construction Disbursement Account or the Completion
Reserve Account on the date that the Isle-Black Hawk has been Operating for at
least 30 consecutive days and (i) there is no ongoing construction in
connection with the Isle-Black Hawk or, included in connection with the hotel
if the Company has exercised the Hotel Option and (ii) there exists no Default
or Event of Default under the Indenture, the Disbursement Agent shall, upon
the direction of the Company, subject to certain exceptions set forth in the
Cash Collateral and Disbursement
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Agreement, disburse all remaining funds, if any, in the Completion Reserve
Account and in the Construction Disbursement Account to any account or
accounts specified by the Company.
Events of Default Under the Cash Collateral and Disbursement Agreement
The Cash Collateral and Disbursement Agreement will also provide that an
event of default shall exist thereunder if any of the following shall occur:
(i) a Default or Event of Default occurs and is continuing under the
Indenture; (ii) the Independent Construction Consultant, after appropriate
consultation with the Company, is unable to deliver a certificate in
connection with a requested disbursement or an amendment to the Construction
Disbursement Budget; (iii) the Independent Construction Consultant reviewing
prior disbursements reports an exception and such exception continues for a
period of ten days; (iv) any representation, warranty, certification or
statement by the Issuers in the Cash Collateral and Disbursement Agreement or
any certificate required to be delivered therein is untrue in any material
respect on the date given or made and such untruthfulness continues for a
period of five business days after notice thereof; (v) if at any time the
amount remaining in the Construction Disbursement Account and the Completion
Reserve Account is less than the amount required in the Construction
Disbursement Budget to cause the Isle-Black Hawk to be Operating on or before
the Operating Deadline without giving effect to the hotel if the Company has
not exercised the Hotel Option; or if the Company exercises the Hotel Option,
by the Hotel Substantial Completion Date and such deficiency continues for a
period of 30 days; and (vi) the Issuers fail to deliver certain other
documents necessary to perfect the Trustee's security interest in the Cash
Collateral and Disbursement Agreement and investments therein and such failure
continues for a period of five days. If an event of default exists under the
Cash Collateral and Disbursement Agreement, the Disbursement Agent will not be
permitted to authorize the disbursement of funds from the Construction
Disbursement Account or the Completion Reserve Account until such event of
default is cured, provided that, subject to direction of the Trustee, the
Disbursement Agent may continue to disburse funds from the Construction
Disbursement Account or the Completion Reserve Account, (a) in an amount up to
$2.0 million if necessary to prevent the condition of the Isle-Black Hawk from
deteriorating or to preserve work completed on the Isle-Black Hawk, (b) to pay
for work already completed or materials already purchased or (c) to pay for
retainage amounts if an event of default continues for more than three months.
All funds in the Cash Collateral Accounts will be pledged as security for
the repayment of the Notes.
EVENT OF DEFAULT
The Indenture will provide that each of the following constitutes an Event
of Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages, if any, with respect to, the Notes; (ii) default in
payment when due of the principal of or premium, if any, on the Notes; (iii)
failure by the Issuers to comply with the provisions described under "--
Mandatory Redemption," "--Repurchase at the Option of Holders--Change of
Control," "--Asset Sales" or "--Event of Loss," "--Restricted Payments," "--
Incurrence of Indebtedness and Issuance of Preferred Stock," "--Merger,
Consolidation or Sale of Assets," "--Limitation on Use of Proceeds" or "--
Restriction on Activities of Capital"; (iv) failure by the Issuers for 30 days
after notice to comply with any of its other agreements in the Indenture or
the Notes; (v) default under any mortgage, indenture or instrument under which
there may be issued or by which there may be 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
date of the Indenture, which default (a) is caused by a failure to pay
principal of or premium, if any, or interest on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on the date of
such default (a "Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any
other such Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $5.0 million or more;
(vi) failure by the Issuers or any of their Subsidiaries to pay final
judgments aggregating in excess of $5.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; (vii) breach by the Issuers of
any material representation or
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warranty set forth in the Collateral Documents, or default by the Issuers in
the performance of any covenant set forth in the Collateral Documents, or
repudiation by the Issuers of their obligations under the Collateral Documents
or the unenforceability of the Collateral Documents against the Issuers for
any reason; (viii) certain events of bankruptcy or insolvency with respect to
the Issuers or any of their Subsidiaries; (ix) 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 any Gaming Facility; (x) default by Casino
America in the performance of its obligations set forth in the Completion
Capital Commitment or repudiation of its obligations under the Completion
Capital Commitment; or (xi) the failure of the Isle-Black Hawk to be Operating
by the Operating Deadline or to remain Operating thereafter, except (i) as the
hours of operation of the Isle-Black Hawk may be limited by any Gaming
Authority or Gaming Law or (ii) for a period of time not to exceed 20 days
during any 30-day period and not to exceed 45 days during any one-year period;
provided, however, that, in any event, there shall not be an Event of Default
under this clause (xi)(ii) if the failure to remain Operating during such
period results from an Event of Loss pursuant to the terms of the Indenture.
If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in principal amount of the Notes then outstanding may declare
all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Issuers, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute
a Significant Subsidiary, all outstanding Notes will become due and payable
without further action or notice. The 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 Notes then outstanding may
direct the Trustee in its exercise of any trust or power. In the event the
Trustee is required by the Holders or otherwise required by the Indenture or
the Collateral Documents to take any action which may reasonably result in
environmental-related liability to the Trustee, the Trustee may require
additional indemnities regarding such liability. If such indemnities are not
obtained, the Trustee may resign.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Issuers with
the intention of avoiding payment of the premium that the Issuers would have
had to pay if the Issuers then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes.
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 or Liquidated Damages, if any, on, or the principal of,
the Notes.
The Issuers are required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Issuers are required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
REMEDIES UPON DEFAULT UNDER NOTES
Enforcement of rights under certain of the Collateral Documents would
require that the Trustee initiate a foreclosure against the Note Collateral.
Such foreclosure would be subject to certain notice and other procedural
limitation.
ENFORCEMENT OF SECURITY DOCUMENTS
If an Event of Default occurs under the Indenture, the Trustee, acting on
behalf of the Holders, may enforce its rights and remedies under the Indenture
and the Collateral Documents. These remedies include foreclosing upon and
selling the Note Collateral, including commencing a judicial proceeding to
seek a monetary judgment against the Company and foreclosing on the Deed of
Trust. Foreclosing on the Deed of Trust can be
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accomplished either through a summary proceeding involving the trustees named
in the Deed of Trust (the public trustee and the Trustee) upon presentation of
the "original evidence of debt" (as required by Colorado law) or by judicial
foreclosure. A judicial foreclosure can be more time consuming and more costly
to pursue than a public trustee foreclosure. Once an order for sale is
obtained in a judicial foreclosure, however, the procedure and rights
regarding cure, bidding, public sale and redemption are similar to those in a
public trustee foreclosure. These remedies, however, may be pursued
simultaneously or seriatim in Colorado.
In certain instances, it may be necessary to pursue a judicial foreclosure.
For example, the Deed of Trust will indicate that a legended and originally
executed Indenture held by the Trustee will be the "original evidence of debt"
for purposes of Colorado law. In the event that the public trustee refuses to
acknowledge such Indenture as the "original evidence of debt" and, instead,
requires the delivery of all original outstanding Notes, the Trustee may be
required to resort to the institution of judicial foreclosure proceedings if
all such Notes, or adequate indemnities, are not delivered. Judicial
foreclosure proceedings are independent actions brought in a court of law and
are governed by the traditional rules of evidence. As a result, in a judicial
foreclosure, the Trustee, while not necessarily having to present the
"original evidence of debt," would need to prove to the court under the
traditional rules of evidence the existence and owing of the debt. In such
case, the Deed of Trust and Indenture are likely to constitute evidence of the
debt. Judicial foreclosure could also be necessitated by such matters as the
discovery of defects in the Deed of Trust, issues regarding priority,
challenges to title to the property, or the existence of a dispute which may
lead to the sale being enjoined or otherwise challenged.
The Deed of Trust purports to provide the Trustee with certain rights and
remedies, such as allowing the Trustee to take possession of the encumbered
property, to collect rents immediately upon default, without the appointment
of a receiver, and to obtain the appointment of a receiver, as a matter of
right, upon ex parte application. Certain remedies, however, such as purported
waivers of rights of redemption or cure prior to default, are against public
policy in Colorado and are thus limited or unenforceable. Applicable law also
may impose a duty of good faith and fair dealing on the Trustee, which may
need to be considered in the exercise of rights and remedies on default.
Certain other provisions or remedies under the Deed of Trust may be
additionally qualified or limited by applicable law, which will not interfere
with the practical realization of the benefits of the security interest
intended, provided the Trustee acts in good faith and in a commercially
reasonable manner.
Due to the legal restrictions on the ability to engage in gaming activities
in gaming jurisdictions and the state restrictions on the retail sale of
alcoholic beverages, the Trustee may incur delays or possibly frustration in
its efforts to sell all or a portion of the Note Collateral. Operators of
gaming facilities and liquor licensed establishments are required to be
licensed by Gaming Authorities and Liquor Licensing Authorities, respectively,
and may be required by Gaming Authorities and Liquor Licensing Authorities to
file applications, to be investigated and to be found suitable as owners,
operators or landlords of a gaming establishment and a retail liquor licensed
establishment. Such requirements for approval by Gaming Authorities and Liquor
License Authorities 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. In addition, the
disposition of Note Collateral consisting of gaming devices, including slot
machines, will require licensure of the person in possession or buyer by the
applicable Gaming Authority. Also, gaming activities must cease if the
operator does not have a right to possession of the premises and is not
licensed or found suitable by Gaming Authorities. Moreover, the gaming
industry and retail liquor sale industry could become subject to a different
or additional regulations during the term of the Notes, which could further
adversely affect the practical rights and remedies that the Trustee would have
upon the occurrence of an event of default under the Notes or the Indenture.
In addition to being subject to gaming law and liquor law restrictions, the
Trustee's ability to foreclose upon and sell Note Collateral will be subject
to the procedural and other restrictions of state real estate law or the
Uniform Commercial Code. In addition, certain direct or indirect leasehold
interests, contracts and other assets may not be sold without the consent of
certain third parties.
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The ability to foreclose upon and dispose of Note Collateral directly or
indirectly securing the Notes is also likely to be significantly impaired or
delayed by applicable bankruptcy laws if a bankruptcy case were to be
commenced by or against the Issuers. Under applicable bankruptcy laws, the
Trustee and the Holders would be prohibited from foreclosing upon, taking
possession or disposing of the Note Collateral absent bankruptcy court
approval. Moreover, the Issuers would be permitted to retain and use Note
Collateral as long as the Trustee and the Holders are being provided "adequate
protection" in the form of a cash payment or periodic cash payments or an
additional or replacement lien or in some other form approved by the court in
its discretion. While this requirement is generally intended to protect the
value of the security, it cannot be predicted what form of "adequate
protection" might be approved by the court in the particular case. The court
has broad discretionary powers in all these matters, including the valuation
of Note Collateral. In view of these considerations, it is not possible to
predict for how long payments on the Notes would be delayed following the
filing of a bankruptcy case, whether or when the Trustee could foreclose upon
or take possession of or sell the Note Collateral or to what extent the
Holders would be compensated for any delay in payment or loss of value of the
Note Collateral.
After application of proceeds of any foreclosure sale to the Indebtedness,
the Trustee may be entitled to a deficiency judgment under certain
circumstances. There can be no assurance, however, that the Trustee would be
successful in obtaining any deficiency judgment, what the amount of any such
judgment if obtained might be, or that the Issuers would be able to satisfy
any such judgment, if obtained.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND MEMBERS
No director, officer, employee, incorporator or member of the Issuers shall
have any liability for any obligations of the Issuers under the Notes or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Issuers may, at their option and at any time, elect to have all of their
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance") except for (i) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of, premium, if any, and interest
and Liquidated Damages, if any, on such Notes when such payments are due from
the trust referred to below, (ii) the Issuers' obligations with respect to the
Notes concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen 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 Issuers'
obligations in connection therewith and (iv) the Legal Defeasance provisions
of the Indenture. In addition, the Issuers may, at their option and at any
time, elect to have their obligations 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 Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Issuers must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders, cash in U.S. dollars, non-callable Government Securities, or a
combination thereof, in such amounts as will be sufficient, in the opinion of
a nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest and Liquidated Damages, if any, on
the outstanding Notes on the stated maturity or on the applicable redemption
date, as the case may be, and the Issuers must specify whether the Notes are
being defeased to maturity or to a particular redemption date; (ii) in the
case of Legal Defeasance, the Issuers shall have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that (a) the Issuers
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have received from, or there has been published by, the Internal Revenue
Service a ruling or (b) since the date of the Indenture, there has been a
change in the applicable federal income tax law, in either case to the effect
that, and based thereon such opinion of counsel shall confirm that, the
Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, the Issuers shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that the Holders of the outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred; (iv) no Default or
Event of Default shall have occurred and be continuing on the date of such
deposit (other than a Default or Event of Default resulting from the borrowing
of funds to be applied to such deposit) or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period
ending on the 91st day after the date of deposit; (v) such Legal Defeasance or
Covenant Defeasance will not result in a breach or violation of, or constitute
a default under any material agreement or instrument (other than the
Indenture) to which the Issuers or any of their Subsidiaries is a party or by
which the Issuers or any of their Subsidiaries is bound; (vi) the Issuers must
have delivered to the Trustee an opinion of counsel to the effect that after
the 91st day 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; (vii) the Issuers must deliver to
the Trustee an Officers' Certificate stating that the deposit was not made by
the Issuers with the intent of preferring the Holders over other creditors of
the Issuers with the intent of defeating, hindering, delaying or defrauding
creditors of the Issuers or others; and (viii) the Issuers must deliver to the
Trustee an Officers' Certificate and an opinion of counsel, each stating that
all conditions precedent provided for relating to the Legal Defeasance or the
Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Issuers may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Issuers are not required to transfer or exchange any Note
selected for redemption. Also, the Issuers are not required to transfer or
exchange any Note for a period of 15 days before a selection of Notes to be
redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next three succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, 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 Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for Notes).
Without the consent of the Holders of at least 66 2/3% in aggregate
principal amount of the Notes then outstanding, an amendment or waiver may not
affect the Liens in favor of the Trustee and the Holders created under the
Collateral Documents in a manner adverse to the Holders (other than pursuant
to the release of Note Collateral in accordance with the provisions of the
Indenture and of the applicable Collateral Documents) or release all or
substantially all of the Note Collateral.
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an
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amendment, supplement or waiver, (ii) reduce the principal of or change the
fixed maturity of any Note or alter the provisions with respect to the
redemption of the Notes (other than provisions relating to the covenants
described above under "--Repurchase at the Option of Holders"), (iii) reduce
the rate of or change the time for payment of interest on any Note, (iv) waive
a Default or Event of Default in the payment of principal of or premium, or
Liquidated Damages, 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 the Notes and a waiver of the payment default that
resulted from such acceleration), (v) make any Note payable in money other
than that stated in the Notes, (vi) make any change in the provisions of the
Indenture relating to waivers of past Defaults or the rights of Holders to
receive payments of principal of or premium or Liquidated Damages, if any, or
interest on the Notes, (vii) waive a redemption payment with respect to any
Note (other than a payment required by one of the covenants described above
under "--Repurchase at the Option of Holders") or (viii) make any change in
the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder, the
Issuers and the Trustee may amend or supplement the Indenture or the Notes to
cure any ambiguity, defect or inconsistency, to provide for uncertificated
Notes in addition to or in place of certificated Notes, to provide for the
assumption of the Issuers' obligations to the Holders in the case of a merger
or consolidation, to make any change that would provide any additional rights
or benefits to the Holders or that does not adversely affect the legal rights
under the Indenture or the Collateral Documents of any such Holder, or to
comply with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Issuers, to obtain payment of claims in
certain cases, or to realize on certain 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 Commission for
permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
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 man in the
conduct of his own affairs. Subject to such provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the
Indenture at the request of any Holder, unless such Holder shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth in the next paragraph, the Notes will initially be
issued in the form of one Global Note (the "Global Note"). The Global Note
will be deposited on the Expiration Date with, or on behalf of, The Depository
Trust Company (the "Depositary") and registered in the name of Cede & Co., as
nominee of the Depositary (such nominee being referred to herein as the
"Global Note Holder").
Notes that are issued as described below under "--Certificated Securities"
will be issued in the form of registered definitive certificates (the
"Certificated Securities"). Upon the transfer of Certificated Securities, such
Certificated Securities may, unless the Global Note has previously been
exchanged for Certificated Securities, be exchanged for an interest in the
Global Note representing the principal amount of Notes being transferred.
The Depositary is a limited purpose trust company that was created to hold
securities for its participating organizations (collectively, the
"Participants" or the "Depositary's Participants") and to facilitate the
clearance and settlement of transactions in such securities between
Participants through electronic book-entry changes in
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accounts of its Participants. The Depositary's Participants include securities
brokers and dealers, banks and trust companies, clearing corporations and
certain other organizations. Access to the Depositary's system is also
available to other entities such as banks, brokers, dealers and trust
companies (collectively, the "Indirect Participants" or the "Depositary's
Indirect Participants") that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly. Persons who
are not Participants may beneficially own securities held by or on behalf of
the Depositary only thorough the Depositary's Participants or the Depositary's
Indirect Participants.
The Issuers expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Note, the Depositary will credit the
accounts of Participants designated by the Initial Purchaser with portions of
the principal amount of the Global Note and (ii) ownership of the Notes
evidenced by the Global Note will be shown on, and the transfer of ownership
thereof will be effected only through, records maintained by the Depositary
(with respect to the interests of the Depositary's Participants), the
Depositary's Participants and the Depositary's Indirect Participants.
Prospective purchasers are advised that 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 Notes evidenced by the Global
Note will be limited to such extent. For certain other restrictions on the
transferability of the Notes, see "Notice to Investors."
So long as the Global Note Holder is the registered owner of any Notes, the
Global Note Holder will be considered the sole Holder under the Indenture of
any Notes evidenced by the Global Note. Beneficial owners of Notes evidenced
by the Global Note will not be considered the owners or Holders thereof under
the Indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the Trustee thereunder. Neither the
Issuers nor the Trustee will have any responsibility or liability for any
aspect of the records of the Depositary or for maintaining, supervising or
reviewing any records of the Depositary relating to the Notes.
Payments in respect of the principal of, premium, if any, interest and
Liquidated Damages, if any, on any Notes registered in the name of the Global
Note Holder on the applicable record date will be payable by the Trustee to or
at the direction of the Global Note Holder in its capacity as the registered
Holder under the Indenture. Under the terms of the Indenture, the Issuers and
the Trustee may treat the persons in whose names Notes, including the Global
Note, are registered as the owners thereof for the purpose of receiving such
payments. Consequently, neither the Issuers nor the Trustee has or will have
any responsibility or liability for the payment of such amounts to beneficial
owners of Notes. The Issuers believe, however, that it is currently the policy
of the Depositary to immediately credit the accounts of the relevant
Participants with such payments, in amounts proportionate to their respective
holdings of beneficial interests in the relevant security as shown on the
records of the Depositary. Payments by the Depositary's Participants and the
Depositary's Indirect Participants to the beneficial owners of Notes will be
governed by standing instructions and customary practice and will be the
responsibility of the Depositary's Participants or the Depositary's Indirect
Participants.
Certificated Securities
Subject to certain conditions, any person having a beneficial interest in
the Global Note may, upon request to the Trustee, exchange such beneficial
interest for Notes in the form of Certificated Securities. Upon any such
issuance, the Trustee is required to register such Certificated Securities in
the name of, and cause the same to be delivered to, such person or persons (or
the nominee of any thereof). All such certificated Notes would be subject to
the legend requirements described herein under "Notice to Investors." In
addition, if (i) the Issuers notify the Trustee in writing that the Depositary
is no longer willing or able to act as a depositary and the Issuers are unable
to locate a qualified successor within 90 days or (ii) the Issuers, at their
option, notify the Trustee in writing that they elect to cause the issuance of
Notes in the form of Certificated Securities under the Indenture, then, upon
surrender by the Global Note Holder of its Global Note, Notes in such form
will be issued to each person that the Global Note Holder and the Depositary
identify as being the beneficial owner of the related Notes.
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Neither the Issuers nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of
Notes and the Issuers and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
Same Day Settlement and Payment
The Indenture will require that payments in respect of the Notes represented
by the Global Note (including principal, premium, if any, interest and
Liquidated Damages, if any) be made by wire transfer of immediately available
funds to the accounts specified by the Global Note Holder. With respect to
Certificated Securities, the Issuers will make all payments of principal,
premium, if any, interest and Liquidated Damages, if any, by wire transfer of
immediately available funds to the accounts specified by the Holders thereof
or, if no such account is specified, by mailing a check to each such Holder's
registered address.
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 Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Adjusted Fixed Charge Coverage Ratio" means with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person and its
Subsidiaries for such period to Adjusted Fixed Charges of such Person and its
Subsidiaries for such period (calculated in the same manner as the Fixed
Charge Coverage Ratio is calculated).
"Adjusted Fixed Charges" means with respect to any Person for any period,
the Fixed Charges of such Person and its Subsidiaries for such period plus the
Contingent Interest of such Person and its Subsidiaries for such period.
"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 that beneficial ownership of 10% or more of the voting securities of
a Person shall be deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets (including, without limitation, by way of a sale and leaseback)
(provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Subsidiaries, taken as
a whole, will be governed by the provisions of the Indenture described above
under "--Repurchase at the Option of Holders--Change of Control" and/or the
provisions described above under "--Merger, Consolidation or Sale of Assets"
and not by the provisions of the Asset Sale covenant) and (ii) the issue or
sale by the Company or any of its Subsidiaries of Equity Interests of any of
the Company's Subsidiaries, in the case of either clause (i) or (ii), whether
in a single transaction or a series of related transactions (a) that have a
fair market value in excess of $250,000 or (b) for net proceeds in excess of
$250,000. Notwithstanding the foregoing: (i) a transfer of assets by the
Company to a Wholly Owned Subsidiary or by a Wholly Owned Subsidiary to the
Company or to another Wholly Owned Subsidiary, (ii) an issuance of Equity
Interests by a Wholly Owned Subsidiary to the Company or to another
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Wholly Owned Subsidiary, (iii) a Restricted Payment that is permitted by the
covenant described above under "--Restricted Payments" and (iv) a transfer of
all Public Improvements (as defined in the Subdivision Agreement) and all
installed physical facilities (as described in the Subdivision Agreement)
required to be transferred by the Company to the city of Black Hawk, Colorado
pursuant to the terms of the Subdivision Agreement will not be deemed to be
Asset Sales.
"Attributable Debt" in respect of a sale and leaseback transaction means, at
the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"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 on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited), (iv) in the case of a limited liability company,
membership interests and (v) any other interest or participation that confers
on a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Collateral Accounts" means collectively, the Interest Reserve Account,
the Completion Reserve Account, the Construction Disbursement Account and the
Disbursed Funds Account (as defined in the Cash Collateral and Disbursement
Agreement).
"Cash Collateral and Disbursement Agreement" means the Cash Collateral and
Disbursement Agreement among the Issuers, the Trustee, the Independent
Construction Consultant and the Disbursement Agent, in connection with the
Isle-Black Hawk.
"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 domestic commercial bank
having capital and surplus in excess of $500 million and a Keefe Bank Watch
Rating of "B" or better, (iv) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clauses
(ii) and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper having
the highest rating obtainable from Moody's Investors Service, Inc. or Standard
& Poor's Corporation and in each case maturing within six months after the
date of acquisition and (vi) investment funds investing solely in securities
of the types described in (ii), (iii), (iv) or (v) above if such fund has net
assets of at least $500 million.
"Cash Collateral Accounts" means collectively, the Interest Reserve Account,
the Completion Reserve Account, the Construction Disbursement Account and the
Disbursed Funds Account (as defined in the Cash Collateral and Disbursement
Agreement) and any replacements of or substitutes for such Accounts.
"Casino America" means Casino America, Inc., a Delaware corporation.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all
or substantially all of the assets of the Company and its Subsidiaries, taken
as a whole, to any "person" (as
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such term is used in Section 13(d)(3) of the Exchange Act) other than Casino
America or any of its Affiliates or (ii) the expiration or termination of the
Management Agreement or the replacement of Casino America or any of its
Affiliates as manager under the Management Agreement with any Person other
than a successor to Casino America, (iii) the adoption of a plan relating to
the liquidation or dissolution of the Company or Casino America or any
successor thereto, (iv) the liquidation or dissolution of the Company or
Casino America or any successor thereto, (v) prior to the consummation of an
Initial Public Offering, the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which is that
Casino America and Nevada Gold, or a successor to Casino America or Nevada
Gold, cease to collectively control a majority of the voting power of the
Company, (vi) after an Initial Public Offering, the Company's becoming aware
of (by way of a report or any other filing pursuant to Section 13(d) of the
Exchange Act, proxy vote, written notice or otherwise) the acquisition by any
Person or related group (within the meaning of Section 13(d)(3) or Section
14(d)(2) of the Exchange Act, or any successor provision to either of the
foregoing, including any "group" acting for the purpose of acquiring, holding
or disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act), other than Casino America and Nevada Gold, or a successor to
Casino America or Nevada Gold, in a single transaction or in a related series
of transactions, by way of merger, consolidation or other business combination
or purchase of beneficial ownership (within the meaning of Rule 13d-3 under
the Exchange Act, or any successor provision) of 50% or more of the total
voting power entitled to vote in the election of the Managers or Board of
Directors of such other Person surviving the transaction and, at such time,
Casino America and Nevada Gold, or a successor to Casino America or Nevada
Gold, shall fail to beneficially own, directly or indirectly, securities
representing greater than the combined voting power of the Company's or such
other Person's Capital Stock as is beneficially owned by such Person or group;
(vii) the first day on which the Company fails to own 100% of the issued and
outstanding Equity Interests of Capital; and (viii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Managers (together with any new managers or board members, as the case may
be, whose election or appointment by such committee or whose nomination for
election by the members or shareholders of the Company, as the case may be,
was approved by a vote of a majority of the managers or board members, as the
case may be, then still in office who were either managers or board members 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 then in office; provided, however, that a Change of Control shall not
occur solely by reason of a Permitted C-Corp. Conversion.
"Closing Date" means the closing date for the sale and original issuance of
the Notes.
"Collateral Documents" means, collectively, the Deed of Trust by the Issuers
to the Public Trustee of the County of Gilpin, Colorado, the Security
Agreement by the Issuers in favor of the Trustee, the Assignments of Patent,
Trademark and Copyright, the Collateral Assignments by the Issuers in favor of
the Trustee, the Cash Collateral and Disbursement Agreement, Issuer Pledge
Agreement by the Company in favor of the Trustee, the Pledge and Assignment by
the Issuers in favor of the Trustee, the Manager Subordination Agreement,
Uniform Commercial Code financing statements and fixture filings, and any
other agreements, instruments, documents, pledges or filings that evidence,
set forth or limit the Lien of the Trustee in the Note Collateral (as such
terms are defined in the Indenture).
"Company" means Isle of Capri Black Hawk L.L.C., a Colorado limited
liability company.
"Completion Capital Commitment" means the Completion Capital Commitment
dated as of the date of the Indenture executed by Casino America in favor of
the Trustee for the benefit of the Holders.
"Completion Reserve Account" means the account to be maintained by the
Disbursement Agent and pledged to the Trustee, pursuant to the terms of the
Cash Collateral and Disbursement Agreement, into which approximately $5.0
million of the proceeds of the Offering will be deposited.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in
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connection with an Asset Sale (to the extent such losses were deducted in
computing such Consolidated Net Income), plus (ii) provision for taxes based
on income or profits of such Person and its Subsidiaries for such period, to
the extent that such provision for taxes was included in computing such
Consolidated Net Income, plus (iii) Consolidated Interest Expense of such
Person and its Subsidiaries for such period, to the extent that any such
expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) of such Person and its Subsidiaries for such period to the
extent that such depreciation and amortization were deducted in computing such
Consolidated Net Income, in each case, on a consolidated basis and determined
in accordance with GAAP. Notwithstanding the foregoing, the provision for
taxes on the income or profits of, and the depreciation and amortization of, a
Subsidiary of the referent Person shall be added to Consolidated Net Income to
compute Consolidated Cash Flow only to the extent (and in the same proportion)
that the Net Income of such Subsidiary was included in calculating the
Consolidated Net Income of such Person and only if a corresponding amount
would be permitted at the date of determination to be dividended to the
Company by such Subsidiary without prior governmental approval (that has not
been obtained), and without direct or indirect restriction pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Subsidiary or its stockholders.
"Consolidated Interest Expense" means, with respect to any person for any
period, without duplication, (i) the consolidated interest expense of such
Person and its Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization or original issue discount, non-
cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of
letter of credit or bankers' acceptance financings, and net payments (if any)
pursuant to Hedging Obligations), (ii) the consolidated interest expense of
such Person and its Subsidiaries that was capitalized during such period,
(iii) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Subsidiaries or secured by a Lien on
assets of such Person or one of its Subsidiaries (whether or not such
Guarantee or Lien is called upon) and (iv) 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 consolidated basis, determined in accordance with GAAP; provided
that (i) the Net Income (but not loss) 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 to
the referent Person or a Wholly Owned Subsidiary thereof, (ii) the Net Income
of any Subsidiary shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary of such Net
Income is not at the date of determination permitted without any prior such
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable
to such Subsidiary or its stockholders, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the
date of such acquisition shall be excluded and (iv) the cumulative effect of a
change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date plus (ii) the
respective amounts reported on such Person's balance sheet as of such date
with respect to any series of preferred stock (other than Disqualified Stock)
that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such preferred stock, less (x) all
write-ups (other than write-ups resulting from foreign currency translations
and write-ups of tangible assets of a going concern business made within 12
months after the acquisition of such business) subsequent to
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the date of the Indenture in the book value of any asset owned by such Person
or a consolidated Subsidiary of such Person, (y) all investments as of such
date in unconsolidated Subsidiaries and in Persons that are not Subsidiaries
(except, in each case, Permitted Investments) and (z) all unamortized debt
discount and expense and unamortized deferred charges as of such date, all of
the foregoing determined in accordance with GAAP.
"Construction Disbursement 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 the financing, design, development, construction
and equipping of the Isle-Black Hawk, as such schedules are delivered to the
Disbursement Agent on the Closing Date and as amended from time to time in
accordance with the terms of the Cash Collateral and Disbursement Agreement.
"Construction Disbursement Account" means the account, to be maintained by
the Disbursement Agent and pledged to the Trustee, pursuant to the terms of
the Cash Collateral and Disbursement Agreement, into which approximately $52.9
million of the net proceeds of the Offering will be deposited.
"Contingent Interest" means with respect to any principal amount of the New
Notes as of any date after the Isle-Black Hawk becomes Operating, an amount
equal to the product of (i) 5% 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 $75.0 million.
"Deed of Trust" means the Deed of Trust to Public Trustee, Security
Agreement, Fixture Filing and Assignment of Rents, Leases and Leasehold
Interests dated as of August 20, 1997, by the Company to the Public Trustee of
the County of Gilpin, Colorado in favor of the Trustee.
"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.
"Disbursement Agent" means IBJ Schroder Bank & Trust Company, as
disbursement agent.
"Disqualified Stock" means any Capital Stock that, 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 the
date that is 91 days after the date on which the New Notes mature.
"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 clauses (ii) or (iii) above.
"Excess Cash Flow" means, with respect to the Company for any Operating
Year, the Consolidated Cash Flow of the Company and its Subsidiaries for such
Operating Year, minus (i) cash interest expense (including the portion of any
payments associated with Capital Lease Obligations) of the Company and its
Subsidiaries that is actually paid during such Operating Year, minus (ii) up
to $3.5 million in capital expenditures of the Company and its Subsidiaries
paid to maintain or improve the Isle-Black Hawk that are actually paid during
such Operating Year (excluding any capital expenditures made with the proceeds
from the sale of the New Notes), minus (iii) principal payments on
Indebtedness permitted to be incurred pursuant to the covenant described above
under "--Incurrence of Indebtedness and Issuance of Preferred Stock", minus
(iv) amounts paid during such Operating Year in the event that the Company
exercises the Hotel Option or commences construction of a hotel as part of
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the Isle-Black Hawk, in each case which hotel will constitute Note Collateral;
provided, however, that all amounts deducted pursuant to this clause (iv)
shall not exceed $6.3 million in aggregate for all Operating Years and minus
(v) to the extent such amounts were not included in computing Consolidated
Cash Flow, amounts distributed to Members during such Operating Year pursuant
to clause (iv) of the penultimate paragraph under "Certain Covenants--
Restricted Payments" so long as such distributions, at the time of such
distributions, were permitted to be distributed pursuant to the terms of the
Indenture.
"Favorable Private Letter Ruling" means a private letter ruling, reasonably
satisfactory to the Trustee, issued by the United States Internal Revenue
Service to the Company to the effect that the Company will not be a publicly
traded partnership taxable as a corporation for United States federal income
tax purposes as a result of the issuance by the Company of the Notes.
"Favorable Tax Opinion" means a written opinion, reasonably satisfactory to
the Trustee, addressed and delivered to the Trustee by a nationally recognized
law firm to the effect that the Company will not be a publicly traded
partnership taxable as a corporation for United States federal income tax
purposes as a result of the issuance by the Company of the Notes.
"FF&E" means furniture, fixtures or equipment used in the ordinary course of
the business of the Company and its Subsidiaries.
"FF&E Financing" means the incurrence of Indebtedness, the proceeds of which
are utilized solely to finance or refinance the acquisition of (or entry into
a capital lease by the Company or a Subsidiary with respect to) FF&E.
"Final Plans" with respect to any particular work or improvement means Plans
which (i) have received final approval from all governmental authorities
required to approve such Plans prior to completion of the work or improvements
and (ii) contain sufficient specificity to permit the completion of the work
or improvement.
"Financial Assurances" shall mean a letter of credit, a surety or
performance bond or other similar financial guaranty of a Qualified Financial
Institution in form and substance reasonably satisfactory to the Trustee in an
amount not less than the aggregate amounts previously distributed, plus the
contemplated distribution, to any Requesting Member pursuant to clause (iv) of
the penultimate paragraph under "Certain Covenants--Restricted Payments" from
and after the date of the Indenture (the "Assurance Amount") pursuant to which
such Qualified Financial Institution guarantees payment to the Company (and
the Company agrees to demand such payment) for so long as any Notes are
outstanding of the Assurance Amount upon the occurrence of (i) the earliest to
occur of (x) the payment of federal income taxes by the Company, (y) the entry
of a final judicial determination that the Company is not a "pass-through
entity" for federal income tax purposes or (z) the accrual by the Company for
the payment of federal income taxes as required in accordance with generally
accepted accounting principles; and (ii) failure by the Company to receive
reimbursement of the Assurance Amount in cash previously distributed to such
Requesting Member (or successor thereto) within thirty days after the
occurrence of any event referred to in clause (i) above.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Subsidiaries for such period to the Fixed Charges of such Person and its
Subsidiaries for such period. In the event that the Issuers or any of their
Subsidiaries incur, assume, guarantee or redeem any Indebtedness (other than
revolving credit borrowings) 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 date on which 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 giving 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 reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that
have been made by the Issuers or any of their Subsidiaries, including through
mergers or consolidations and including any related
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financing transactions, during the four-quarter reference period or subsequent
to such reference period and on or prior to the Calculation Date shall be
deemed to have occurred on the first day of the four-quarter reference period
and Consolidated Cash Flow for such reference period shall be calculated
without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in accordance with
GAAP, and operations or businesses disposed of prior to the Calculation Date,
shall be excluded and (iii) the Fixed Charges attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the referent Person or any of its Subsidiaries following
the Calculation Date.
"Fixed Charges" means, with respect to any Person for any period, without
duplication, the sum of (i) Fixed Interest, (ii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Subsidiaries or secured by a Lien on assets of such Person or one of its
Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iii)
the product of (a) all dividend payments, whether or not in cash, on any
series of preferred stock of such Person or any of its Subsidiaries, other
than dividend payments on Equity Interests payable solely in Equity Interests
of the Issuers, times (b) 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 tax rate of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP.
"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, which are in effect from time to time.
"Gaming Authority" means any agency, authority, board, bureau, commission,
department, office or instrumentality of any nature whatsoever of the United
States federal or foreign government, any state, province or any city or other
political subdivision or otherwise, and whether now or hereafter in existence,
or any officer or official thereof, including the Colorado Limited Gaming
Control Commission and any other applicable gaming regulatory authority with
authority to regulate any gaming operation (or proposed gaming operation)
owned, managed or operated by the Company, Casino America or Nevada Gold or
any of their respective Subsidiaries.
"Gaming Business" means the gaming business and includes all businesses
either licensed or unlicensed by a Gaming Authority necessary for, incident to
or connected with or arising out of the operation of a gaming establishment or
facility (including developing and operating lodging, retail and restaurant
facilities, sports or entertainment facilities, transportation services or
other related activities or enterprises and any additions or improvements
thereto) and any businesses incident and useful to the gaming business,
including, without limitation, food and beverage distribution operations to
the extent that they are operated in connection with a gaming business.
"Gaming Facility" means any tangible building or other structure used or
expected to be used to enclose space in which a Gaming Business is conducted
and (i) wholly or partially owned, directly or indirectly, by the Company or
any Subsidiary or (ii) any portion or aspect of which is managed or used, or
expected to be managed or used, by the Company or a Subsidiary; provided that
the term Gaming Facility does not include any real property whether or not
such building or other structure is located thereon or adjacent thereto or any
furniture, fixtures and equipment, including gaming equipment, used in
connection with any Gaming Business.
"Gaming Law" means the gaming laws of any jurisdiction or jurisdictions to
which the Company or any of its Subsidiaries is, or may at any time after the
date of the Indenture, be subject.
"Gaming License" means any license, permit, franchise or other authorization
from any Gaming Authority required on the date of the Indenture or at any time
thereafter to own, lease, operate or otherwise conduct the Gaming Business of
the Company, including all licenses granted under the gaming laws of any
jurisdiction to which the Company is, or may at any time after the date of the
Indenture, be subject.
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"Government Securities" means the securities purchased by the Company upon
consummation of the offering and deposited in the Interest Reserve Account and
in which the Trustee has a first priority perfected security interest which
are comprised of (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 of 1933,
as amended), 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, 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.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Holders" means the record holders from time to time of the Notes.
"Hotel Option" means the Company's option, subject to the terms and
conditions set forth in the Design/Build Agreement, to build a hotel in
connection with the development of the Isle-Black Hawk.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money (including
accrued and unpaid Contingent Interest) or evidenced by bonds, notes,
debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or banker's acceptances or representing Capital
Lease Obligations or the balance deferred and unpaid of the purchase price of
any property or representing any Hedging Obligations, except any such balance
that constitutes an accrued expense or trade payable, if and to the extent any
of the foregoing indebtedness (other than letters of credit, performance or
other surety bonds and Hedging Obligations) would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP, as well as all
indebtedness secured by a Lien on any asset of such Person (whether or not
such indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other
Person.
"Independent Construction Consultant" means the independent construction
consultant to be retained in connection with the construction of the Isle-
Black Hawk, or any successor independent construction consultant appointed by
the Trustee pursuant to the terms of the Cash Collateral and Disbursement
Agreement.
"Interest Reserve Account" means the account to be maintained by the
Disbursement Agent and pledged to the Trustee pursuant to the terms of the
Cash Collateral and Disbursement Agreement into which approximately $14.1
million of the proceeds of the Offering will be deposited and used to purchase
the Government Securities.
"Investment Grade Securities" means any Investment in (i) marketable direct
obligations issued or unconditionally guaranteed by the United States
Government or issued by any agency thereof and backed by the full faith and
credit of the United States, in each case maturing within five years from the
date of acquisition thereof, (ii) marketable direct obligations issued by any
state of the United States of America maturing within one year from the date
of acquisition thereof and, at the time of acquisition, having one of the two
highest ratings
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obtainable from both Standard & Poor's Corporation and Moody's Investors
Service, Inc., (iii) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having one of the
two highest ratings obtainable from both Standard & Poor's Corporation and
Moody's Investors Service, Inc., (iv) certificates of deposit maturing within
two years from the date of the Indenture issued by, or bank accounts
maintained with, commercial banks organized under the laws of the United
States of America or any state thereof or the District of Columbia, each
having combined capital and surplus of not less than $500 million and having a
rating of "A1" or better from Standard & Poor's Corporation or "P1" or better
from Moody's Investors Service, Inc., (v) bonds issued by corporations
organized under the laws of the United States or any state thereof, maturing
within two years from the date of the Indenture and having a rating of "BBB-"
or better by Standard and Poor's Corporation or "Baa3" or better by Moody's
Investors Service, Inc. or (vi) money market funds organized under the laws of
the United States or any state thereof that invest solely in any of the types
of investments permitted under this definition; provided that any such
Investment Grade Securities which are purchased with a portion of the net
proceeds from the sale of the Notes are deposited in either the Construction
Disbursement Account or the Completion Reserve Account and the Trustee has a
first priority perfected security interest in such Investment Grade
Securities.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons in the forms of direct or indirect loans (including
guarantees of Indebtedness or other obligations), advances (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), capital contributions, purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided that
an acquisition of assets, Equity Interests or other securities by the Company
for consideration consisting of common equity securities of the Company shall
not be deemed to be an Investment. If the Company or any Subsidiary of the
Company sells or otherwise disposes of any Equity Interests of any direct or
indirect Subsidiary of the Company such that, after giving effect to any such
sale or disposition, such Person is no longer a Subsidiary of the Company, the
Company shall be deemed to have made an Investment on the date of any such
sale or disposition equal to the fair market value of the Equity Interests of
such Subsidiary not sold or disposed of.
"Isle-Black Hawk" means the pending project to develop, construct, equip and
operate the Isle of Capri Casino and related amenities, as described in this
Offering Circular.
"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).
"Liquor License" means any license, permit, franchise or other authorization
from any Liquor Licensing Authority necessary or required on the date of the
Indenture or at any time thereafter to own, lease, operate or otherwise
conduct the lodging, retail, restaurant or other entertainment facilities of
the Company in the manner described in this Offering Circular, including all
licenses granted under the liquor licensing laws of any jurisdiction to which
the Company is, or may at any time after the date of the Indenture, be
subject.
"Liquor Licensing Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States federal or a foreign government, any state, province or any
city or other political subdivision or otherwise, and whether now or hereafter
in existence, or any officer or official thereof, including the Colorado
Liquor Enforcement Division and the city of Black Hawk Liquor Licensing
Authority and any other applicable liquor licensing regulatory authority with
authority to regulate any liquor licensed operation (or proposed liquor
licensed operation) owned, managed or operated by the Company, Casino America
or Nevada Gold or any of their respective Subsidiaries.
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"Management Agreement" means the Amended and Restated Management Agreement
dated as of July 29, 1997, between the Company and Casino America relating to
the management of the Isle-Black Hawk.
"Management Fees" means any amounts payable to Casino America pursuant to
Section 9.1 of the Management Agreement.
"Managers" means (i) for so long as the Company is a limited liability
company, the Managers appointed pursuant to the Operating Agreement or (ii)
otherwise, the Board of Directors of the Company.
"Manager Subordination Agreement" means the Manager Subordination Agreement
dated as of the date of the Indenture among the Company, Casino America and
the Trustee.
"Members " means the members of the Company.
"Minimum Facilities" means, with respect to the Isle-Black Hawk, a casino
which has in operation at least 1,025 slot machines and ten table games,
related amenities (including a restaurant, buffet restaurant, a bar and an
event area) and has parking for at least 900 vehicles, including parking for
up to 150 vehicles which may be temporarily unavailable in the event that the
Company exercises the Hotel Option.
"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 by such Person or any of its Subsidiaries or
the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries, (ii) any extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss), (iii) in the case of any Person that is
treated as a pass-through entity for United States federal income tax
purposes, the provision for taxes based on income or profits of such Person
and its Subsidiaries for such period that would be applicable if such Person
were taxable as a subchapter "C" corporation and (iv) solely for the purpose
of calculating the Fixed Charge Coverage Ratio to determine compliance by the
Issuers with the covenants described under "--Incurrence of Indebtedness and
Issuance of Preferred Stock," "--Restricted Payments" and "--Restriction on
Payment of Management Fees," pre-opening expenses as determined in accordance
with GAAP incurred by such Person in connection with the opening of the Isle-
Black Hawk up to a maximum of $2.5 million.
"Net Loss Proceeds" means the aggregate cash proceeds received by the
Company or any of its Subsidiaries in respect of any Event of Loss, including,
without limitation, insurance proceeds from condemnation awards or damages
awarded by any judgment, net of the direct costs in recovery of such Net Loss
Proceeds (including, without limitation, legal, accounting, appraisal and
insurance adjuster fees and any relocation expenses incurred as a result
thereof), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that were the subject of such Event
of Loss, and any taxes paid or payable as a result thereof.
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any non-
cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking 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 and
any tax sharing arrangements), amounts required to be applied to the repayment
of Indebtedness (to the extent, in the case of revolving credit Indebtedness,
such Indebtedness is permanently reduced) secured by a Lien on the asset or
assets that were the subject of such Asset Sale and any reserve for adjustment
in respect of the sale price of such asset or assets established in accordance
with GAAP;
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provided, that the Trustee for the benefit of the Holders shall hold a
perfected first priority security interest in such aggregate cash proceeds.
"Nevada Gold" means Nevada Gold, Inc., a Nevada corporation.
"Note Collateral" means all assets, now owned or hereafter acquired, of the
Issuers or any of their respective Subsidiaries, that are pledged or assigned,
or required to be pledged or assigned under the Indenture or the Collateral
Documents, to the Trustee pursuant to the Collateral Documents, which will
initially include all real estate, improvements and all personal property
owned by the Issuers and all accounts held by or for the benefit of the
Issuers, together with all proceeds thereof (including, without limitation,
the proceeds of Asset Sales), in each case excluding FF&E acquired with FF&E
Financing, gaming and liquor licenses, and certain other exceptions.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Operating" means, with respect to the Isle-Black Hawk, the first time that
(i) all 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 development, construction and
equipping of, and beginning operations at, the Isle-Black Hawk have been
discharged or, if payment is not yet due or if such payment is contested in
good faith by the Issuers, sufficient funds remain in the Construction
Disbursement Account to discharge such Liens and the Issuers have taken any
action (including the institution of legal proceedings) necessary to prevent
the sale of any or all of the Isle-Black Hawk or the real property on which
the Isle-Black Hawk will be constructed, (iii) the Independent Construction
Consultant, the general contractor and the architect of the Isle-Black Hawk
shall have delivered a certificate to the Trustee certifying that the Isle-
Black Hawk is substantially complete in all material respects in accordance
with the Final Plans with respect to the Minimum Facilities and all applicable
building and other laws, ordinances and regulations, (iv) the Isle-Black Hawk
is in a condition (including installation of furnishings, fixtures and
equipment) to receive customers in the ordinary course of business, (v) the
Minimum Facilities are open to the general public and operating in accordance
with all applicable laws and (vi) a temporary certificate of occupancy has
been issued for the Isle-Black Hawk by the appropriate governmental
authorities.
"Operating Deadline" means June 15, 1999.
"Operating Year" means the four consecutive fiscal quarter period of the
Company beginning immediately after the date that the Isle-Black Hawk first
becomes Operating, and each succeeding four consecutive fiscal quarter period
thereafter that begins immediately after each anniversary of the date the
Isle-Black Hawk becomes Operating.
"Permitted C-Corp. Conversion" shall mean a transaction resulting in the
Company becoming a subchapter "C" corporation pursuant to the United States
Internal Revenue Code; provided, that in connection with such transaction, (i)
the subchapter "C" corporation resulting from such transaction is a
corporation organized and existing under the laws of any state of the United
States or the District of Columbia and the beneficial holders of the Equity
Interests of the subchapter "C" corporation resulting from such transaction
shall be the same, and shall be in the same percentages, as the beneficial
holders of the Equity Interests of the Company immediately prior to such
transaction; (ii) the subchapter "C" corporation resulting from such
transaction assumes all the obligations of the Company under the Notes, the
Collateral Documents and the Indenture pursuant to a supplemental indenture in
a form reasonably satisfactory to the Trustee; (iii) the Trustee is provided
45 days' advance notice of such transaction and evidence reasonably
satisfactory to the Trustee (which shall include but not to be limited to
title insurance and/or an opinion of counsel) regarding the maintenance of the
perfection, priority and proof of the security interest of the Trustee in the
Note Collateral; (iv) after giving effect to such transaction no Default or
Event of Default exists; (v) such transaction would not result in the loss or
suspension or material impairment of any Gaming License unless a comparable
replacement Gaming License is effective
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prior to or simultaneously with such loss, suspension or material impairment;
(vi) the subchapter "C" corporation resulting from such transaction will have
Consolidated Net Worth immediately after the transaction equal to or greater
than the Consolidated Net Worth of the Company immediately preceding the
transaction and after giving pro forma effect as if the transaction had
occurred at the beginning of the applicable four-quarter period, the Fixed
Charge Coverage Ratio after the transaction of the subchapter "C" corporation
resulting from such transaction shall be equal to or greater than the Fixed
Charge Coverage Ratio of the Company immediately preceding the transaction;
(vii) such transaction would not require any Holder or beneficial owner of
Notes to obtain a Gaming License or be qualified or found suitable under the
law of any applicable gaming jurisdiction; provided that such Holder or
beneficial owner would not have been required to obtain a Gaming License or be
qualified or found suitable under the laws of any applicable gaming
jurisdiction in the absence of such transaction; (viii) the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee to the effect that the Holders will not recognize
income gain or loss for federal income tax purposes as a result of such
Permitted C-Corp. Conversion; and (ix) the Issuers shall have delivered to the
Trustee an Officers' Certificate as to compliance with all of the above
conditions.
"Permitted Investments" means (i) any Investment in the Issuers or in a
Wholly Owned Subsidiary of the Issuers that is engaged in the Gaming Business
and that is evidenced by Capital Stock or Subsidiary Intercompany Notes that
are pledged to the Trustee as Note Collateral; (ii) any Investment in Cash
Equivalents; (iii) any Investment by the Issuers or any Subsidiary of the
Issuers in a Person that is evidenced by Capital Stock or Subsidiary
Intercompany Notes that are pledged to the Trustee as Note Collateral, if as a
result of such Investment (a) such Person becomes a Wholly Owned Subsidiary of
the Issuers engaged in the Gaming Business or (b) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Issuers or a
Wholly Owned Subsidiary of the Issuers and that is engaged in the Gaming
Business; (iv) any Restricted Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under "--Repurchase at the Option
of Holders--Asset Sales"; (v) any acquisition of assets solely in exchange for
the issuance of Equity Interests (other than Disqualified Stock) of the
Issuers; and (vi) after the Isle-Black Hawk is Operating, any purchases from
time to time by the Company of Notes.
"Permitted Liens" means (i) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Issuers or any
Subsidiary of the Issuers; provided that such Liens were in existence prior to
the contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Issuers; (ii) Liens on property existing at the time of acquisition thereof by
the Issuers or any Subsidiary of the Issuers (other than materials, supplies
or FF&E acquired in connection with developing, constructing or equipping of,
or commencing operations at, the Isle-Black Hawk), provided that such Liens
were in existence prior to the contemplation of such acquisition; (iii) Liens
existing on the date of the Indenture and previously disclosed to the Trustee
in writing; (iv) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good faith
by appropriate proceedings promptly instituted and diligently concluded;
provided that any reserve or other appropriate provision as shall be required
in conformity with GAAP shall have been made therefor; (v) statutory Liens of
landlords and carriers, warehousemen, mechanics, suppliers, materialmen,
repairmen or other like Liens arising in the ordinary course of business and
with respect to amounts not yet delinquent or being contested in good faith by
an appropriate process of law, and for which a reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made, and,
with respect to such Liens arising in connection with the Isle-Black Hawk, (a)
the work or supplies provided which gave rise to such lien were contemplated
by the Design/Build Agreement; (b) there is no Default or Event of Default
under the Cash Collateral and Disbursement Agreement and (c) the payment for
such work or supplies is payable under the payment bond obtained by Haselden
pursuant to the Design/Build Agreement; (vi) Liens on FF&E to secure
Indebtedness permitted by clauses (ii) and (viii) of the second paragraph of
the covenant described under "--Certain Covenants--Incurrence of Indebtedness
and Issuance of Preferred Stock"; (vii) Liens securing obligations in respect
of the Indenture or the Notes; (viii) pledges or deposits in the ordinary
course of business to secure lease obligations or nondelinquent obligations
under workers' compensation, unemployment insurance or similar legislation;
(ix)
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easements, rights-of-way, restrictions, minor defects or irregularities in
title and other similar charges or encumbrances not interfering in any
material respect with the business or assets of the Company or any Subsidiary
incurred in the ordinary course of business; and (x) Liens arising from filing
Uniform Commercial Code financing statements for a precautionary purpose in
connection with true leases of personal property that are otherwise permitted
under the Indenture and under which the Issuers or any Subsidiary is lessee.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Subsidiaries; provided that: (i) the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the lesser of (a) the original
principal amount of (or accreted value, if applicable) the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses incurred in connection therewith) and (b) to the extent
such Indebtedness is secured by a Lien described in clause (vi) of the
definition of Permitted Liens above, the then current fair market value of the
asset so encumbered; (ii) such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and has 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,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and is subordinated in right of payment
to, the Notes on terms at least as favorable to the Holders as those contained
in the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; and (iv) such Indebtedness is
incurred by the Company.
"Person" means an individual, partnership, limited liability company,
corporation, trust or unincorporated organization and a government agency or a
political subdivision thereof.
"Plans" means the plans, specifications, working drawings, change orders,
correspondence and related items, which may be amended by the Company, as the
case may be, as necessary or appropriate, that collectively: (i) provide for
and detail the manner of development, construction and equipping of the Isle-
Black Hawk; (ii) call for construction which will permit the Isle-Black Hawk
to be Operating on or prior to the Operating Deadline, subject only to
Permitted Liens; (iii) call for construction which will cause the Isle-Black
Hawk to be Operating for a total cost consistent with its Construction
Disbursement Budget (as defined in the Cash Collateral and Disbursement
Agreement) and the line items set forth therein; (iv) provide for and detail
the manner of development, construction and equipping of, and the related
budget for, the hotel which may be built in connection with the Isle-Black
Hawk pursuant to the Company's exercise of the Hotel Option, in accordance
with the Construction Disbursement Budget, as amended, and the line items set
forth therein; (v) to the extent such Plans are amended, in the reasonable,
professional judgment of the Independent Construction Consultant, continue to
represent a logical evolution consistent with previous Plans; and (vi)
together with any amendments, are consistent with the description of the Isle-
Black Hawk contained herein, and are consistent with all governmental
approvals and requirements, including, without limitation, the Black Hawk
Building Department, Historical Architecture Review Commission, Gaming
Authorities, and the Subdivision Agreement.
"Public Equity Offering" means an underwritten public offering of common
Capital Stock of the Company registered under the Securities Act (other than a
public offering registered on Form S-8 under the Securities Act) that results
in proceeds of at least $25.0 million to the Company.
"Qualified Financial Institution" shall mean any domestic commercial bank
having capital and surplus in excess of $500 million and a Keefe Bank Watch
Rating of "B" or better.
"Requesting Member" shall mean a member of the Company that seeks to obtain
a distribution from the Company pursuant to clause (iv) of the penultimate
paragraph under "Certain Covenants--Restricted Payments."
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"Restricted Investment" means an Investment other than a Permitted
Investment.
"Semiannual Period" means the two fiscal quarter periods ending during the
January or July immediately preceding the applicable interest payment date.
"Significant Subsidiary" means any Subsidiary that would be a significant
subsidiary as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"Subdivision Agreement" means the Subdivision Agreement to be entered into
after the issuance of the Notes, between the Company and the city of Black
Hawk, Colorado.
"Subsidiary" means, with respect to any Person, (i) 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 that
Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or one or more Subsidiaries of such Person (or any combination
thereof).
"Subsidiary Intercompany Notes" means the intercompany notes senior to any
subordinated debt of, and pari passu with all existing senior Indebtedness of
the issuing Subsidiary, issued by Subsidiaries of the Company in favor of the
Company to evidence advances by the Company, in each case, in the form
attached as an exhibit to the Indenture.
"Substantially Owned Subsidiary" of any Person means a Subsidiary of such
Person at least 80% of the outstanding Capital Stock or other ownership
interest 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 or by such Person and one or more Wholly Owned Subsidiaries of such
Person.
"Tax Amount" means, with respect to any period, without duplication, the
amount of taxable income in respect of the income of the Company of any Member
multiplied by the highest marginal combined federal, state and local tax rates
applicable to corporations for such period.
"Tax Distribution Condition" means any of the following: (i) the Company
shall be the subject of a Favorable Private Letter Ruling, a copy of which has
been sent to the Trustee and which shall remain in full force and effect; (ii)
the Trustee shall have received a Favorable Tax Opinion which shall be
confirmed as of the date of any distribution pursuant to clause (iv) of the
penultimate paragraph under "Certain Covenants--Restricted Payments"; or (iii)
the party proposing to receive a distribution in an amount not to exceed the
Tax Amount shall have provided Financial Assurances to the Trustee.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) 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 (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"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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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion is a summary of certain federal income tax
consequences expected to result from the acquisition, ownership and
disposition of the New Notes acquired in the Exchange Offer by holders of the
New Notes, but does not purport to be a complete analysis of all potential tax
effects. This summary is based on current provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), applicable Treasury Regulations,
judicial authority, and current administrative rulings and pronouncements of
the Internal Revenue Service (the "Service"). There can be no assurance that
the Service will not take a contrary view, and no ruling from the Service has
been or will be sought. Legislative, judicial, or administrative changes or
interpretations may be forthcoming 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 holders.
The tax treatment of a holder of New Notes may vary depending upon such
holder's particular situation. Certain holders (including, but not limited to,
certain financial institutions, insurance companies, broker-dealers, tax-
exempt organizations, foreign corporations, persons who are not citizens or
residents of the United States, and persons holding the New Notes as part of a
"straddle," "hedge" or "conversion transaction") may be subject to special
rules not discussed below. The discussion is limited to holders ("Holders")
who are "U.S. Holders" who will hold the New Notes as "capital assets"
(generally, property held for investment) within the meaning of Section 1221
of the Code. A U.S. Holder is a beneficial owner of a New Note who or which is
for U.S. federal income tax purposes (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized
in or under the laws of the United States or of any political subdivision
thereof, (iii) an estate the income of which is subject to U.S. federal income
taxation regardless of its source, or (iv) a "U.S. Trust." A U.S. Trust is (a)
for taxable years beginning after December 31, 1996, or if the trustee of a
trust elects to apply the following definition to an earlier taxable year
ending after August 20, 1996, any trust if, and only if, (i) a court within
the United States is able to exercise primary supervision over the
administration of the trust and (ii) one or more U.S. persons have the
authority to control all substantial decisions of the trust and (b) for all
other taxable years, any trust whose income is includible in gross income for
U.S. federal income tax purposes regardless of its source. The term U.S.
Holder also includes certain former U.S. citizens whose income and gain on the
New Notes will be subject to U.S. taxation.
The New Notes provide for both Fixed Interest payments and Contingent
Interest payments. The New Notes have legal and other economic terms typically
associated with indebtedness and are intended to create a debtor-creditor
relationship between the Company and the Holders. Accordingly, the Company
will treat the New Notes as indebtedness and will treat both Fixed and
Contingent Interest as interest for Federal income tax purposes. Such
treatment is not binding on the Service (or the courts), and there can be no
assurance that the Service will not successfully argue (or that a court will
not hold) that the New Notes should be characterized, in whole or in part, as
equity for Federal income tax purposes. If the Company's treatment of the New
Notes were not upheld, all or a portion of the interest payments on the New
Notes would be recharacterized, possibly either as distributions received from
a corporation with respect to corporate stock or as distributions from a
partnership. A recharacterization could affect the timing, character and
amount of income includible in the Holders' income, and the Holders could face
other adverse tax consequences. The following discussion assumes that the New
Notes are treated as indebtedness and both Fixed Interest and Contingent
Interest are treated as interest.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION
OF THE NEW NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL,
OR FOREIGN TAX LAWS.
CONSEQUENCES OF THE EXCHANGE OFFER TO EXCHANGING AND NONEXCHANGING HOLDERS
An exchange of New Notes for Notes in satisfaction of a Holder's
registration rights as provided herein should not be treated as an exchange
for federal income tax purposes because the New Notes should not be considered
to differ materially in kind or extent from the Notes. As a result, (i) an
Exchanging Holder will not
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recognize any gain or loss on the Exchange; (ii) the holding period on the New
Note will include the holding period for the Note; (iii) the basis of the New
Note will be the same as the basis for the Note; and (iv) the original issue
discount on the New Note will be the same as on the Note.
The Exchange Offer will result in no Federal income tax consequences to a
nonexchanging Holder of Notes.
LIQUIDATED DAMAGES
The Company intends to take the position that the Liquidated Damages
described above under "Description of New Notes--Registration Rights;
Liquidated Damages" will be taxable to the Holder as ordinary income in
accordance with the Holder's method of accounting for federal income tax
purposes. The Service may take a different position, however, which could
affect the timing of both the Holder's income and the Company's deduction with
respect to the Liquidation Damages.
RECOGNITION OF INTEREST INCOME
Certain Treasury Regulations (the "Contingent Payment Regulations") govern
the treatment of debt instruments issued on or after August 13, 1996 that
provide for one or more contingent payments. Because the New Notes provide for
one or more contingent payments of interest, the Contingent Payment
Regulations will apply to the New Notes. Under the Contingent Payment
Regulations, the Company must construct a projected payment schedule for the
New Notes and holders generally must recognize interest income on a constant
yield basis (similar to the method prescribed for including original issue
discount ("OID") in income) based on the projected payment schedule, with
certain adjustments if actual payments differ from projected payments.
In particular, the projected payment schedule will be determined by
including all noncontingent payments and the "expected value" of all
contingent payments on the New Notes. The projected payment schedule must
produce the "comparable yield," which is the yield at which the Company would
issue a fixed rate debt instrument with terms and conditions similar to those
of the New Notes. The amount of interest that accrues each accrual period is
the product of the "comparable yield" and the New Note's "adjusted issue
price" at the beginning of each accrual period (generally, the six month
period ending on each interest payment date). The "adjusted issue price" of a
New Note is equal to the price first paid for a substantial amount of the New
Notes, increased by interest previously accrued on the New Note (determined
without adjustments), and decreased by the amount of any noncontingent
payments and the projected amount of any contingent payments previously made
on the New Note. Except for adjustments made for differences between actual
and projected payments, the amount of interest included in income by a holder
of New Note is the sum of the "daily portions" of interest income with respect
to the New Note for each day during the taxable year (or portion thereof) on
which such holder held such New Note. The "daily portions" of interest income
are determined by allocating to each day in any accrual period a ratable
portion of the interest income allocable to that accrual period. If actual
payments differ from projected payments, then holders will generally be
required in any given taxable year either to include additional interest in
gross income (in case the actual payments exceed projected payments in such
taxable year) or to reduce the amount of interest income otherwise accounted
(in case the actual payments are less than the projected payments in such
taxable year).
Thus, under the rules described in the preceding paragraph, depending on the
"comparable yield" and "expected value" used to determine the projected
payment schedule, holders of New Notes may be required to include amounts in
income prior to the receipt of cash payments attributable to such income. The
Company will provide to holders the projected payment schedule for the New
Notes. The projected payment schedule for the New Notes will consist of all
Fixed Interest payments, all scheduled principal payments and a projected
amount and time for each Contingent Interest payment. The yield, timing and
amounts set forth on the projected payment schedule are for federal income tax
purposes only and are not assurances by the Company with respect to any aspect
of the New Notes. Holders will generally be bound by the projected payment
schedule. However, the Service will not respect a projected payment schedule
which it determines to be unreasonable. Holders are
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strongly urged to consult their tax advisors with respect to the application
of the contingent payment rules described above to the New Notes.
If the New Notes are sold or otherwise disposed of when there are remaining
contingent payments under the projected payment schedule, then any gain
recognized under such sale or other disposition will be ordinary interest
income. Any loss recognized will be ordinary loss to the extent the holders'
total interest inclusions on a New Note exceed the total amount of ordinary
loss the holder took into account pursuant to the adjustments described in the
second preceding sentence.
It is possible that the New Notes may be subject to the provisions of the
Code dealing with high yield discount obligations in which case the members of
the Company may not be entitled to claim a deduction with respect to a certain
portion of the interest payments (the "Disqualified Portion"). Under certain
circumstances, this could result in the Company making additional
distributions to its members, which could reduce the amount of cash available
to the Company to meet its obligations under the New Notes.
SALE, RETIREMENT OR OTHER TAXABLE DISPOSITION
Except as provided for above, a holder of a New Note in general will
recognize gain or loss upon the sale, redemption, retirement, or other taxable
disposition of such New Note in an amount equal to the difference between (i)
the amount of cash and the fair market value of property received in exchange
therefor (except to the extent attributable to the payment of accrued interest
or OID, which generally will be taxable to the holder as ordinary income) and
(ii) the holder's adjusted tax basis in such New Note. A holder's adjusted tax
basis in a New Note generally will be equal to the price paid for such New
Note, increased by the amount of OID, if any included in gross income prior to
the date of disposition, and decreased by the amount of any cash payments of
such OID on such New Note received prior to disposition. To the extent not
treated as ordinary income or loss as described above, any gain or loss
recognized on the sale, redemption, retirement, or other taxable dispositions
of a New Note generally will be capital gain or loss. The recently enacted
Taxpayer Relief Act of 1997 made certain changes to the Code with respect to
taxation of capital gains of taxpayers other than corporations that are U.S.
Holders. In general, the maximum tax rate for non-corporate taxpayers on long-
term capital gains has been lowered to 20% from the previous 28% rate for most
capital assets (including the New Notes) held for more than 18 months. For
taxpayers in the 15% regular tax bracket, the maximum tax rate on long-term
capital gains is now 10%. Capital gain on such assets having a holding period
of more than one year but not more than 18 months will be subject to a maximum
tax rate of 28%.
PUBLICLY TRADED PARTNERSHIP
In general, a partnership is not a taxable entity for United States federal
income tax purposes. Instead, each partner, in determining its United States
federal income tax liability, if any, takes into account its allocable share
of items of income, gain, loss, deduction, and credit of the partnership.
Certain partnerships ("publicly traded partnerships"), however, are treated as
corporations for federal tax purposes if interests in the partnership are
traded on an established securities market or on a secondary market (or a
substantial equivalent thereof). Treasury Regulations provide generally that,
for this purpose, an "interest in a partnership" includes any financial
instrument or contract the value of which is determined in whole or in part by
reference to the partnership (including the results of partnership
operations). The Treasury Regulations make an exception to this rule, however,
for any financial instrument or contract that (i) is treated as debt for
federal tax purposes and (ii) is not convertible into or exchangeable for an
interest in the capital or profits of the partnership and does not provide for
a payment of equivalent value. The Company believes that the New Notes are
properly treated as debt for federal income tax purposes and, although the New
Notes provide for Contingent Interest, that such New Notes do not provide for
payments that are equivalent in value to an interest in partnership capital or
profits. Therefore, the Company intends to report as a partnership, rather
than as a publicly traded partnership taxable as a corporation, for federal
income tax purposes. There can be no assurance, however, that the Service
would not be successful in taking a contrary position, in which case, the
Company would be treated as a corporation for federal tax purposes, a portion
of the interest on the New Notes would be nondeductible for tax purposes and
the amount
108
<PAGE>
of the Company's after-tax cash flow available to meet its obligations under
the New Notes would be reduced. In order to mitigate such risk, the Indenture
provides that the Company may not distribute to the Company's equity holders
tax payment distributions in certain circumstances as described under
"Description of the New Notes--Certain Covenants--Restricted Payments" unless
the equity holder has provided Financial Assurances to the Trustee or unless
there has been obtained a Favorable Private Letter Ruling or Favorable Tax
Opinion with respect to such risk. See "Description of the New Notes--Certain
Covenants--Restricted Payments."
BACKUP WITHHOLDING
A holder of New Notes may be subject to backup withholding at the rate of
31% with respect to interest paid on, OID accrued on and gross proceeds from a
sale or other disposition of, the New Notes unless (i) such holder is a
corporation or comes within certain other exempt categories and, when
required, demonstrates this fact or (ii) provides a correct taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. A holder of New Notes who does not provide the Company with
his or her correct taxpayer identification number may be subject to penalties
imposed by the Service.
The Company will report to the holders of the New Notes and the Service the
amount of any "reportable payments" (including any OID accrued on the New
Notes) and any amount withheld with respect to the New Notes during the
calendar year.
109
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account as a result of
market-making activities or other trading activities in connection with the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired as a result of market-making activities or other trading
activities. The Issuers have agreed that for a period of 120 days after the
Expiration Date, it will make available a prospectus meeting the requirements
of the Securities Act to any broker-dealer for use in connection with any such
resale. In addition, until December 11, 1997, all dealers effecting
transactions in the New Notes may be required to deliver a prospectus.
The Issuers will receive no proceeds in connection with the Exchange Offer.
New 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 New Notes or a combination of such methods of resale, at market
prices prevailing at the time of resale, at prices related to such prevailing
market prices or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such New Notes. Any broker-dealer that resells New 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 New Notes may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of New Notes and any commissions or concessions
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.
LEGAL MATTERS
Certain legal matters with respect to the New Notes will be passed upon for
the Issuers by Mayer, Brown & Platt, Chicago, Illinois.
EXPERTS
The consolidated financial statements of Isle of Capri Black Hawk L.L.C. at
August 24, 1997 and for the period from April 25, 1997 (Date of Inception)
through August 24, 1997, appearing in this Prospectus and Registration
Statement have been audited by Ernst & Young LLP, independent auditors, as
stated in their report thereon appearing elsewhere herein, and are included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
110
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
REPORT OF INDEPENDENT AUDITORS............................................. F-2
FINANCIAL STATEMENTS:
Balance Sheet............................................................ F-3
Statement of Operations.................................................. F-4
Statement of Members' Equity............................................. F-5
Statement of Cash Flows.................................................. F-6
NOTES TO FINANCIAL STATEMENTS.............................................. F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying consolidated balance sheet of Isle of Capri
Black Hawk L.L.C. (a development stage company) as of August 24, 1997, and the
related consolidated statements of operations, members' equity and cash flows
for the period April 25, 1997 (inception) through August 24, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion of 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 Isle of Capri Black Hawk
L.L.C. at August 24, 1997, and the results of its operations and its cash
flows for the period from April 25, 1997 (inception) through August 24, 1997,
in conformity with generally accepted accounting principles.
Ernst & Young LLP
Chicago, Illinois
October 14, 1997
F-2
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
(DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AUGUST 24,
1997
------------
ASSETS
<S> <C>
Current assets
Cash............................................................ $ 682,463
Accrued interest receivable..................................... 37,721
Preopening costs................................................ 1,901
------------
Total current assets.......................................... 722,085
------------
Property and equipment
Land and land improvements...................................... 14,544,328
Construction in progress........................................ 636,535
------------
Property and equipment............................................ 15,180,863
------------
Other assets
Restricted cash................................................. 69,798,703
Deferred financing costs, net................................... 4,380,470
------------
74,179,173
------------
Total assets.................................................. $ 90,082,121
============
LIABILITIES AND MEMBERS' EQUITY
Liabilities and members' equity
Current liabilities:
Accounts payable-related parties................................ $ 3,627
Accrued liabilities:
Interest...................................................... 106,849
Other......................................................... 20,133
------------
Total current liabilities......................................... 130,609
------------
Long-term debt.................................................... 75,000,000
Members' equity
Member's capital -- Casino America of Colorado, Inc............. 8,169,125
Member's capital -- Blackhawk Gold, Ltd......................... 6,782,387
------------
Total members' equity......................................... 14,951,512
------------
Total liabilities and members' equity............................. $ 90,082,121
============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-3
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
(DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD APRIL 25, 1997 (DATE OF INCEPTION) THROUGH AUGUST 24, 1997
<TABLE>
<S> <C>
Interest expense, net of capitalized interest of $22,971............. $(90,746)
Interest income...................................................... 37,721
--------
Net loss........................................................... $(53,025)
========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-4
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
(DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF MEMBERS' EQUITY
<TABLE>
<CAPTION>
CASINO AMERICA BLACKHAWK TOTAL
OF COLORADO, INC. GOLD, LTD MEMBERS' EQUITY
----------------- ----------- ---------------
<S> <C> <C> <C>
Balance, April 25, 1997
(inception).................... -- -- --
Capital contribution-
development costs............ 316,636 -- 316,636
Capital contribution-cash..... 7,083,880 484 7,084,364
Capital contribution-land..... 100,000 7,503,537 7,603,537
Equity transfer............... 700,000 (700,000) --
Net loss...................... (31,391) (21,634) (53,025)
----------- ----------- ------------
Balance, August 24, 1997........ $ 8,169,125 $ 6,782,387 $ 14,951,512
=========== =========== ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-5
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
(DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD APRIL 25, 1997 (DATE OF INCEPTION) THROUGH AUGUST 24, 1997
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss........................................................ $ (53,025)
Adjustments to reconcile net loss to net cash used in operating
activities:
Amortization of deferred financing costs...................... 6,869
Changes in current assets and liabilities:
Increase in preopening costs................................ (1,901)
Accounts receivable......................................... (37,721)
Accounts payable and accrued liabilities.................... 83,877
-----------
Net cash used in operating activities......................... (1,901)
-----------
Cash flows from investing activities:
Purchase of land................................................ (6,400,000)
Purchase of property and equipment.............................. (557,701)
Increase in restricted cash..................................... (69,798,703)
-----------
Net cash used in investing activities......................... (76,756,404)
-----------
Cash flows from financing activities:
Proceeds from borrowings........................................ 72,000,000
Deferred financing costs........................................ (1,247,133)
Principal payment on land mortgage.............................. (396,463)
Capital contribution received................................... 7,084,364
-----------
Net cash provided by financing activities..................... 77,440,768
-----------
Net increase in cash.............................................. 682,463
Cash, beginning of period......................................... --
-----------
Cash, end of period............................................... $ 682,463
===========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Debt issued for:
Underwriting discount on first mortgage notes................. 3,000,000
Capital contributions:
Land, net of mortgage of $396,463............................. 7,603,537
Financing fees................................................ 136,579
Property and equipment........................................ 180,057
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-6
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
(DEVELOPMENT STAGE COMPANIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and basis of presentation
On April 25, 1997 ("Date of Inception"), Isle of Capri Black Hawk L.L.C. (the
"Company") (formerly ICB L.L.C.), a Colorado limited liability company, was
formed. The Company is owned by Casino America of Colorado, Inc. ("Casino
America of Colorado"), a wholly owned subsidiary of Casino America, Inc.
("Casino America"), and Blackhawk Gold, Ltd. ("Blackhawk Gold"), a wholly owned
subsidiary of Nevada Gold and Casinos, Inc. ("Nevada Gold"). The Company is a
Development Stage Company and has not commenced gaming operations. The
principal purpose of the Company is to develop and operate a casino
entertainment complex in Black Hawk, Colorado, which is anticipated to open in
late 1998 or early 1999.
On August 20, 1997, the Company and Isle of Capri Capital Corp., a wholly
owned subsidiary of the Company that has no operations, assets or liabilities,
issued $75,000,000 of 13% First Mortgage notes (the "Notes") due 2004 in order
to finance the construction and development of a casino entertainment complex
in Black Hawk, CO.
The Operating Agreement ("the Agreement") signed April 25, 1997, provides
that the Company will continue until December 31, 2096, or until such date that
dissolution may occur. Pursuant to the Agreement, Casino America of Colorado
contributed cash and Blackhawk Gold contributed cash and land to the Company.
Casino America of Colorado, Inc. had an ownership interest of 59.2% and
Blackhawk Gold, Ltd. had an ownership interest of 40.8% at August 24, 1997.
Profits and losses of the Company will be allocated in proportion to their
ownership interests.
The preparation of financial statements in conformity with generally accepted
accounting principles necessarily 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 as well as revenues and expenses during the reporting period. Actual
amounts when ultimately realized could differ from those estimates.
Preopening costs
Preopening costs are initially capitalized and then expensed when the related
business commences operations. From Inception to date, the Company has been
developing its gaming complex in Black Hawk, and as such, all normal operating
costs have been capitalized as preopening costs.
Income Taxes
No provision for Federal or state income taxes is recorded in the Financial
Statements as income taxes are the responsibilities of the individual members.
Certain significant risks and uncertainties
Gaming regulation licensing. The Company's ability to conduct gaming
operations in the State of Colorado depends on the licensability or
qualification of the Company, Casino America, and Nevada Gold. Such licensing
and qualifications will be reviewed periodically by the gaming authorities in
Colorado.
Competition. The Black Hawk/Central City, Colorado market already has many
established casinos. The market is highly competitive and other development
projects are currently being planned.
Construction risks. Any construction project entails significant construction
risks, including, but not limited to, cost overruns, delays in receipt of
governmental approvals, shortages of materials or skilled labor, labor
disputes, unforeseen environmental or engineering problems, work stoppages,
fire and other natural disasters, construction scheduling problems and weather
interference, any of which, if it occurred, could delay construction or result
in substantial increases in costs to the Company.
F-7
<PAGE>
ISLE OF CAPRI BLACK HAWK L.L.C.
(DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
2. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost except for land contributed by
Blackhawk Gold, Ltd. which is stated at appraised value. Depreciation will be
computed, upon the commencement of gaming operations, using the straight-line
method over the estimated useful lives of the property and equipment.
3. OTHER ASSETS
Restricted cash. Represents cash proceeds from the Notes held in trust by
IBJ Schroder Bank and Trust in New York, as trustee. These funds are held in
three separate accounts (Construction Disbursement, Completion Reserve,
Interest Reserve) with usage restricted by the Indenture. The Construction
Disbursement Account, approximately $50.7 million, will be used for the
development, construction and opening of the casino entertainment complex. The
Completion Reserve Account, approximately $5.0 million, will be used in the
event these are insufficient funds in the Construction Disbursement Account to
complete the casino entertainment complex. The Interest Reserve Account,
approximately $14.1 million, will be used to pay the first three fixed
interest payments on the notes,
Deferred financing costs. These costs will be amortized over the life of the
bonds commencing on the date of issuance, August 20, 1997.
4. LONG-TERM DEBT
Long-term debt consists of $75,000,000 in 13.0% first mortgage notes with
contingent interest due August 31, 2004. The Notes were issued under an
indenture dated August 20, 1997, between the Company and Capital Corp. as co-
issuers. The notes accrue interest at the rate of 13.0% per annum, payable
semiannually on February 28 and August 31 of each year, commencing February
28, 1998. Additionally, contingent interest is payable on the notes on each
interest date, in an aggregate principal amount equal to 5% of the Company's
Consolidated Cash Flow, provided that no Contingent Interest shall be payable
prior to commencement to operations.
The Notes are redeemable at the option of the Company, in whole or in part,
at any time on or after August 1, 2001 at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest to the redemption date, if redeemed during the 12-month period
beginning on August 31 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001.......................... 106.5%
2002.......................... 103.2%
2003.......................... 100.0%
</TABLE>
Beginning with the first operating year after the Company begins gaming
operations, the Company will be required to offer to purchase, at a price of
101% of the aggregate principal amount thereof, the maximum principal amount
of the Notes that may be purchased with 50% of the Company's excess cash flow
(as defined).
Substantially all of the Company's assets are pledged as collateral for
long-term debt. At August 24, 1997, the Company was in compliance with all
debt covenants.
5. RELATED PARTY TRANSACTIONS
Completion Capital Commitment. Casino America has provided a Completion
Capital Commitment pursuant to which it has committed to contribute to the
Company up to $5.0 million in the event that such amounts are necessary to
cause the Company to commence operations on or before April 1, 1999, or if the
Company has not begun operating by such date.
Management Agreement. On April 25, 1997, the Company entered into a
Management Agreement (the "Management Agreement") with Casino America which in
exchange for a fee will manage the company. The management fee will be equal
to two percent of revenues (as defined in the Management Agreement), plus ten
percent of operating income, but not to exceed four percent of revenues. The
management fee will go into effect upon commencement of casino operations.
F-8
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE ISSUERS OR THE EXCHANGE AGENT. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY,
ANY OF THE NEW NOTES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... ii
Summary................................................................... 1
Risk Factors.............................................................. 12
Use of Proceeds........................................................... 25
Selected Financial Data................................................... 27
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 28
Business.................................................................. 30
Material Agreements....................................................... 39
Gaming and Liquor Regulatory Matters...................................... 46
Management................................................................ 52
Certain Transactions...................................................... 53
Principal Security Holders................................................ 54
The Exchange Offer........................................................ 55
Description of the New Notes.............................................. 64
Certain Federal Income Tax Considerations................................. 106
Plan of Distribution...................................................... 110
Legal Matters............................................................. 110
Independent Public Accountants............................................ 110
Index to Financial Statements............................................. F-1
</TABLE>
$75,000,000
LOGO
ISLE OF CAPRI BLACK HAWK L.L.C.
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
13% SERIES B FIRST MORTGAGE NOTES DUE 2004
WITH CONTINGENT INTEREST
PROSPECTUS
, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OTHERS
(a) The Operating Agreement requires the Company to indemnify each member,
manager, employee or agent with respect to any proceeding asserted against
such member, manager, employee or agent due to his or its status as such other
than for certain violations of the Operating Agreement.
(b) Sections 7-109-102 and 7-109-107 of the Colorado Business Corporation
Act ("CBCA") permit indemnification of directors, officers, employees,
fiduciaries and agents of Capital under certain conditions and subject to
certain limitations. The indemnity may be granted if the individual incurred
liability in a proceeding because he was a director, officer, employee,
fiduciary or agent of Capital and (a) acted in good faith, (b) reasonably
believed that his conduct was in Capital's best interest and (c) in the case
of criminal proceeding, had no reasonable cause to believe that his conduct
was unlawful. No indemnity is permitted if the individual is adjudged liable
to Capital. Capital is not permitted under the CBCA to indemnify any
individual unless authorized in the specific case after a determination by a
disinterested quorum of the board, by independent legal counsel selected by a
disinterested quorum of the board or by the shareholders. Notwithstanding, the
foregoing, a director, officer, employee, fiduciary or agent of Capital is
entitled to indemnification if he is wholly successful, on the merits or
otherwise, in the defense if any proceeding to which he is made party.
(c) The Purchase Agreement and Registration Rights Agreement (the forms of
which are included as exhibits to this registration statement) provide for
indemnification under certain circumstances of the registrants and their
directors and officers by the Initial Purchaser and the holders of the Notes.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
The exhibits filed as part of this registration statement are as follows;
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
1. Purchase Agreement among Isle of Capri Black Hawk L.L.C., Isle of
Capri Black Hawk Capital Corp. and Jefferies & Company, Inc.
3.1 Articles of Organization of Isle of Capri Black Hawk L.L.C.
3.2 Articles of Incorporation of Isle of Capri Black Hawk Capital Corp.
3.3 Bylaws of Isle of Capri Black Hawk Capital Corp.
4.1 Indenture among Isle of Capri Black Hawk L.L.C., Isle of Capri Black
Hawk Capital Corp. and IBJ Schroder Bank & Trust Company, as Trust-
ee.
4.2 Form of 13% Series A First Mortgage Note due 2004 With Contingent
Interest.
4.3 Cash Collateral and Disbursement Agreement among IBJ Schroder Bank &
Trust Company, as the Disbursement Agent, IBJ Schroder Bank & Trust
Company, as the Trustee, CRSS Constructors, Inc., as the Independent
Construction Consultant, Isle of Capri Black Hawk L.L.C., as the
Company and an Issuer and Isle of Capri Black Hawk Capital Corp., as
Co-Issuer.
4.4 Registration Rights Agreement among Isle of Capri Black Hawk L.L.C.,
Isle of Capri Black Hawk Capital Corp., and Jefferies & Company,
Inc.
4.5 Deed Of Trust To Public Trustee, Security Agreement, Fixture Filing
and Assignment of Rents, Leases and Leasehold Interests.
4.6 Assignment of Rents, Leases and Leasehold Interests.
4.7 Security Agreement.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
4.8 Issuer Pledge Agreement.
4.9 Collateral Assignment.
4.10 Pledge and Assignment.
4.11 Consent to Assignment of Construction Agreement.
4.12 Consent to Assignment of Management Agreement.
4.13 Consent to Assignment of License Agreement.
4.14 Manager Subordination Agreement.
4.15 Environmental Indemnity.
4.16 Assignment of Trademark.
4.17 Assignment of Copyright.
4.18 Assignment of Patent.
4.19 Completion Capital Commitment.
* 5 Opinion of Mayer, Brown & Platt
10.1 Operating Agreement
10.2 Members Agreement
10.3 Management Agreement
10.4 License Agreement
10.5 Land Purchase Contract
*10.6 Exchange Commitment Letter
*10.7 Design/Build Agreement
*10.8 Subdivision Agreement
21 List of Subsidiaries
*23.1 Consent of Mayer, Brown & Platt (included in opinion filed as Ex-
hibit 5)
23.2 Consent of Ernst & Young LLP
24 Powers of Attorney (included as part of the signature page hereof).
*25 Statement of Eligibility of Trustee
*99 Form of Letter of Transmittal
</TABLE>
- --------
*To be filed by amendment.
(b) Financial Statement Schedules:
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission have been omitted
because they are not required, amounts which would have otherwise be required
to be shown with respect to any item are not material, are inapplicable or the
required information has already been provided elsewhere in the registration
statement.
II-2
<PAGE>
ITEM 22. UNDERTAKINGS
(a) The undersigned registrants hereby undertake:
(1) 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 of 1933;
(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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective 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;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) 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 the
registrant of expenses incurred or paid by a director, officer or controlling
person of the 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 will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of indemnification by it is against public policy
as expressed in the Act and will be governed by the final adjudication of such
issue
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 437(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(d) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4,10(b), 11 or 13 of this form, within one business day of
II-3
<PAGE>
receipt of such request, and to send the incorporated documents by first class
mail to other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(f) The registrant has not entered into any arrangement or understanding
with any person to distribute the securities to be received in the Exchange
Offer and to the best of the registrant's information and belief, each person
participating in the Exchange Offer is acquiring the securities in its
ordinary course of business and has no arrangement or understanding with any
person to participate in the distribution of the securities to be received in
the Exchange Offer. In this regard, the registrant will make each person
participating in the Exchange Offer aware (through the Exchange Offer
Prospectus or otherwise) that if the Exchange Offer is being registered for
the purpose of secondary resales, any securityholder using the exchange offer
to participate in a distribution of the securities to be acquired in the
registered exchange offer (1) could not rely on the staff position enunciated
in Exxon Capital Holdings Corporation (available April 13, 1989) or similar
letters and (2) must comply with registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction. The registrant acknowledges that such a secondary resale
transaction should be covered by an effective registration statement
containing the selling securityholder information required by Item 507 of
Regulation S-K.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF LAS
VEGAS, STATE OF NEVADA, ON OCTOBER 14, 1997.
Isle of Capri Black Hawk L.L.C. Isle of Capri Black Hawk Capital
Corp.
/s/ John M. Gallaway
By: _______________________________ /s/ John M. Gallaway
John M. Gallaway By: _________________________________
President and Chief Operating John M. Gallaway
Officer President and Chief
Operating Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints John M. Gallaway, his true and lawful attorney-
in-fact and agent, with full power of substitution and resubstitution, for him
and in his name, place and stead, in any and all capabilities, to sign any and
all amendments (including post-effective amendments) to this registration
statement, and to file the same, with all exhibits thereto, and any and all
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full power and
authority to do and perform any and all acts and things requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent, or his substitute or nominee, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons in the
capacities indicated on the dates indicated.
SIGNATURE TITLE DATE
/s/ Bernard Goldstein Chief Executive October 14,
- ------------------------------------- Officer of the 1997
BERNARD GOLDSTEIN Company and of
Capital
/s/ John M. Gallaway President and Chief October 14,
- ------------------------------------- Operating Officer 1997
JOHN M. GALLAWAY of the Company and
of Capital; Manager
of the Company;
Director of Capital
/s/ Allan B. Solomon Executive Vice October 14,
- ------------------------------------- President, General 1997
ALLAN B. SOLOMON Counsel and
Secretary of the
Company and of
Capital; Manager of
the Company;
Director of Capital
/s/ H. Thomas Winn Vice President of October 16,
- ------------------------------------- the Company and of 1997
H. THOMAS WINN Capital; Manager of
the Company;
Director of Capital
/s/ Rexford A. Yeisley Vice President, October 14,
- ------------------------------------- Chief Financial 1997
REXFORD A. YEISLEY Officer, Treasurer
and Assistant
Secretary of the
Company and of
Capital
/s/ Timothy M. Hinkley Senior Vice October 14,
- ------------------------------------- President of 1997
TIMOTHY M. HINKLEY Operations of the
Company and of
Capital
II-5
<PAGE>
EXHIBIT 1
ISLE OF CAPRI BLACK HAWK L.L.C.
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
$75,000,000
13% Series A First Mortgage Notes due 2004 With Contingent Interest
PURCHASE AGREEMENT
August 14, 1997
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard, 10th Floor
Los Angeles, California 90025
Ladies and Gentlemen:
Isle of Capri Black Hawk L.L.C., a Colorado limited liability company (the
"Company"), and Isle of Capri Black Hawk Capital Corp., a Colorado corporation
-------
and a wholly owned subsidiary of the Company ("Capital" and together with the
-------
Company, the "Issuers"), propose to issue and sell to Jefferies & Company, Inc.
(the "Initial Purchaser") an aggregate of $75.0 million principal amount of
their 13% Series A First Mortgage Notes due 2004 With Contingent Interest (the
"Series A Notes"), subject to the terms and conditions set forth herein. The
--------------
Series A Notes and the Series B Notes (as defined below) (the Series A Notes and
the Series B Notes being collectively referred to herein as the "Notes") will be
-----
issued pursuant to an Indenture dated as of August 20, 1997 (the "Indenture"),
---------
among the Issuers and IBJ Schroder Bank & Trust Company, as trustee. The
obligations of the Issuers under the Notes will be secured by security interests
in or pledges of (the "Security Interests") certain assets (the "Collateral") as
------------------ ----------
set forth in the Indenture and the Collateral Documents. Capitalized terms used
but not defined herein shall have the meanings ascribed thereto in the
Indenture.
1. OFFERING CIRCULAR.
The Series A Notes will be offered and sold to the Initial Purchaser
pursuant to one or more exemptions from the registration requirements under the
Securities Act of 1933, as amended (the "Act"). The Issuers have prepared a
---
preliminary offering circular dated July 30, 1997 (the "Preliminary Offering
--------------------
Circular"), and a final offering circular dated August 14, 1997 (the "Final
- -------- -----
Offering Circular" and, together with the Preliminary Offering Circular, the
- -----------------
"Offering Circular"), relating to the Series A Notes.
-----------------
Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Indenture, the Series A Notes (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
<PAGE>
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE THAT IS TWO
YEARS (OR SUCH SHORTER PERIOD THAT MAY HEREAFTER BE PROVIDED UNDER RULE
144(k) AS PERMITTING RESALES BY NON-AFFILIATES OF RESTRICTED SECURITIES
WITHOUT RESTRICTION) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND
THE LAST DATE ON WHICH THE ISSUERS OR ANY AFFILIATE OF THE ISSUERS WAS THE
OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) EXCEPT (A) TO
THE ISSUERS, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES
ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO
A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501 (A)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT THAT IS PURCHASING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR,"
FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR
(F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUERS' AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND
IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM
APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO
THE TRUSTEE."
2
<PAGE>
2. AGREEMENTS TO SELL AND PURCHASE.
On the basis of the representations, warranties and covenants contained in
this Purchase Agreement (this "Agreement"), and subject to its terms and
---------
conditions, the Issuers agree to issue and sell to the Initial Purchaser and the
Initial Purchaser agrees to purchase from the Issuers, an aggregate principal
amount of $75.0 million of Series A Notes at a purchase price equal to 96.0% of
the principal amount thereof (the "Purchase Price").
--------------
3. TERMS OF OFFERING.
The Initial Purchaser has advised the Issuers that the Initial Purchaser
will make offers (the "Exempt Resales") of the Series A Notes purchased
--------------
hereunder on the terms set forth in the Offering Circular, as amended or
supplemented, solely to (i) persons whom the Initial Purchaser reasonably
believes to be "qualified institutional buyers" as defined in Rule 144A under
the Act ("QIBs") and (ii) a limited number of other institutional "accredited
----
investors," as defined in Rule 501(a) (1), (2), (3) or (7) under the Act, that
make certain representations and agreements to the Issuers (each, an "Accredited
----------
Institution" and, together with the QIBs, the "Eligible Purchasers"). The
- ----------- -------------------
Initial Purchaser will offer the Series A Notes to Eligible Purchasers initially
at a price equal to 100% of the principal amount thereof. Such price may be
changed at any time without notice.
Holders (including subsequent transferees) of the Series A Notes will have
the registration rights set forth in the Registration Rights Agreement (the
"Registration Rights Agreement") to be dated the Closing Date (as defined
-----------------------------
below), in substantially the form of Exhibit A hereto, for so long as such
Series A Notes constitute "Transfer Restricted Securities" (as defined in the
------------------------------
Registration Rights Agreement). Pursuant to the Registration Rights Agreement,
the Issuers will agree to file with the Securities and Exchange Commission (the
"Commission") under the circumstances set forth therein, (i) a registration
----------
statement under the Act (the "Exchange Offer Registration Statement") relating
-------------------------------------
to the Issuers' 13% Series B First Mortgage Notes due 2004 With Contingent
Interest (the "Series B Notes") to be offered in exchange for the Series A Notes
--------------
and/or (ii) under certain circumstances, a shelf registration statement pursuant
to Rule 415 under the Act (the "Shelf Registration Statement" and, together with
----------------------------
the Exchange Offer Registration Statement, the "Registration Statements")
-----------------------
relating to the resale by certain holders of the Series A Notes, and to use
their best efforts to cause such Registration Statements to be declared and
remain effective and usable for the periods specified in the Registration Rights
Agreement and to consummate the Exchange Offer.
The Notes will be secured obligations and the Issuers will enter into a
deed of trust, a security agreement, a collateral assignment, a cash collateral
and disbursement agreement, all certificates to be delivered in connection
therewith, a pledge and assignment, issuer pledge agreement, UCC-1 financing
statements, fixture filings, environmental indemnity, assignment of patents,
assignment of trademarks, assignment of copyrights, consent to assignment of
licensing agreement, consent to assignment of management agreement, consent to
assignment of construction contract, manager subordination agreement, loss payee
and additional insured endorsements, endorsements of any performance or payment
bonds, waivers of liens, consents to
3
<PAGE>
assignments and certain other collateral agreements (collectively the
"Collateral Documents") dated on or prior to the Closing Date in favor of the
--------------------
Trustee that will provide for the grant of Security Interests in the Collateral
to the Trustee for the benefit of the holders of the Notes. The Security
Interests will secure the payment and performance when due of all the respective
obligations of the Issuers under the Notes, the Indenture and the Collateral
Documents.
The following documents are hereinafter collectively referred to as
"Operative Documents": (i) this Agreement, (ii) the Indenture, (iii) the Notes,
-------------------
(iv) the Registration Rights Agreement, (v) the Collateral Documents, (vi) the
Design/Build Agreement dated as of July 22, 1997 (the "Design/Build Agreement"),
----------------------
between the Company and Haselden Construction, Inc., (vii) the Amended and
Restated Management Agreement dated as of July 29, 1997 (the "Management
----------
Agreement"), between the Company and Casino America, Inc. ("Casino America"), as
- --------- --------------
Manager, (viii) the Subdivision Agreement (the "Subdivision Agreement"), to be
---------------------
executed by the Company and the city of Black Hawk, Colorado substantially in
the form in which it exists on the Closing Date and (ix) the License Agreement
to be dated as of the Closing Date between the Company and Casino America.
The following documents are hereinafter collectively referred to as
"Transaction Documents": (i) the Operative Documents, (ii) the Completion
---------------------
Capital Commitment (the "Completion Capital Commitment") to be executed on the
-----------------------------
Closing Date by Casino America in favor of the Trustee, (iii) the Amended and
Restated Operating Agreement (the "Operating Agreement") of the Company dated as
-------------------
of July 29, 1997, between Casino America of Colorado, Inc. ("Casino Colorado")
---------------
and Blackhawk Gold, Ltd. ("Blackhawk Gold"), (iv) the Amended and Restated
--------------
Members Agreement dated as of July 29, 1997 (the "Exchange Commitment Letter"),
--------------------------
between Casino Colorado and Blackhawk Gold, (v) the Manager Subordination
Agreement to be executed on the Closing Date by Casino America in favor of the
Trustee, (vi) the Land Purchase Agreement dated June 5, 1997 (the "Land Purchase
-------------
Agreement"), between Casino America and Roman Entertainment Corporation of
- ---------
Colorado and (vii) the Exchange Commitment Letter dated June 5, 1997, between
Nevada Gold & Casinos, Inc. ("Nevada Gold") and the city of Black Hawk,
-----------
Colorado,
4. DELIVERY AND PAYMENT.
(a) Delivery of, and payment of the Purchase Price for, the Series A Notes
(the "Closing") shall be made at 10:00 a.m., New York City time, on August 20,
-------
1997 (the "Closing Date"), at the offices of Latham & Watkins, 885 Third Avenue,
------------
New York, New York 10022, or such other time or place as the Initial Purchaser
and the Issuers shall designate. Delivery of certain documents in connection
with the Closing shall be made on the Closing Date at the offices of Latham &
Watkins, 633 West Fifth Street, Los Angeles, California 90071.
(b) One or more of the Series A Notes in definitive global form,
registered in the name of Cede & Co., as nominee of the Depository Trust Company
("DTC"), having an aggregate principal amount corresponding to the aggregate
---
principal amount of the Series A Notes sold pursuant to Exempt Resales to QIBs
(collectively, the "Global Note") and if required one or more certificates
-----------
representing Series A Notes ("Definitive Notes") in definitive form,
----------------
4
<PAGE>
registered in such names and denominations as the Initial Purchaser so requests,
in an aggregate amount corresponding to the aggregate principal amount of Series
A Notes sold pursuant to Exempt Resales to Accredited Institutions, shall be
delivered by the Issuers to the Initial Purchaser (or as the Initial Purchaser
directs) in each case with any transfer taxes thereon duly paid by the Issuers
against payment by the Initial Purchaser of the Purchase Price therefor by wire
transfer in same day funds to the order of the Company, provided that the
Company shall give at least two business days' prior written notice of the
information required to effect such wire transfer. The Global Note and
Definitive Notes shall be made available to the Initial Purchaser for inspection
not later than 12:30 p.m., New York City time, on the business day immediately
preceding the Closing Date.
5. AGREEMENTS OF THE ISSUERS.
Each of the Issuers, jointly and severally, hereby agrees with the Initial
Purchaser as follows:
(a) To advise the Initial Purchaser promptly and, if requested by the
Initial Purchaser, confirm such advice in writing, (i) of the issuance by any
state securities commission of any stop order suspending the qualification or
exemption from qualification of any Series A Notes for offering or sale in any
jurisdiction designated by the Initial Purchaser pursuant to Section 5(e)
hereof, or the initiation of any proceeding by any state securities commission
or other federal or state regulatory authority for such purpose and (ii) of the
happening of any event during the period referred to in Section 5(c) hereof that
makes any statement of a material fact made in the Final Offering Circular
untrue or that requires the making of any additions to or changes in the Final
Offering Circular in order to make the statements therein in light of the
circumstances in which they were made not misleading. The Issuers shall use
their best efforts to prevent the issuance of any stop order or order suspending
the qualification or exemption of any of Series A Notes under any state
securities or Blue Sky laws, and if at any time any state securities commission
or other federal or state regulatory authority shall issue an order suspending
the qualification or exemption of any Series A Notes under any state securities
or Blue Sky laws, the Issuers shall use their best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchaser and those persons identified by the
Initial Purchaser to the Issuers as many copies of the Preliminary Offering
Circular and the Final Offering Circular, and any amendments or supplements
thereto, as the Initial Purchaser may reasonably request. Subject to the Initial
Purchaser's compliance with its representations and warranties and agreements
set forth in Section 9 hereof, the Issuers consent to the use of the Final
Offering Circular, and any amendments and supplements thereto, by the Initial
Purchaser in connection with Exempt Resales.
(c) During such period as in the opinion of counsel for the Initial
Purchaser an Offering Circular is required by law to be delivered in connection
with Exempt Resales by the Initial Purchaser and in connection with market-
making activities of the Initial Purchaser for so long as any Series A Notes are
outstanding, (i) not to make any amendment or supplement to the
5
<PAGE>
Offering Circular of which the Initial Purchaser shall not previously have been
advised or to which the Initial Purchaser shall reasonably object after being so
advised (unless in the opinion of counsel to the Company, such amendment or
supplement is required by law) and (ii) to prepare promptly upon the Initial
Purchaser's reasonable request, any amendment or supplement to the Offering
Circular which may be necessary in connection with such Exempt Resales or such
market-making activities.
(d) If, during the period referred to in Section 5(c) above, any event
shall occur or condition shall exist as a result of which, in the judgment of
the Issuers or in the reasonable judgment of counsel to the Initial Purchaser,
it becomes necessary to amend or supplement the Offering Circular in order to
comply with applicable law or to make the statements therein, in the light of
the circumstances when such Offering Circular is delivered to an Eligible
Purchaser, not materially misleading, forthwith to notify the Initial Purchaser
and to prepare an appropriate amendment or supplement to such Offering Circular
so that the Offering Circular complies with applicable law or so that the
statements therein, as so amended or supplemented, will not, in the light of the
circumstances when the Offering Circular is so delivered, be materially
misleading, and to furnish to the Initial Purchaser and such other persons as
the Initial Purchaser may designate such number of copies thereof as the Initial
Purchaser may reasonably request.
(e) To cooperate with the Initial Purchaser and counsel to the Initial
Purchaser in connection with the registration or qualification of the Series A
Notes for offer and sale to the Initial Purchaser and pursuant to Exempt Resales
under the securities or Blue Sky laws of such jurisdictions as the Initial
Purchaser may request and to continue such qualification in effect so long as
required for Exempt Resales and to file such consents to service of process or
other documents as may be necessary in order to effect such registration or
qualification; provided, however, that neither of the Issuers shall be required
in connection therewith to register or qualify as a foreign corporation in any
jurisdiction in which it is not now so qualified or to take any action that
would subject it to general consent to service of process or taxation other than
as to matters and transactions relating to the Preliminary Offering Circular,
the Final Offering Circular or Exempt Resales, in any jurisdiction in which it
is not now so subject.
(f) To apply the proceeds from the sale of the Series A Notes as set forth
under the caption "Use of Proceeds" in the Offering Circular and to comply with
the provisions of the Collateral Documents and the Manager Subordination
Agreement concerning disbursement of funds, subject to such procedural
modifications that are permitted under the Cash Collateral and Disbursement
Agreement.
(g) So long as any Notes are outstanding and prior to the consummation of
the Exchange Offer, (i) to mail and make generally available as soon as
practicable after the end of each fiscal year to the record holders of the Notes
a financial report of the Issuers and their subsidiaries on a consolidated basis
(and similar financial report of all unconsolidated subsidiaries, if any), all
such financial reports to include a consolidated balance sheet, a consolidated
statement of operations, a consolidated statement of cash flows and a
consolidated statement of members' or shareholders' equity as of the end of and
for such fiscal year, together with comparable information as of the end of and
for the preceding year, certified by the Issuers'
6
<PAGE>
independent public accountants and (ii) to mail and make generally available as
soon as practicable after the end of each quarterly period (beginning with
respect to the fiscal quarter ending on October 26, 1997) (except for the last
quarterly period of each fiscal year) to such holders, a consolidated balance
sheet, a consolidated statement of operations and a consolidated statement of
cash flows (and similar financial reports of all unconsolidated subsidiaries, if
any) as of the end of and for such period, and for the period from the beginning
of such year to the close of such quarterly period, together with comparable
information for the corresponding periods of the preceding year.
(h) So long as the Notes are outstanding, to furnish to the Initial
Purchaser as soon as available copies of all reports or other communications
furnished to or filed with the Commission or any national securities exchange on
which any class of securities of the Issuers are listed and such other publicly
available information concerning the Issuers and/or its subsidiaries as the
Initial Purchaser may reasonably request.
(i) So long as any of the Series A Notes remain outstanding and during any
period in which the Issuers are not subject to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), to make
------------
available to any holder of Series A Notes in connection with any sale thereof
and any prospective purchaser of such Series A Notes from such holder, the
information ("Rule 144A Information") required by Rule 144A(d)(4) under the Act.
---------------------
(j) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, and except as provided in the
following paragraph, to pay or cause to be paid all expenses incident to the
performance of the obligations of the Issuers under this Agreement, including:
(i) the fees, disbursements and expenses of counsel to the Issuers and
accountants of the Issuers in connection with the sale and delivery of the
Series A Notes to the Initial Purchaser and pursuant to Exempt Resales, and all
other fees or expenses in connection with the preparation, printing, filing and
distribution of the Preliminary Offering Circular, the Final Offering Circular
and all amendments and supplements to any of the foregoing (including financial
statements) specified in Section 5(c) and 5(d) prior to or during the period
specified in Section 5(c), including the mailing and delivering of copies
thereof to the Initial Purchaser and persons designated by it in the quantities
specified herein, (ii) all costs and expenses related to the transfer and
delivery of the Series A Notes to the Initial Purchaser and pursuant to Exempt
Resales, including any transfer or other taxes payable thereon, (iii) all costs
of printing or producing this Agreement, the other Operative Documents and any
other agreements or documents in connection with the offering, purchase, sale or
delivery of the Series A Notes, (iv) the performance by the Issuers of their
other obligations under this Agreement and the other Operable Documents, (v) all
expenses in connection with the registration or qualification of the Series A
Notes for offer and sale under the securities or Blue Sky laws of the several
states and all costs of printing or producing any preliminary and supplemental
Blue Sky memoranda in connection therewith (including the filing fees and
reasonable fees and disbursements of counsel for the Initial Purchaser in
connection with such registration or qualification and memoranda relating
thereto), (vi) the cost of printing any certificates representing the Series A
Notes, (vii) all expenses and listing fees in connection with the application
for quotation of the Series A Notes on the Private Offerings, Resales and
Trading through Automated Linkages ("PORTAL") system
7
<PAGE>
of the National Association of Securities Dealers, Inc. ("NASD"), (viii) the
----
fees and expenses of the Trustee and the Trustee's counsel in connection with
the Indenture and the Notes, (ix) the costs and charges of any transfer agent,
registrar and/or depositary (including DTC), (x) any fees charged by rating
agencies for the rating of the Notes, (xi) all costs and expenses of the
Exchange Offer and any Registration Statement, as set forth in the Registration
Rights Agreement, (xii) the fees and expenses of the Disbursement Agent (as
defined in the Indenture) pursuant to the Cash Collateral and Disbursement
Agreement, (xiii) reasonable "roadshow" travel and other reasonable expenses
incurred in connection with the marketing and sale of the Notes, (xiv) if the
sale of the Notes is consummated, reimbursement of the first $75,000 of the
Initial Purchaser's reasonable disbursements and out-of-pocket expenses incurred
in connection with the transactions contemplated by this Agreement, with the
exception of the fees and disbursements of counsel for the Initial Purchaser,
which shall be borne solely by the Initial Purchaser and (xv) and all other
costs and expenses incident to the performance of the obligations of the Issuers
hereunder for which provision is not otherwise made in this Section.
(k) To use its best efforts to effect the inclusion of the Series A Notes
in PORTAL and to maintain the listing of the Series A Notes on PORTAL for so
long as any Series A Notes are outstanding.
(l) To obtain the approval of DTC for "book-entry" transfer of the Notes
(other than Definitive Notes), and to comply with all of its agreements set
forth in the representation letters of the Issuers to DTC relating to the
approval of the Notes by DTC for "book-entry" transfer.
(m) During the period beginning on the date hereof and continuing to and
including the Closing Date, not to offer, sell, contract to sell or otherwise
transfer or dispose of any debt securities of the Issuers or any warrants,
rights or options to purchase or otherwise acquire debt securities of the
Issuers substantially similar to the Notes (other than the Notes), without the
prior written consent of the Initial Purchaser.
(n) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Series A Notes to the Initial Purchaser or
pursuant to Exempt Resales in a manner that would require the registration of
any such sale of the Series A Notes under the Act.
(o) Not to voluntarily claim, and to actively resist any attempts to
claim, the benefit of any usury laws against the holders of any Notes.
(p) To cause the Exchange Offer to be made in the appropriate form to
permit the Series B Notes registered pursuant to the Act to be offered in
exchange for the Series A Notes and to comply with all applicable federal and
state securities laws in connection with the Exchange Offer.
(q) To comply with all of its agreements set forth in the Registration
Rights Agreement.
8
<PAGE>
(r) To diligently seek the issuance of any Authorization (as defined
herein) which is necessary for the Company to develop, own and operate the Isle-
Black Hawk (as defined in the Indenture) to be issued, including without
limitation, any necessary Authorization to be issued by any Gaming Authority or
Liquor Licensing Authority.
(s) To diligently seek the execution and delivery of the Subdivision
Agreement by each of the parties thereto substantially in the form in which it
exists on the Closing Date.
(t) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by it prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the
Series A Notes.
6. REPRESENTATIONS AND WARRANTIES OF THE ISSUERS
As of the date hereof (except as otherwise provided), the Issuers, jointly
and severally, represent and warrant to, and agree with, the Initial Purchaser
that:
(a) The Preliminary Offering Circular as of its date did not, and the
Final Offering Circular as of its date does not and as of the Closing Date will
not, and any supplement or amendment to either of them will not, contain any
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, except that the
representations and warranties contained in this paragraph (a), (i) shall not
apply to statements in or omissions from the Preliminary Offering Circular or
the Final Offering Circular (or any supplement or amendment thereto) based upon
information relating to the Initial Purchaser furnished to the Issuers by the
Initial Purchaser expressly for use therein as set forth in Section 10(b) hereof
and (ii) shall not apply to statements in or omissions from the Preliminary
Offering Circular that relate to the inclusion of contingent interest and
pricing information only contained in the Final Offering Circular. No stop order
preventing the use of the Preliminary Offering Circular or the Final Offering
Circular, or any amendment or supplement thereto, or any order asserting that
any of the transactions contemplated by this Agreement (other than those
contemplated by the Registration Rights Agreement) are subject to the
registration requirements of the Act, has been issued and no proceeding for that
purpose has commenced or is pending or, to the knowledge of the Issuers, is
contemplated.
(b) Each of the Issuers is duly organized, validly existing and in good
standing under the laws of the State of Colorado and, except as otherwise
described in the Preliminary Offering Circular or the Final Offering Circular,
has all necessary power and authority to carry on its business as described in
the Preliminary Offering Circular and the Final Offering Circular and to own,
lease and operate its properties, and is duly qualified and is in good standing
to do business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification.
(c) All outstanding membership interests of the Company have been duly
authorized and validly issued and are fully paid, non-assessable and, except as
otherwise provided in Article 13 of the Operating Agreement and Section 2.4 and
Articles 3 and 7 of the Members Agreement,
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are not subject to any preemptive or similar rights. The table under the caption
"Capitalization" in the Offering Circular, including the footnotes thereto,
presents fairly, as of its date, (i) the capitalization of the Company and (ii)
the "as adjusted" capitalization of the Company on a consolidated basis after
giving effect to the Capitalization Transactions (as defined in the Offering
Circular), the organization of Capital, the issuance of the Series A Notes and
the application by the Company of the net proceeds therefrom. Capital is the
only subsidiary of the Company.
(d) All outstanding shares of capital stock of Capital have been duly
authorized and validly issued and are fully paid, non-assessable and not subject
to any preemptive or similar rights and are directly owned by the Company free
and clear of any security interest, claim, lien, encumbrance or adverse interest
of any nature (each a "Lien"). Capital has no subsidiaries.
----
(e) Except as otherwise described in Article 13 of the Operating Agreement
or Section 2.4 or Articles 3 and 7 of the Members Agreement, neither of the
Issuers has any outstanding options to purchase, or any preemptive rights or
other rights to subscribe for or purchase, any securities or obligations
convertible into, or any contracts or commitments to issue or sell, any of its
equity interests or any such options, rights, convertible securities or
obligations.
(f) This Agreement has been duly authorized, executed and delivered by
each of the Issuers and is a valid and binding agreement of each of the Issuers,
enforceable against each of them in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally, (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability and (iii) limited by securities laws prohibiting or
limiting the availability of, and public policy against, indemnification or
contribution.
(g) The Indenture has been duly authorized by each of the Issuers and, on
the Closing Date, will have been validly executed and delivered by each of the
Issuers. When the Indenture has been duly executed and delivered by each of the
Issuers, (i) the Indenture will be a valid and binding agreement of each of the
Issuers, enforceable against each of them in accordance with its terms except as
(A) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (B) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability and (ii) will conform, in all
material respects, to the description thereof contained in the Final Offering
Circular. On the Closing Date, the Indenture will conform, in all material
respects, to the requirements of the Trust Indenture Act of 1939, as amended
(the "TIA" or "Trust Indenture Act"), and the rules and regulations of the
--- -------------------
Commission applicable to an indenture which is qualified thereunder.
(h) The Series A Notes have been duly authorized and, on the Closing Date,
will have been validly executed and delivered by each of the Issuers. When the
Series A Notes have been issued, executed and authenticated in accordance with
the provisions of the Indenture and delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement, the Series A Notes
will be entitled to the benefits of the Indenture and will be valid and binding
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<PAGE>
obligations of the Issuers, enforceable against each of them in accordance with
their terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability. On the Closing Date,
the Series A Notes will conform, in all material respects, to the description
thereof contained in the Final Offering Circular.
(i) The Series B Notes have been duly authorized by each of the Issuers.
When the Series B Notes are issued, executed and authenticated in accordance
with the terms of the Exchange Offer and the Indenture, the Series B Notes, upon
delivery to the Company of the applicable Series A Notes in exchange therefor,
will be entitled to the benefits of the Indenture and will be the valid and
binding obligations of each of the Issuers, enforceable against each of them in
accordance with their terms, except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability.
(j) When issued, the Notes will rank senior in right of payment with all
of the Issuers' other unsubordinated indebtedness. As of the Closing Date, after
giving effect to the Capitalization Transactions, the Notes will be the only
outstanding Indebtedness of the Issuers.
(k) The Registration Rights Agreement has been duly authorized by each of
the Issuers and, on the Closing Date, will have been duly executed and delivered
by each of the Issuers. When the Registration Rights Agreement has been duly
executed and delivered, the Registration Rights Agreement will be a valid and
binding agreement of each of the Issuers, enforceable against each of them in
accordance with its terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally, (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability and
(iii) limited by securities laws prohibiting or limiting the availability of,
and public policy against, indemnification or contribution. On the Closing Date,
the Registration Rights Agreement will conform, in all material respects, to the
description thereof contained in the Offering Circular.
(l) Each of the Collateral Documents to which either of the Issuers is a
party has been duly authorized by each of the Issuers, as applicable, and, on
the Closing Date, will have been duly executed and delivered by each of the
Issuers, as applicable. When each such Collateral Document has been duly
executed and delivered, each such Collateral Document will be a valid and
binding agreement of the Issuer that is a party thereto, as applicable,
enforceable against each of them, as applicable, in accordance with its terms
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. On the Closing Date, each of the
Collateral Documents will conform, in all material respects, to the description
thereof contained in the Offering Circular.
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<PAGE>
(m) Each of the Management Agreement and the Design/Build Agreement has
been duly authorized, executed and delivered by the Company and is a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability. On Closing Date, each
of the Management Agreement and the Design/Build Agreement will conform, to the
description thereof contained in the Offering Circular.
(n) The License Agreement has been duly authorized by the Company and, on
the Closing Date, will have been duly executed and delivered by the Company.
When the License Agreement has been duly executed and delivered, it will be a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability. On the
Closing Date, the License Agreement will conform, to the description thereof
contained in the Offering Circular.
(o) The Subdivision Agreement has been duly authorized by the Company and,
upon due execution and delivery by the Company and the city of Black Hawk, will
be a valid and binding agreement of the Company in accordance with its terms,
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. Upon its execution and delivery,
the Subdivision Agreement will conform, in all material respects, to the
description thereof contained in the Offering Circular.
(p) The execution, delivery and performance of this Agreement and the
other Operative Documents, compliance by each of the Issuers with all provisions
hereof and thereof and the consummation of the transactions contemplated hereby
and thereby do not and will not (i) require any consent, approval, authorization
or other order of, or qualification with, any court or governmental body or
agency (except such as may be required under the securities or Blue Sky laws of
the various states), (ii) conflict with or constitute a breach of any of the
terms or provisions of, or a default under, the Operating Agreement or the
charter or bylaws of Capital, or any indenture, loan agreement, mortgage, lease
or other agreement or instrument that is material to either of the Issuers, to
which either of the Issuers is a party or by which either of the Issuers or
their respective property is bound, (iii) violate or conflict with any
applicable law or any rule, regulation, judgment, order or decree of any court
or any governmental body or agency having jurisdiction over either of the
Issuers or their respective property in any material respect, (iv) result in the
imposition or creation of (or the obligation to create or impose) a Lien (except
for Permitted Liens) under, any agreement or instrument to which either of the
Issuers is a party or by which either of the Issuers or their respective
property is bound or (v) result in the termination or revocation of any
Authorization of the either of the Issuers or result in any other impairment of
the rights of the holder of any such Authorization.
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(q) The Company is not in violation of the Operating Agreement and Capital
is not in violation of its charter or bylaws and neither of them is in default
in the performance of any obligation, agreement, covenant or condition contained
in any indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to either of them to which either of them is a party
or by which either of them or their respective property is bound. There does not
exist any state of facts which constitutes an event of default on the part of
the Issuers as defined in such documents or which, with notice or lapse of time
or both, would constitute such an event of default.
(r) There are no legal or governmental proceedings pending or. to the
knowledge of the Issuers, threatened to which either of the Issuers is or could
be a party or to which any of their respective property is or could be subject,
which might (i) result, singly or in the aggregate, in a material adverse effect
on the business, prospects, financial condition or results of operations of the
Issuers, (ii) interfere with or adversely affect the issuance or marketability
of the Notes or (iii) draw into question the validity of this Agreement or the
other Operative Documents (a "Material Adverse Effect")
-----------------------
(s) Neither of the Issuers has violated any foreign, federal, state or
local law or regulation relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws") or any provisions of the Employee Retirement
------------------
Income Security Act of 1974, as amended ("ERISA"), or the rules and regulations
-----
promulgated thereunder, except for such violations which, singly or in the
aggregate, would not have a Material Adverse Effect.
(t) Other than as disclosed in the Offering Circular, 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
either of the Issuers 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 Environmental Law) or any violation of any Environmental Law.
(u) Neither of the Issuers has adopted any employee pension, welfare or
benefit plans to which the Issuers or any corporation considered an affiliate of
the Issuers within the meaning of Section 407(d)(7) of ERISA is a party in
interest or disqualified person. If any such plan is adopted, the execution and
delivery of this Agreement and the other Operative Documents and the sale of the
Series A Notes will not involve any non-exempt prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code of
1986, as amended. The representations made in the preceding sentence are made in
reliance upon and subject to the accuracy of, and compliance with, the
representations and covenants made or deemed made by the Initial Purchaser as
set forth in the Offering Circular under "Notice to Investors."
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<PAGE>
(v) Each of the Issuers has such permits, licenses, consents, exemptions,
franchises, authorizations and other approvals (each, an "Authorization") of,
-------------
and has made all filings with and notices to, all governmental or regulatory
authorities and self-regulatory organizations and all courts and other
tribunals, including without limitation, under any applicable Environmental
Laws, as are necessary to own, lease, license and operate its properties and to
conduct its business in the manner described in the Offering Circular, except
for Authorizations which the Issuers would not customarily possess at the date
hereof but which will be obtained in the ordinary course of development of the
Isle-Black Hawk and except for any Authorizations to be issued by any Gaming
Authority or Liquor Licensing Authority which are necessary for the Company to
own and operate the Isle-Black Hawk, and no such Authorization contains, or will
upon the issuance thereof contain, a materially burdensome restriction. Each
such Authorization is valid and in full force and effect and each of the Issuers
is in compliance with all the terms and conditions thereof and with the rules
and regulations of the authorities and governing bodies having jurisdiction with
respect thereto; and no event has occurred (including, without limitation, the
receipt of any notice from any authority or governing body) which allows or,
after notice or lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization or results or, after notice or lapse of
time or both, would result in any other material impairment of the rights of the
holder of any such Authorization; and such Authorizations contain no
restrictions that are materially burdensome to each of the Issuers. Neither of
the Issuers has any reason to believe that any governmental body or agency is
considering limiting, suspending or revoking any such Authorization. Neither of
the Issuers has any reason to believe that any such Authorization necessary in
the future to own or operate the Isle-Black Hawk in the manner described in the
Offering Circular, including without limitation, any Gaming License or Liquor
License, will not be granted upon application (or, alternatively, that the
necessity to obtain such license, permit or approval will not be waived), or
that any Gaming Authority or Liquor Licensing Authority or any other
governmental agencies are investigating either of the Issuers or related
parties, other than in ordinary course administrative reviews or any ordinary
course review of the transactions contemplated hereby.
(w) The accountants, Ernst & Young LLP, that have certified the financial
statements and supporting schedules included in the Preliminary Offering
Circular and the Final Offering Circular are independent public accountants with
respect to the Issuers, as required by the Act and the Exchange Act. The
historical financial statements, together with related schedules and notes, set
forth in the Preliminary Offering Circular and the Final Offering Circular
comply as to form in all material respects with the requirements applicable to
registration statements on Form S-1 under the Act.
(x) The historical financial statements, together with related schedules
and notes forming part of the Offering Circular (and any amendment or supplement
thereto), present fairly the financial position, results of operations and
changes in financial position of the Company on the basis stated in the Offering
Circular at the respective dates or for the respective periods to which they
apply; such statements and related schedules, if any, and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data set forth
in the Offering Circular regarding the Issuers (and any amendment or
14
<PAGE>
supplement thereto) are, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the books and
records of each of the Issuers. The forward-looking statements contained in the
Offering Circular are based upon good faith estimates and assumptions believed
by the Issuers to be reasonable when made.
(y) Neither of the Issuers is and, after giving effect to the offering and
sale of the Series A Notes and the application of the net proceeds thereof as
described in the Offering Circular, neither will be, an "investment company," as
such term is defined in the Investment Company Act of 1940, as amended.
(z) Except for the Registration Rights Agreement, there are no contracts,
agreements or understandings between either of the Issuers and any person
granting such person the right to require either of the Issuers to file a
registration statement under the Act with respect to any securities of either of
the Issuers or to require either of the Issuers to include such securities with
the Notes registered pursuant to any Registration Statement.
(aa) Neither of the Issuers nor any agent thereof acting on their behalf
has taken, and none of them will take, any action that might cause this
Agreement or the issuance or sale of the Series A Notes to violate Regulation G
(12 C.F.R. Part 207), Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R.
Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the
Federal Reserve System.
(bb) Since the respective dates as of which information is given in the
Offering Circular other than as set forth in the Offering Circular (exclusive of
any amendments or supplements thereto subsequent to the date of this Agreement),
(i) there has not occurred any change or any development involving a prospective
change in the condition, financial or otherwise, or the earnings, business,
management or operations of the Issuers taken as a whole which, singly or in the
aggregate, would have a Material Adverse Effect, (ii) there has not been any
change or any development involving a prospective change in the equity interests
or in the long-term debt of the Issuers taken as a whole which, singly or in the
aggregate, would have a Material Adverse Effect and (iii) neither of the Issuers
has incurred any material liability or obligation, direct or contingent.
(cc) The Issuers do not intend to, nor do they believe that they will,
incur debts beyond their ability to pay such debts as they mature. As of the
date hereof, the present fair market value of the assets of the Issuers exceeds,
and on the Closing Date, the present fair market value of the assets of the
Issuers will exceed, the amounts that will be required to be paid on or in
respect of their existing debts and other liabilities (including contingent
liabilities) when and as they become absolute and matured. The assets of the
Issuers do not constitute unreasonably small capital to carry out the business
of the Issuers, as conducted or proposed to be conducted.
(dd) Other than as described in the Offering Circular, there is no statute,
rule, regulation or order that has been enacted, adopted or issued by any
governmental agency which could have a Material Adverse Effect.
15
<PAGE>
(ee) Each of the Preliminary Offering Circular and the Final Offering
Circular, as of its date, contains all the information specified in, and meeting
the requirements of, Rule 144A(d)(4) under the Act.
(ff) When the Series A Notes are issued and delivered pursuant to this
Agreement, the Series A Notes will not be of the same class (within the meaning
of Rule 144A under the Act) as any security of either of the Issuers that is
listed on a national securities exchange registered under Section 6 of the
Exchange Act or that is quoted in a United States automated inter-dealer
quotation system.
(gg) No form of general solicitation or general advertising (as defined in
Regulation D under the Act) was used by either of the Issuers, or any of their
respective representatives (other than the Initial Purchaser, as to whom neither
of the Issuers makes any representation) in connection with the offer and sale
of the Series A Notes contemplated hereby, including, but not limited to,
articles, notices or other communications published in any newspaper, magazine
or similar medium, or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising. No securities of the same class as the Series A Notes have been
issued and sold by either of the Issuers within the six-month period immediately
prior to the date hereof.
(hh) Prior to the effectiveness of any Registration Statement, the
Indenture is not required to be qualified under the TIA.
(ii) No registration under the Act of the Series A Notes is required for
the sale of the Series A Notes to the Initial Purchaser as contemplated hereby
or for the Exempt Resales assuming (i) the accuracy of the Initial Purchaser's
representations and warranties and agreements set forth in Section 9 hereof,
(ii) that each of the Eligible Purchasers that purchases Series A Notes in
Exempt Resales is a QIB or Accredited Institution and (iii) the accuracy of the
representations made by each Accredited Institution that purchases Series A
Notes pursuant to an Exempt Resale as set forth in the letter of representation
in the form of Annex A to the Offering Circular.
(jj) No "nationally recognized statistical rating organization" as such
term is defined for purposes of Rule 436(g)(2) under the Act (i) has imposed (or
has informed either of the Issuers that it is considering imposing) any
condition (financial or otherwise) on either of the Issuers' retaining any
rating assigned as of the date hereof to the Notes or (ii) has indicated to
either of the Issuers that it is considering (A) the downgrading, suspension or
withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (B) any change in
the outlook for any rating of the Notes.
(kk) Each certificate signed by any officer of either of the Issuers and
delivered to the Initial Purchaser or counsel for the Initial Purchaser shall be
deemed to be a representation and warranty of such Issuer to the Initial
Purchaser as to the matters covered thereby.
(ll) As of the Closing Date and upon consummation of the Capitalization
Transactions (as defined in the Offering Circular) and the transactions
contemplated by the Exchange
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Commitment Letter, the issuance of the Notes and the application of the net
proceeds therefrom, the Company will have good and marketable title in fee
simple to all real property being contributed to the Company by Blackhawk Gold
or which is subject to any option being contributed to the Company by Casino
Colorado, in each case as described in the section of the Offering Circular
entitled "Summary(Capitalization Transactions," and good and marketable title to
all personal property owned by the Company which is material to the business of
the Company, free and clear of Liens and defects, except such as are described
in the Offering Circular or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made of such
property by the Company in connection with its business as described in the
Offering Circular; and any real property held under lease by the Company is held
under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property by the Company in connection with its business as described in the
Offering Circular, except as described in the Offering Circular.
(mm) The Company owns or possesses, or, upon the execution of the License
Agreement dated as of the Closing Date between the Company and Casino America,
and subject to the terms thereof, will have a license for the use of all
licenses, trademarks, service marks and trade names ("intellectual property") to
---------------------
be employed by it in connection with the operation of its business in the manner
described in the Offering Circular and the Company has not received any notice
of infringement of or conflict with asserted rights of others with respect to
any such intellectual property.
(nn) The Issuers are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which they are engaged or will be engaged;
and neither of the Issuers has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers at a cost that would not have a
Material Adverse Effect.
(oo) Upon the Closing, the Company will maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any material differences.
(pp) All material tax returns required to be filed by the Issuers in any
jurisdiction have been filed, other than those filings being contested in good
faith, and all material taxes, including withholding taxes, penalties and
interest, assessments, fees and other charges due pursuant to such returns or
pursuant to any assessment received by the Issuers have been paid, other than
those being contested in good faith and for which adequate reserves have been
provided.
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(qq) The Company will be treated as a partnership for United States federal
and state income tax purposes.
(rr) The contemplated operation and use of the Isle-Black Hawk, including
the construction of the Isle-Black Hawk, will be (giving effect to any waivers
or variances which may be obtained) in compliance with all applicable municipal,
county, state and federal laws, regulations, ordinances, standards, orders, and
other regulations, where the failure to comply therewith could have a Material
Adverse Effect. Under applicable zoning and use laws, ordinances, rules and
regulations, the Isle-Black Hawk may be used for the purposes contemplated in
the Offering Circular, the Indenture and the Collateral Documents.
(ss) At all times after execution and delivery of the Issuer Pledge
Agreement by the Company, upon delivery of the stock certificates, if any,
evidencing all the securities pledged thereunder, together with stock powers or
appropriate instruments of transfer, duly endorsed in blank, and all instruments
pledged pursuant to the issuer pledge agreement, endorsed in blank, the security
interests created for the benefit of the Trustee and the holders of the Notes
under the issuer pledge agreement will constitute valid, perfected first
priority security interests in the collateral subject thereto.
(tt) At all times after execution and delivery of the Collateral Documents
(other than the Issuer Pledge Agreement and the Pledge and Assignment) by the
parties thereto and completion of the filings and recordings contemplated
thereby, the security interests created for the benefit of the Trustee and the
Holders pursuant to the Collateral Documents (other than the Issuer Pledge
Agreement and the Pledge and Assignment) will constitute valid, perfected first
priority security interests in the collateral subject thereto.
(uu) All notice filings to be made pursuant to the Collateral Documents are
in proper form to be filed in order to perfect a security interest in the
Collateral described therein.
(vv) At all times after execution and delivery of the Pledge and Assignment
and upon the Trustee taking possession of the collateral subject thereto in
accordance with the terms of the Pledge and Assignment and completion of the
filings and recordings contemplated thereby, the security interests created for
the benefit of the Trustee and the Holders pursuant to the Pledge and Assignment
will constitute valid, perfected first priority security interests in the
collateral subject thereto.
(ww) The Initial Purchaser has been furnished with a copy of the plans and
specifications for the construction of the improvements of the Isle-Black Hawk
and other necessary expenditures. Such plans and specifications are
satisfactory to the Issuers. The anticipated cost of such improvements
(including interest, legal, architectural, engineering, planning, zoning and
other similar costs) does not exceed the amounts for such costs set forth under
the caption "Use of Proceeds" in the Offering Circular. In addition, each of
the other amounts set forth in the section entitled "Sources and Uses of Funds"
under the caption "Use of Proceeds" in the Offering Circular are based upon
reasonable assumptions as to all matters
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material to the estimates set forth therein and are not expected to exceed the
amounts set forth for such items.
(xx) The Construction Disbursement Budget (as defined in the Cash
Collateral and Disbursement Agreement) and the Construction Schedule (as defined
in the Cash Collateral and Disbursement Agreement), as of the Closing Date, (i)
are, in the Company's opinion after due investigation, based on reasonable
assumptions as to all legal and factual matters material to the estimates set
forth therein and relying to a large extent on professional advisors and (ii) do
not conflict with the provisions of the Indenture and the other Operative
Documents.
Each of the Issuers acknowledges that the Initial Purchaser and, for
purposes of the opinions to be delivered to the Initial Purchaser pursuant to
Section 11 hereof, counsel to each of the Issuers and counsel to the Initial
Purchaser will rely upon the accuracy and truth of the foregoing representations
and hereby consents to such reliance.
7. REPRESENTATIONS AND WARRANTIES OF CASINO AMERICA.
(a) Each of Casino America and Casino Colorado has been duly incorporated,
is validly existing and is a corporation in good standing under the laws of its
jurisdiction of incorporation and has all necessary corporate power and
authority to carry on its business and to own, lease and operate its properties,
and is duly qualified and is in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such qualification,
except, with respect to Casino America, where the failure to be so qualified
would not have a material adverse effect on its business, prospects, financial
condition or results of operations. Casino America owns all of the outstanding
capital stock of Casino Colorado.
(b) All outstanding shares of capital stock of Casino Colorado have been
duly authorized and validly issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights and are directly owned by Casino
America free and clear of any Lien. The Issuers are the only subsidiaries of
Casino Colorado.
(c) Casino Colorado does not have any outstanding options to purchase, or
any preemptive rights or other rights to subscribe for or purchase, any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, any equity interests of Casino Colorado or any such options,
rights, convertible securities or obligations.
(d) Each of this Agreement and the Management Agreement has been duly
authorized, executed and delivered by Casino America and each is a valid and
binding agreement of Casino America, enforceable against Casino America in
accordance with its terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally, (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability and
(iii) with respect to this Agreement, limited by securities laws prohibiting or
limiting the availability of, and public policy against, indemnification or
contribution. On the Closing Date, the Management Agreement will conform to the
description thereof contained in the Offering Circular.
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(e) The Capitalization Transactions have been authorized by all necessary
corporate action by or on the part of Casino America. Each of the Completion
Capital Commitment, the License Agreement, the Manager Subordination Agreement
and the Land Purchase Contract has been duly authorized by Casino America and,
on the Closing Date, each of them will have been validly executed and delivered
by Casino America. When the Completion Capital Commitment, the License
Agreement, the Manager Subordination Agreement and the Land Purchase Contract
have been duly executed and delivered by Casino America, each of them will be a
valid and binding agreement of Casino America, enforceable against Casino
America in accordance with its terms, except as (i) the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability. On the Closing Date, each of the Completion Capital Commitment,
the License Agreement, the Manager Subordination Agreement and the Land Purchase
Contract will conform in all material respects to the description thereof
contained in the Offering Circular.
(f) Except as described in the Offering Circular or as provided in such
agreement, the execution, delivery and performance of this Agreement, the
Management Agreement, the Completion Capital Commitment, the Manager
Subordination Agreement, the License Agreement and the Land Purchase Agreement
and compliance by Casino America with all provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby will not (i)
require any consent, approval, authorization or other order of, or qualification
with, any court or governmental body or agency or any other person (except such
as may be required under the securities or Blue Sky laws of the various states),
(ii) conflict with or constitute a breach of any of the terms or provisions of,
or a default under, the charter or bylaws of Casino America, or any indenture,
loan agreement, mortgage, lease or other agreement or instrument that is
material to Casino America, to which Casino America is a party or by which
Casino America or its property is bound, (iii) violate or conflict with any
applicable law or any rule, regulation, judgment, order or decree of any court
or any governmental body or agency having jurisdiction over Casino America or
its property or (iv) result in the imposition or creation of (or the obligation
to create or impose) a Lien under, any agreement or instrument to which Casino
America is a party or by which Casino America or its property is bound.
(g) On the Closing Date, Casino America will have sufficient availability
for Restricted Payments, as defined in and pursuant to section 1012 of the
indenture dated as of August 1, 1996, among Casino America, the subsidiary
guarantors identified therein and Fleet National Bank, as trustee, relating to
the issuance of $315,000,000 principal amount of 12 1/2% Senior Secured Notes
due 2003 of Casino America, for all amounts to be paid by Casino America to any
person pursuant to the terms of the Transaction Documents that would be
considered Restricted Payments thereunder.
(h) Other than as disclosed in the Offering Circular, Casino America is
not aware of any fact or any event which has occurred or which 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) arising out of, based on or resulting from the presence or release
20
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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 Environmental
Law) or any violation of any Environmental Law with respect to the Casino
America Parcel (as defined in the Offering Circular).
(i) Casino America owns all trademarks which are to be licensed to the
Company pursuant to the terms of the License Agreement for use by the Company at
the Isle-Black Hawk and Casino America has not received any notice of, and is
not otherwise aware of, any infringement of, or conflict with, asserted rights
of others with respect to the foregoing, other than with respect to a pending
claim involving the "Isle of Capri" name that is not material to the Company or
to the Isle-Black Hawk.
(j) As of the Closing Date, the Company will have good and marketable
title in fee simple to the Casino America Parcel free and clear of Liens and
defects, except such as are described in the Offering Circular or such as do not
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company.
(k) The financial information set forth in the Offering Circular (and any
amendment or supplement thereto) regarding Casino America is, in all material
respects, accurately presented.
(j) Casino America does not intend to, nor does it believe that it will,
incur debts beyond its ability to pay such debts as they mature. As of the date
hereof, the present fair market value of the assets of Casino America exceeds,
and on the Closing Date, the present fair market value of the assets of Casino
America will exceed, the amounts that will be required to be paid on or in
respect of the existing debts and other liabilities (including contingent
liabilities) of Casino America when and as they become absolute and matured. The
assets of Casino America do not constitute unreasonably small capital to carry
out the business of Casino America, as conducted or proposed to be conducted.
8. REPRESENTATIONS AND WARRANTIES OF NEVADA GOLD.
(a) Each of Nevada Gold and Blackhawk Gold has been duly incorporated, is
validly existing and is a corporation in good standing under the laws of its
jurisdiction of incorporation and has all necessary corporate power and
authority to carry on its business and to own, lease and operate its properties,
and is duly qualified and is in good standing as a foreign corporation
authorized to do business in each jurisdiction in which the nature of its
business or its ownership or leasing of property requires such qualification,
except, with respect to Nevada Gold, where the failure to be so qualified would
not have a material adverse effect on its business, prospects, financial
condition or results of operations. Nevada Gold owns all of the outstanding
capital stock of Blackhawk Gold.
(b) All outstanding shares of capital stock of Blackhawk Gold have been
duly authorized and validly issued and are fully paid, non-assessable and not
subject to any
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preemptive or similar rights and are directly owned by Nevada Gold free and
clear of any Lien. Blackhawk Gold has no subsidiaries.
(c) Blackhawk Gold does not have any outstanding options to purchase, or
any preemptive rights or other rights to subscribe for or purchase, any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, any equity interests of Blackhawk Gold or any such options,
rights, convertible securities or obligations.
(d) The Capitalization Transactions have been authorized by all necessary
corporate action by or on the part of Nevada Gold. Each of this Agreement and
the Exchange Commitment Letter has been duly authorized, executed and delivered
by Nevada Gold and is a valid and binding agreement of Nevada Gold, enforceable
against Nevada Gold in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally, (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability and (iii) with respect to this Agreement, limited by
securities laws prohibiting or limiting the availability of, and public policy
against, indemnification or contribution. On the Closing Date, the Exchange
Commitment Letter will conform, in all material respects, to the description
thereof contained in the Offering Circular.
(e) Except as described in the Offering Circular or as provided in such
agreement, the execution, delivery and performance of this Agreement and the
Exchange Commitment Letter and compliance by Nevada Gold with all provisions
hereof and thereof and the consummation of the transactions contemplated hereby
and thereby will not (i) require any consent, approval, authorization or other
order of, or qualification with, any court or governmental body or agency or any
other person (except such as may be required under the securities or Blue Sky
laws of the various states), (ii) conflict with or constitute a breach of any of
the terms or provisions of, or a default under, the charter or bylaws of Nevada
Gold, or any indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to Nevada Gold, to which Nevada Gold is a party or
by which Nevada Gold or its property is bound, (iii) violate or conflict with
any applicable law or any rule, regulation, judgment, order or decree of any
court or any governmental body or agency having jurisdiction over Nevada Gold or
its property or (iv) result in the imposition or creation of (or the obligation
to create or impose) a Lien under, any agreement or instrument to which Nevada
Gold is a party or by which Nevada Gold or its property is bound.
(f) Other than as disclosed in the Offering Circular, Nevada Gold is not
aware of any fact or any event which has occurred or which 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) 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 Environmental
Law) or any violation of any Environmental Law with respect to the Nevada Gold
Parcel (as defined in the Offering Circular).
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(g) As of the Closing Date, the Company will have good and marketable
title in fee simple to the Nevada Gold Parcel free and clear of Liens and
defects, except such as are described in the Offering Circular or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company.
(h) As of the Closing Date, neither Nevada Gold nor any of its
subsidiaries will have any debts or liabilities other than as described in its
Form 10-K for the fiscal year ended March 31, 1997 or those incurred after March
31, 1997 in the ordinary course of business.
(i) Nevada Gold does not intend to, nor does it believe that it will,
incur debts beyond its ability to pay such debts as they mature. The principal
business of Nevada Gold is the development of gaming properties through joint
ventures or otherwise. As of the date hereof, the present fair market value of
the assets of Nevada Gold exceeds, and on the Closing Date, the present fair
market value of the assets of Nevada Gold will exceed, the amounts that will be
required to be paid on or in respect of the existing debts and other liabilities
(including contingent liabilities) of Nevada Gold when and as they become
absolute and matured. The assets of Nevada Gold do not constitute unreasonably
small capital to carry out the business of Nevada Gold, as conducted or proposed
to be conducted.
9. REPRESENTATIONS AND WARRANTIES OF THE INITIAL PURCHASER.
The Initial Purchaser represents and warrants to, and agrees with, the
Issuers:
(a) Such Initial Purchaser is a QIB with such knowledge and experience in
financial and business matters as are necessary in order to evaluate the merits
and risks of an investment in the Series A Notes.
(b) Such Initial Purchaser (i) is not acquiring the Series A Notes with a
view to any distribution thereof or with any present intention of offering or
selling any of the Series A Notes in a transaction that would violate the Act or
the securities laws of any State of the United States or any other applicable
jurisdiction and (ii) will be reoffering and reselling the Series A Notes only
to QIBs in reliance on the exemption from the registration requirements of the
Act provided by Rule 144A and to a limited number of Accredited Institutions
that execute and deliver a letter to the Issuers and the Initial Purchaser
containing certain representations and agreements in the form attached as Annex
-----
A to the Offering Circular.
- -
(c) No form of general solicitation or general advertising (within the
meaning of Regulation D under the Act) has been or will be used by such Initial
Purchaser or any of its representatives in connection with the offer and sale of
any of the Series A Notes pursuant hereto, including, but not limited to,
articles, notices or other communications published in any newspaper, magazine
or similar medium, or broadcast over television or radio, or transmitted over
the Internet, or communicated in any seminar or meeting whose attendees have
been invited by any general solicitation or general advertising.
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(d) Such Initial Purchaser agrees that, in connection with Exempt Resales,
such Initial Purchaser will solicit offers to buy the Series A Notes only from,
and will offer to sell the Series A Notes only to, Eligible Purchasers. The
Initial Purchaser further agrees that it will offer to sell the Series A Notes
only to, and will solicit offers to buy the Series A Notes only from (i)
Eligible Purchasers that the Initial Purchaser reasonably believes are QIBs and
(ii) Accredited Institutions who make the representations contained in, and
execute and return to the Initial Purchaser, a certificate in the form of Annex
-----
A attached to the Offering Circular, in each case, that agree that (A) the
- -
Series A Notes purchased by them may be resold, pledged or otherwise transferred
within the time period referred to under Rule 144(k) (taking into account the
provisions of Rule 144(d) under the Act, if applicable) under the Act, as in
effect on the date of the transfer of such Series A Notes, only (1) to the
Issuers, (2) to a person whom the seller reasonably believes is a QIB purchasing
for its own account or for the account of a QIB in a transaction meeting the
requirements of Rule 144A under the Act, (3) in an offshore transaction (as
defined in Rule 902 under the Act) meeting the requirements of Rule 904 of the
Act, (4) in a transaction meeting the requirements of Rule 144 under the Act,
(5) to an Accredited Institution that, prior to such transfer, furnishes the
Trustee a signed letter containing certain representations and agreements
relating to the registration of transfer of such Note (the form of which is
substantially the same as Annex A to the Offering Circular) and, if such
-------
transfer is in respect of an aggregate principal amount of Series A Notes less
than $250,000, an opinion of counsel acceptable to the Issuers that such
transfer is in compliance with the Act, (6) in accordance with another exemption
from the registration requirements of the Act (and based upon an opinion of
counsel acceptable to the Issuers) or (7) 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)
they will deliver to each person to whom such Series A Notes or an interest
therein is transferred a notice substantially to the effect of the foregoing.
(e) None of the Initial Purchaser nor any of its affiliates or any person
acting on its or their behalf has engaged or will engage in any directed selling
efforts within the meaning of Regulation S with respect to the Series A Notes.
The Initial Purchaser acknowledges that the Issuers and, for purposes of
the opinions to be delivered to the Initial Purchaser pursuant to Section 11
hereof, counsel to the Issuers and counsel to the Initial Purchaser will rely
upon the accuracy and truth of the foregoing representations and the Initial
Purchaser hereby consents to such reliance.
10. INDEMNIFICATION
(a) The Issuers, Casino America and Nevada Gold (collectively, the
"Venture Entities"), jointly and severally, agree to indemnify and hold harmless
the Initial Purchaser, its affiliates and their respective officers, directors,
partner, counsel, employees and agents any other person who controls such
Initial Purchaser or any of its respective affiliates within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, and the agents,
employees, officers, directors, partners, counsel and shareholders of such
persons, to the fullest extent lawful, from and against any and all losses,
claims, damages, liabilities, expenses and judgments (including, without
limitation, any reasonable legal or other expenses incurred in connection with
24
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investigating or defending any matter, including any action, that could give
rise to any such losses, claims, damages, liabilities or judgments) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Final Offering Circular (or any amendment or supplement thereto), the
Preliminary Offering Circular or any Rule 144A Information provided by the
Issuers to any holder or prospective purchaser of Series A Notes pursuant to
Section 5(i) hereof or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to the Initial Purchaser furnished in writing to the Issuers by such Initial
Purchaser; provided, however, that the Issuers, Casino America and Nevada Gold
will not be liable to the extent but only to the extent that any such losses,
claims, damages, liabilities or judgments arise out of or are 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 Issuers by or on behalf of the Initial Purchaser
expressly for use therein as set forth in Section 10(b) hereof; and provided,
further, that this indemnity agreement with respect to the Preliminary Offering
Circular shall not inure to the benefit of the Initial Purchaser if the person
asserting any such losses, claims, damages, liabilities, expenses or judgments
purchased Notes from the Initial Purchaser, or any person controlling the
Initial Purchaser, if a copy of the Final Offering Circular (as then amended or
supplemented) was not sent or given by or on behalf of the Initial Purchaser to
such person at or prior to the written confirmation of the sale of such Notes to
such person and if the Final Offering Circular (as so amended or supplemented)
would have corrected the defect giving rise to such loss, claim, damage,
liability, expense or judgment; and provided, further, that the obligations of
Casino America and Nevada Gold pursuant to this Section 10(a) shall terminate
upon the later of (i) February 28, 2000 and (ii) one year after the date on
which the Isle-Black Hawk becomes Operating. This indemnity agreement will be
in addition to any liability which the Casino America, Nevada Gold or the
Issuers may otherwise have, including under this Agreement.
(b) The Initial Purchaser agrees to indemnify and hold harmless each of
the Venture Entities, and their respective directors and officers and each
person, if any, who controls (within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act) any of the Venture Entities, to the same extent
as the foregoing indemnity from the Venture Entities to the Initial Purchaser
but only with reference to information relating to the Initial Purchaser
furnished in writing to the Issuers by the Initial Purchaser expressly for use
in the Preliminary Offering Circular or the Final Offering Circular, which
include only the third and fourth sentences under the caption "Risk
Factors(Absence of Public Market" and the fourth paragraph under the caption
"Plan of Distribution" in the Preliminary Offering Circular or the Final
Offering Circular.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 10(a) or 10(b) (the
indemnified party"), the indemnified party shall promptly notify the person
- ------------ -----
against whom such indemnity may be sought (the "indemnifying party") in writing
------------ -----
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all reasonable fees and expenses of such counsel, as incurred
(except
25
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that in the case of any action in respect of which indemnity may be sought
pursuant to both Sections 10(a) and 10(b), the Initial Purchaser shall not be
required to assume the defense of such action pursuant to this Section 10(c),
but may employ separate counsel and participate in the defense thereof, but the
fees and expenses of such counsel, except as provided below, shall be at the
expense of the Initial Purchaser) . Any indemnified party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the sole
expense of the indemnified party unless (i) the employment of such counsel shall
have been specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include both
the indemnified party and the indemnifying party, and the indemnified party
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of the
indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions 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) for all
indemnified parties and all such reasonable fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by
Jefferies & Company, Inc., in the case of the parties indemnified pursuant to
Section 10(a), and by the Venture Entities, in the case of parties indemnified
pursuant to Section 10(b). The indemnifying party shall indemnify and hold
harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than twenty business days after the
indemnifying party shall have received a request from the indemnified party for
reimbursement for the reasonable fees and expenses of counsel (in any case where
such reasonable fees and expenses are at the expense of the indemnifying party)
and, prior to the date of such settlement, the indemnifying party shall have
failed to comply with such reimbursement request. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party, satisfactory in form and substance to such indemnified party, from all
liability on claims that are or could have been the subject matter of such
action and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this Section 10 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
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 and judgments (i) in such
proportion as is
26
<PAGE>
appropriate to reflect the relative benefits received by the Issuers, on the one
hand, and the Initial Purchaser on the other hand from the offering of the
Series A Notes or (ii) if the allocation provided by clause 10(d)(i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause 10(d)(i) above but also the
relative fault of the Issuers, on the one hand, and the Initial Purchaser, on
the other hand, in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative benefits received by the
Issuers, on the one hand and the Initial Purchaser, on the other hand, shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Series A Notes (before deducting expenses) received by the Issuers, and
the total discounts and commissions received by the Initial Purchaser bear to
the total price to investors of the Series A Notes, in each case as set forth in
the table on the cover page of the Offering Circular. The relative fault of the
Issuers, on the one hand, and the Initial Purchaser, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Issuers, on the one hand,
or the Initial Purchaser, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Venture Entities and the Initial Purchaser agree that it would not be
just and equitable if contribution pursuant to this Section 10(d) were
determined by pro rata allocation 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 judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any reasonable legal or other
expenses incurred by such indemnified party in connection with investigating or
defending any matter, including any action, that could have given rise to such
losses, claims, damages, liabilities or judgments. Notwithstanding the
provisions of this Section 10, the Initial Purchaser shall not be required to
contribute any amount in excess of the amount by which the total price of the
Series A Notes purchased by it were sold to investors in Exempt Resales exceeds
the amount of any damages which the Initial Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(e) The remedies provided for in this Section 10 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
11. CONDITIONS OF INITIAL PURCHASER'S AND THE ISSUERS' OBLIGATIONS
(a) The obligations of the Initial Purchaser to purchase the Series A
Notes under this Agreement are subject to the satisfaction of each of the
following conditions:
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<PAGE>
(i) All the representations and warranties contained in each of the
Transaction Documents shall be true and correct in all material respects (other
than representations and warranties with a materiality qualifier, which shall be
true and correct as written) on the Closing Date with the same force and effect
as if made on and as of the Closing Date.
(ii) On or after the date hereof, (A) there shall not have occurred
any downgrading, suspension or withdrawal of, nor shall any notice have been
given of any potential or intended downgrading, suspension or withdrawal of, or
of any review (or of any potential or intended review) for a possible change
that does not indicate the direction of the possible change in, any rating of
either of the Issuers or any securities of the either of the Issuers (including,
without limitation, the placing of any of the foregoing ratings on credit watch
with negative or developing implications or under review with an uncertain
direction) by any "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Act, (B) there
shall not have occurred any change, nor shall notice have been given of any
potential or intended change, in the outlook for any rating of either of the
Issuers by any such rating organization and (C) no such rating organization
shall have given notice that it has assigned (or is considering assigning) a
lower rating to the Notes than that on which the Notes were marketed.
(iii) Since the respective dates as of which information is given in
the Offering Circular other than as set forth in the Offering Circular
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (A) there shall not have occurred any change or any development
involving a prospective change in the condition, financial or otherwise, or the
earnings, business, management or operations of either of the Issuers, (B) there
shall not have been any change or any development involving a prospective change
in the equity interests or in the long-term debt of the either of the Issuers
and (C) neither of the Issuers shall have incurred any liability or obligation,
direct or contingent, the effect of which, in any such case described in clause
11(a)(iii)(A), 11(a)(iii)(B) or 11(a)(iii)(C), in your judgment, is material and
adverse and, in your judgment, makes it impracticable to market the Series A
Notes on the terms and in the manner contemplated in the Offering Circular.
(iv) You shall have received on the Closing Date a certificate
dated the Closing Date, signed by the President and the Chief Financial Officer
of each of the Issuers, confirming the matters set forth in Sections 11(a)(i),
11(a)(ii) and 11(a)(iii) hereof.
(v) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchaser), dated the Closing
Date, of Mayer, Brown & Platt, counsel for the Issuers, substantially to the
effect set forth in Exhibit B hereto.
(vi) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchaser), dated the Closing
Date, of Brownstein, Hyatt, Farber & Strickland, P.C., counsel for the Issuers,
substantially to the effect set forth in Exhibit C hereto.
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<PAGE>
(vii) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchaser), dated the Closing
Date, of Phelps Dunbar, L.L.P. and Allan B. Solomon, Esq., counsel for Casino
America, substantially to the effect set forth in Exhibit D hereto, or such
other counsel as is satisfactory to you and counsel for the Initial Purchaser.
(viii) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchaser), dated the Closing
Date, of Adams & Reese, LLP, counsel for Nevada Gold, in the form of Exhibit E
hereto.
(ix) You shall have received on the Closing Date an opinion, dated
the Closing Date, of Latham & Watkins, counsel for the Initial Purchaser, in
form and substance reasonably satisfactory to the Initial Purchaser covering
such matters as are customarily covered in such opinions.
(x) You shall have received, at the time this Agreement is executed
and at the Closing Date, letters dated the date hereof or the Closing Date, as
the case may be, in form and substance satisfactory to the Initial Purchaser
from Ernst & Young LLP, independent public accountants, containing the
information and statements of the type ordinarily included in accountants'
"comfort letters" to the Initial Purchaser with respect to the financial
statements and certain financial information contained in the Offering Circular.
(xi) You shall have received on the Closing Date an Officer's
Certificate dated the Closing Date, signed by the President of Nevada Gold,
certifying that Nevada Gold is not subject to the terms of the Investment
Company Act of 1940 pursuant to the exemption therefrom described in Section 3a-
2 of such Act.
(xii) The Series A Notes shall have been approved by the NASD for
trading and duly listed in PORTAL.
(xiii) All of the Transaction Documents shall have been executed and
shall be in full force and effect and the Initial Purchaser shall have received
fully executed copies thereof. The Issuers shall have received the requisite
governmental and regulatory approval in connection with each of the Transaction
Documents and transactions contemplated by the Offering Circular to be completed
on or before the Closing Date.
(xiv) No party shall have failed at or prior to the Closing Date to
perform or comply with any of the agreements contained in any of the Transaction
Documents and required to be performed or complied with by such party at or
prior to the Closing Date.
(xv) The Trustee shall have received (i) a certificate of insurance
demonstrating insurance coverages of types, in amounts, with insurers and with
other terms required by the terms of the Transaction Documents and (ii) executed
copies of each UCC-1 financing statement signed by the Issuers, naming the
Trustee as secured party and filed in such jurisdictions as the Initial
Purchaser may reasonably require.
29
<PAGE>
(xvi) All documents and agreements shall have been filed, and
other actions shall have been taken, as may be required to perfect the Security
Interests of the Trustee in the Collateral, and to accord the Trustee the
priorities over other creditors of either of the Issuers as contemplated by the
Offering Circular and the Transaction Documents.
(xvii) The Trustee shall have received irrevocable commitments for
title insurance for the real property on which the Isle-Black Hawk will be
located from First American Title Company, in a form and substance reasonably
satisfactory to the Initial Purchasers, subject only to Permitted Liens
permitted under the Indenture.
(xviii) No injunction, restraining order or order of any nature by
a court, government body or agency shall have been issued as of the Closing Date
that would prevent or interfere with the issuance and sale of the Series A
Notes; and no stop order suspending the qualification or exemption from
qualification of any of the Series A Notes in any jurisdiction shall have been
issued and no action, claim, suit or proceeding (including without limitation an
investigation or partial proceeding such as a deposition) for that purpose shall
have been commenced or be pending or contemplated as of the Closing Date.
(xix) You shall have received evidence reasonably satisfactory to
you of the existence of a performance bond to be delivered pursuant to the
Design/Build Agreement.
(b) The obligation of the Issuers to sell the Series A Notes under
this Agreement is subject to the satisfaction or waiver of each of the following
conditions:
(i) The Initial Purchaser shall have delivered payment to the
Issuer for the Series A Notes pursuant to Sections 2 and 4(b) of this Agreement.
(ii) All of the representations and warranties of the Initial
Purchaser in this Agreement shall be true and correct in all material respects
at and as of the Closing Date, with the same force and effect as if made on and
as of such date.
(iii) No injunction, restraining order or order of any nature by
a court, government body or agency shall have been issued as of the Closing Date
that would prevent or interfere with the issuance and sale of the Series A
Notes; and no stop order suspending the qualification or exemption from
qualification of any of the Series A Notes in any jurisdiction shall have been
issued and no action, claim, suit or proceeding (including without limitation an
investigation or partial proceeding such as a deposition) for that purpose shall
have been commenced or be pending or contemplated as of the Closing Date.
12. EFFECTIVE DATE OF AGREEMENT AND TERMINATION.
This Agreement shall become effective upon the execution and delivery of
this Agreement by the parties hereto.
This Agreement may be terminated at any time prior to the Closing Date by
the Initial Purchaser by written notice to the Issuers if any of the following
has occurred: (i) any outbreak
30
<PAGE>
or escalation of hostilities or other national or international calamity or
crisis or change in economic conditions or in the financial markets of the
United States or elsewhere that, in the Initial Purchaser's judgment, is
material and adverse and, in the Initial Purchaser's judgment, makes it
impracticable to market the Series A Notes on the terms and in the manner
contemplated in the Offering Circular, (ii) the suspension or material
limitation of trading in securities or other instruments on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market or any
setting of limitations on prices for securities or other instruments on any such
exchange or the Nasdaq National Market, (iii) the enactment, publication, decree
or other promulgation after the date hereof of any federal or state statute,
regulation, rule or order of any court or other governmental authority which in
the Initial Purchaser's opinion materially and adversely affects, or will
materially and adversely affect, the business, prospects, financial condition or
results of operations of the Issuers, (i) the declaration of a banking
moratorium by either federal or New York State authorities or (v) the taking of
any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in the Initial Purchaser's opinion has a
material adverse effect on the financial markets in the United States.
13. REPRESENTATIONS AND INDEMNITIES TO SURVIVE
The respective indemnities, contribution agreements, representations,
warranties and other statements of each of the Issuers, Casino America, Nevada
Gold and the Initial Purchaser set forth in or made pursuant to this Agreement
shall remain operative and in full force and effect, and will survive delivery
of and payment for the Series A Notes, regardless of (i) any investigation, or
statement as to the results thereof, made by or on behalf of the Initial
Purchaser, the officers or directors of the Initial Purchaser, any person
controlling the Initial Purchaser, each of the Issuers, Casino America and
Nevada Gold, the officers or directors of each of them, or any person
controlling any of them, (ii) acceptance of the Series A Notes and payment for
them hereunder and (iii) termination of this Agreement; provided, however, that
indemnities, contribution agreements, representations, warranties and other
statements of Casino America and Nevada Gold set forth in or made pursuant to
this Agreement shall terminate upon the later of (A) February 28, 2000 and (B)
one year after the date on which the Isle-Black Hawk becomes Operating.
14. NOTICES
Any such statements, requests, notices or agreements shall take effect at
the time of receipt thereof. All statements, requests notices and agreements
(each a "Notice") hereunder shall be in writing, and:
------
(a) If to the Initial Purchaser, Notices shall be delivered or sent by
mail, telex or facsimile transmission to the Initial Purchaser as follows:
31
<PAGE>
Jefferies & Company, Inc.
11100 Santa Monica Boulevard, 10th Floor
Los Angeles, California 90025
Attention:
Fax: (310) 914-1014
(b) If to the Issuers, Notices shall be delivered or sent by mail, telex,
or facsimile transmission to the address of the Issuers as follows:
Isle of Capri Black Hawk L.L.C.
Isle of Capri Black Hawk Capital Corp.
c/o Casino America, Inc.
711 Washington Loop
Biloxi, Mississippi 39530
Attention:
Fax: (601) 435-5998
(c) If to Casino America, Notices shall be delivered or sent by mail,
telex, or facsimile transmission to the address of Casino America as follows:
Casino America
711 Washington Loop
Biloxi, Mississippi 39530
Attention: Chief Financial Officer
Fax: (601) 435-5998
(d) If to Nevada Gold, Notices shall be delivered or sent by mail, telex
or facsimile transmission to Nevada Gold as follows:
Nevada Gold & Casinos, Inc.
3040 Post Oak Boulevard, Suite 675
Houston, Texas 77056
Attention: H. Thomas Winn
Fax: (281) 621-2245
15. APPLICABLE LAW
This Agreement shall be governed and construed in accordance with the laws
of the State of New York.
16. COUNTERPARTS
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.
32
<PAGE>
17. THIRD PARTIES
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon each of the Issuers, Casino
America, Nevada Gold, the Initial Purchaser, the Initial Purchaser's directors
and officers, any controlling persons referred to herein, the directors or
Managers of each of the Issuers and its successors and assigns, all as and to
the extent provided in this Agreement, and no other person shall acquire or have
any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include a purchaser of any of the Series A Notes from the
Initial Purchaser merely because of such purchase.
18. OTHER FEES AND EXPENSES
If for any reason the Series A Notes are not delivered by or on behalf of
the Issuers as provided herein (other than as a result of any termination of
this Agreement pursuant to Section 12 hereof), the Issuers, Casino America and
Nevada Gold, jointly and severally, agree to reimburse the Initial Purchaser for
all reasonable out-of-pocket expenses (including the reasonable out-of-pocket
fees and disbursements of counsel) incurred by them. Notwithstanding any
termination of this Agreement, the Issuers, Casino America and Nevada Gold,
jointly and severally, shall be liable for all expenses which it has agreed to
pay pursuant to Section 5(j) hereof. The Issuers, Casino America and Nevada
Gold, jointly and severally, also agree to reimburse the Initial Purchaser and
its officers, directors and each person, if any, who controls such Initial
Purchaser within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act for any and all reasonable out-of-pocket fees and expenses
(including without limitation the reasonable out-of-pocket fees and expenses of
counsel) incurred by them in connection with enforcing their rights under this
Agreement (including without limitation their rights under Section 10 hereof).
33
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Very truly yours,
ISLE OF CAPRI BLACK HAWK L.L.C.
By:[SIGNATURE ILLEGIBLE]
---------------------
Name:
Title:
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
By:[SIGNATURE ILLEGIBLE]
---------------------
Name:
Title:
CASINO AMERICA, INC., solely with respect
to Sections 7, 10, 13, 14, 17 and 18 hereof
By:[SIGNATURE ILLEGIBLE]
---------------------
Name:
Title:
NEVADA GOLD & CASINOS, INC., solely with
respect to Sections 8, 10, 13, 14, 17 and
18 hereof
By:_____________________
Name:
Title:
Accepted and Agreed to:
JEFFERIES & COMPANY, INC.
By:_______________________
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Very truly yours,
ISLE OF CAPRI BLACK HAWK L.L.C.
By:(SIGNATURE ILLEGIBLE)
---------------------
Name:
Title:
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
By:(SIGNATURE ILLEGIBLE)
---------------------
Name:
Title:
CASINO AMERICA, INC., solely with respect
to Sections 7, 10, 13, 14, 17 and 18 hereof
By:(SIGNATURE ILLEGIBLE)
---------------------
Name:
Title:
NEVADA GOLD & CASINOS, INC., solely with
respect to Sections 8, 10, 13, 14, 17 and
18 hereof
By:(SIGNATURE ILLEGIBLE)
---------------------
Name:
Title:
Accepted and Agreed to:
JEFFERIES & COMPANY, INC.
By:
_____________________
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Very truly yours,
ISLE OF CAPRI BLACK HAWK L.L.C.
By:
____________________
Name:
Title:
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
By:
____________________
Name:
Title:
CASINO AMERICA, INC., solely with respect
to Sections 7, 10, 13, 14, 17 and 18 hereof
By:
____________________
Name:
Title:
NEVADA GOLD & CASINOS, INC., solely with
respect to Sections 8, 10, 13, 14, 17 and
18 hereof
By:
____________________
Name:
Title:
Accepted and Agreed to:
JEFFERIES & COMPANY, INC.
By: /s/ David P. St. Jean
----------------------
Name: David P. St. Jean
Title: Managing Director
<PAGE>
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
<PAGE>
FORM OF REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement (this "Agreement") dated as of August 20,
---------
1997, among Isle of Capri Black Hawk L.L.C., a Colorado limited liability
company (the "Company"), Isle of Capri Black Hawk Capital Corp., a Colorado
-------
corporation and a wholly owned subsidiary of the Company ("Capital" and,
-------
together with the Company, the "Issuers"), and Jefferies & Company, Inc. (the
-------
"Initial Purchaser"), who has agreed to purchase the Issuers, 13% Series A First
- ------------------
Mortgage Notes due 2004 With Contingent Interest (the "Series A Notes") pursuant
--------------
to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement dated August 14,
1997 (the "Purchase Agreement"), among the Issuers and the Initial Purchaser.
------------------
In order to induce the Initial Purchaser to purchase the Series A Notes, the
Issuers have 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 Section 2 of 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.
---
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
-------------
Closing Date: The date of this Agreement.
------------
Commission: The Securities and Exchange Commission.
----------
Consummate: A Registered Exchange Offer shall be deemed "Consummated"
----------
for purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (ii) 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 (iii) the delivery by the Issuers
to the Registrar under the Indenture of Series B Notes in the same aggregate
principal amount as the aggregate principal amount of Series A Notes that were
tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Series A Notes, each Interest
--------------------
Payment Date.
Effectiveness Target Date: As defined in Section 5 hereof.
-------------------------
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
<PAGE>
Exchange Offer: The registration by the Issuers under the Act of the
--------------
Series B Notes pursuant to a Registration Statement pursuant to which the
Issuers offer the Holders of all outstanding Transfer Restricted Securities the
opportunity to exchange all such outstanding Transfer Restricted Securities held
by such Holders for Series B 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 Series A 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) or
(7) of Regulation D under the Act ("Accredited Institutions").
-----------------------
Holders: As defined in Section 2(b) hereof.
-------
Indemnified Holder: As defined in Section 8(a) hereof.
------------------
Indenture: The Indenture dated as of August 20, 1997, among the Issuers
---------
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.
Initial Purchaser: As defined in the preamble hereto.
-----------------
Interest Payment Date: As defined in the Indenture and the Notes.
---------------------
NASD: National Association of Securities Dealers, Inc.
----
Notes: Collectively, the Series A Notes and the Series B Notes.
-----
Person: An individual, partnership, limited liability company,
------
corporation, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement, 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.
Record Holder: With respect to any Damages Payment Date relating to the
-------------
Notes, each Person who is a Holder of Notes on the record date with respect to
the Interest Payment Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
--------------------
Registration Statement: Any registration statement of the Issuers
----------------------
relating to (i) an offering of Series B Notes pursuant to an Exchange Offer or
(ii) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, which is filed
2
<PAGE>
pursuant to the provisions of this Agreement, in each case, including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
Series B Notes: The Issuers 13% Series B First Mortgage Notes due 2004
--------------
With Contingent Interest to be issued pursuant to the Indenture in the Exchange
Offer.
Shelf Filing Deadline: As defined in Section 4(a) hereof.
---------------------
Shelf Filing Event: As defined in Section 4(a) hereof.
------------------
Shelf Registration Statement: As defined in Section 4(a) 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 Series A Note, until the earliest
------------------------------
to occur of (i) the date on which such Series A Note is exchanged by a person
other than a broker-dealer for a Series B Note in the Exchange Offer, (b)
following the exchange by a broker-dealer in the Exchange Offer of a Series A
Note for a Series B Note, the date on which such Series B 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, (iii) the date on which such Series A Note has been effectively
registered under the Act and disposed of in accordance with the Shelf
Registration Statement or (iv) the date on which such Series A Note is
distributed to the public pursuant to Rule 144 under the Act.
Underwritten Registration or Underwritten Offering: A registration in
------------------------- ---------------------
which securities of the Issuers are sold to an underwriter for reoffering to the
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
------------------------------
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. 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 permissible under applicable
law or Commission policy (after the procedures set forth in Section 6(a) below
have been complied with), the Issuers shall (i) cause to be filed with the
Commission as soon as practicable after the Closing Date, but in no event later
than 60 days after the Closing Date, a Registration Statement under the Act
relating to the Series B Notes and the Exchange Offer, (ii) use their best
efforts to cause such Registration Statement to become effective at the earliest
possible time, but in no event later than 120 days after the Closing Date, (iii)
in connection with the foregoing, file (A) all pre-effective amendments to such
Registration Statement as may be necessary in order to
3
<PAGE>
cause such Registration Statement to become effective, (B) if applicable, a
post-effective amendment to such Registration Statement pursuant to Rule 430A
under the Act and (C) cause all necessary filings in connection with the
registration and qualification of the Series B 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 Registration Statement,
commence the Exchange Offer. The Exchange Offer shall be on the appropriate form
permitting registration of the Series B Notes to be offered in exchange for the
Transfer Restricted Securities and to permit resales of Notes held by Broker-
Dealers as contemplated by Section 3(c) below.
(b) The Issuers 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 Issuers shall cause
the Exchange Offer to comply with all applicable federal and state securities
laws. No securities other than the Notes shall be included in the Exchange Offer
Registration Statement. The Issuers shall use their 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 Issuers shall indicate in a "Plan of Distribution" section
contained in the Prospectus contained in the Exchange Offer Registration
Statement that any Broker-Dealer who holds Series A Notes that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Issuers), may exchange such
Series A Notes 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 any resales of the Series B Notes received by such Broker-Dealer
in the Exchange Offer, which prospectus delivery requirement 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 resales by Broker-Dealers
that the Commission may require in order to permit such resales pursuant
thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer
or disclose the amount of 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 Issuers shall use their 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 resales of Notes acquired by Broker-Dealers for
their own accounts as a result of market-making activities or other trading
activities, 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 of one year from the date on which the
Exchange Offer Registration Statement is declared effective.
4
<PAGE>
The Issuers shall provide sufficient copies of the latest version of such
Prospectus to Broker-Dealers promptly upon request at any time during such one-
year period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Issuers are not required to file an
Exchange Offer Registration Statement 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) below have
been complied with) or (ii) if any Holder of Transfer Restricted Securities
shall notify the Issuers within 20 days of the Consummation of the Exchange
Offer that (A) such Holder is prohibited by applicable law or Commission policy
from participating in the Exchange Offer, (B) such Holder may not resell the
Series B Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder or (C) such Holder is a Broker-Dealer and holds Series A Notes acquired
directly from the Issuers or an affiliate of the Issuers (each such event
referred to in clauses (i) and (ii) above a "Shelf Filing Event"), then the
Issuers shall:
(x) cause to be filed 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") on or prior to 45 days after such obligations arises (such date
being the "Shelf Filing Deadline"), which Shelf Registration Statement
shall provide for resales of all Transfer Restricted Securities the Holders
of which shall have provided the information required pursuant to Section
4(b) hereof, and
(y) use their best efforts to cause such Shelf Registration Statement
to be declared effective by the Commission on or before the 120th day after
the Shelf Filing Deadline.
The Issuers shall use their best efforts to keep such Shelf Registration
Statement 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 resales of Notes by the Holders of Transfer Restricted
Securities 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 of at least two years following the Closing Date (or for such shorter
period that will terminate when all of the Notes covered by the Shelf
Registration Statement have been sold pursuant thereto or cease to be
outstanding); provided, however, that the Issuers may, on one occasion, by
notice to all persons to whom it has provided a copy of the prospectus contained
in such Shelf Registration Statement, suspend the use thereof for a period not
to exceed 20 consecutive days in the event that, in the opinion of counsel to
the Issuers, there are material non-public circumstances that would render such
resale prospectus materially inaccurate or misleading.
(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 Issuers in writing, within 20 business days after
5
<PAGE>
receipt of a request therefor, such information as the Issuers may reasonably
request 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 used its best efforts
to provide all such reasonably requested information. Each Holder as to which
any Shelf Registration Statement is being effected agrees to furnish promptly to
the Issuers all information required to be disclosed in order to make the
information previously furnished to the Issuers by such Holder not materially
misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement is not
filed with the Commission on or prior to 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 in this Agreement (the "Effectiveness Target Date"), (iii) the
-------------------------
Exchange Offer has not been Consummated within 45 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) any Registration Statement required by this Agreement is
declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded immediately by a post-
effective amendment to such Registration Statement that cures such failure and
that is itself immediately declared effective (each such event referred to in
clauses (i) through (iv), a "Registration Default"), the Issuers agree to pay
--------------------
liquidated damages to each Holder of Transfer Restricted Securities 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 Transfer Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues; provided, however, that
upon the occurrence of an event described in clause (iv) above with respect to
the failure of a Shelf Registration Statement to be effective or usable in
connection with resales of Transfer Restricted Securities, only those Holders
whose Notes were registered pursuant to such Shelf Registration Statement shall
be entitled to collect liquidated damages. The amount of the liquidated damages
shall increase by an additional $.05 per week per $1,000 in principal amount of
Transfer Restricted Securities with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
liquidated damages of $.25 per week per $1,000 principal amount of Transfer
Restricted Securities. All accrued liquidated damages shall be paid to Record
Holders by the Issuers on each Damages Payment Date by wire transfer of
immediately available funds or by federal funds check on each Damages Payment
Date, as provided in the Indenture. Following the cure of all Registration
Defaults relating to any particular Transfer Restricted Securities, the accrual
of liquidated damages with respect to such Transfer Restricted Securities will
cease.
All obligations of the Issuers 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 Transfer Restricted
Security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
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(a) Exchange Offer Registration Statement. In connection with the Exchange
-------------------------------------
Offer, the Issuers shall comply with all of the provisions of Section 6(c)
below, shall use their best efforts to effect such exchange to permit the sale
of Transfer Restricted 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 in the reasonable opinion of counsel to the Issuers there is a
question as to whether the Exchange Offer is permitted by applicable law,
the Issuers agree to seek a no-action letter or other favorable decision
from the Commission allowing the Issuers to Consummate an Exchange Offer
for such Series A Notes. The Issuers agree to pursue the issuance of such a
decision to the Commission staff level but shall not be required to take
commercially unreasonable action to effect a change of Commission policy.
The Issuers agree, however, to (A) participate in telephonic conferences
with the Commission, (B) deliver to the Commission staff an analysis
prepared by counsel to the Issuers setting forth the legal bases, if any,
upon which such counsel has concluded that such an Exchange Offer should be
permitted and (C) diligently pursue 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 Issuers, prior to the
Consummation thereof, a written representation to the Issuers (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
either of the Issuers, (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 Series B Notes to be issued in the
Exchange Offer and (C) it is acquiring the Series B Notes in its ordinary
course of business. In addition, all such Holders of Transfer Restricted
Securities shall otherwise cooperate in the Issuers' preparations for the
Exchange Offer. 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 effec t 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 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 should 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 Series B Notes obtained by such Holder in exchange
for Series A Notes acquired by such Holder directly from the Issuers.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Issuers shall provide a supplemental letter to the
Commission (A) stating that the Issuers are registering the Exchange Offer
in reliance on the position of the Commission
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enunciated in Exxon Capital Holdings Corporation (available May 13, 1988),
----------------------------------
Morgan Stanley and Co., Inc. (available June 5, 1991) and , if applicable,
----------------------------
and no-action letter obtained pursuant to clause (i) above and (B)
including a representation that the Issuers have not entered into any
arrangement or understanding with any Person to distribute the Series B
Notes to be received in the Exchange Offer and that, to the best of the
Issuers' information and belief, each Holder participating in the Exchange
Offer is acquiring the Series B Notes in its ordinary course of business
and has no arrangement or understanding with any Person to participate in
the distribution of the Series B Notes received in the Exchange Offer.
(b) Shelf Registration Statement. In connection with the Shelf
----------------------------
Registration Statement, the Issuers shall comply with all the provisions of
Section 6(c) below and shall use their 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, and
pursuant thereto the Issuers 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 method or
methods of distribution thereof.
(c) General Provisions. In connection with any Registration Statement and
------------------
any Prospectus required by this Agreement to permit the sale or resale of
Transfer Restricted Securities (including, without limitation, any Registration
Statement and the related Prospectus required to permit resales of Notes by
Broker-Dealers), the Issuers shall:
(i) use their best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements for
the period specified in Section 3 or 4 of this Agreement, 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 Issuers shall file promptly an appropriate amendment to such
Registration Statement, in the case of clause (A), correcting any such
misstatement or omission, and, in the case of either clause (A) or (B), use
their best efforts to cause such amendment to be declared effective and
such Registration Statement and the related Prospectus to become usable for
their intended purpose(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 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
the applicable provisions of Rules 424 and 430A 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
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<PAGE>
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, to 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) after obtaining
knowledge thereof, 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 or the
Prospectus in order to make the statements therein not misleading and (E)
of the suspension of effectiveness of the Shelf Registration Statement
pursuant to the terms of Section 4(a) hereof. 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 Issuers shall use their best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(iv) furnish to each of the selling Holders and each of the
underwriter(s), if any, before filing with the Commission, copies of any such
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 of such
Holders and underwriter(s), if any, for a period of at least five business days,
and the Issuers 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 a selling
Holder of Transfer Restricted Securities covered by such Registration Statement
or the underwriter(s), 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;
(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), if
any, make the Issuers' representatives available for discussion of such document
and other customary due diligence matters, and
9
<PAGE>
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 the underwriter(s), all financial and other
records, pertinent corporate documents and properties of the Issuers and
cause the Issuers' officers, directors and employees to supply all
information reasonably requested by any such Holder, underwriter, attorney
or accountant in connection with such Registration Statement subsequent to
the filing thereof and prior to its effectiveness;
(vii) if requested by any selling Holders or the underwriter(s),
if any, promptly incorporate 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 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
Issuers are notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated or to maintain the rating thereof with
the appropriate rating agencies, if so requested by the Holders of a
majority in aggregate principal amount of Notes covered thereby or the
underwriter(s), if any;
(ix) furnish to each selling Holder and each of the underwriter(s),
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 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 Issuers hereby consent 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 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, all to such extent
as may be requested by the Initial Purchaser or by any Holder of Transfer
10
<PAGE>
Restricted Securities or underwriter in connection with any sale or resale
pursuant to any Registration Statement contemplated by this Agreement; and
whether or not an underwriting agreement is entered into and whether or not the
registration is an Underwritten Registration, the Issuers shall:
(A) furnish to the Initial Purchaser, each selling Holder and each
underwriter, if any, in such substance and scope as they may request and as
are customarily made by issuers to underwriters in primary underwritten
offerings, upon the date of the Consummation of the Exchange Offer and, if
applicable, the effectiveness of the Shelf Registration Statement:
(1) an Officer's Certificate, dated the date of the Consummation
of the Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, signed by (y) the
President or any Vice President and (z) a principal financial or
accounting officer of each of the Issuers, confirming, as of the date
thereof, the matters set forth in clauses (a)(i), (a)(ii) and (a)(iii)
of Section 11 of the Purchase Agreement and such other matters as such
parties may reasonably request;
(2) an opinion, dated the date of Consummation of the Exchange
Offer or the date of effectiveness of the Shelf Registration
Statement, as the case may be, of counsel for each of the Issuers,
Casino America and Nevada Gold covering the matters set forth in
clauses (a)(v), (a)(vi), (a)(vii) and (a)(viii) of Section 11 of the
Purchase Agreement and such other matter as such parties may
reasonably request, and in any event including a statement to the
effect that such counsel has participated in conferences with officers
and other representatives of the Issuers, representatives of the
independent public accountants for the Issuers, the Initial
Purchaser's representatives and the Initial Purchasers' counsel 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 officers and other
representatives of the Issuers and without independent check or
verification), 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
11
<PAGE>
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 light of the circumstances under which they
were made, not misleading. Without limiting the foregoing, such
counsel may state further that 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 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
Consummation of the Exchange Offer or the date of effectiveness of the
Shelf Registration Statement, as the case may be, from the Issuers'
independent accountants, in the customary form and covering matters of
the type customarily covered in comfort letters by underwriters in
connection with primary underwritten offerings, and affirming the
matters set forth in the comfort letters delivered pursuant to
clause(a)(x) Section 11 of the Purchase Agreement, without material
exception;
(B) set forth in full or incorporate by reference in the underwriting
agreement, if any, 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 Issuers pursuant to this
clause (ix), if any.
If at any time the representations and warranties of the Issuers contemplated
in clause (A)(1) above cease to be true and correct, the Issuers shall so advise
the Initial Purchaser and the underwriter(s), if any, and each selling Holder
promptly and, if requested by such Persons, shall confirm such advice in
writing;
(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) 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 Shelf
Registration Statement; provided, however, the Issuers shall not be required to
register or qualify as a foreign corporation where 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;
12
<PAGE>
(xiii) shall issue, upon the request of any Holder of Series A Notes
covered by the Shelf Registration Statement, Series B Notes, having an
aggregate principal amount equal to the aggregate principal amount of
Series A Notes surrendered to the Issuers by such Holder in exchange
therefor or being sold by such Holder; such Series B Notes to be registered
in the name of such Holder or in the name of the purchaser(s) of such
Notes, as the case may be; in return, the Series A Notes held by such
Holder shall be surrendered to the Issuers for cancellation;
(xiv) 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 enable such Transfer Restricted Securities to be
in such denominations and registered in such names as the Holders or the
underwriter(s), if any, may request at least two business days prior to any
sale of Transfer Restricted Securities made by such underwriter(s);
(xv) use their 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 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 (x) above;
(xvi) if any fact or event contemplated by clause (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 Initial Purchasers of
Transfer Restricted Securities and for the period specified in Sections 3
and 4 hereof, 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 not misleading;
(xvii) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of the Registration Statement 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 reasonable 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 their best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to
its security holders, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
for the twelve-month period (A) commencing at the end of any fiscal quarter
in which Transfer Restricted Securities are sold to underwriters in a
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<PAGE>
firm or best efforts Underwritten Offering or (B) if not sold to
underwriters in such an offering, beginning with the first month of the
Issuers' first fiscal quarter commencing after the effective date of the
Registration Statement;
(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 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 Issuers 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 and
Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security that, upon
receipt of any notice from the Issuers of the existence of any fact of the kind
described in Section 6(c)(iii)(D) or (E) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement (i) in the case of Section (c)(iii)(D) hereof,
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(xv) hereof, or until it is advised in
writing (the "Advice") by the Issuers 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 and (ii) in the case of Section
(c)(iii)(E) hereof, until 20 days after the date of such notice. If so directed
by the Issuers, each Holder will deliver to the Issuers (at the Issuers'
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 Issuers
shall give any such notice, the time period regarding the effectiveness of such
Registration Statement set forth in Section3 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 Issuers' performance of or compliance
with this Agreement will be borne by the Issuers, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses of any "qualified independent
underwriter" and its counsel that may be required by the rules and
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<PAGE>
regulations the NASD; (ii) all fees and expenses of compliance with federal
securities state Blue Sky or securities laws; (iii) all expenses of printing
(including printing certificates for the Series B 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 each of the
Issuers and, subject to Section 7(b) below, the Holders of Transfer Restricted
Securities; (v) as applicable or required, all application and filing fees in
connection with listing Notes on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and (vi) all fees and
disbursements of independent certified public accountants of the Issuers
(including the expenses of any special audit and comfort letters required by or
incident to such performance). The Issuers will, in any event, bear its internal
expenses (including, without limitation, all salaries and expenses of their
respective 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 Issuers. In connection with any Registration
Statement required by this Agreement (including, without limitation, the
Exchange Offer Registration Statement and the Shelf Registration Statement), the
Issuers 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, who shall be Latham & Watkins or such other counsel as may be
chosen by the 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 Issuers, jointly and severally, agree to indemnify and hold
harmless (i) each Holder and (ii) each person, if any, who controls (within the
meaning of Section15 of the Act or Section 20 of the Exchange Act) any Holder
(any of the persons referred 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
------------------
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 (i) an untrue
statement or omission or alleged untrue statement or omission that is made in
reliance upon and in conformity with information relating
15
<PAGE>
to any of the Holders furnished in writing to the Issuers 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
Issuers, such Indemnified Holder (or the Indemnified Holder controlled by such
controlling person) shall promptly notify the Issuers in writing (provided, that
the failure to give such notice shall not relieve the Issuers of their
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 by the Issuers (unless it is ultimately determined
that an Indemnified Holder is not entitled to indemnification hereunder). The
Issuers 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 Issuers shall be
liable for any settlement of any such action or proceeding effected with the
Issuers' prior written consent, which consent shall not be withheld
unreasonably, and the Issues agree 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 written
consent of the Issuers. The Issuers 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 Issuers, and their respective
directors, officers, and any person controlling (within the meaning of Section
15 of the Act or Section 20 of the Exchange Act) the Issuers, and the respective
officers, directors, partners, employees, representatives and agents of each
such person, to the same extent as the foregoing indemnity from the Issuers to
each of the Indemnified Holders, but only with respect to claims and actions (i)
based on information relating to such Holder furnished in writing by such Holder
expressly for use in any Registration Statement.
(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
16
<PAGE>
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 the relative benefits received by the Issuers 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
Issuers 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 Issuers 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 relates to information supplied by the
Issuers 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 limitations 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.
The Issuers 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 proceeds
received by such Holder from sales of Series A Notes exceeds the sum of (i) the
amount paid by such Holder for such Series A Notes plus (ii) the amount 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 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. The Holders' obligations to contribute
pursuant to this Section 8(c) are several in proportion to the respective
principal amount of Series A Notes held by each of the Holders hereunder and not
joint.
SECTION 9. RULE 144A
The Issuers hereby agree with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective Initial Purchaser of such Transfer Restricted
Securities from 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.
17
<PAGE>
SECTION 10. PARTICIPATION IN 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 approved by the Persons entitled hereunder to approve such
arrangements 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.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or 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 Issuers.
SECTION 12. MISCELLANEOUS
(a) Remedies. The Issuers agree that monetary damages (including the
--------
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 Issuers will not on or after the date
--------------------------
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 Issuers have 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 Issuers' securities under any agreement in effect on the date
hereof.
(c) Adjustments Affecting the Notes. The Issuers will not take any or
-------------------------------
permit any change to occur, with respect to the Notes that would materially and
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 Issuers have obtained the
written consent of Holders of a majority of the then 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
18
<PAGE>
of a majority of the outstanding principal amount of Transfer Restricted
Securities being tendered or registered.
(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), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at 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 Issuers:
Isle of Capri Black Hawk L.L.C.
Isle of Capri Black Hawk Capital Corp.
c/o Casino America, Manager
711 Washington Loop
Biloxi, Mississippi 39530
Telecopier No.: (601) 435-5998
Attention:____________________
With a copy to:
Mayer, Brown & Platt
190 S. LaSalle Street, Suite 3100
Chicago, Illinois 60603
Telecopier No.: (312) 701- 7711
Attention: Paul Theiss
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt 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 only to the extent such successor or assign
acquired Transfer Restricted Securities from such Holder.
(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
19
<PAGE>
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
------------
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 Issuers with respect to
the Transfer Restricted Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
20
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
ISLE OF CAPRI BLACK HAWK L.L.C.
By:__________________________________
Name:
Title:
ISLE OF CAPRI BLACK HAWK CAPITAL
CORP.
By:__________________________________
Name:
Title:
JEFFERIES & COMPANY, INC.
By:______________________________
Name:
Title:
21
<PAGE>
EXHIBIT B
FORM OF OPINION OF MAYER, BROWN & PLATT
(a) The Series A Notes have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Initial Purchaser in accordance with the terms of this
Agreement, will be entitled to the benefits of the Indenture and will be valid
and binding obligations of the each of the Issuers, enforceable against each of
them in accordance with their terms except as (x) the enforceability thereof may
be limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (y) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability.
(b) The Series B Notes have been duly authorized and, when executed,
authenticated and delivered in accordance with the provisions of the Indenture
and the Registration Rights Agreement, will be entitled to the benefits of the
Indenture and will be valid and binding obligations of the each of the Issuers,
enforceable against each of them in accordance with their terms except as (x)
the enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (y) rights of acceleration and
the availability of equitable remedies may be limited by equitable principles of
general applicability.
(c) The Indenture has been duly authorized, executed and delivered by each
of the Issuers and is a valid and binding agreement of each of the Issuers,
enforceable against each of them in accordance with its terms except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (y) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability.
(d) The Purchase Agreement has been duly authorized, executed and
delivered by each of the Issuers and is a valid and binding agreement of each of
the Issuers, enforceable against each of the Issuers in accordance with its
terms, except as (x) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally, (y) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability and (z) the unenforceability under
certain circumstances under law or court decisions of provisions providing for
the indemnification of or contribution to a party with respect to a liability
where such indemnification or contribution is contrary to public policy or
prohibited by law.
(e) The Registration Rights Agreement has been duly authorized, executed
and delivered by each of the Issuers and is a valid and binding agreement of
each of the Issuers, enforceable against each of the Issuers in accordance with
its terms, except as (x) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors' rights generally,
(y) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability and (z) the
unenforceability under certain circumstances under law or court decisions of
provisions providing for the
<PAGE>
indemnification of or contribution to a party with respect to a liability where
such indemnification or contribution is contrary to public policy or prohibited
by law.
(f) The Management Agreement, the License Agreement and the Design/Build
Agreement have been duly authorized, executed and delivered by the Company and
each of them is a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability.
(g) The Subdivision Agreement has been duly authorized by the Company and,
upon due execution and delivery by the Company and the city of Black Hawk, will
be a valid and binding agreement of the Company in accordance with its terms,
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
(h) The execution, delivery and performance of the Purchase Agreement, the
Indenture, the Series A Notes, the Series B Notes, the Registration Rights
Agreement, the Management Agreement, the License Agreement, the Design/Build
Agreement, the Completion Capital Commitment, the Manager Subordination
Agreement and the Collateral Documents by each of the Issuers to which either of
them is a party, compliance by each of the Issuers and with all provisions
hereof and thereof and the consummation of the transactions contemplated hereby
and thereby will not (i) other than approvals required to be obtained from the
Securities and Exchange Commission in connection with the Exchange Offer and any
permits and approvals required to be obtained pursuant to the performance of the
Design/Build Agreement, require any consent, approval, authorization or other
order of, or qualification with, any court or governmental body or agency
(except such as may be required under the securities or Blue Sky laws of the
various states), (ii) conflict with or constitute a breach of any of the terms
or provisions of, or a default under, the operating agreement of the Company or
the charter or bylaws of Capital or any indenture, loan agreement, mortgage,
lease or other agreement or instrument that is identified by the Issuers in a
certificate as material to either of the Issuers, to which either of the Issuers
is a party or by which either of the Issuers or their respective property is
bound, (iii) violate or conflict with any applicable law or any rule or
regulation known by such counsel to be applicable to the transactions
contemplated by such agreements or any judgment, order or decree of any court or
any governmental body or agency having jurisdiction over either of the Issuers
or their respective property, (iv) result in the imposition or creation of (or
the obligation to create or impose) a Lien under, any agreement or instrument
that is identified by the Issuers in a certificate as material to either of the
Issuers or their respective properties, or (v) other than with respect to
Authorizations (as defined below) issued under the laws of the state of
Colorado, result in the termination or revocation of any Authorization of either
of the Issuers or result in any other impairment of the rights of the holder of
any such Authorization;
B-2
<PAGE>
(i) The statements under the captions "Material Agreements," "Description
of Notes" and "Plan of Distribution" in the Offering Circular, insofar as such
statements constitute a summary of the legal matters, documents or proceedings
referred to therein, fairly present in all material respects such legal matters,
documents and proceedings;
(j) The Company is not in violation of its operating agreement and Capital
is not in violation of its charter or bylaws and, to the best of such counsel's
knowledge after due inquiry, neither of the Issuers is in default in the
performance of any obligation, agreement, covenant or condition contained in any
indenture, loan agreement, mortgage, lease or other agreement or instrument that
is material to either of the Issuers, to which either of the Issuers is a party
or by which either of the Issuers or their respective property is bound;
(k) The Indenture, the Series A Notes, the Series B Notes, the Purchase
Agreement, the Registration Rights Agreement, the Completion Capital Commitment,
the Manager Subordination Agreement and the Collateral Documents select the
internal laws of the state of New York as their governing laws. A New York
state court or a federal court sitting in New York will honor the parties'
choice of the internal laws of the state of New York as the law applicable to
such documents.
(l) After due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which either of the Issuers is
or could be a party or to which any of their respective property is or could be
subject, which might reasonably be expected to result, singly or in the
aggregate, in a Material Adverse Effect.
(m) Neither of the Issuers has any reason to believe that any such
Authorization necessary in the future to own or operate the Isle-Black Hawk in
the manner described in the Offering Circular, including without limitation, any
Gaming License and Liquor License, will not be granted upon application (or,
alternatively, that the necessity to obtain such license, permit or approval
will not be waived), or that any Gaming Authority or Liquor Licensing Authority
or any other governmental agencies are investigating either of the Issuers or
related parties, other than in ordinary course administrative reviews or any
ordinary course review of the transactions contemplated hereby.
(n) Assuming the Issuers engage in the development of the Isle-Black Hawk,
neither of the Issuers is and, after giving effect to the offering and sale of
the Series A Notes and the application of the net proceeds thereof as described
in the Offering Circular, will not be, an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended;
(o) To the best of such counsel's knowledge after due inquiry, there are
no contracts, agreements or understandings between the either of the Issuers and
any person granting such person the right to require either of the Issuers to
file a registration statement under the Act with respect to any securities of
either of the Issuers or to require either of the Issuers to include such
securities with the Notes registered pursuant to any Registration Statement;
B-3
<PAGE>
(p) The Indenture complies as to form in all material respects with the
requirements of the TIA, and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder. It is not necessary
in connection with the offer, sale and delivery of the Series A Notes to the
Initial Purchaser in the manner contemplated by this Agreement or in connection
with the Exempt Resales to qualify the Indenture under the TIA.
(q) No registration under the Act of the Series A Notes is required for
the sale of the Series A Notes to the Initial Purchaser as contemplated by this
Agreement or for the Exempt Resales assuming that (i) the Initial Purchaser is a
QIB, (ii) the accuracy of, and compliance with, the Initial Purchaser's
representations and agreements contained in Section 9 of this Agreement, (iii)
the accuracy of the representations of the Issuers set forth in Sections 6(ee),
6(ff) or 6(gg) of this Agreement and (iv) with respect to Accredited
Institutions, the accuracy of the representations made by each such Accredited
Institution as set forth in the letter of representation executed by such
Accredited Institution in the form of Annex A to the Offering Circular.
-------
(r) Such counsel has no reason to believe that, as of the date of the
Offering Circular or as of the Closing Date, the Offering Circular, as amended
or supplemented, if applicable (except for the financial statements and related
notes, financial statement schedules and other financial, statistical and
accounting data included therein, as to which such counsel need not express any
belief) contains any untrue statement of a material fact or omits 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.
(s) Except as described in the Offering Circular, no consent, approval,
authorization, or filing of or with any court or governmental authority or
agency is now required for the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby and
thereby, including the issuance, sale and delivery of the Notes, except the
registration under the Act of the Notes, the qualification of the Indenture
under the TIA and such as may be required under state securities, Blue Sky or
real estate syndication laws, gaming laws or liquor licensing laws which have
been obtained or made to the extent required as of the date hereof and are in
full force and effect.
(t) The provisions of the Pledge and Assignment are effective to create
valid security interests in favor of the Trustee for the benefit of the Holders
in the collateral described in the Pledge and Assignment (the "Pledge
Collateral"), including, without limitation, collateral which (i) is subject to
Article 8 of the New York UCC, (ii) is subject to Article 9 of the New York UCC,
(iii) constitutes deposit accounts excluded from the coverage of Article 9 of
the New York UCC by Section 9-104(l) thereof, or (iv) constitutes securities
issued by the federal government or any agency or instrumentality thereof
excluded from the coverage of Article 8 of the New York UCC, as security for the
payment, to the extent set forth therein, of all obligations of the Issuers to
the Trustee under the Transaction Documents.
(u) Assuming (i) that all confirmations required to be executed pursuant
to the Pledge and Assignment have been so executed, (ii) the accuracy of the
factual statements made in
B-4
<PAGE>
Section 3 of each such confirmation by the party executing such confirmation,
and (iii) that the party executing such confirmation has completed Exhibit 1 to
such confirmation in accordance with the terms of such confirmation, upon taking
the actions set forth in Section 3 of, and listed on Exhibit 1 to, such
confirmation, the security interest in favor of the Trustee for the benefit of
the Holders in the Pledge Collateral will be perfected.
(v) The financing statement is in appropriate form for filing in the
Office of the Secretary of State of the State of New York. Upon the proper
filing of the financing statement in the Office of the Secretary of State of the
State of New York [and [add local filing offices as necessary]] the security
interest in favor of the Trustee for the benefit of the Holders in the Pledge
Collateral will be perfected to the extent a security interest in such Pledge
Collateral can be perfected by filing a financing statement under the provisions
of the New York UCC.
(w) It is our opinion that a federal or state court sitting in New York
will honor the parties' choice of the internal laws of the State of New York as
the law applicable to the Transaction Documents (to the extent set forth in such
Transaction Documents) and to the determination of whether the obligations
created by the Transaction Documents are usurious.
(x) The Subdivision Agreement has been duly authorized by the Company.
(y) The provisions of the Security Agreement and the Collateral Assignment
are effective to create valid security interests in favor of the Trustee for the
benefit of itself and the ratable benefit of the Note Holders, in that portion
of the collateral described in each such document which is subject to Article 9
of the UCC (the "Collateral") as security for the payment, to the extent set
forth therein, of all obligations of the Issuers under the Transaction
Documents.
(z) Assuming the Trustee takes possession of and holds the shares of
capital stock listed on Schedule ___ to the Pledge Agreement (the "Pledged
Shares"), delivered to the Trustee pursuant to the Pledge Agreement, with
undated stock powers duly indorsed in blank, in the State of New York, the
Pledge Agreement creates a valid and perfected security interest in favor of the
Trustee for the benefit of itself and the Note Holders in the rights in such
Pledged Shares which each Pledgor (as defined in the Pledge Agreement) has or
has actual authority to convey, free of any adverse claim, as security for the
payment, to the extent set forth in the Pledge Agreement, of all obligations of
the Issuers under the Transaction Documents.
(aa) Capital Corp.'s authorized capital stock consists of _______________
shares of common stock, all of which have been duly authorized and validly
issued, are fully paid and nonassessable, and, based solely on our review of
Capital Corp.'s stock records, are owned of record by the Company indicated as
the owner of such shares on Schedule ___ to the Pledge Agreement.
(bb) [Note: No opinion is currently being requested regarding instruments
pledged pursuant to the Pledge Agreement because we understand that there will
be no instruments at closing.]
B-5
<PAGE>
The opinion of Mayer, Brown & Platt described above shall be rendered at
the request of the Issuers and shall so state therein. In giving such opinion,
as to matters of Colorado law, Mayer, Brown & Platt may rely upon an opinion of
Brownstein Hyatt Farber & Strickland, P.C. In addition, in giving an opinion
with respect to the matters covered by paragraph (q) above, Mayer, Brown & Platt
may state that its opinion and belief are based upon its participation in
conferences with directors, officers and other representatives of the Issuers,
representatives of the independent public accountants for the Issuers, your
representatives and representatives of your counsel, at which conferences the
contents of the Offering Circular and related matters were discussed, but has
not, except as expressly set forth above, independently verified and do is not
passing upon and assumes no responsibility for the accuracy, completeness or
fairness of the statements contained in the Offering Circular.
B-6
<PAGE>
EXHIBIT C
FORM OF OPINION OF BROWNSTEIN HYATT FARBER & STRICKLAND, P.C.
(a) Each of the Issuers is duly organized, validly existing and in good
standing under the laws of the State of Colorado and has all necessary power and
authority to carry on its business as described in the Preliminary Offering
Circular and the Final Offering Circular and to own, lease and operate its
properties.
(b) Each of the Issuers is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in which the
nature of its business or its ownership or leasing of property requires such
qualification.
(c) All the outstanding membership interests of the Company have been
duly authorized and validly issued and are fully paid, non-assessable and not
subject to any preemptive or similar rights.
(d) All of the outstanding shares of capital stock of Capital have been
duly authorized and validly issued and are fully paid, non-assessable, and are
owned by the Company, free and clear of any Lien.
(e) Each of the Collateral Documents has been duly authorized, executed
and delivered by each of the Issuers and is a valid and binding agreement of
each of the Issuers, enforceable against each of them in accordance with its
terms except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability.
(f) The execution, delivery and performance of the Collateral Documents
by each of the Issuers to which either of them is a party, compliance by each of
the Issuers and with all provisions hereof and thereof and the consummation of
the transactions contemplated hereby and thereby will not (i) require any
consent, approval, authorization or other order of, or qualification with, any
court or governmental body or agency (except such as may be required under the
securities or Blue Sky laws of the various states), (ii) conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
the charter or bylaws of either of the Issuers or any indenture, loan agreement,
mortgage, lease or other agreement or instrument that is material to either of
the Issuers, to which either of the Issuers is a party or by which either of the
Issuers or their respective property is bound, (iii) violate or conflict with
any applicable law or any rule, regulation, judgment, order or decree of any
court or any governmental body or agency having jurisdiction over either of the
Issuers or their respective property, (iv) result in the imposition or creation
of (or the obligation to create or impose) a Lien under, any agreement or
instrument to which either of the Issuers is a party or by which either of the
Issuers or their respective property is bound, or (v) result in the termination
or revocation of any Authorization (as defined below) of either the Issuers or
result in any other impairment of the rights of the holder of any such
Authorization.
<PAGE>
(g) Neither of the Issuers has any outstanding options to purchase, or
any preemptive rights or other rights to subscribe for or purchase, any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, equity interests or any such options, rights, convertible
securities or obligations.
(h) The statements under the caption "Risk Factors Ability to Realize on
Collateral; Bankruptcy Considerations," "Risk Factors Certain Bankruptcy
Considerations Limited Liability Companies," "Risk Factors Mechanic's Liens,"
"Risk Factors Gaming Regulation," "Risk Factors Legislative Issues," "Risk
Factors State Gaming Tax Issues" and "Gaming and Liquor Regulatory Matters" in
the Offering Circular, insofar as such statements constitute a summary of the
legal matters, documents or proceedings referred to therein with respect to
Colorado law, fairly present in all material respects such legal matters,
documents and proceedings;
(i) After due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which either of the Issuers is
or could be a party or to which any of their respective property is or could be
subject, which might result, singly or in the aggregate, in a Material Adverse
Effect.
(j) Neither of the Issuers has violated any Environmental Laws or any
provisions of ERISA, or the rules and regulations promulgated thereunder, except
for such violations which, singly or in the aggregate, would not have a Material
Adverse Effect.
(k) Other than as disclosed in the Offering Circular, 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
either of the Issuers 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 Environmental Law) or any violation of any Environmental Law.
(l) Each of the Issuers has such Authorizations of, and has made all
filings with and notices to, all governmental or regulatory authorities and
self-regulatory organizations and all courts and other tribunals, including
without limitation, under any applicable Environmental Laws, as are necessary to
own, lease, license and operate its properties and to conduct its business in
the manner described in the Offering Circular, except for Authorizations which
the Issuers would not customarily possess at the date hereof but which will be
obtained in the ordinary course of development of the Isle-Black Hawk and except
for any Authorizations to be issued by any Gaming Authority or Liquor Licensing
Authority which are necessary for the Company to own and operate the Isle-Black
Hawk, and no such Authorization contains, or will upon the issuance thereof
contain, a materially burdensome restriction. Each such Authorization is valid
and in full force and effect and the each of the Issuers is in compliance with
all the terms and conditions thereof and with the rules and regulations of the
authorities and governing bodies
C-2
<PAGE>
having jurisdiction with respect thereto; and no event has occurred (including,
without limitation, the receipt of any notice from any authority or governing
body) which allows or, after notice or lapse of time or both, would allow,
revocation, suspension or termination of any such Authorization or results or,
after notice or lapse of time or both, would result in any other impairment of
the rights of the holder of any such Authorization; and such Authorizations
contain no restrictions that are burdensome to each of the Issuers. Neither of
the Issuers has any reason to believe that any governmental body or agency is
considering limiting, suspending or revoking any such Authorization. Neither of
the Issuers has any reason to believe that any such Authorization necessary in
the future to own or operate the Isle-Black Hawk in the manner described in the
Offering Circular, including without limitation, any Gaming License or Liquor
License, will not be granted upon application (or, alternatively, that the
necessity to obtain such license, permit or approval will not be waived), or
that any Gaming Authority or Liquor Licensing Authority or any other
governmental agencies are investigating either of the Issuers or related
parties, other than in ordinary course administrative reviews or any ordinary
course review of the transactions contemplated hereby.
(m) As of the Closing Date, the Company will have good and marketable
title in fee simple to the Casino America Parcel free and clear of Liens and
defects, except such as are described in the Offering Circular or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company.
(n) The Indenture will qualify as the "evidence of indebtedness" under
Section ___ of the [Colorado law].
(o) To the best knowledge of such counsel, there is no statute, rule,
regulation or order that has been enacted, adopted or issued by any governmental
agency which could have a Material Adverse Effect.
(p) The contemplated operation and use of the Isle-Black Hawk, including
the construction of the Isle-Black Hawk, will be (giving effect to any waivers
or variances which may be obtained) in compliance with all applicable municipal,
county, state and federal laws, regulations, ordinances, standards, orders, and
other regulations, where the failure to comply therewith could have a material
adverse effect on the business, property, condition (financial or otherwise) or
operation of the Isle-Black Hawk as it is contemplated to be operated. Under
applicable zoning and use laws, ordinances, rules and regulations, the Isle-
Black Hawk may be used for the purposes contemplated in the Offering Circular
and the Indenture and the related documents, and all necessary subdivision
approvals have been obtained for the Isle-Black Hawk except to the extent the
failure to have or obtain any such approval would not have a material adverse
effect on the business, condition (financial or otherwise), operations,
properties or prospects of either of the Issuers.
(q) The Deed of Trust is in form sufficient (i) to create a valid lien and
security interest in that portion of the Trust Property (as defined in the Deed
of Trust) which constitutes fixtures under the Colorado UCC (the "Colorado
Fixtures") and (ii) to constitute a fixture filing,
C-3
<PAGE>
in accordance with the provisions of the Colorado UCC, covering the portion of
the Trust Property which constitutes fixtures under the Colorado UCC.
(r) Upon the proper recording of the Deed of Trust in the Official
Records of the county in which the portion of the Trust Property under the Deed
of Trust which constitutes real property in Colorado ("Colorado Real Property")
is located, the Deed of Trust will impart notice of the interest of the Trustee,
as beneficiary thereunder, with respect to the Colorado Real Property under
Colorado law.
(s) The priority of the lien of the Deed of Trust, to the extent such Deed
of Trust secures future advances, is determined under Colorado law by the date
on which the Deed of Trust is recorded.
(t) The provisions of each of the Security Agreement and the Collateral
Assignment are effective to create valid security interests in favor of the
Trustee for the benefit of the Holders in that portion of the collateral
described in the Security Agreement and the Collateral Assignment which is
subject to Article 9 of the New York UCC (the "Article 9 Collateral") as
security for the payment, to the extent set forth therein, of all obligations of
the Issuers to the Trustee under the Transaction Documents.
(u) Assuming the Trustee takes possession of and holds the shares of
capital stock listed on Part I of Schedule 1 to the Issuer Pledge Agreement (the
"Pledged Shares"), delivered to the Trustee pursuant to the Issuer Pledge
Agreement in the State of New York, the Issuer Pledge Agreement creates a valid
and perfected security interest in favor of the Trustee for the benefit of the
Holders in the rights in such Pledged Shares which each Pledgor (as defined in
the Pledge Agreement) has or has actual authority to convey as security for the
payment, to the extent set forth in the Issuer Pledge Agreement, of all
obligations of the Issuers to the Holders under the Transaction Documents.
(v) Assuming the Trustee takes possession of and holds the promissory
notes listed on Part II of Schedule 1 to the Issuer Pledge Agreement (the
"Pledged Notes"), delivered to the Trustee for the benefit of the Holders
pursuant to the Issuer Pledge Agreement in the State of New York, the Issuer
Pledge Agreement creates a valid and perfected security interest in favor of the
Trustee for the benefit of the Holders in such Pledged Notes as security for the
payment, to the extent set forth in the Issuer Pledge Agreement, of all
obligations of the Company to the Holders under the Transaction Documents.
(w) It is our opinion that a federal or state court sitting in Colorado
will honor the parties' choice of the internal laws of the State of New York as
the law applicable to the Transaction Documents (to the extent set forth in such
Transaction Documents) and to the determination of whether the obligations
created by the Transaction Documents are usurious.
C-4
<PAGE>
EXHIBIT D
FORM OF OPINION OF CASINO AMERICA COUNSEL
(a) Each of Casino America and Casino Colorado is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all necessary power and authority to carry on its business
and to own, lease and operate its properties.
(b) Each of Casino America and Casino Colorado is duly qualified and is
in good standing as a foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or its ownership or leasing of
property requires such qualification, except, with respect to Casino America,
where the failure to be so qualified would not have a material adverse effect on
its business, prospects, financial condition or results of operations.
(c) All of the outstanding shares of capital stock of Casino Colorado
have been duly authorized and validly issued and are fully paid, non-assessable
and are not subject to any preemptive or similar rights, and are owned by Casino
America, free and clear of any Liens.
(d) The Purchase Agreement has been duly authorized, executed and
delivered by Casino America and is a valid and binding agreement of Casino
America, enforceable against Casino America in accordance with its terms, except
as (x) the enforceability thereof may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally and (y) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability;
(e) The Management Agreement, Completion Capital Commitment, the License
Agreement, the Manager Subordination Agreement and the Land Purchase Contract
has been duly authorized, executed and delivered by Casino America and is a
valid and binding agreement of Casino America, enforceable against Casino
America in accordance with its terms except as (i) the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability.
(f) The execution, delivery and performance of the Purchase Agreement, the
Management Agreement, the Completion Capital Commitment, the Manager
Subordination Agreement, the License Agreement and the Land Purchase Agreement
and compliance by Casino America with all provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby will not (i)
require any consent, approval, authorization or other order of, or qualification
with, any court or governmental body or agency or any other person (except such
as may be required under the securities or Blue Sky laws of the various states),
(ii) conflict with or constitute a breach of any of the terms or provisions of,
or a default under, the charter or bylaws of Casino America, or any indenture,
loan agreement, mortgage, lease or other agreement or instrument that is
material to Casino America, to which Casino America is a party or by which
Casino America or its property is bound, (iii) violate or conflict with any
applicable law or any rule, regulation, judgment, order or decree of any court
or any governmental body or agency having jurisdiction over Casino America or
its property or (iv)
D-2
<PAGE>
result in the imposition or creation of (or the obligation to create or impose)
a Lien under, any agreement or instrument to which Casino America is a party or
by which Casino America or its property is bound.
(g) Casino America owns all trademarks which are to be licensed to the
Company pursuant to the terms of the License Agreement for use by the Company at
the Isle-Black Hawk and Casino America has not received any notice of, and is
not otherwise aware of, any infringement of, or conflict with, asserted rights
of others with respect to the foregoing.
(h) Casino America is not in default in the performance or observance of
any obligation, agreement, covenant or condition contained in the indenture
governing the 12-1/2% First Mortgage Notes due 2003 issued by Casino America.
(i) The financing statement is in appropriate form for filing in the
Office of the Secretary of State of the State of Mississippi. Upon the proper
filing of the financing statement in the Office of the Secretary of State of the
State of Mississippi [and [add local filing offices as necessary]] the security
interest in favor of the Trustee for the benefit of the Holders in the Article 9
Collateral will be perfected to the extent a security interest in such Article 9
Collateral can be perfected by filing a financing statement under the provisions
of the Mississippi UCC.
D-2
<PAGE>
EXHIBIT E
FORM OF OPINION OF NEVADA GOLD COUNSEL
(a) Each of Nevada Gold and Blackhawk Gold is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all necessary power and authority to carry on its business
and to own, lease and operate its properties.
(b) Nevada Gold is duly qualified and is in good standing as a foreign
corporation authorized to do business in Texas and Colorado and to our knowledge
neither Nevada Gold nor Blackhawk Gold requires qualification or good standing
as a foreign corporation in any other jurisdiction, except, where the failure to
be so qualified would not have a material adverse effect on its business,
prospects, financial condition or results of operations.
(c) All of the outstanding shares of capital stock of Blackhawk Gold have
been duly authorized and validly issued and are fully paid, non-assessable and
are not subject to any preemptive or similar rights, and are owned by Nevada
Gold, free and clear of any Liens.
(d) The Purchase Agreement has been duly authorized, executed and
delivered by Nevada Gold and is a valid and binding agreement of Nevada Gold,
enforceable against Nevada Gold in accordance with its terms, except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (y) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability;
(e) The Exchange Commitment Letter has been duly authorized, executed and
delivered by Nevada Gold and is a valid and binding agreement of Nevada Gold,
enforceable against Nevada Gold in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability.
(f) The execution, delivery and performance of the Purchase Agreement,
the Exchange Commitment Letter and the Voting Agreement and compliance by Nevada
Gold with all provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not (i) require any consent,
approval, authorization or other order of, or qualification with, any court or
governmental body or agency or any other person (except such as may be required
under the securities or Blue Sky laws of the various states), (ii) conflict with
or constitute a breach of any of the terms or provisions of, or a default under,
the operating agreement, charter or bylaws of Nevada Gold, or any indenture,
loan agreement, mortgage, lease or other agreement or instrument that is
material to Nevada Gold, to which Nevada Gold is a party or by which Nevada Gold
or its property is bound, (iii) violate or conflict with any applicable law or
any rule, regulation, judgment, order or decree of any court or any governmental
body or agency having jurisdiction over Nevada Gold or its property or (iv)
result in the imposition or creation of (or the obligation to create or impose)
a Lien under, any
<PAGE>
agreement or instrument to which Nevada Gold is a party or by
which Nevada Gold or its property is bound.
E-2
<PAGE>
-----------------------
Mail to: Secretary of State For office use only 031
Corporate Section
1560 Broadway, Suite 200 19971066760
Denver, CO 80202 $ 50.00
(303) 894-2261 SECRETARY OF STATE
Fax (303) 894-2242 01-25-97 16:39:30
-----------------------
MUST BE TYPED
FILING FEE: $50.00
MUST SUBMIT TWO COPIES
ARTICLES OF ORGANIZATION
Please include a typed
self-addressed envelope
I/We the undersigned natural person(s) of the age of eighteen years or more,
acting as organizer(s) of a limited liability company under the Colorado Limited
Liability Company Act, adopt the following Articles of Organization for such
limited liability company:
FIRST: The name of the limited liability company is ICB L.L.C
-------------------------
SECOND: Principal place of business (if known):
------------------------------
----------------------------------------------------------------------
THIRD: The street address of the initial registered office of the limited
liability company is: 1675 Broadway, Denver, Colorado 80202
-------------------------------------------------
The mailing address (if different from above) of the initial
registered office of the limited liability company is:
----------------
----------------------------------------------------------------------
The name of its proposed registered agent in Colorado at that address
is: The Corporation Company
-------------------------------------------------------------------
FOURTH: The management is vested in managers (check if appropriate)
---
FIFTH: The names and business addresses of the initial manager or managers or
if the management is vested in the members, rather than managers, the
names and addresses of the member of members are:
NAME ADDRESS (include zip codes)
Anthony O. Bryan 500 Skokie Blvd., Ste. 575, Northbrook,
- -------------------------------- IL 60062
Mark W. Coffin 4400 One Houston Center, 1221 McKinney
- -------------------------------- --------------------------------------
Houston, TX 77010
SIXTH: The name and address of each organizer is:
NAME ADDRESS (include zip codes)
Michael J. Perlowski 190 South LaSalle Street
- -------------------------------- --------------------------------------
Chicago, IL 60603
- -------------------------------- --------------------------------------
Signed Signed /s/ Michael J. Perlowski
Organizer:
Organizer:
<PAGE>
- --------------------------------------------------------------------------------
STATE OF COLORADO
DEPARTMENT OF STATE
I hereby certify that this is a true and complete copy of the document
filed in this office and admitted to record in
File 19971066760
--------------------------------------------------------------------------
- ------------------------------------------------------------------------------
DATED July 10, 1997
-------- --
Victoria Buckley
------------------
Secretary of State
By /s/Amy M. Evans
----------------
- ------------------------------------------------------------------------------
[SEAL OF STATE OF COLORADO 1876 APPEARS HERE]
<PAGE>
EXHIBIT 3.2
ARTICLES OF INCORPORATION
-------------------------
OF
--
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
--------------------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned incorporator, being of
the age of eighteen years or more, desiring to organize a corporation under the
Colorado Business Corporation Act, makes, signs and verifies these Articles of
Incorporation.
ARTICLE I
---------
The name of the corporation is ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
ARTICLE II
----------
The corporation is to have perpetual existence.
ARTICLE III
-----------
The nature of the business and the objects and the purpose for which this
corporation is created are to engage in the transaction of all lawful business
for which corporations may be incorporated pursuant to the Colorado Business
Corporation Act.
ARTICLE IV
----------
In furtherance of the purposes set forth in Article III of these Articles
of Incorporation, the corporation shall have and may exercise all of the rights,
powers and privileges now or hereafter conferred upon corporations organized
under and pursuant to the laws of the State of Colorado, including, but not
limited to, the power to become a member of a limited liability company and to
enter into general partnerships, limited partnerships (whether the corporation
be a limited or general partner), joint ventures, syndicated pool, associations
and other arrangements for carrying on one or more of the purposes set forth in
Article III of these Articles of Incorporation and in the Colorado Business
Corporation Act, jointly or in common with others. In addition, the corporation
may do everything necessary, suitable or proper for the accomplishment of any of
its corporate purposes.
ARTICLE V
---------
A. Authorized Shares: the aggregate number of shares which the corporation
-----------------
shall have authority to issue is One Thousand (1,000) shares of common stock.
All shares when issued shall be nonassessable and full paid. Each shareholder of
record shall be entitled at all shareholders' meetings to one vote for each
share of stock standing in his name on the books of the corporation.
1
<PAGE>
B. Transfer Restrictions: The corporation shall have the right, by
---------------------
appropriate action, to impose restrictions upon the transfer of any shares of
its common stock, or any interest therein, from time to time issued, provided
that such restrictions as may from time to time be so imposed or notice of the
substance thereof shall be set forth upon the face or back of the certificates
representing such shares of common stock.
C. Preemptive Rights: No shareholder of the corporation shall have any
-----------------
preemptive or other right to subscribe for any additional unissued or treasury
shares of stock or for other securities of any class, or for rights, warrants or
options to purchase stock, or for scrip, or for securities of any kind
convertible into stock or for securities carrying stock purchase rights.
ARTICLE VI
----------
The private property of the shareholders of the corporation shall not be
subject to the payment or corporate debts, liabilities or obligations to any
extent whatsoever.
ARTICLE VII
-----------
The business and affairs of the corporation shall be managed by a Board of
Directors which shall exercise all the powers of the corporation, except as
otherwise provided in the Bylaws of the corporation or by these Articles of
Incorporation. There shall be at least one director or such larger number as
shall be fixed by the Bylaws or from time to time by amendment of the Bylaws,
but no decrease on the number of directors shall shorten the term of any
incumbent director.
ARTICLE VIII
------------
The initial Board of Directors shall consist of three (3) members. The
names and address of the persons who are to serve as directors until the first
annual meeting of the shareholders or until their successors are elected and
qualified is as follows:
John Gallaway
711 Washington Loop
Biloxi, MS 39350
ARTICLE IX
----------
Cumulative voting in the election of directors is not allowed.
2
<PAGE>
ARTICLE X
---------
No contract or other transaction between the corporation and any other
person, firm, partnership, corporation, trust, joint venture, syndicate or other
entity shall be in any way affected or invalidated solely by reason of the fact
that any director or officer of the corporation is pecuniarily or otherwise
interested in, or is a director, officer, shareholder, employee, fiduciary or
member of such other entity or solely by reason of the fact that any director or
officer is in any way interested, may be a party to or may be interested in a
contract or other transaction of the corporation.
ARTICLE XI
----------
The corporation shall, subject to the provisions of the Bylaws of the
corporation, indemnify any and all of its directors or officers to the fullest
extent provided by the laws of the State of Colorado.
ARTICLE XII
-----------
No officer, director or shareholder of the corporation shall be bound by or
have any personal liability under any documents, agreements, understandings or
arrangements relating to the corporation except as provided below. The parties
to any agreement to which the corporation is a party shall look solely to the
assets of the corporation for satisfaction of any liability of the corporation
in respect of all documents, agreements, understandings and arrangements
relating to the corporation and shall have no recourse against any of the
directors, officers or shareholders of the corporation or any of their personal
assets for the performance or payment of any obligation thereunder. The
foregoing shall apply to all and any future documents, agreements,
understandings, arrangements and transactions with respect to the corporation.
No director shall be personally liable to the corporation or its shareholders
for monetary damages for breach of fiduciary duty as a director, provided that
this provision shall not eliminate or limit the liability of a director (i) for
any breach of the director's duty of loyalty to the corporation or its
shareholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for any act
specified in Section 7-108-403 of the Colorado Business Corporation Act; or (iv)
for any transaction from which the director derived an improper personal
benefit. The protection afforded in this Article shall not restrict other common
law protections and rights that a director may have. The limitations on personal
liability contained in this Article shall continue as to a person who has ceased
to be a director, and shall inure to the benefit of his heirs, executors and
administrators. Neither the amendment nor repeal of this Article XII, nor the
adoption of any
3
<PAGE>
provision of these Articles of Incorporation inconsistent with this Article XII,
shall eliminate or reduce the effect of this Article XII in respect of any
matter occurring, or any cause of action, suit or claim that, but for this
Article XII would accrue or arise, prior to such amendment, repeal or adoption.
ARTICLE XIII
------------
In addition to the other powers now or hereafter conferred upon the Board
of Directors by these Articles of Incorporation, the Bylaws of the corporation,
or by the laws of the State of Colorado, the Board of Directors may from time to
time distribute to the shareholders in partial liquidation a portion of the
corporation's assets, in cash or in kind; subject, however, to the limitations
contained in the Colorado Business Corporation Act.
ARTICLE XIV
-----------
A. The address of the corporation's initial registered office is c/o 1675
Broadway, Denver, Colorado 80202 and the name of the corporation's initial
registered agent at that address is The Corporation Company. The written consent
of the initial registered agent to the appointment as such is stated below.
B. The address of the corporation's initial principal office is 711
Washington Loop, Biloxi, Mississippi, 39350.
ARTICLE XV
----------
The directors shall have the power to make Bylaws and to amend or alter the
Bylaws from time to time as they deem proper for the administration and
regulation of the affairs of the corporation.
ARTICLE XVI
-----------
The right is reserved from time to time to amend, alter or repeal any
provisions of and to add to these Articles of Incorporation in any manner now or
hereafter prescribed or permitted by the laws of the State of Colorado, and the
rights of all shareholders are subject to this reservation.
ARTICLE XVII
------------
The name and address of the incorporator of the corporation is: Christy T.
O'Connor, 410 - 17th Street, 22nd Floor, Denver, Colorado 80202.
4
<PAGE>
IN WITNESS WHEREOF, the incorporator has executed these Article of
Incorporation this 16th day of July, 1997.
/s/ Christy T. O'Connor
------------------------------------
Christy T. O'Connor, Incorporator
The undersigned consents to the appointment as the initial registered
agent of Isle of Capri Black Hawk Capital Corp.
CT Corporation System
By: /s/ [SIGNATURE APPEARS HERE]
-----------------------------------------------------
Its: [NAME APPEARS HERE], Asst. Vice Pres.
----------------------------------------------------
5
<PAGE>
--------------------------------------------------------
STATE OF COLORADO
DEPARTMENT OF STATE
I hereby certify that this is a
true and complete copy of the document
filed in this office and admitted to
record in
File 19971112373 [SEAL OF STATE OF
----------------------------------- COLORADO APPEARS
---------------------------------------- HERE]
DATED July 24, 1997
-------- --
/s/ Victoria Buckley
----------------------------------------
Secretary of State
By /s/ Amy M. Evans
-------------------------------------
--------------------------------------------------------
<PAGE>
EXHIBIT 3.3
BYLAWS
------
OF
--
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
--------------------------------------
A Colorado Corporation
ARTICLE I
---------
OFFICES
-------
Section 1. Registered Office. The registered office of the corporation in
--------- -----------------
the State of Colorado shall be located at 1675 Broadway, Denver, Colorado 80202.
The name of the corporation's registered agent at such address shall be CT
Corporation System. The registered office and/or registered agent of the
corporation may be changed from time to time by action of the board of
directors.
Section 2. Other Offices. The corporation may also have offices at such
--------- -------------
other places, both within and without the State of Colorado, as the board of
directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
----------
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place and Time of Meetings. An annual meeting of the
--------- --------------------------
stockholders shall be held each year for the purpose of electing directors and
conducting such other proper business as may come before the meeting. The
date, time and place of the annual meeting may be determined by resolution of
the board of directors or as set by the president of the corporation.
Section 2. Special Meetings. Special meetings of stockholders may be
--------- ----------------
called for any purpose (including, without limitation, the filling of board
vacancies and newly created directorships), and may be held at such time and
place, within or without the State of Colorado, as shall be stated in a notice
of meeting or in a duly executed waiver of notice thereof. Such meetings may be
called at any time by two or more members of the board of directors or the
president and shall be called by the president upon the written request of
holders of shares entitled to cash not less than thirty percent (30%) of the
outstanding shares of any series or class of the corporation's capital stock.
Section 3. Place of Meetings. The board of directors may designate any
---------- -----------------
place, either within or without the State of Colorado, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
corporation.
<PAGE>
Section 4. Notice. Whenever stockholders are required or permitted to take
--------- ------
action at a meeting, written or printed notice stating the place, date, time,
and, in the case of special meetings, the purpose or purposes, of such meeting,
shall be given to each stockholder entitled to vote at such meeting not less
than 10 nor more than 60 days before the date of the meeting. All such notices
shall be delivered, either personally or by mail, by or at the direction of the
board of directors, the president or the secretary, and if mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
postage prepaid, addressed to the stockholder at his, her or its address as the
same appears on the records of the corporation. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened.
Section 5. Stockholders List. The officer having charge of the stock
--------- -----------------
ledger of the corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. Except as otherwise provided by applicable law or by
--------- ------
the Certificate of Incorporation, a majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time in accordance with Section
7 of this Article, until a quorum shall be present or represented.
Section 7. Adjourned Meetings. When a meeting is adjourned to another time
--------- ------------------
and place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative vote
--------- -------------
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question. Where a separate vote by class is required, the
affirmative vote of the majority of shares of such class present in person or
represented by proxy at the meeting shall be the act of such class.
Section 9. Voting Rights. Except as otherwise provided by the General
--------- -------------
Corporation Law of the State of Colorado or by the certificate of incorporation
of the corporation or any
<PAGE>
amendments thereto and subject to Section 3 of Article VI hereof, every
stockholder shall at every meeting of the stockholders be entitled to one vote
in person or by proxy for each share of common stock held by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
---------- -------
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him, her or
it by proxy. Every proxy must be signed by the stockholder granting the proxy
or by his, her or its attorney-in-fact. No proxy shall be voted or acted upon
after three years from its date, unless the proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is irrevocable
and if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A proxy may be made irrevocable regardless of
whether the interest with which it is coupled is an interest in the stock itself
or an interest in the Corporation generally.
Section 11. Action by Written Consent. Unless otherwise provided in the
---------- -------------------------
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than a majority of
the shares entitled to vote, or if greater, not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted and shall be
delivered to the corporation by delivery to its registered office in the state
of Colorado, or the corporation's principal place of business, or an officer or
agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested provided, however, that no consent or consents
delivered by certified or registered mail shall be deemed delivered until such
consent or consents are actually received at the registered office. All consents
properly delivered in accordance with this section shall be deemed to be
recorded when so delivered. No written consent shall be effective to take the
corporate action referred to therein unless, within sixty days of the earliest
dated consent delivered to the corporation as required by this section, written
consents signed by the holders of a sufficient number of shares to take such
corporate action are so recorded. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing. Any action taken
pursuant to such written consent or consents of the stockholders shall have the
same force and effect as if taken by the stockholders at a meeting thereof.
ARTICLE III
-----------
DIRECTORS
---------
Section 1. General Powers. The business and affairs of the corporation
--------- --------------
shall be managed by or under the direction of the board of directors.
Section 2. Number, Election and Term of Office. The number of directors
--------- -----------------------------------
which shall constitute the first board shall be three. Thereafter, the number
of directors shall be established
<PAGE>
from time to time by resolution of the board. The directors shall be elected by
a plurality of the votes of the shares present in person or represented by proxy
at the meeting and entitled to vote in the election of directors. The directors
shall be elected in this manner at the annual meeting of the stockholders,
except as provided in Section 4 of this Article III. Each director elected shall
hold office until a successor is duly elected and qualified or until his or her
earlier death, resignation or removal as hereinafter provided.
Section 3. Removal and Resignation. Any director or the entire board of
--------- -----------------------
directors may be removed at any time, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors.
Whenever the holders of any class or series are entitled to elect one or more
directors by the provisions of the corporation's certificate of incorporation,
the provisions of this section shall apply, in respect to the removal without
cause or a director or directors so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole. Any director may resign at any time upon written
notice to the corporation.
Section 4. Vacancies. Except as otherwise provided by the Certificate of
--------- ---------
Incorporation of the corporation or any amendments thereto, vacancies and newly
created directorships resulting from any increase in the authorized number of
directors may be filled by a majority vote of the directors then in office. Each
director so chosen shall hold office until a successor is duly elected and
qualified or until his or her earlier death, resignation or removal as herein
provided.
Section 5. Annual Meetings. The annual meeting of each newly elected board
--------- ---------------
of directors shall be held without other notice than this by-law immediately
after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than the
--------- ------------------------
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the board of directors may be called by or at the
request of the president or vice president on at least 72 hours notice to each
director, either personally, by telephone, by mail, or by telegraph; in like
manner and on like notice the president must call a special meeting on the
written request of at least a majority of the directors.
Section 7. Quorum. Required Vote and Adjournment. A majority of the total
--------- -------------------------------------
number of directors shall constitute a quorum for the transaction of business.
The vote of a majority of directors present at a meeting at which a quorum is
present shall be the act of the board of directors. If a quorum shall not be
present at any meeting of the board of directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The board of directors may, by resolution passed by
--------- ----------
a majority of the whole board, designate one or more committees, each committee
to consist of one or more of the directors of the corporation, which to the
extent provided in such resolution or these by-laws shall have and may exercise
the powers of the board of directors in the management and affairs of the
corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name
<PAGE>
or names as may be determined from time to time by resolution adopted by the
board of directors. Each committee shall keep regular minutes of its meetings
and report the same to the board of directors when required.
Section 9. Committee Rules. Each committee of the board of directors may
--------- ---------------
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of directors or
---------- ------------------------
any committee thereof may participate in and act at any meeting of such board or
committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this section shall
constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of the
---------- ------------------------------------------
board of directors or any committee thereof who is present at a meeting shall
be conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes
of the meeting or unless his or her written dissent to such action shall be
filed with the person acting as the secretary of the meeting before the
adjournment thereof or shall be forwarded by registered mail to the secretary of
the corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
Section 12. Action by Written Consent. Unless otherwise restricted by the
---------- -------------------------
certificate of incorporation, any action required or permitted to be taken at
any meeting of the board of directors, or of any committee thereof, may be taken
without a meeting if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
ARTICLE IV
----------
OFFICERS
--------
Section 1. Number. The officers of the corporation shall be elected by the
--------- ------
board of directors and shall consist of a chairman, if any is elected, a
president, one or more vice presidents, a secretary, a treasurer, and such other
officers and assistant officers as may be deemed necessary or desirable by the
board of directors. Any number of offices may be held by the same person,
except that no person may simultaneously hold the office of president and
secretary. In its
<PAGE>
discretion, the board of directors may choose not to fill any office for any
period as it may deem advisable.
Section 2. Election and Term of Office. The officers of the corporation
--------- ---------------------------
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. The president shall appoint other officers to serve for such terms as he
or she deems desirable. Vacancies may be filled or new offices created and
filled at any meeting of the board of directors. Each officer shall hold office
until a successor is duly elected and qualified or until his or her earlier
death, resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of directors
--------- -------
may be removed by the board of directors whenever in is judgment the best
interests of the corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
--------- ---------
death, resignation, removal, disqualification or otherwise, may be filled by the
board of directors for the unexpired portion of the term by the board of
directors then in office.
Section 5. Compensation. Compensation of all officers shall be fixed by
--------- ------------
the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. The Chairman of the Board. The Chairman of the Board, if one
--------- -------------------------
shall have been elected, shall be a member of the board, an officer of the
Corporation, and, if present, shall preside at each meeting of the board of
directors or shareholders. The Chairman of the Board shall, in the absence or
disability of the president, act with all of the powers and be subject to all
the restrictions of the president. He shall advise the president, and in the
president's absence, other officers of the Corporation, and shall perform such
other duties as may from time to time be assigned to him by the board of
directors.
Section 7. The President. The president shall be chief executive officer
--------- -------------
of the corporation. In the absence of the Chairman of the Board or if a Chairman
of the Board shall have not been elected, the president shall preside at all
meetings of the stockholders and board of directors at which he or she is
present; subject to the powers of the board of directors, shall have general
charge of the business, affairs and property of the corporation, and control
over its officers, agents and employees; and shall see that all orders and
resolutions of the board of directors are carried into effect. the president
shall have such other powers and perform such other duties as may be prescribed
by the board of directors or as may be provided in these Bylaws.
Section 8. Vice-presidents. The vice-president, if any, or if there shall
--------- ---------------
be more than one, the vice-presidents in the order determined by the board of
directors shall, in the absence or disability of the president, act with all of
the powers and be subject to all the restrictions of the president. The
vice-presidents shall also perform such other duties and have such other powers
as the board of directors, the president or these by-laws may, from time to
time, prescribe
<PAGE>
Section 9. The Secretary and Assistant Secretaries. The secretary shall
--------- ---------------------------------------
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the
president's supervision, the secretary shall give, or cause to be given, all
notices required to be given by these by-laws or by law; shall have such powers
and perform such duties as the board of directors, the president or these
by-laws may, from time to time, prescribe; and shall have custody of the
corporate seal of the corporation. The secretary, or an assistant secretary,
shall have authority to affix the corporate seal to any instrument requiring it
and when so affixed, it may be attested by his or her signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his or her signature. The assistant secretary, or if
there be more than one, the assistant secretaries in the order determined by the
board of directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors, the
president, or secretary may, from time to time, prescribe.
Section 10. The Treasurer and Assistant Treasurer. The treasurer shall have
---------- -------------------------------------
the custody of the corporate funds and securities; shall keep full and accurate
accounts of receipts and disbursements in books belongings to the corporation;
shall deposit all monies and other valuable effects in the name and to the
credit of the corporation as may be ordered by the board of directors; shall
cause the funds of the corporation to be disbursed when such disbursements have
been duly authorized, taking proper vouchers for such disbursements; and shall
render to the president and the board of directors, at its regular meeting or
when the board of directors so requires, an account of the corporation; shall
have such powers and perform such duties as the board of directors, the
president or these by-laws may, from time to time, prescribe. If required by
the board of directors, the treasurer shall give the corporation a bond (which
shall be rendered every six years) in such sums and with such surety or sureties
as shall be satisfactory to the board of directors for the faithful performance
of the duties of the office of treasurer and for the restoration to the
corporation, in case of death, resignation, retirement, or removal from office,
of all books, papers, vouchers, money, and other property of whatever kind in
the possession or under the control of the treasurer belonging to the
corporation. The assistant treasurer, or if there shall be more than one, the
assistant treasurers in the order determined by the board of directors, shall in
the absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer. The assistant treasurers shall perform such other
duties and have such other powers as the board of directors, the president or
treasurer may, from time to time, prescribe.
Section 11. Other Officers, Assistant Officers and Agents. Officers,
---------- ---------------------------------------------
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
Section 12. Absence or Disability of Officers. In the case of the absence
---------- ---------------------------------
or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
<PAGE>
ARTICLE V
---------
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
-------------------------------------------------
Section 1. Nature of Indemnity. Each person who was or is made a party or
--------- -------------------
is threatened to be made a party or is threatened to be made a party to or is
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of the
fact that he or a person of whom he is the legal representative, is or was a
director or officer, of the corporation or is or was serving at the request of
the corporation as a director, officer, employee, fiduciary, or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, employee, fiduciary or agent or in any other capacity while serving as
a director, officer, employee, fiduciary or agent, shall be indemnified and held
harmless by the corporation to the fullest extent which it is empowered to do so
by the General Corporation Law of the State of Colorado, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the corporation to provide broader
indemnification rights than said law permitted the corporation to provide prior
to such amendment) against all expense, liability and loss (including attorneys'
fees actually and reasonably incurred by such person in connection with such
proceeding and such indemnification shall inure to the benefit of his or her
heirs, executors and administrators; provided, however, that, except as provided
in Section 2 hereof, the corporation shall indemnify any such person seeking
indemnification in connection with a proceeding initiated by such person only if
such proceeding was authorized by the board of directors of the corporation. The
right to indemnification conferred in this Article V shall be a contract right
and, subject to Sections 2 and 5 hereof, shall include the right to be paid by
the corporation the expenses incurred in defending any such proceeding in
advance of its final disposition. The corporation may, by action of its board of
directors, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors and
officers.
Section 2. Procedure for Indemnification of Directors and Officers. Any
--------- -------------------------------------------------------
indemnification of a director or officer of the corporation under Section 1 of
this Article V or advance of expenses under Section 5 of this Article V shall be
made promptly, and in any event within 30 days, upon the written request of the
director or officer. If a determination by the corporation that the director or
officer is entitled to indemnification pursuant to this Article V is required,
and the corporation fails to respond within sixty days to a written request for
indemnity, the corporation shall be deemed to have approved the request. If the
corporation denies a written request for indemnification or advancing of
expenses, in whole or in part, or if payment in full pursuant to such request is
not made within 30 days, the right to indemnification or advances as granted by
this Article V shall be enforceable by the director or officer in any court of
competent jurisdiction. Such person's costs and expenses incurred in connection
with successfully establishing his or her right to indemnification, in whole or
in part, in any such action shall also be indemnified by the corporation. It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to the
corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Colorado for
the corporation to indemnify the claimant for the amount claimed, but the burden
of such defense shall be on the corporation. Neither the failure of the
corporation (including its board of directors, independent legal counsel, or its
stockholders) to have made a determination
<PAGE>
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he or she met the applicable standard of
conduct set forth in the General Corporation Law of the State of Colorado, nor
an actual determination by the corporation (including its board of directors,
independent legal counsel, or its stockholders) that the claimant has not met
such, applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
Section 3. Nonexclusivity of Article V. The rights to indemnification and
--------- ---------------------------
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article V shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. Insurance. The corporation may purchase and maintain insurance
--------- ---------
on its own behalf and on behalf of any person who is or was a director, officer,
employee, fiduciary, or agent of the corporation or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him or her and incurred by him or her in any such
capacity, whether or not the corporation would have the power to indemnify such
person against such liability under this Article V.
Section 5. Expenses. Expenses incurred by any person described in Section 1
--------- --------
of this Article V in defending a proceeding shall be paid by the corporation in
advance of such proceeding's final disposition unless otherwise determined by
the board of directors in the specific case upon receipt of an undertaking by or
on behalf of the director or officer to repay such amount if it shall ultimately
be determined that he or she is not entitled to be indemnified by the
corporation. Such expenses incurred by other employees and agents may be so paid
upon such terms and conditions, if any, as the board of directors deems
appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
--------- --------------------
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the corporation
as employees or agents of another corporation, partnership,joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V shall be
--------- ---------------
deemed to be a contact right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Colorado or
other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceedings then existing.
Section 8. Merger or Consolidation. For purposes of this Article V,
--------- -----------------------
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, wold have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent
<PAGE>
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this Article V with respect to the resulting or surviving
corporation as he or she would have with respect to such constituent corporation
if its separate existence had continued.
ARTICLE VI
----------
CERTIFICATES OF STOCK
---------------------
Section 1. Form. Every holder of stock in the corporation shall be
---------- ----
entitled to have a certificate, signed by, or in the name of the corporation by
the chairman of the board, the president or a vice-president and the secretary
or an assistant secretary of the corporation, certifying the number of shares
owned by such holder in the corporation. If such a certificate is countersigned
(1) by a transfer agent or an assistant transfer agent other than the
corporation or its employee or (2) by a registrar, other than the corporation or
its employee, the signature of any such chairman of the board, president,
vice-president, secretary, or assistant secretary may be facsimiles. In case
any officer or officers who have signed, or whose facsimile signature or
signatures have been used on, any such certificate or certificates shall cease
to be such officer or officers of the corporation whether because of death,
resignation or otherwise before such certificate or certificates have been
delivered by the corporation, such certificate or certificates may nevertheless
be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or signatures have been
used thereon had not ceased to be such officer or officers of the corporation.
All certificates for shares shall be consecutively numbered or otherwise
identified. The name of the person to whom the shares represented thereby are
issued, with the number of shares and date of issue, shall be entered on the
books of the corporation. Shares of stock of the corporation shall only be
transferred on the books of the corporation by the holder of record thereof or
by such holder's attorney duly authorized in writing, upon surrender to the
corporation of the certificate or certificates for such shares endorsed by the
appropriate person or persons, with such evidence of the authenticity of such
endorsement, transfer, authorization, and other matters as the corporation may
reasonably require, and accompanied by all necessary stock transfer stamps. In
the event, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate or certificates, and
record the transaction on its books. The board of directors may appoint a bank
or trust company organized under the laws of the United States or any state
thereof to act as its transfer agent or registrar, or both in connection with
the transfer of any class or series of securities of the corporation.
Section 2. Lost Certificates. The board of directors may direct a new
--------- -----------------
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged have been lost,
stolen, or destroyed, upon making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a bond
sufficient to idemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
<PAGE>
Section 3. Fixing a Record Date for Stockholder Meetings. In order that the
--------- ---------------------------------------------
corporation may determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the board of directors, and
which record date shall not be more than sixty nor less than ten days before the
date of such meeting. If no record date is fixed by the board of directors, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be the close of business on the next day preceding
the day on which notice is given, or if notice is waived, at the close of
business on the day next preceding the day on which the meeting is held. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the
adjournment meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In order
--------- --------------------------------------------------
that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the corporation by
delivery to its registered office in the State of Colorado, its principal place
of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the board of directors and prior action by the board of directors is required by
statute, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the board of directors adopts the resolution taking such
prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that the
--------- ---------------------------------------
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than sixty days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the board of directors adopts the
resolution relating thereto.
Section 6. Subscription for Stock. Unless otherwise provided for in the
--------- ----------------------
subscription agreement, subscription for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installation
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
<PAGE>
ARTICLE VII
-----------
GENERAL PROVISIONS
------------------
Section 1. Dividends. Dividends upon the capital stock of the corporation,
--------- ---------
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation. Before
payment of any dividend, there may be set aside out of any funds of the
corporation available for dividends such sum or sums as the directors from time
to time, in their absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the corporation, or any other purpose and the directors may
modify or abolish any such reserve in the manner in which it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders
--------- ------------------------
for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any officer or
--------- ---------
officers, or any agent or agents, of the corporation to enter into any contract
or to execute and deliver any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to specific
instances.
Section 4. Loans. The corporation may lend money to, or guarantee any
--------- -----
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
--------- -----------
by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors may provide a corporate
--------- --------------
seal which shall be in the form of a circle and shall have inscribed thereon the
name of the corporation and the words "Corporate Seal, Colorado". The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities in
--------- --------------------------------------
any pother corporation held by the corporation shall be voted by the president,
unless the board of directors specifically confers authority to vote with
respect thereto, which authority may be general or
<PAGE>
confined to specific instances, upon some other person or officer. Any person
authorized to vote securities shall have the power to appoint proxies, with
general power of substitution.
Section 8. Inspection of Books and Records. Any stockholder of record, in
--------- -------------------------------
person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall be the person who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the corporation at its registered
office in the State of Colorado or at its principal place of business.
Section 9. Section Headings. Section headings in these by-laws are for
--------- -----------------
convenience of reference only and shall not by given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of
---------- -----------------------
these by-laws is or becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the State of Colorado or any
other applicable law, the provision of these by-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.
ARTICLE VIII
------------
AMENDMENTS
----------
These Bylaws may be amended, altered, or repealed and new Bylaws adopted
at any meeting of the board of directors by a majority vote. The fact that the
power to adopt, amend, alter, or repeal the Bylaws has been conferred upon the
board of directors shall not divest the stockholders of the same powers.
<PAGE>
SUBSCRIPTION AGREEMENT
----------------------
WHEREAS, there has been organized under the laws of the State of Colorado,
a corporation known as Isle of Capri Black Hawk Capital Corp. (the
"Corporation").
WHEREAS, the Corporation has been organized for the purpose of engaging in
any lawful act or activity for which corporations may be organized under the
Business Corporation Act of the State of Colorado.
WHEREAS, the Corporation is authorized to issue 1,000 shares of Common
Stock, no par value ("Common Stock").
NOW, THEREFORE, in consideration of the covenants contained herein, the
undersigned hereby subscribes for, and agrees to purchase one hundred (100)
shares of Common Stock of the Corporation and agrees to pay therefor the amount
of $100.00.
The subscription hereunder shall be payable at such time or times as the
Board of Directors of the Corporation may determine, and the shares of stock
subscribed for hereunder shall be issued at the time payment is received
therefor.
Dated as of the 22 day of July, 1997
-- ----
ISLE OF CAPRI BLACK HAWK, LLC
By: /s/ Allan Solomon
---------------------------------
ALLAN SOLOMON, MANAGER
By: /s/ John Gallaway
---------------------------------
JOHN GALLAWAY, MANAGER
By: /s/ H. Thomas Winn
---------------------------------
H. THOMAS WINN, MANAGER
Accepted as of
July 22, 1997
- -------
ISLE OF CAPRI BLACK HAWK
CAPITAL CORP.
/s/ Allan B. Solomon
- -------------------------
Name:
Title:
<PAGE>
================================================================================
---------- ----------
NUMBER SHARES
---------- ----------
1 100
---------- ----------
------------------------------------------------------------
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
Common Stock, No Par Value
------------------------------------------------------------
This Certifies that ISLE OF CAPRI BLACK HAWK, LLC is the
------------------------------------
registered holder of ONE HUNDRED*************************** Shares
---------------------------------------
ISLE OF CAPRI BLACK HAWK CAPITAL CORP. FULLY PAID AND NON ASSESSABLE
transferable only on the books of the Corporation by the holder
hereof in person or by Attorney upon surrender of this Certificate
properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate
to be signed by its duly authorized officers and its Corporate Seal to
be hereunto affixed
this 22nd day of July, A.D.
-------- -----
/s/ [SIGNATURE APPEARS HERE] /s/ [SIGNATURE APPEARS HERE]
---------------------------- ----------------------------
President Secretary
================================================================================
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
ISLE OF CAPRI BLACK HAWK L.L.C.
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
ISSUERS
$75,000,000
13% FIRST MORTGAGE NOTES DUE 2004
WITH CONTINGENT INTEREST
_________________
INDENTURE
Dated as of August 20, 1997
_________________
IBJ SCHRODER BANK & TRUST COMPANY
Trustee
- --------------------------------------------------------------------------------
<PAGE>
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).......................................................... 2.5
(b).......................................................... N.A.
(c).......................................................... N.A.
313(a).......................................................... 7.6
(b)(1)....................................................... 10.3
(b)(2)....................................................... 7.7
(c).......................................................... 7.6
(d).......................................................... 7.6
314(a).......................................................... 4.3
(b).......................................................... 10.2
(c)(1)....................................................... N.A.
(c)(2)....................................................... N.A.
(c)(3)....................................................... N.A.
(d)..........................................................10.3, 10.4, 10.5
(e).......................................................... 11.5
(f).......................................................... N.A.
315(a).......................................................... 7.1
(b).......................................................... 7.5
(c).......................................................... 7.1
(d).......................................................... 7.1
(e).......................................................... 6.11
316(a)(last sentence)........................................... 2.9
(a)(1)(A).................................................... 6.5
(a)(1)(B).................................................... 6.4
(a)(2)....................................................... N.A.
(b).......................................................... 6.7
(c).......................................................... 2.12
317(a)(1)....................................................... 6.8
(a)(2)....................................................... 6.9
(b).......................................................... 2.4
318(a).......................................................... N.A.
(b).......................................................... N.A.
(c).......................................................... N.A.
N.A. means not applicable.
</TABLE>
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE................................................ 1
Section 1.1. Definitions........................................................................... 1
Section 1.2. Other Definitions..................................................................... 21
Section 1.3. Incorporation by Reference of Trust Indenture Act..................................... 22
Section 1.4. Rules of Construction................................................................. 22
ARTICLE 2. THE NOTES................................................................................. 23
Section 2.1. Form and Dating....................................................................... 23
Section 2.2. Execution and Authentication.......................................................... 23
Section 2.3. Registrar and Paying Agent............................................................ 24
Section 2.4. Paying Agent to Hold Money in Trust................................................... 24
Section 2.5. Holder Lists.......................................................................... 24
Section 2.6. Transfer and Exchange................................................................. 25
Section 2.7. Replacement Notes..................................................................... 31
Section 2.8. Outstanding Notes..................................................................... 31
Section 2.9. Treasury Notes........................................................................ 32
Section 2.10. Temporary Notes....................................................................... 32
Section 2.11. Cancellation.......................................................................... 32
Section 2.12. Defaulted Interest.................................................................... 32
Section 2.13. CUSIP Number.......................................................................... 33
Section 2.14. Exchange registration................................................................. 33
ARTICLE 3. REDEMPTION AND PREPAYMENT................................................................. 33
Section 3.1. Notices to Trustee.................................................................... 33
Section 3.2. Selection of Notes to Be Redeemed..................................................... 34
Section 3.3. Notice of Redemption.................................................................. 34
Section 3.4. Effect of Notice of Redemption........................................................ 35
Section 3.5. Deposit of Redemption Price........................................................... 35
Section 3.6. Notes Redeemed in Part................................................................ 36
Section 3.7. Optional Redemption................................................................... 36
Section 3.8. Gaming Redemption..................................................................... 36
Section 3.9. Mandatory Redemption.................................................................. 37
Section 3.10. Offer to Purchase by Application of Excess Proceeds................................... 37
ARTICLE 4. COVENANTS................................................................................. 39
Section 4.1. Payment of Notes...................................................................... 39
Section 4.2. Maintenance of Office or Agency....................................................... 40
Section 4.3. Reports............................................................................... 40
Section 4.4. Compliance Certificate................................................................ 41
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 4.5. Taxes................................................................................. 41
Section 4.6. Stay, Extension and Usury Laws........................................................ 41
Section 4.7. Restricted Payments................................................................... 42
Section 4.8. Dividend and Other Payment Restrictions Affecting Subsidiaries........................ 44
Section 4.9. Incurrence of Indebtedness and Issuance of Preferred Stock............................ 44
Section 4.10. Asset Sales.......................................................................... 47
Section 4.11. Transactions with Affiliates......................................................... 48
Section 4.12. Liens................................................................................ 48
Section 4.13. Line of Business..................................................................... 49
Section 4.14. Corporate Existence.................................................................. 49
Section 4.15. Offer to Repurchase Upon Change of Control........................................... 49
Section 4.16. Limitation on Issuances and Sales of Capital Stock of Wholly Owned
Subsidiaries............................................................................... 51
Section 4.17. Additional Subsidiary Guarantees..................................................... 51
Section 4.18. Insurance............................................................................ 51
Section 4.19. Limitation on Status as Investment Company........................................... 52
Section 4.20. Further Assurances................................................................... 52
Section 4.21. Construction......................................................................... 53
Section 4.22. Limitations on Use of Proceeds....................................................... 53
Section 4.23. Sale and Leaseback Transactions...................................................... 53
Section 4.24. Restrictions on Preferred Stock of Subsidiaries...................................... 54
Section 4.25. Advances to Subsidiaries............................................................. 54
Section 4.26. Collateral Documents................................................................. 54
Section 4.27. Restriction on Payment of Management Fees............................................ 54
Section 4.28. Restrictions on Activities of Capital................................................ 55
Section 4.29. Provision of Certificate Regarding Gaming Licensing Issues and
Liquor Licensing Issues.................................................................... 55
Section 4.30. Event Of Loss........................................................................ 55
Section 4.31. Excess Cash Purchase Offer........................................................... 57
ARTICLE 5. SUCCESSORS.............................................................................. 57
Section 5.1. Merger, Consolidation or Sale of Assets............................................... 57
Section 5.2. Successor Corporation Substituted..................................................... 58
ARTICLE 6. DEFAULTS AND REMEDIES................................................................... 58
Section 6.1. Events of Default..................................................................... 58
Section 6.2. Acceleration.......................................................................... 60
Section 6.3. Other Remedies........................................................................ 61
Section 6.4. Waiver of Past Defaults............................................................... 61
Section 6.5. Control by Majority................................................................... 61
Section 6.6. Limitation on Suits................................................................... 62
Section 6.7. Rights of Holders of Notes to Receive Payment......................................... 62
Section 6.8. Collection Suit by Trustee............................................................ 62
Section 6.9. Trustee May File Proofs of Claim...................................................... 62
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Section 6.10. Priorities........................................................................... 63
Section 6.11. Undertaking for Costs................................................................ 63
Section 6.12. Management of Casinos................................................................ 64
ARTICLE 7. TRUSTEE................................................................................. 64
Section 7.1. Duties of Trustee..................................................................... 64
Section 7.2. Rights of Trustee..................................................................... 65
Section 7.3. Individual Rights of Trustee.......................................................... 66
Section 7.4. Trustee's Disclaimer.................................................................. 66
Section 7.5. Notice of Defaults.................................................................... 66
Section 7.6. Reports by Trustee to Holders of the Notes............................................ 67
Section 7.7. Compensation and Indemnity............................................................ 68
Section 7.8. Replacement of Trustee................................................................ 68
Section 7.9. Successor Trustee by Merger, etc...................................................... 70
Section 7.10. Eligibility; Disqualification........................................................ 70
Section 7.11. Preferential Collection of Claims Against Issuers.................................... 70
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE................................................ 70
Section 8.1. Option To Effect Legal Defeasance Or Covenant Defeasance.............................. 70
Section 8.2. Legal Defeasance and Discharge........................................................ 70
Section 8.3. Covenant Defeasance................................................................... 71
Section 8.4. Conditions to Legal or Covenant Defeasance............................................ 72
Section 8.5. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions............................................................... 73
Section 8.6. Repayment to Issuers.................................................................. 73
Section 8.7. Reinstatement......................................................................... 74
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER........................................................ 74
Section 9.1. Without Consent of Holders of Notes................................................... 74
Section 9.2. With Consent of Holders of Notes...................................................... 75
Section 9.3. Compliance with Trust Indenture Act................................................... 76
Section 9.4. Revocation and Effect of Consents..................................................... 76
Section 9.5. Notation on or Exchange of Notes...................................................... 77
Section 9.6. Trustee to Sign Amendments, etc....................................................... 77
ARTICLE 10. COLLATERAL AND SECURITY................................................................ 77
Section 10.1. Security............................................................................. 77
Section 10.2. Recording and Opinions............................................................... 78
Section 10.3. Release of Note Collateral........................................................... 80
Section 10.4. Certificates of the Issuers.......................................................... 80
Section 10.5. Protection Of The Trust Estate....................................................... 81
Section 10.6. Certificates of the Trustee.......................................................... 81
Section 10.7. Authorization of Actions to Be Taken by the Trustee Under the
Collateral Documents........................................................................... 81
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
Section 10.8. Authorization of Receipt of Funds by the Trustee Under the Collateral Documents....... 82
Section 10.9. Termination of Security Interest...................................................... 83
Section 10.10. Cooperation Of Trustee................................................................ 83
Section 10.11. Collateral Agent...................................................................... 83
ARTICLE 11. MISCELLANEOUS............................................................................ 85
Section 11.1. Trust Indenture Act Controls.......................................................... 85
Section 11.2. Notices............................................................................... 86
Section 11.3. Communication by Holders of Notes with Other Holders of Notes......................... 87
Section 11.4. Certificate and Opinion as to Conditions Precedent.................................... 87
Section 11.5. Statements Required in Certificate or Opinion......................................... 87
Section 11.6. Rules by Trustee and Agents........................................................... 88
Section 11.7. No Personal Liability of Directors, Officers, Employees and Members................... 88
Section 11.8. Governing Law......................................................................... 88
Section 11.9. No Adverse Interpretation of Other Agreements......................................... 88
Section 11.10. Successors............................................................................ 89
Section 11.11. Severability.......................................................................... 89
Section 11.12. Counterpart Originals; Legended Indenture............................................. 89
Section 11.13. Table of Contents, Headings, etc...................................................... 89
</TABLE>
EXHIBITS
Exhibit A FORM OF DEBENTURE
Exhibit B CERTIFICATE OF TRANSFEROR
iv
<PAGE>
INDENTURE dated as of August 20, 1997, among Isle of Capri Black Hawk
L.L.C., a Colorado limited liability company (the "Company"), Isle of Capri
Black Hawk Capital Corp., a Colorado corporation and a wholly owned subsidiary
of the Company ("Capital" and, together with the Company, the "Issuers"), and
IBJ Schroder Bank & Trust Company, as trustee (the "Trustee").
Each of the Issuers and the Trustee agree as follows for the benefit of
each other and for the equal and ratable benefit of the Holders (as defined
herein) of the 13% Series A Notes due 2004 With Contingent Interest (the "Series
A Notes") and the 13% Series B Notes due 2004 With Contingent Interest (the
"Series B Notes" and, together with the Series A Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.1. Definitions.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Adjusted Fixed Charge Coverage Ratio" means with respect to any Person for
any period, the ratio of the Consolidated Cash Flow of such Person and its
Subsidiaries for such period to Adjusted Fixed Charges of such Person and its
Subsidiaries for such period (calculated in the same manner as the Fixed Charge
Coverage Ratio is calculated).
"Adjusted Fixed Charges" means with respect to any Person for any period,
the Fixed Charges of such Person and its Subsidiaries for such period plus the
Contingent Interest of such Person and its Subsidiaries for such period.
"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 that
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.
<PAGE>
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets (including, without limitation, by way of a sale and leaseback)
(provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Subsidiaries, taken as a
whole, shall be governed by Sections 4.15 and 5.1 hereof and not by Section 4.10
hereof) and (ii) the issue or sale by the Company or any of its Subsidiaries of
Equity Interests of any of the Company's Subsidiaries, in the case of either
clause (i) or (ii), whether in a single transaction or a series of related
transactions (a) that have a fair market value in excess of $250,000 or (b) for
net proceeds in excess of $250,000. Notwithstanding the foregoing: (i) a
transfer of assets by the Company to a Wholly Owned Subsidiary or by a Wholly
Owned Subsidiary to the Company or to another Wholly Owned Subsidiary, (ii) an
issuance of Equity Interests by a Wholly Owned Subsidiary to the Company or to
another Wholly Owned Subsidiary, (iii) a Restricted Payment that is permitted by
Section 4.7 hereof and (iv) a transfer of all Public Improvements (as defined in
the Subdivision Agreement) and all installed physical facilities (as described
in the Subdivision Agreement) required to be transferred by the Company to the
city of Black Hawk, Colorado pursuant to the terms of the Subdivision Agreement
shall not be deemed to be Asset Sales.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"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 on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited), (iv) in the case of a limited liability company,
membership interests and (v) any other interest or participation that confers on
a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Collateral Accounts" means collectively, the Interest Reserve
Account, the Completion Reserve Account, the Construction Disbursement Account
and the Disbursed Funds Account (as defined in the Cash Collateral and
Disbursement Agreement) and any replacements of or substitutes for such
Accounts.
-2-
<PAGE>
"Cash Collateral and Disbursement Agreement" means the Cash Collateral and
Disbursement Agreement among the Issuers, the Trustee, the Independent
Construction Consultant and the Disbursement Agent, in connection with the Isle-
Black Hawk.
"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 domestic commercial bank having
capital and surplus in excess of $500 million and a Keefe Bank Watch Rating of
"B" or better, (iv) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the qualifications
specified in clause (iii) above, (v) commercial paper having the highest rating
obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation
and in each case maturing within six months after the date of acquisition and
(vi) investment funds investing solely in securities of the types described in
(ii), (iii), (iv) or (v) above if such fund has net assets of at least $500
million.
"Casino America" means Casino America, Inc., a Delaware corporation.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries, taken as a
whole, to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act) other than Casino America or any of its Affiliates (ii) the expiration or
termination of the Management Agreement or the replacement of Casino America or
any of its Affiliates as manager under the Management Agreement with any Person
other than a successor to Casino America, (iii) the adoption of a plan relating
to the liquidation or dissolution of the Company or Casino America, (iv) the
liquidation or dissolution of the Company or Casino America or any successor
thereto, (v) prior to the consummation of an Initial Public Offering, the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that Casino America and Nevada Gold, or a
successor to Casino America or Nevada Gold, cease to collectively control a
majority of the voting power of the Company, (vi) after an Initial Public
Offering, the Company's becoming aware of (by way of a report or any other
filing pursuant to Section 13(d) of the Exchange Act, proxy vote, written notice
or otherwise) the acquisition by any Person or related group (within the meaning
of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor
provision to either of the foregoing, including any "group" acting for the
purpose of acquiring, holding or disposing of securities within the meaning of
Rule 13d-5(b)(1) under the Exchange Act), other than Casino America and Nevada
Gold, or a successor to Casino America or Nevada Gold, in a single transaction
or in a related series of transactions, by way of merger, consolidation or other
business combination or purchase of beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act, or any successor provision) of 50% or more of
the total voting power entitled to vote in the election of the Managers or Board
of Directors of such other Person
-3-
<PAGE>
surviving the transaction and, at such time, Casino America and Nevada Gold, or
a successor to Casino America or Nevada Gold, shall fail to beneficially own,
directly or indirectly, securities representing greater than the combined voting
power of the Company's or such other Person's Capital Stock as is beneficially
owned by such Person or group; (vii) the first day on which the Company fails to
own 100% of the issued and outstanding Equity Interests of Capital; and (viii)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Managers (together with any new managers or board
members, as the case may be, whose election or appointment by such committee or
whose nomination for election by the members or shareholders of the Company, as
the case may be, was approved by a vote of a majority of the managers or board
members, as the case may be, then still in office who were either managers or
board members 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 then in office; provided, however, that a Change of
Control shall not occur solely by reason of a Permitted C-Corp. Conversion.
"Closing Date" means the closing date for the sale and original issuance of
the Notes.
"Collateral Documents" means, collectively, the Deed of Trust by the
Issuers to the Public Trustee of the County of Gilpin, Colorado, the Security
Agreement by the Issuers in favor of the Trustee, the Assignments of Patent,
Trademark and Copyright, the Collateral Assignments by the Issuers in favor of
the Trustee, the Cash Collateral and Disbursement Agreement Issuer Pledge
Agreement by the Company in favor of the Trustee, the Pledge and Assignment by
the Issuers in favor of the Trustee, the Manager Subordination Agreement,
Uniform Commercial Code financing statements and fixture filings, and any other
agreements, instruments, documents, pledges or filings that evidence, set forth
or limit the Lien of the Trustee in the Note Collateral (as such terms are
defined in this Indenture).
"Commission" means the Securities and Exchange Commission.
"Company" means Isle of Capri Black Hawk L.L.C., a Colorado limited
liability company.
"Completion Capital Commitment" means the Completion Capital Commitment
dated as of the date of this Indenture executed by Casino America in favor of
the Trustee for the benefit of the Holders.
"Completion Reserve Account" means the account to be maintained by the
Disbursement Agent and pledged to the Trustee, pursuant to the terms of the Cash
Collateral and Disbursement Agreement, into which approximately $5.0 million of
the proceeds of the Offering shall be deposited.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
-4-
<PAGE>
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) Consolidated Interest Expense of such Person and its Subsidiaries for
such period, to the extent that any such expense was deducted in computing such
Consolidated Net Income, plus (iv) depreciation and amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) of such Person and its
Subsidiaries for such period to the extent that such depreciation and
amortization were deducted in computing such Consolidated Net Income, in each
case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes on the income or profits
of, and the depreciation and amortization of, a Subsidiary of the referent
Person shall be added to Consolidated Net Income to compute Consolidated Cash
Flow only to the extent (and in the same proportion) that the Net Income of such
Subsidiary was included in calculating the Consolidated Net Income of such
Person and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Consolidated Interest Expense" means, with respect to any person for any
period, without duplication, (i) the consolidated interest expense of such
Person and its Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization or original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations), (ii) the consolidated interest expense of such Person and its
Subsidiaries that was capitalized during such period, (iii) any interest expense
on Indebtedness of another Person that is Guaranteed by such Person or one of
its Subsidiaries or secured by a Lien on assets of such Person or one of its
Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) 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 consolidated basis, determined in accordance with GAAP; provided
that (i) the Net Income (but not loss) 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 to the
referent Person or a Wholly Owned Subsidiary thereof, (ii) the Net Income of any
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary of such Net Income is not
at the date of determination permitted without any prior such governmental
approval (that has not been obtained) or, directly or indirectly, by operation
of the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to such Subsidiary or
its stockholders, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for
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any period prior to the date of such acquisition shall be excluded and (iv) the
cumulative effect of a change in accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of this Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Persons
that are not Subsidiaries (except, in each case, Permitted Investments) and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Construction Disbursement Account" means the account, to be maintained by
the Disbursement Agent and pledged to the Trustee, pursuant to the terms of the
Cash Collateral and Disbursement Agreement, into which $52.2 million of the net
proceeds of the Offering shall be deposited.
"Construction Disbursement 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 the financing, design, development, construction
and equipping of the Isle-Black Hawk, as such schedules are delivered to the
Disbursement Agent on the Closing Date and as amended from time to time in
accordance with the terms of the Cash Collateral and Disbursement Agreement.
"Contingent Interest" means with respect to any principal amount of the
Notes as of any date after the Isle-Black Hawk becomes Operating, an amount
equal to the product of (i) 5% 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 $75.0 million.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.2 hereof or such other address as to which the
Trustee may give notice to the Issuers.
"Deed of Trust" means the Deed of Trust to Public Trustee, Security
Agreement, Fixture Filing and Assignment of Rents, Leases and Leasehold
Interests dated as of August 20, 1997, by the Company to the Public Trustee of
the County of Gilpin, Colorado in favor of the Trustee.
"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.
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"Definitive Notes" means Notes that are in the form of the Notes attached
hereto as Exhibit A, that do not include the information called for by footnotes
1 and 2 thereof.
"Depository" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.3 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.
"Disbursement Agent" means IBJ Schroder Bank & Trust Company, as
disbursement agent.
"Disqualified Stock" means any Capital Stock that, 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 the date
that is 91 days after the date on which the Notes mature.
"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 clauses (ii) or (iii)
above.
"Excess Cash Flow" means, with respect to the Company for any Operating
Year, the Consolidated Cash Flow of the Company and its Subsidiaries for such
Operating Year, minus (i) cash interest expense (including the portion of any
payments associated with Capital Lease Obligations and Contingent Interest, if
any) of the Company and its Subsidiaries that is actually paid during such
Operating Year, minus (ii) up to $3.5 million in capital expenditures of the
Company and its Subsidiaries paid to maintain or improve the Isle-Black Hawk
that are actually paid during such Operating Year (excluding any capital
expenditures made with the proceeds from the sale of the Notes), minus
(iii) principal payments on Indebtedness permitted to be incurred pursuant to
Section 4.9 hereof, minus (iv) amounts paid during such Operating Year in the
event that the Company exercises the Hotel Option or commences construction of a
hotel as part of the Isle-Black Hawk, in each case which hotel will constitute
Note Collateral; provided, however, that all amounts deducted pursuant to this
clause (iv) shall not exceed $6.3 million in aggregate for all Operating Years
and minus (v) to the extent such amounts were not included in computing
Consolidated Cash Flow, amounts distributed to Members during such Operating
Year pursuant to clause (iv) of the penultimate paragraph of Section 4.7 hereof
so long as such distributions, at the time of such distributions, were permitted
to be distributed pursuant to the terms of this Indenture.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer that may be made by the Issuers pursuant
to the Registration Rights Agreement to exchange Series B Notes for Series A
Notes.
"Favorable Private Letter Ruling" means a private letter ruling, reasonably
satisfactory to the Trustee, issued by the United States Internal Revenue
Service to the Company to the effect that the Company will not be a publicly
traded partnership taxable as a corporation for United States federal income tax
purposes as a result of the issuance by the Company of the Notes.
"Favorable Tax Opinion" means a written opinion, reasonably satisfactory to
the Trustee, addressed and delivered to the Trustee by a nationally recognized
law firm to the effect that the Company will not be a publicly traded
partnership taxable as a corporation for United States federal income tax
purposes as a result of the issuance by the Company of the Notes.
"FF&E" means furniture, fixtures or equipment used in the ordinary course
of the business of the Company and its Subsidiaries.
"FF&E Financing" means the incurrence of Indebtedness, the proceeds of
which are utilized solely to finance or refinance the acquisition of (or entry
into a capital lease by the Company or a Subsidiary with respect to) FF&E.
"Final Plans" with respect to any particular work or improvement means
Plans which (i) have received final approval from all governmental authorities
required to approve such Plans prior to completion of the work or improvements
and (ii) contain sufficient specificity to permit the completion of the work or
improvement.
"Financial Assurances" shall mean a letter of credit, a surety or
performance bond or other similar financial guaranty of a Qualified Financial
Institution in form and substance reasonably satisfactory to the Trustee in an
amount not less than the aggregate amounts previously distributed, plus the
contemplated distribution, to any Requesting Member pursuant to clause (iv) of
the penultimate paragraph under "Certain Covenants(Restricted Payments" from and
after the date of the Indenture (the "Assurance Amount") pursuant to which such
Qualified Financial Institution guarantees payment to the Company (and the
Company agrees to demand such payment) for so long as any Notes are outstanding
of the Assurance Amount upon the occurrence of (i) the earliest to occur of
(x) the payment of federal income taxes by the Company, (y) the entry of a final
judicial determination that the Company is not a "pass-through entity" for
federal income tax purposes or (z) the accrual by the Company for the payment of
federal income taxes as required in accordance with generally accepted
accounting principles; and (ii) failure by the Company to receive reimbursement
of the Assurance Amount in cash previously distributed to such Requesting Member
(or successor thereto) within thirty days after the occurrence of any event
referred to in clause (i) above.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Subsidiaries for such period to the Fixed Charges of such Person and its
Subsidiaries for such period. In the event that the Issuers
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or any of their Subsidiaries incur, assume, guarantee or redeem any Indebtedness
(other than revolving credit borrowings) or issue preferred stock subsequent to
the commencement of the period for which the Fixed Charge Coverage Ratio is
being calculated but prior to the date on which 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 giving 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 reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by the Issuers or any of their Subsidiaries, including through mergers
or consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (iii) of
the proviso set forth in the definition of Consolidated Net Income, and (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges shall
not be obligations of the referent Person or any of its Subsidiaries following
the Calculation Date.
"Fixed Charges" means, with respect to any Person for any period, without
duplication, the sum of (i) Fixed Interest, (ii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Subsidiaries or secured by a Lien on assets of such Person or one of its
Subsidiaries (whether or not such Guarantee or Lien is called upon) and
(iii) the product of (a) all dividend payments, whether or not in cash, on any
series of preferred stock of such Person or any of its Subsidiaries, other than
dividend payments on Equity Interests payable solely in Equity Interests of the
Issuers, times (b) 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 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, which are in effect from time to time.
"Gaming Authority" means any agency, authority, board, bureau, commission,
department, office or instrumentality of any nature whatsoever of the United
States federal or foreign government, any state, province or any city or other
political subdivision or otherwise, and whether now or hereafter in existence,
or any officer or official thereof, including the
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Colorado Limited Gaming Control Commission and any other applicable gaming
regulatory authority with authority to regulate any gaming operation (or
proposed gaming operation) owned, managed or operated by the Company, Casino
America or Nevada Gold or any of their respective Subsidiaries.
"Gaming Business" means the gaming business and includes all businesses
either licensed or unlicensed by a Gaming Authority necessary for, incident to
or connected with or arising out of the operation of a gaming establishment or
facility (including developing and operating lodging, retail and restaurant
facilities, sports or entertainment facilities, transportation services or other
related activities or enterprises and any additions or improvements thereto) and
any businesses incident and useful to the gaming business, including, without
limitation, food and beverage distribution operations to the extent that they
are operated in connection with a gaming business.
"Gaming Facility" means any tangible building or other structure used or
expected to be used to enclose space in which a Gaming Business is conducted and
(i) wholly or partially owned, directly or indirectly, by the Company or any
Subsidiary or (ii) any portion or aspect of which is managed or used, or
expected to be managed or used, by the Company or a Subsidiary; provided that
the term Gaming Facility does not include any real property whether or not such
building or other structure is located thereon or adjacent thereto or any
furniture, fixtures and equipment, including gaming equipment, used in
connection with any Gaming Business.
"Gaming Law" means the gaming laws of any jurisdiction or jurisdictions to
which the Company or any of its Subsidiaries is, or may at any time after the
date of this Indenture, be subject.
"Gaming License" means any license, permit, franchise or other
authorization from any Gaming Authority required on the date of this Indenture
or at any time thereafter to own, lease, operate or otherwise conduct the Gaming
Business of the Company, including all licenses granted under the gaming laws of
any jurisdiction to which the Company is, or may at any time after the date of
this Indenture, be subject.
"Global Note" means a Note that contains the paragraph referred to in
footnote 1 and the additional schedule referred to in footnote 2 to the form of
the Note attached hereto as Exhibit A.
"Government Securities" means the securities purchased by the Company (a)
upon consummation of the offering and deposited in the Interest Reserve Account
and in which the Trustee has a first priority perfected security interest or
(b) deposited with the Trustee pursuant to Section 8.5 hereof, in either case
which are comprised of (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 of 1933, as
amended), as custodian with respect to any such Government Security or a
specific payment of principal of or
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interest on any such Government Security held by such custodian for the account
of the holder of such depository receipt; provided, 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.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Holders" means the record holders from time to time of the Notes.
"Hotel Option" means the Company's option, subject to the terms and
conditions set forth in the Design/Build Agreement, to build a hotel in
connection with the development of the Isle-Black Hawk.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money (including
accrued and unpaid Contingent Interest) or evidenced by bonds, notes, debentures
or similar instruments or letters of credit (or reimbursement agreements in
respect thereof) or banker's acceptances or representing Capital Lease
Obligations or the balance deferred and unpaid of the purchase price of any
property or representing any Hedging Obligations, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing indebtedness (other than letters of credit, performance or other
surety bonds and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, as well as all
indebtedness secured by a Lien on any asset of such Person (whether or not such
indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other Person.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Independent Construction Consultant" means the independent construction
consultant to be retained in connection with the construction of the Isle-Black
Hawk, or any successor independent construction consultant appointed by the
Trustee pursuant to the terms of the Cash Collateral and Disbursement Agreement.
"Interest Reserve Account" means the account to be maintained by the
Disbursement Agent and pledged to the Trustee pursuant to the terms of the Cash
Collateral and Disbursement
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Agreement into which $14.1 million of the proceeds of the Offering shall be
deposited and used to purchase the Government Securities.
"Investment Grade Securities" means any Investment in (i) marketable direct
obligations issued or unconditionally guaranteed by the United States Government
or issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within five years from the date of
acquisition thereof, (ii) marketable direct obligations issued by any state of
the United States of America maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from both Standard & Poor's Corporation and Moody's
Investors Service, Inc., (iii) commercial paper maturing no more than one year
from the date of creation thereof and, at the time of acquisition, having one of
the two highest ratings obtainable from both Standard & Poor's Corporation and
Moody's Investors Service, Inc., (iv) certificates of deposit maturing within
two years from the date of this Indenture issued by, or bank accounts maintained
with, commercial banks organized under the laws of the United States of America
or any state thereof or the District of Columbia, each having combined capital
and surplus of not less than $500 million and having a rating of "A1" or better
from Standard & Poor's Corporation or "P1" or better from Moody's Investors
Service, Inc., (v) bonds issued by corporations organized under the laws of the
United States or any state thereof, maturing within two years from the date of
this Indenture and having a rating of "BBB--" or better by Standard and Poor's
Corporation or "Baa3" or better by Moody's Investors Service, Inc. or (vi) money
market funds organized under the laws of the United States or any state thereof
that invest solely in any of the types of investments permitted under this
definition; provided that any such Investment Grade Securities which are
purchased with a portion of the net proceeds from the sale of the Notes are
deposited in either the Construction Disbursement Account or the Completion
Reserve Account and the Trustee has a first priority perfected security interest
in such Investment Grade Securities.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons in the forms of direct or indirect loans (including
guarantees of Indebtedness or other obligations), advances (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), capital contributions, purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided that
an acquisition of assets, Equity Interests or other securities by the Company
for consideration consisting of common equity securities of the Company shall
not be deemed to be an Investment. If the Company or any Subsidiary of the
Company sells or otherwise disposes of any Equity Interests of any direct or
indirect Subsidiary of the Company such that, after giving effect to any such
sale or disposition, such Person is no longer a Subsidiary of the Company, the
Company shall be deemed to have made an Investment on the date of any such sale
or disposition equal to the fair market value of the Equity Interests of such
Subsidiary not sold or disposed of.
"Isle-Black Hawk" means the pending project to develop, construct, equip
and operate the Isle of Capri Casino and related amenities, as described in the
Offering Circular of the Issuers dated August 14, 1997, relating to the Series A
Notes.
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"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
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.
"Liquor License" means any license, permit, franchise or other
authorization from any Liquor Licensing Authority necessary or required on the
date of this Indenture or at any time thereafter to own, lease, operate or
otherwise conduct the lodging, retail, restaurant or other entertainment
facilities of the Company in the manner described in the Offering Circular of
the Issuers dated August 14, 1997 relating to the Series A Notes, including all
licenses granted under the liquor licensing laws of any jurisdiction to which
the Company is, or may at any time after the date of this Indenture, be subject.
"Liquor Licensing Authority" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
the United States federal or a foreign government, any state, province or any
city or other political subdivision or otherwise, and whether now or hereafter
in existence, or any officer or official thereof, including the Colorado Liquor
Enforcement Division and the city of Black Hawk Liquor Licensing Authority and
any other applicable liquor licensing regulatory authority with authority to
regulate any liquor licensed operation (or proposed liquor licensed operation)
owned, managed or operated by the Company, Casino America or Nevada Gold or any
of their respective Subsidiaries.
"Management Agreement" means the Amended and Restated Management Agreement
dated as of July 29, 1997, between the Company and Casino America relating to
the management of the Isle-Black Hawk.
"Management Fees" means any amounts payable to Casino America pursuant to
Section 9.1 of the Management Agreement.
"Managers" means (i) for so long as the Company is a limited liability
company, the Managers appointed pursuant to the Operating Agreement or (ii)
otherwise, the Board of Directors of the Company.
"Manager Subordination Agreement" means the Manager Subordination Agreement
dated as of the date of this Indenture among the Company, Casino America and the
Trustee.
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"Members" means the members of the Company.
"Minimum Facilities" means, with respect to the Isle-Black Hawk, a casino
which has in operation at least 1,025 slot machines and ten table games, related
amenities (including a restaurant, buffet restaurant, a bar and an event area)
and has parking for at least 900 vehicles, including parking for up to 150
vehicles which may be temporarily unavailable in the event that the Company
exercises the Hotel Option.
"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 by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries,
(ii) any extraordinary or nonrecurring gain (but not loss), together with any
related provision for taxes on such extraordinary or nonrecurring gain (but not
loss), (iii) in the case of any Person that is treated as a pass-through entity
for United States federal income tax purposes, the provision for taxes based on
income or profits of such Person and its Subsidiaries for such period that would
be applicable if such Person were taxable as a subchapter "C" corporation and
(iv) solely for the purpose of calculating the Fixed Charge Coverage Ratio to
determine compliance by the Issuers with Sections 4.7, 4.9 and 4.27 hereof, pre-
opening expenses as determined in accordance with GAAP incurred by such Person
in connection with the opening of the Isle-Black Hawk up to a maximum of $2.5
million.
"Net Loss Proceeds" means the aggregate cash proceeds received by the
Company or any of its Subsidiaries in respect of any Event of Loss, including,
without limitation, insurance proceeds from condemnation awards or damages
awarded by any judgment, net of the direct costs in recovery of such Net Loss
Proceeds (including, without limitation, legal, accounting, appraisal and
insurance adjuster fees and any relocation expenses incurred as a result
thereof), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that were the subject of such Event of
Loss, and any taxes paid or payable as a result thereof.
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any non-cash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale (including, without limitation, legal, accounting and investment
banking 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 and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
(to the extent, in the case of revolving credit Indebtedness, such Indebtedness
is permanently reduced) secured by a Lien on the asset or assets that were the
subject of such Asset Sale and any reserve for adjustment in respect of the sale
price of such asset or assets established in accordance with GAAP; ; provided,
that the Trustee for the benefit
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of the Holders shall hold a perfected first priority security interest in such
aggregate cash proceeds.
"Nevada Gold" means Nevada Gold, Inc., a Nevada corporation.
"Note Collateral" means all assets, now owned or hereafter acquired, of the
Issuers or any of their respective Subsidiaries, that are pledged or assigned,
or required to be pledged or assigned under this Indenture or the Collateral
Documents, to the Trustee pursuant to the Collateral Documents, which shall
initially include all real estate, improvements and all personal property owned
by the Issuers and all accounts held by or for the benefit of the Issuers,
together with all proceeds thereof (including, without limitation, the proceeds
of Asset Sales), in each case excluding FF&E acquired with FF&E Financing,
gaming and liquor licenses, and certain other exceptions.
"Note Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"Obligations" means any principal, interest (including Contingent Interest,
if any), penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Offering" means the Offering of the Notes by the Issuers.
"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
or Capital, as the case may be, by two Officers of the Company or Capital, as
the case may be, one of whom must be the principal executive officer, the
principal financial officer, the treasurer or the principal accounting officer
of the Company or Capital, as the case may be, that meets the requirements of
Section 12.5 hereof.
"Operating" means, with respect to the Isle-Black Hawk, the first time that
(i) all 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 development, construction and equipping of,
and beginning operations at, the Isle-Black Hawk have been discharged or, if
payment is not yet due or if such payment is contested in good faith by the
Issuers, sufficient funds remain in the Construction Disbursement Account to
discharge such Liens and the Issuers have taken any action (including the
institution of legal proceedings) necessary to prevent the sale of any or all of
the Isle-Black Hawk or the real property on which the Isle-Black Hawk shall be
constructed, (iii) the Independent Construction Consultant, the general
contractor and the architect of the Isle-Black Hawk shall have delivered a
certificate to the Trustee certifying that the Isle-Black Hawk is substantially
complete in all material respects in accordance with the Final Plans with
respect to the Minimum Facilities and all applicable
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building and other laws, ordinances and regulations, (iv) the Isle-Black Hawk is
in a condition (including installation of furnishings, fixtures and equipment)
to receive customers in the ordinary course of business, (v) the Minimum
Facilities are open to the general public and operating in accordance with all
applicable laws and (vi) a temporary certificate of occupancy has been issued
for the Isle-Black Hawk by the appropriate governmental authorities.
"Operating Deadline" means June 15, 1999.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 12.5 hereof.
The counsel may be an employee of or counsel to either the Issuers or the
Trustee.
"Operating Year" means the four consecutive fiscal quarter period of the
Company beginning immediately after the date that the Isle-Black Hawk first
becomes Operating, and each succeeding four consecutive fiscal quarter period
thereafter that begins immediately after each anniversary of the date the Isle-
Black Hawk becomes Operating.
"Permitted C-Corp. Conversion" shall mean a transaction resulting in the
Company becoming a subchapter "C" corporation pursuant to the United States
Internal Revenue Code; provided, that in connection with such transaction,
(i) the subchapter "C" corporation resulting from such transaction is a
corporation organized and existing under the laws of any state of the United
States or the District of Columbia and the beneficial holders of the Equity
Interests of the subchapter "C" corporation resulting from such transaction
shall be the same, and shall be in the same percentages, as the beneficial
holders of the Equity Interests of the Company immediately prior to such
transaction; (ii) the subchapter "C" corporation resulting from such transaction
assumes all the obligations of the Company under the Notes, the Collateral
Documents and the Indenture pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee; (iii) the Trustee is provided 45 days'
advance notice of such transaction and evidence reasonably satisfactory to the
Trustee (which shall include but not to be limited to title insurance and/or an
opinion of counsel) regarding the maintenance of the perfection, priority and
proof of the security interest of the Trustee in the Note Collateral; (iv) after
giving effect to such transaction no Default or Event of Default exists;
(v) such transaction would not result in the loss or suspension or material
impairment of any Gaming License unless a comparable replacement Gaming License
is effective prior to or simultaneously with such loss, suspension or material
impairment; (vi) the subchapter "C" corporation resulting from such transaction
will have Consolidated Net Worth immediately after the transaction equal to or
greater than the Consolidated Net Worth of the Company immediately preceding the
transaction and after giving pro forma effect as if the transaction had occurred
at the beginning of the applicable four-quarter period, the Fixed Charge
Coverage Ratio after the transaction of the subchapter "C" corporation resulting
from such transaction shall be equal to or greater than the Fixed Charge
Coverage Ratio of the Company immediately preceding the transaction; (vii) such
transaction would not require any Holder or beneficial owner of Notes to obtain
a Gaming License or be qualified or found suitable under the law of any
applicable gaming jurisdiction; provided that such Holder or beneficial owner
would not have been required to obtain a Gaming License or be qualified or found
suitable under the laws of any applicable gaming jurisdiction in the absence of
such transaction; (viii) the Company
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shall have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee to the effect that the Holders will not
recognize income gain or loss for federal income tax purposes as a result of
such Permitted C-Corp. Conversion; and (ix) the Issuers shall have delivered to
the Trustee an Officers' Certificate as to compliance with all of the above
conditions.
"Permitted Investments" means (i) any Investment in the Issuers or in a
Wholly Owned Subsidiary of the Issuers that is engaged in the Gaming Business
and that is evidenced by Capital Stock or Subsidiary Intercompany Notes that are
pledged to the Trustee as Note Collateral; (ii) any Investment in Cash
Equivalents; (iii) any Investment by the Issuers or any Subsidiary of the
Issuers in a Person that is evidenced by Capital Stock or Subsidiary
Intercompany Notes that are pledged to the Trustee as Note Collateral, if as a
result of such Investment (a) such Person becomes a Wholly Owned Subsidiary of
the Issuers engaged in the Gaming Business or (b) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Issuers or a Wholly Owned
Subsidiary of the Issuers and that is engaged in the Gaming Business; (iv) any
Restricted Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with Section 4.10
hereof; (v) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Issuers; and (vi) after
the Isle-Black Hawk is Operating, any purchases from time to time by the Company
of Notes.
"Permitted Liens" means (i) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Issuers or any
Subsidiary of the Issuers; provided that such Liens were in existence prior to
the contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Issuers; (ii) Liens on property existing at the time of acquisition thereof by
the Issuers or any Subsidiary of the Issuers (other than materials, supplies or
FF&E acquired in connection with developing, constructing or equipping of, or
commencing operations at, the Isle-Black Hawk), provided that such Liens were in
existence prior to the contemplation of such acquisition; (iii) Liens existing
on the date of this Indenture and previously disclosed to the Trustee in
writing; (iv) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded; provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (v) statutory Liens of
landlords and carriers, warehousemen, mechanics, suppliers, materialmen,
repairmen or other like Liens arising in the ordinary course of business and
with respect to amounts not yet delinquent or being contested in good faith by
an appropriate process of law, and for which a reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made, and, with
respect to such Liens arising in connection with the Isle-Black Hawk, (a) the
work or supplies provided which gave rise to such lien were contemplated by the
Design/Build Agreement; (b) there is no Default or Event of Default under the
Cash Collateral and Disbursement Agreement and (c) the payment for such work or
supplies is payable under the payment bond obtained by Haselden Construction,
Inc. pursuant to the Design/Build Agreement; (vi) Liens on FF&E to secure
Indebtedness permitted by clauses (ii) and (viii) of the second paragraph of
Section 4.9 hereof; (vii) Liens securing obligations in respect of this
Indenture or
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the Notes; (viii) pledges or deposits in the ordinary course of business to
secure lease obligations or nondelinquent obligations under workers'
compensation, unemployment insurance or similar legislation; (ix) easements,
rights-of-way, restrictions, minor defects or irregularities in title and other
similar charges or encumbrances not interfering in any material respect with the
business or assets of the Company or any Subsidiary incurred in the ordinary
course of business; and (x) Liens arising from filing Uniform Commercial Code
financing statements for a precautionary purpose in connection with true leases
of personal property that are otherwise permitted under this Indenture and under
which the Issuers or any Subsidiary is lessee.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Subsidiaries issued in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Subsidiaries; provided that: (i) the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the lesser of (a) the original
principal amount of (or accreted value, if applicable) the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses incurred in connection therewith) and (b) to the extent
such Indebtedness is secured by a Lien described in clause (vi) of the
definition of Permitted Liens above, the then current fair market value of the
asset so encumbered; (ii) such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and has 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, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred by the
Company.
"Person" means an individual, partnership, limited liability company,
corporation, trust or unincorporated organization and a government agency or a
political subdivision thereof.
"Plans" means the plans, specifications, working drawings, change orders,
correspondence and related items, which may be amended by the Company, as the
case may be, as necessary or appropriate, that collectively: (i) provide for and
detail the manner of development, construction and equipping of the Isle-Black
Hawk; (ii) call for construction which shall permit the Isle-Black Hawk to be
Operating on or prior to the Operating Deadline, subject only to Permitted
Liens; (iii) call for construction which shall cause the Isle-Black Hawk to be
Operating for a total cost consistent with its Construction Disbursement Budget
(as defined in the Cash Collateral and Disbursement Agreement) and the line
items set forth therein; (iv) provide for and detail the manner of development,
construction and equipping of, and the related budget for, the hotel which may
be built in connection with the Isle-Black Hawk pursuant to the Company's
exercise of the Hotel Option, in accordance with the Construction Disbursement
Budget, as amended, and the line items set forth therein; (v) to the extent such
Plans are amended, in the reasonable, professional judgment of the Independent
Construction Consultant, continue to represent a logical evolution consistent
with previous Plans; and (vi) together with
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any amendments, and are consistent with the description of the Isle-Black Hawk
contained herein, and are consistent with all governmental approvals and
requirements, including, without limitation, the Black Hawk Building Department,
Historical Architecture Review Commission, Gaming Authorities and the
Subdivision Agreement.
"Public Equity Offering" means an underwritten public offering of common
Capital Stock of the Company registered under the Securities Act (other than a
public offering registered on Form S-8 under the Securities Act) that results in
proceeds of at least $25.0 million to the Company.
"Qualified Financial Institution" shall mean any domestic commercial bank
having capital and surplus in excess of $500 million and a Keefe Bank Watch
Rating of "B" or better.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of August 20, 1997, among the Issuers and the other party named on the
signature page thereof, as such agreement may be amended, modified or
supplemented from time to time.
"Requesting Member" shall mean a member of the Company that seeks to obtain
a distribution from the Company pursuant to clause (iv) of the penultimate
paragraph of Section 4.7 hereof.
"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 an Investment other than a Permitted
Investment.
"Securities Act" means the Securities Act of 1933, as amended.
"Semiannual Period" means the two fiscal quarter periods ending during the
January or July immediately preceding the applicable interest payment date.
"Significant Subsidiary" means any Subsidiary that would be a significant
subsidiary as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date of this
Indenture.
"Subdivision Agreement" means the Subdivision Agreement to be entered into
after the issuance of the Notes, between the Company and the city of Black Hawk,
Colorado.
"Subsidiary" means, with respect to any Person, (i) 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
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Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"Subsidiary Intercompany Notes" means the intercompany notes senior to any
subordinated debt of, and pari passu with all existing senior Indebtedness of
the issuing Subsidiary, issued by Subsidiaries of the Company in favor of the
Company to evidence advances by the Company, in each case, in the form attached
as an exhibit to this Indenture.
"Substantially Owned Subsidiary" of any Person means a Subsidiary of such
Person at least 80% of the outstanding Capital Stock or other ownership interest
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 or by
such Person and one or more Wholly Owned Subsidiaries of such Person.
"Tax Amount" means, with respect to any period, without duplication, the
amount of taxable income in respect of the income of the Company of any Member
multiplied by the highest marginal combined federal, state and local tax rates
applicable to corporations for such period.
"Tax Distribution Condition" means any of the following: (i) the Company
shall be the subject of a Favorable Private Letter Ruling, a copy of which has
been sent to the Trustee and which shall remain in full force and effect;
(ii) the Trustee shall have received a Favorable Tax Opinion which shall be
confirmed as of the date of any distribution pursuant to clause (iv) of the
penultimate paragraph under Section 4.7 hereof; or (iii) the party proposing to
receive a distribution in an amount not to exceed the Tax Amount shall have
provided Financial Assurances to the Trustee.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb)
as in effect on the date on which this Indenture is qualified under the TIA.
"Transfer Restricted Securities" means securities that bear or are required
to bear the legend set forth in Section 2.6 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.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) 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 (b) the
number of years (calculated to the nearest one-twelfth) that shall elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
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"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.
Section 1.2. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction"......................4.11
"Asset Sale Offer"...........................4.10
"Benefitted Party"...........................11.1
"Change of Control Offer"....................4.15
"Change of Control Payment"..................4.15
"Change of Control Payment Date".............4.15
"Collateral Agent"..........................10.11
"Covenant Defeasance".........................8.3
"Event of Default"............................6.1
"Event of Loss Offer"........................4.30
"Excess Cash Flow Offer".....................4.31
"Excess Cash Flow Offer Amount"..............4.31
"Excess Cash Flow Purchase Price"............4.31
"Excess Cash Purchase Offer".................4.31
"Excess Loss Proceeds".......................4.30
"Excess Proceeds"............................4.10
"Excess Proceeds Offer".......................3.9
"Gaming and Liquor Laws"....................12.14
"Incur".......................................4.9
"Indemnification..............................4.7
"Legal Defeasance"............................8.2
"Legended Indenture"........................12.12
"Note Obligations"...........................11.1
"Offer Amount"................................3.9
"Offer Period"................................3.9
"Paying Agent"................................2.3
"Payment Default".............................6.1
"PIK Debt"....................................4.9
"Purchase Date"...............................3.9
"Registrar"...................................2.3
"Restricted Payments".........................4.7
"Trustee".....................................8.5
</TABLE>
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Section 1.3. 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 Issuers and any successor obligor upon the
Notes.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by Commission rule under the TIA
have the meanings so assigned to them.
Section 1.4. 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;
(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; and
(6) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of successor sections or
rules adopted by the Commission from time to time.
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ARTICLE 2.
THE NOTES
Section 2.1. Form and Dating.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each
Note shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Issuers and the Trustee,
by their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
Notes issued in global form shall be substantially in the form of Exhibit A
attached hereto (including the text referred to in footnotes 1 and 2 thereto).
Notes issued in definitive form shall be substantially in the form of Exhibit A
attached hereto (but without including the text referred to in footnotes 1 and 2
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the 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 2.6 hereof.
Section 2.2. Execution and Authentication.
Two Officers of each Issuer shall sign the Notes by manual or facsimile
signature. The seal of each of the Issuers shall be reproduced on the Notes and
may be in facsimile form.
If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
The Trustee shall, upon a written order of the Issuers signed by two
Officers of each Issuer, authenticate Notes for original issue up to the
aggregate principal amount stated in paragraph 4 of the Notes. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.7 hereof.
The Trustee may appoint an authenticating agent acceptable to the Issuers
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by
the Trustee includes authentication by such agent.
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An authenticating agent has the same rights as an Agent to deal with the Issuers
or an Affiliate of the Issuers.
Section 2.3. Registrar and Paying Agent.
The Issuers shall maintain an office or agency where Notes may be presented
for registration of transfer or for exchange ("Registrar") and an office or
agency where Notes may be presented for payment ("Paying Agent"). The Registrar
shall keep a register of the Notes and of their transfer and exchange. The
Issuers may appoint one or more co-registrars and one or more additional paying
agents. The term "Registrar" includes any co-registrar and the term "Paying
Agent" includes any additional paying agent. The Issuers may change any Paying
Agent or Registrar without notice to any Holder. The Issuers shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Issuers fail to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Issuers may act
as Paying Agent or Registrar.
The Issuers initially appoint The Depository Trust Company to act as
Depository with respect to the Global Notes.
The Issuers initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
Section 2.4. Paying Agent to Hold Money in Trust.
The Issuers shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent shall hold in trust for the benefit of Holders
or the Trustee all money held by the Paying Agent for the payment of principal,
premium or Liquidated Damages, if any, or interest (including Contingent
Interest, if any) on the Notes, and shall notify the Trustee of any default by
the Issuers in making any such payment. While any such default continues, the
Trustee may require a Paying Agent to pay all money held by it to the Trustee.
The Issuers at any time may require a Paying Agent to pay all money held by it
to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other
than the Issuers) shall have no further liability for the money. If the Issuers
act as Paying Agent, they shall segregate and hold in a separate trust fund for
the benefit of the Holders all money held by them as Paying Agent. Upon any
bankruptcy or reorganization proceedings relating to the Issuers, the Trustee
shall serve as Paying Agent for the Notes.
SECTION 2.5. 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 (S) 312(a). If the Trustee is
not the Registrar, the Issuers shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may
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reasonably require of the names and addresses of the Holders and the Issuers
shall otherwise comply with TIA (S) 312(a).
Section 2.6. 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 register 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
(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
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Holder or the transferee reasonably acceptable to the
Issuers and to the Registrar to the effect that such
transfer is in compliance with the Securities Act.
(b) Transfer of a Definitive Notes for a Beneficial Interest in a Global
Notes. 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
of Exhibit B hereto) 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,
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 Issuers shall issue and, upon receipt of an
authentication order in accordance with Section 2.2 hereof, 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, and, in
the case of a Transfer Restricted Security, the following
additional information and documents (all of which may be
submitted by facsimile):
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(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 benefic ial 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
Issuers and to 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 Issuers shall execute and, upon receipt of an
authentication order in accordance with Section 2.2 hereof, 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 2.6(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 2.6), 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:
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(i) the Depository for the Notes notifies the Issuers 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 Issuers within 90 days after delivery of
such notice; or
(ii) the Issuers, at their sole discretion, notify the Trustee in
writing that they elect to cause the issuance of Definitive
Notes under this Indenture,
then the Issuers shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.2 hereof, 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:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY,
PRIOR TO THE DATE THAT IS TWO YEARS (OR SUCH SHORTER PERIOD THAT
MAY HEREAFTER BE PROVIDED UNDER RULE 144(k) AS PERMITTING
RESALES BY NON-AFFILIATES OF RESTRICTED SECURITIES WITHOUT
RESTRICTION) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF
AND THE LAST DATE ON WHICH THE ISSUERS OR ANY AFFILIATE OF THE
ISSUERS WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
SUCH SECURITY) EXCEPT (A) TO THE ISSUERS, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
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BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE
ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO NON-U.S.
PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING
OF REGULATIONS UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS
PURCHASING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT
OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES
ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
ISSUERS' AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE
FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING
ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO
THE TRUSTEE."
(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
(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 2.6(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
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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 Issuers shall issue and, upon receipt of an
authentication order in accordance with Section 2.2 hereof, the
Trustee shall authenticate Series B Notes in exchange for
Series A Notes accepted for exchange in the Exchange Offer,
which Series B 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
Series A Notes is either (A) a broker-dealer, (B) a Person
participating in the distribution of the Series A Notes or (C)
a Person who is an affiliate (as defined in Rule 144A) of the
Issuers.
(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 Note 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 Issuers
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 Issuers 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 3.7, 3.8, 3.10,
4.10, 4.15, 4.30, 4.31 and 9.5 hereto).
(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 Issuers,
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.
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(v) The Issuers 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 3.2 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 Issuers 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 (including Contingent Interest, if
any) on such Notes, and neither the Trustee, any Agent nor the
Issuers 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 2.2 hereof.
Section 2.7. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, or the Issuers and the
Trustee receive evidence to its satisfaction of the destruction, loss or theft
of any Note, the Issuers shall issue and the Trustee, upon the written order of
the Issuers signed by two Officers of each of the Issuers, shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Issuers, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Issuers to protect the
Issuers, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Issuers may charge for their
expenses in replacing a Note.
Every replacement Note is an additional obligation of the Issuers and shall
be entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
Section 2.8. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation,
those reductions in the interest in a Global Note effected by the Trustee in
accordance with the provisions hereof, and those described in this Section as
not outstanding. Except as set forth in Section 2.9 hereof, a Note does not
cease to be outstanding because the Issuers or an Affiliate of the Issuers holds
the Note.
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If a Note is replaced pursuant to Section 2.7 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 4.1
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 Issuers or an Affiliate of any thereof)
holds, on a redemption date or maturity date, money sufficient to pay Notes
payable on that date, then on and after that date such Notes shall be deemed to
be no longer outstanding and shall cease to accrue interest (including
Contingent Interest, if any).
Section 2.9. 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
Issuers, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Issuers, 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.
Section 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Issuers may prepare and
the Trustee shall authenticate temporary Notes upon a written order of the
Issuers signed by two Officers of each of the Issuers. Temporary Notes shall be
substantially in the form of definitive Notes but may have variations that the
Issuers considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Issuers hall prepare
and the Trustee shall authenticate definitive Notes in exchange for temporary
Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this
Indenture.
Section 2.11. Cancellation.
The Issuers at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Issuers. The Issuers may not issue new Notes to replace Notes that it
has paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Issuers default in a payment of interest (including Contingent
Interest, if any,
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then due) on the Notes, they shall pay the defaulted interest (including
Contingent Interest, if any, then due) in any lawful manner plus, to the extent
lawful, interest (including Contingent Interest, if any, then due) payable on
the defaulted interest (including Contingent Interest, if any, then due), 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 4.1 hereof. The Issuers shall notify
the Trustee in writing of the amount of defaulted interest (including Contingent
Interest, if any, then due) proposed to be paid on each Note and the date of the
proposed payment. The Issuers 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
(including Contingent Interest, if any, then due). At least 15 days before the
special record date, the Issuers (or, upon the written request of the Issuers,
the Trustee in the name and at the expense of the Issuers) 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, then due) to be paid.
Section 2.13. CUSIP Number.
The Issuers in issuing the Notes may use a "CUSIP" number and if so the
Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders, provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes and that reliance may be placed only on
the other identification numbers printed on the Notes. The Issuers shall
promptly notify the Trustee of any change in the CUSIP number.
Section 2.14. Exchange registration
In the event that the Issuers deliver to the Trustee a copy of an order of
effectiveness or a certification of the Issuers with respect to such
effectiveness with respect to the Exchange Offer, the Trustee shall, at the
Issuers' expense, notify the Holders of the receipt of such order of
effectiveness or certification and upon the request of any Holder shall exchange
such Holder's Notes upon the terms set forth in the Exchange Offer.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.1. Notices to Trustee.
If the Issuers elect to redeem Notes pursuant to the optional redemption
provisions of Section 3.7 hereof, each Issuer shall furnish to the Trustee, at
least 30 days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of this Indenture pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the principal amount of
Notes to be redeemed and (iv) the redemption price.
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Section 3.2. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption shall be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate; provided
that no Notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first class mail at least 30 but not more than 60
days before the redemption date (except in the case of redemption required by
any Gaming Authority, which may be less than 30 days) to each Holder of Notes to
be redeemed at its registered address. Notices of redemption may not be
conditional. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in a principal amount equal to the
unredeemed portion thereof shall be issued in the name of the Holder thereof
upon cancellation of the original Note. On and after the redemption date,
interest (including Contingent Interest, if any) ceases to accrue on Notes or
portions of them called for redemption.
The Trustee shall promptly notify the Issuers in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.3. Notice of Redemption.
Subject to the provisions of Section 3.9 hereof, at least 30 days but not
more than 60 days before a redemption date, the Issuers shall mail or cause to
be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
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(f) that, unless the Issuers defaults in making such redemption payment,
interest (including Contingent Interest, if any) 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.
At the Issuers' request, the Trustee shall give the notice of redemption in
the Issuers' name and at its expense; provided, however, that each of the
Issuers shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
Section 3.4. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.3 hereof,
Notes called for redemption become irrevocably due and payable on the redemption
date at the redemption price. A notice of redemption may not be conditional.
Section 3.5. Deposit of Redemption Price.
One Business Day prior to the redemption date, the Issuers shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the redemption
price of and accrued interest (including Contingent Interest, if any) on all
Notes to be redeemed on that date. The Trustee or the Paying Agent shall
promptly return to the Issuers any money deposited with the Trustee or the
Paying Agent by the Issuers in excess of the amounts necessary to pay the
redemption price of, and accrued interest (including Contingent Interest, if
any) on, all Notes to be redeemed.
If the Issuers comply with the provisions of the preceding paragraph, on
and after the redemption date, interest (including Contingent Interest, if any)
shall cease to accrue on the Notes or the portions of Notes called for
redemption. If a Note is redeemed on or after an interest record date but on or
prior to the related interest payment date, then any accrued and unpaid interest
(including Contingent Interest, if any, then due) shall be paid to the Person in
whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Issuers to comply with the preceding
paragraph, interest (including Contingent Interest, if any, then due) shall be
paid on the unpaid principal, from the redemption date until such principal is
paid, and to the extent lawful on any interest (including Contingent Interest,
if any, then due) not paid on such unpaid principal, in each case at the rate
provided in the Notes and in Section 4.1 hereof.
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Section 3.6. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Issuers shall issue
and, upon the Issuers' written request, the Trustee shall authenticate for the
Holder at the expense of the Issuers a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
Section 3.7. Optional Redemption.
(a) Except as set forth in clause (b) of this Section 3.7, the Notes shall
not be redeemable at the Issuers' option prior to August 31, 2001. Thereafter,
the Notes shall be subject to redemption at the option of the Issuers, 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, if any) and
Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on August 31 of the years
indicated below:
YEAR PERCENTAGE
---- ----------
2001 .................. 106.500%
2002 .................. 103.250%
2003 .................. 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section 3.7, at
any time prior to August 31, 2000, the Issuers may redeem up to 35% in aggregate
principal amount of Notes originally issued under this Indenture at a redemption
price of 113% of the principal amount thereof, plus accrued and unpaid interest
(including Contingent Interest, if any) and Liquidated Damages, if any, thereon,
to the redemption date, with the net proceeds of a Public Equity Offering;
provided that at least $48.75 million in aggregate principal amount of Notes
remains outstanding immediately after the occurrence of each such redemption;
and provided, further, that the call for such redemption shall occur within 45
days of the date of the closing of such Public Equity Offering.
(c) Any redemption pursuant to this Section 3.7 shall be made pursuant to
the provisions of Section 3.1 through 3.6 hereof.
Section 3.8. Gaming Redemption.
Notwithstanding any other provision of this Indenture, if any Gaming
Authority requires that a Holder or beneficial owner of Notes must be licensed,
qualified or found suitable under any applicable gaming law and such 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
Authority (or such lesser period that may be required by such Gaming Authority),
or if such Holder or such beneficial owner is notified by such Gaming Authority
that such Holder or beneficial owner shall not be so licensed, qualified or
found suitable, the Issuers shall have the right, at their option, (i) to
require such Holder or beneficial owner to dispose of such Holder's or
beneficial owner's Notes within 30 days (or such earlier date as may be ordered
by such Gaming
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Authority) of (x) the termination of the period described above for such Holder
or beneficial owner to apply for a license, qualification or finding or
suitability or (y) receipt of the notice from such Gaming Authority that such
Holder or beneficial owner shall not be licensed, qualified or found suitable by
such Gaming Authority or (ii) to redeem 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 such Notes,
together with, in either case, accrued and unpaid interest (including Contingent
Interest, if any) and Liquidated Damages, if any, thereon to the earlier of the
date of redemption or such earlier date as may be required by such Gaming
Authority or the date of the finding of unsuitability by such Gaming Authority,
which may be less than 30 days following the notice of redemption, if so ordered
by such Gaming Authority. Immediately upon a determination by any Gaming
Authority that a Holder or beneficial owner of Notes shall not be licensed,
qualified or found suitable by such Gaming Authority, such Holder or beneficial
owner shall have no further rights with respect to the Notes (i) to exercise,
directly or indirectly, through any trustee, nominee or any other Person or
entity, any right conferred by the Notes or (ii) to receive any interest
(including Contingent Interest, if any, then due) or any other distribution or
payment with respect to the Notes, or any remuneration in any form from the
Issuers for services rendered or otherwise, except the redemption price of the
Notes. The Issuers shall not be required to pay or reimburse any Holder or
beneficial owner of Notes who is required to apply for such license,
qualification or finding of suitability for the costs of the licensure or
investigation for such qualification or finding of suitability. Such expense
shall, therefore, be the obligation of such Holder or beneficial owner.
Section 3.9. Mandatory Redemption.
Except as set forth under Sections 3.8, 4.10, 4.15, 4.30 and 4.31 hereof,
the Issuers shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.
Section 3.10. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Sections 4.10, 4.30 and 4.31 hereof, the
Issuers shall be required to commence an offer to all Holders to purchase Notes
(an "Asset Sale Offer," an "Event of Loss Offer" or an "Excess Cash Purchase
Offer," respectively, and any one an "Excess Proceeds Offer"), it shall follow
the procedures specified below.
The Excess Proceeds 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 applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Issuers shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10, 4.30 or 4.31 hereof, as the case may be (the
"Offer Amount") or, if less than the Offer Amount has been tendered, all Notes
tendered in response to the Excess Proceeds Offer. Payment for any Notes so
purchased shall be made in the same manner as interest payments are made.
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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
(including Contingent Interest, if any, then due) 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 (including Contingent Interest, if any, then due)
shall be payable to Holders who tender Notes pursuant to the Excess Proceeds
Offer.
Upon the commencement of an Excess Proceeds Offer, the Issuers 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 Excess Proceeds
Offer. The Excess Proceeds Offer shall be made to all Holders. The notice,
which shall govern the terms of the Excess Proceeds Offer, shall state:
(a) that the Excess Proceeds Offer is being made pursuant to this Section
3.9 and Sections 4.10. 4.30 and 4.31 hereof and the length of time the Excess
Proceeds Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrete or accrue interest including Contingent Interest, if any;
(d) that, unless the Issuers defaults in making such payment, any Note
accepted for payment pursuant to the Excess Proceeds Offer shall cease to
accrete or accrue interest including Contingent Interest, if any after the
Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Excess
Proceeds Offer may only elect to have all of such Note purchased and may not
elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any Excess
Proceeds 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, or
transfer by book-entry transfer, to the Issuers, a depositary, if appointed by
the Issuers, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Issuers, the depositary or the Paying Agent, as the case may be, receive, 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 election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Issuers shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Issuers so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
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(i) 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 (or transferred by book-entry transfer).
On or before the Purchase Date, the Issuers shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, the Offer
Amount of Notes or portions thereof tendered pursuant to the Excess Proceeds
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Issuers in accordance
with the terms of this Section 3.9. The Issuers, 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 tendered by such Holder and accepted by
the Issuers for purchase, and the Issuers shall promptly issue a new Note, and
the Trustee, upon written request from the Issuers shall authenticate and mail
or deliver such new Note to such Holder, in a principal amount equal to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Issuers to the Holder thereof. The Issuers
shall publicly announce the results of the Excess Proceeds Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.9, any purchase
pursuant to this Section 3.9 shall be made pursuant to the provisions of
Sections 3.1 through 3.6 hereof.
ARTICLE 4.
COVENANTS
Section 4.1. Payment of Notes.
The Issuers shall pay or cause to be paid the principal of, premium, if
any, and interest (including Contingent Interest, if any) on the Notes on the
dates and in the manner provided in the Notes. Principal, premium, if any, and
interest (including Contingent Interest, if any) shall be considered paid on the
date due if the Paying Agent, if other than the Issuers or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Issuers in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest (including Contingent Interest, if
any) then due. The Issuers shall pay all Liquidated Damages, if any, in the
same manner on the dates and in the amounts set forth in the Registration Rights
Agreement.
The Issuers 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 (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(including Contingent Interest, if any) and Liquidated Damages (without regard
to any applicable grace period) at the same rate to the extent lawful.
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Section 4.2. Maintenance of Office or Agency.
The Issuers shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Issuers in respect of the Notes and this Indenture may be served. The
Issuers shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Issuers
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Issuers may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Issuers
of their obligation to maintain an office or agency in the Borough of Manhattan,
the City of New York for such purposes. The Issuers shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
The Issuers hereby designate the Corporate Trust Office of the Trustee as
one such office or agency of the Issuers in accordance with Section 2.3.
Section 4.3. Reports.
Whether or not required by the rules and regulations of the Commission,
beginning with respect to the Company's fiscal quarter ended October 26, 1997,
and continuing for so long as any Notes are outstanding, the Issuers shall
furnish to the holders (i) all consolidated quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if the Issuers were required to file such
Forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that describes the financial position and results of
operations of the Company and its Subsidiaries and, with respect to the annual
information only, a report thereon by the Issuers' certified independent
accountants and (ii) all current reports that would be required to be filed with
the Commission on Form 8-K if the Issuers were required to file such reports.
In addition, whether or not required by the rules and regulations of the
Commission, the Issuers shall file a copy of all such information and reports
with the Commission for public availability (unless the Commission shall not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request. In addition, the Issuers have agreed
that, for so long as any Notes remain outstanding, they shall furnish to the
Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
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Section 4.4. Compliance Certificate.
(a) The Issuers 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 Issuers and their Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Issuers have kept, observed, performed and fulfilled
their obligations under this Indenture and the Collateral Documents, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Issuers have kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and the Collateral Documents
and are not in default in the performance or observance of any of the terms,
provisions and conditions of this Indenture or the Collateral Documents (or, if
a Default or Event of Default shall have occurred, describing all such Defaults
or Events of Default of which he or she may have knowledge and what action the
Issuers are taking or propose to take with respect thereto) and that to the best
of his or her knowledge no event has occurred and remains in existence by reason
of which payments on account of the principal of or interest, if any, on the
Notes is prohibited or if such event has occurred, a description of the event
and what action the Issuers are taking or propose 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 4.3(a) above shall be accompanied by a
written statement of the Issuers' 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 Issuers have violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Issuers shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Issuers are taking or propose to take with
respect thereto.
Section 4.5. Taxes.
The Issuers shall pay, and shall cause each of their Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
Section 4.6. Stay, Extension and Usury Laws.
The Issuers covenant (to the extent that it may lawfully do so) that they
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that
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may affect the covenants or the performance of this Indenture; and the Issuers
(to the extent that they may lawfully do so) hereby expressly waive all benefit
or advantage of any such law, and covenant that they 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 4.7. Restricted Payments.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly: (i) declare or pay any dividend or make any other
payment or distribution on account of the Company's or any of its Subsidiaries'
Equity Interests (including, without limitation, any payment in connection with
any merger or consolidation involving the Company) or to the direct or indirect
holders of the Company's or any of its Subsidiaries' Equity Interests in any
capacity (other than dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Company or dividends or distributions
payable to the Company by a Wholly Owned Subsidiary or a Substantially Owned
Subsidiary); (ii) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company or other Affiliate of the Company (other than any
such Equity Interests owned by the Company or any Wholly Owned Subsidiary of the
Company); (iii) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is pari
passu with or subordinated to the Notes (other than Notes), in each case except
a payment of interest (other than interest payable in Indebtedness incurred
pursuant to clause (x) of the second paragraph of Section 4.9 hereof or a
payment of principal on Indebtedness on or after the due date thereof in
accordance with the payment provisions thereof in each case as such Indebtedness
was permitted pursuant to Section 4.9 hereof; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "Restricted Payments"), unless, at
the time of and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be continuing
or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the Company's most recently completed four full fiscal
quarters, have been permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in clause (ii) of the
first paragraph of Section 4.9 hereof, except that with respect to any
Restricted Payment made to Casino America as a repayment of amounts advanced to
the Company by Casino America pursuant to the Completion Capital Commitment, the
Fixed Charge Coverage Ratio applicable to such Restricted Payment shall be 2.0
to 1.0 and shall otherwise be calculated in accordance with the provisions of
clauses (i) and (ii) of the first paragraph of Section 4.9 hereof; and
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(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Subsidiaries after the
date of this Indenture (excluding Restricted Payments permitted by clause (ii)
of the next succeeding paragraph, is less than the sum of (i) 50% of the
Consolidated Net Income of the Company for the period (taken as one accounting
period) from the beginning of the first fiscal quarter commencing prior to the
date of this Indenture to the end of the Company's most recently ended fiscal
quarter for which internal financial statements are available at the time of
such Restricted Payment (or, if such Consolidated Net Income for such period is
a deficit, less 100% of such deficit), plus (ii) 100% of the aggregate net cash
proceeds received by the Company from the issue or sale since the date of this
Indenture of Equity Interests of the Company (other than Disqualified Stock) or
of Disqualified Stock or debt securities of the Company that have been converted
into such Equity Interests (other than Equity Interests (or Disqualified Stock
or convertible debt securities) sold to a Subsidiary of the Company and other
than Disqualified Stock or convertible debt securities that have been converted
into Disqualified Stock), plus (iii) to the extent that any Restricted
Investment that was made after the date of this Indenture is sold for cash or
otherwise liquidated or repaid for cash, the lesser of (A) the cash return of
capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (B) the initial amount of such Restricted Investment.
The foregoing provisions shall not prohibit (i) the payment of any dividend
or distribution within 60 days after the date of declaration thereof, if at such
date of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any pari passu or subordinated Indebtedness or Equity Interests
of the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of,
other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement, defeasance or other acquisition shall
be excluded from clause (c) (ii) of the preceding paragraph; (iii) so long as no
Default or Event of Default has occurred and is continuing, the defeasance,
redemption, repurchase or other acquisition of pari passu or subordinated
Indebtedness, including the Notes; (iv) so long as the Company is treated as a
pass through entity for United States federal income tax purposes, distributions
to equity holders of the Company in an amount not to exceed the Tax Amount for
such period and so long as the Tax Distribution Condition is satisfied at the
time of such distributions; (v) so long as no Default or Event of Default has
occurred and is continuing, payment to Casino America of amounts owing to it
pursuant to the Management Agreement as in effect on the date of this Indenture
(other than amounts owing to it pursuant to Section 11 thereof,
"Indemnification"), subject to the terms of the Manager Subordination Agreement
relating thereto between Casino America and the Trustee; and (vi) any redemption
required pursuant to Section 3.8 hereof.
The amount of all Restricted Payments (other than cash) shall be the fair
market value (evidenced by a resolution of the Managers set forth in an
Officers' Certificate delivered to the Trustee) on the date of the Restricted
Payment of the assets or securities proposed to be transferred or issued by the
Company or such Subsidiary, as the case may be, pursuant to the Restricted
Payment. Not later than the date of making any Restricted Payment, the Company
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shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.7 were computed, together with a copy of
any fairness opinion or appraisal required by this Indenture.
Section 4.8. Dividend and Other Payment Restrictions Affecting Subsidiaries.
The Company shall not, and shall 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 Subsidiary to
(i)(a) pay dividends or make any other distributions to the Company or any of
its Subsidiaries (1) on its Capital Stock or (2) with respect to any other
interest or participation in, or measured by, its profits, or (b) pay any
indebtedness owed to the Company or any of its Subsidiaries, (ii) make loans or
advances to the Company or any of its Subsidiaries or (iii) transfer any of its
properties or assets to the Company or any of its Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (a) this Indenture,
the Notes or the Collateral Documents, (b) applicable law, (c) by reason of
customary non-assignment provisions in leases entered into in the ordinary
course of business and (d) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive than those contained in the agreements
governing the Indebtedness being refinanced.
Section 4.9. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise (collectively,
"incur"), with respect to any Indebtedness (including Acquired Debt) and that
the Company shall not issue any Disqualified Stock and shall not permit any of
its Subsidiaries to issue any shares of Disqualified Stock; provided, however,
that, so long as no Default or Event of Default has occurred and is continuing,
the Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock if:
(i) the Isle-Black Hawk 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 on which
such additional Indebtedness is incurred or such Disqualified
Stock is issued would have been at least 2.25 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 Stock had been issued, as the
case may be, at the beginning of such four-quarter period; and
(iii) the Weighted Average Life to Maturity of such Indebtedness is
greater than the remaining Weighted Average Life to Maturity of
the Notes.
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So long as no Default or Event of Default has occurred and is continuing,
the foregoing provisions under this Section 4.9 shall not apply to:
(i) the incurrence by the Company and its Subsidiaries of
Indebtedness represented by the Notes or obligations arising
under the Collateral Documents, to the extent that such
obligations would constitute Indebtedness;
(ii) the incurrence by the Company of Permitted Refinancing
Indebtedness in exchange for, or the net proceeds of which are
used to extend, refinance, renew, replace, defease or refund,
Indebtedness that was permitted by this Indenture to be
incurred;
(iii) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any
of its Substantially Owned Subsidiaries; provided, however, that
(a) such Indebtedness is expressly subordinate to the payment in
full of all Obligations with respect to the Notes, (b)(1) any
subsequent issuance or transfer of Equity Interests that results
in any such Indebtedness being held by any Person other than the
Company or a Substantially Owned Subsidiary and (2) any sale or
other transfer of any such Indebtedness to a Person that is not
either the Company or a Substantially Owned Subsidiary shall be
deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Subsidiary, as the case may
be, and (c) if any Subsidiary is the obligor on such
Indebtedness, such Indebtedness is represented by a Subsidiary
Intercompany Notes that is pledged to the Trustee as security
for the Notes;
(iv) the incurrence by the Company of Hedging Obligations that are
incurred for the purpose of fixing or hedging interest rate risk
with respect to any floating rate Indebtedness that is permitted
by the terms of this Indenture to be outstanding;
(v) the incurrence by the Company of Indebtedness (in addition to
Indebtedness permitted by any other clause of this paragraph) in
an aggregate principal amount (or accreted value, as applicable)
at any time outstanding not to exceed $5.0 million for working
capital or other corporate purposes;
(vi) the incurrence by the Company of Indebtedness solely in respect
of standby letters of credit or surety bonds (a) required to be
issued under the Subdivision Agreement in an amount not to
exceed 110% of the cost of the work to be performed thereunder
or (b) required to be issued pursuant to excavation activities
to be undertaken pursuant to the Design/Build Agreement in an
amount not to exceed $1.1 million;
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(vii) the incurrence by the Company of Indebtedness solely in respect
of performance or similar bonds or standby letters of credit;
provided that any such bond or standby letter of credit is
incurred in the ordinary course of the Company's business in an
aggregate amount not to exceed $2.0 million at any one time
outstanding; and provided, further, that any such bond or
standby letter of credit is incurred on terms customary for
operations similar to the Company's;
(viii) the incurrence by the Company of FF&E Financing; provided,
however, that (a) the principal amount of such Indebtedness
does not exceed 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) of the FF&E purchased or leased with the
proceeds thereof, (b) no Indebtedness incurred under the Notes
is utilized for the purchase or lease of such FF&E and (c) the
aggregate principal amount of such Indebtedness does not exceed
$15.0 million outstanding at any time;
(ix) bond or surety obligations posted by the Company or any of its
Subsidiaries in order to prevent the loss or material
impairment of or to obtain a Gaming License or as otherwise
required by an order of any Gaming Authority to the extent
required by applicable law and consistent in character and
amount with customary industry practice so long as such
Indebtedness does not result in, and is not secured by, a Lien
on any of the Note Collateral;
(x) the incurrence by the Company of Indebtedness in an aggregate
principal amount not to exceed $10.0 million in original
principal amount ("PIK Debt") which is expressly subordinate to
the payment in full of all Obligations with respect to the
Notes; provided that any interest which is payable on account
of such PIK Debt shall be paid solely in the form of additional
PIK Debt until the first time that the Company is able to
satisfy the Fixed Charge Coverage Ratio test set forth in
clause (ii) of the first paragraph of this Section 4.9,
calculated after giving pro forma effect to the incurrence of
such PIK Debt and any PIK Debt payable in respect of such PIK
Debt as if all such amounts had been outstanding at the
beginning of the four-quarter period applicable to such
Indebtedness pursuant to such clause (ii); provided, further,
that the Weighted Average Life to Maturity of such Indebtedness
is greater than the remaining Weighted Average Life to Maturity
of the Notes; and provided, further, that the Company may not
incur Indebtedness pursuant to the terms of this paragraph (x)
prior to the time that Casino America has fulfilled all of its
obligations under the Completion Capital Commitment or the
Completion Capital Commitment shall have expired in accordance
with the terms thereof; and
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(xi) the incurrence by the Company of Indebtedness in an aggregate
principal amount not to exceed $2.0 million, the proceeds of
which are to be used to purchase a 0.25 acre parcel of property
located on the corner of Mill Street and Main Street in Black
Hawk, Colorado adjacent to the site of the Isle-Black Hawk,
provided that such property shall be conveyed free and clear of
Liens and, upon the acquisition thereof, shall constitute Note
Collateral promptly upon the purchase thereof pursuant to the
Collateral Documents.
Section 4.10. Asset Sales.
Subject to the terms of the Collateral Documents, the Company shall not,
and shall not permit any of its Subsidiaries to, consummate an Asset Sale,
unless (i) the Company (or the Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Managers set forth in an Officers'
Certificate delivered to the Trustee) of the assets or Equity Interests issued
or sold or otherwise disposed of and (ii) at least 80% of the consideration
therefor received by the Company or such Subsidiary is in the form of Cash
Equivalents; provided that the amount of (x) any liabilities (as shown on the
Company's or such Subsidiary's most recent balance sheet) of the Company or any
Subsidiary (other than contingent liabilities and liabilities that are by their
terms subordinated to the Notes) that are assumed by the transferee of any such
assets pursuant to a customary novation agreement that releases the Company or
such Subsidiary from further liability and (y) any securities, notes or other
obligations received by the Company or any such Subsidiary from such transferee
that are promptly (but in any event within 30 days) converted by the Company or
such Subsidiary into cash (to the extent of the cash received), shall be deemed
to be Cash Equivalents for purposes of this provision.
Within 180 days after the receipt of any Net Proceeds from an Asset Sale,
the Company or such Subsidiary, as the case may be, may (i) apply such Net
Proceeds to the making of a capital expenditure or the acquisition of long-term
assets, in either case, which shall be owned by the Company or such Subsidiary
and be used by or useful to the Company or such Subsidiary in any line of
business in which the Company or such Subsidiary is permitted to be engaged
pursuant to Section 4.13 hereof or (ii) contractually commit to apply such Net
Proceeds to the payment of the costs of construction of real property
improvements or the costs of capital expenditures which, in each case, shall be
Note Collateral and shall be owned by the Company or such Subsidiary and be used
by or useful to the Company or such Subsidiary in any line of business in which
the Company or such Subsidiary is permitted to be engaged pursuant to Section
4.13 hereof; provided, that the Company or such Subsidiary, as the case may be,
grants to the Trustee, on behalf of the Holders, a first priority perfected
security interest on any such properties or assets acquired or constructed with
the Net Proceeds of any such Asset Sale on the terms set forth in this Indenture
and the Collateral Documents. Pending the final application of any such Net
Proceeds, the Company or such Subsidiary shall invest such Net Proceeds in Cash
Equivalents which shall be pledged to the Trustee as security for the Notes and
shall constitute Note Collateral. Any Net Proceeds from Asset Sales that are
not applied or invested as provided in the first sentence of this paragraph
shall be deemed to constitute "Excess Proceeds." When the aggregate amount of
Excess Proceeds exceeds $5.0 million, the Issuers shall be required to make
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an offer to all Holders (an "Asset Sale Offer") to purchase the maximum
principal amount of Notes that may be purchased out of the Excess Proceeds, at
an offer price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest (including Contingent Interest, if any)
and Liquidated Damages, if any, thereon to the date of purchase, which date
shall be no less than 30 nor more than 60 days after the date of the Asset Sale
Offer, in accordance with the procedures set forth in this Indenture. To the
extent that the aggregate amount of Notes tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company may, subject to the
provisions of this Indenture and the Collateral Documents, use any remaining
Excess Proceeds for general corporate purposes. If the aggregate principal
amount of Notes surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased in the manner
described above under Section 3.2 hereof. Upon completion of such Asset Sale
Offer, the amount of Excess Proceeds shall be reset at zero.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall not permit any of its Subsidiaries to,
make any payment to or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (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) the Company
delivers to the Trustee (a) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate consideration in excess of
$1.0 million, a resolution of the Managers set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $5.0 million, an opinion as to
the fairness to the Holders of such Affiliate Transaction from a financial point
of view issued by an accounting, appraisal or investment banking firm of
national standing; provided that (w) payments made pursuant to the Management
Agreement as in effect on the date of this Indenture, (x) any employment or
indemnification agreement entered into by the Company or any of its Subsidiaries
in the ordinary course of business on terms customary in the gaming industry,
(y) transactions between or among the Issuers and/or their Subsidiaries and (z)
Restricted Payments that are permitted by Section 4.7 hereof, in each case,
shall not be deemed Affiliate Transactions.
Section 4.12. Liens.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien on any
asset now owned or hereafter acquired, or any proceeds, income or profits
therefrom or assign or convey any right to receive income therefrom, except
Permitted Liens.
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Section 4.13. Line of Business.
The Company shall not, and shall not permit any Subsidiary to, engage in
any business or investment activities other than the Gaming Business. Neither
the Company nor any of its Subsidiaries shall be permitted by this Indenture to
conduct a Gaming Business in any gaming jurisdiction in which the Company or
such Subsidiary is not licensed on the date of this Indenture if the holders of
the Notes would be required to be licensed as a result thereof; provided that
the provisions described in this sentence shall not prohibit the Company or any
of its Subsidiaries from conducting a Gaming Business in any jurisdiction that
does not require the licensing or qualification of any Holders, but reserves the
discretionary right to require the licensing or qualification of any Holders.
Notwithstanding any other provision of this Indenture, the Company shall not,
and shall not permit any of its Subsidiaries to, engage in any business,
development or investment activity other than at or in conjunction with the
Isle-Black Hawk until the Isle-Black Hawk is Operating.
Section 4.14. Corporate Existence.
Subject to Article 5 hereof, the Issuers shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) their limited
liability company or corporate existence, as applicable, and the corporate,
limited liability company, partnership or other existence of each of their
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Issuers or any such Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Issuers
and their Subsidiaries; provided, however, that the Issuers shall not be
required to preserve any such right, license or franchise, or the corporate,
limited liability company, partnership or other existence of any of their
Subsidiaries, if the Managers shall determine that the preservation thereof is
no longer desirable in the conduct of the business of the Issuers and their
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders of the Notes.
Section 4.15. Offer to Repurchase Upon Change of Control.
Upon the occurrence of a Change of Control, each Holder shall have the
right to require the Issuers to repurchase all or any part (equal to $1,000 or
an integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest (including Contingent Interest, if any) and Liquidated Damages, if any,
thereon to the date of repurchase (the "Change of Control Payment"). Within ten
days following any Change of Control, the Issuers shall mail a notice to each
Holder describing the transaction or transactions that constitute the Change of
Control and offering to repurchase Notes on the date specified in such notice,
which date shall be no earlier than 30 days and no later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date"), pursuant to
the procedures required by this Indenture and described in such notice. The
Issuers shall comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and
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regulations thereunder to the extent such laws and regulations are applicable in
connection with the repurchase of the Notes as a result of a Change of Control.
On the Change of Control Payment Date, the Issuers shall, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Issuers. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note shall be in a
principal amount of $1,000 or an integral multiple thereof. The Issuers shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The Change of Control provisions described above shall be applicable
whether or not any other provisions of this Indenture are applicable. Except as
described above with respect to a Change of Control, this Indenture does not
contain provisions that permit the Holders to require that the Issuers
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction.
The source of funds for any repurchase of Notes upon a Change of Control
shall be the Issuers' cash or cash generated from operations or other sources,
including borrowings (if available and permitted pursuant to the terms of this
Indenture) or sales of assets; however, there can be no assurance that
sufficient funds shall be available at the time of any Change of Control to make
any required purchases of Notes. Any failure by the Issuers to repurchase Notes
tendered pursuant to a Change of Control Offer shall constitute an Event of
Default.
Notwithstanding the foregoing, the Issuers shall not be required to make a
Change of Control Offer upon a Change of Control if a third party makes the
Change of Control Offer in the manner, at the times and otherwise in compliance
with the requirements set forth in this Indenture applicable to a Change of
Control Offer made by the Issuers and purchases all Notes validly tendered and
not withdrawn under such Change of Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Issuers and their Subsidiaries, taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise established definition of the phrase under applicable
law. Accordingly, the ability of a Holder to require the Issuers to repurchase
Notes as a result of a sale, lease, transfer, conveyance or other disposition of
less than all of the assets of the Issuers and their Subsidiaries, taken as a
whole, to another Person or group may be uncertain.
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Section 4.16. Limitation on Issuances and Sales of Capital Stock of Wholly Owned
Subsidiaries.
The Issuers (i) shall not, and shall not permit any of their Wholly Owned
Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any
Capital Stock of any Wholly Owned Subsidiary of the Issuers to any Person (other
than the Issuers or a Wholly Owned Subsidiary of the Issuers), unless (a) such
transfer, conveyance, sale, lease or other disposition is of all the Capital
Stock of such Wholly Owned Subsidiary and (b) the cash Net Proceeds from such
transfer, conveyance, sale, lease or other disposition are applied in accordance
with Section 4.10 hereof and (ii) shall not permit any of their Wholly Owned
Subsidiaries to issue any of its Equity Interests (other than, if necessary,
shares of its Capital Stock constituting directors' qualifying shares) to any
Person other than to the Issuers or a Wholly Owned Subsidiary of the Issuers.
Section 4.17. Additional Subsidiary Guarantees.
If either of the Issuers shall acquire or create a Subsidiary after the
date of this Indenture, then such newly acquired or created Subsidiary shall
execute a Guarantee and deliver an opinion of counsel, in accordance with the
terms of this Indenture.
Section 4.18. Insurance.
Until the 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 is customarily carried by similar businesses with
such deductibles, retention, self-insured amounts and coinsurance provisions as
are customarily carried by similar businesses of similar size, including,
without limitation, property and casualty, and, with respect to insurance on the
Note Collateral, shall have provided insurance certificates evidencing such
insurance to the Trustee on or prior to the Closing Date and shall thereafter
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. 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;
(iv) business interruption insurance at all times on and after the
Isle-Black Hawk is Operating; and
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(v) 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 the amount of 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 customarily insured consistent with industry
standards and with a deductible no greater than 2% of the
insured value of the Isle-Black Hawk 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 this Indenture (except worker's compensation)
shall name the Company and the Trustee as additional insureds or loss payees, as
the case may be, 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 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 X, or if such carrier is not rated 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 Closing Date
and each anniversary thereafter a certificate of an insurance agent stating that
the insurance policies obtained by the Company and its Subsidiaries comply with
this Section 4.18 and the related applicable provisions of the Collateral
Documents.
Section 4.19. Limitation on Status as Investment Company.
Neither the Issuers nor their Subsidiaries shall become subject to
registration as an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended), or otherwise become subject to
regulation under the Investment Company Act of 1940.
Section 4.20. Further Assurances.
The Issuers shall (and shall cause each of their Subsidiaries to) do,
execute, acknowledge, deliver, record, re-record, file, re-file, register and
re-register, as applicable, 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
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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 the validity, effectiveness and priority of any of the
Collateral Documents and the Liens intended to be created thereby and (iv) to
better assure, convey, grant, assign, transfer, preserve, protect and confirm to
the Trustee any of the rights granted now or hereafter intended by the parties
thereto to be granted to the Trustee or under any other instrument executed in
connection therewith or granted to the Issuers under the Collateral Documents or
under any other instrument executed in connection therewith.
Section 4.21. Construction.
The Company shall cause construction of the Isle-Black Hawk, 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 contracts to which the Company is a party and within the budget for
the project set forth in the Cash Collateral and Disbursement Agreement.
Section 4.22. Limitations on Use of Proceeds.
The Company shall cause the net proceeds of the Offering to be deposited in
the Cash Collateral Accounts, of which $14.1 million shall be deposited in the
Interest Reserve Account and invested solely in Government Securities, $52.2
million shall be deposited in the Construction Disbursement Account and invested
solely in Investment Grade Securities and $5.0 million shall be deposited in the
Completion Reserve Account and invested solely in Investment Grade Securities,
in each case, to be disbursed only in accordance with the Cash Collateral and
Disbursement Agreement. The Company will cause the Disbursement Agent, pursuant
to the terms of the Cash Collateral and Disbursement Agreement, to (i) invest up
to $5.0 million of the funds deposited into the Interest Reserve Account in
Government Securities having a maturity date on or before the date which is one
business day prior to February 28, 1998, (ii) invest up to $4.6 million of the
funds deposited into the Interest Reserve Account in Government Securities
having a maturity date on or before the date which is one business day prior to
August 31, 1998 and (iii) invest up to $4.5 million of the funds deposited into
the Interest Reserve Account in Government Securities having a maturity date on
or before the date which is one business day prior to February 28, 1999.
Section 4.23. Sale and Leaseback Transactions.
The Company shall not, and shall not permit any of its Subsidiaries to,
enter into any sale and leaseback transaction; provided that the Company may
enter into a sale and leaseback transaction if (i) the Company could have (a)
incurred Indebtedness in an amount equal to the Attributable Debt relating to
such sale and leaseback transaction pursuant to the first paragraph of Section
4.9 hereof and (b) incurred a Lien to secure such Indebtedness under Section
4.12 hereof, (ii) the gross cash proceeds of such sale and leaseback transaction
are at least equal to the fair market value (as determined in good faith by the
Managers and set forth in an Officers' Certificate delivered to the Trustee) of
the property that is the subject of such sale and leaseback
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transaction and (iii) the transfer of assets in such sale and leaseback
transaction is permitted by, and the Company applies the proceeds of such
transaction in compliance with Section 4.10 hereof.
Section 4.24. Restrictions on Preferred Stock of Subsidiaries.
The Company shall not permit any of its Subsidiaries to issue any preferred
stock, or permit any Person to own or hold an interest in any preferred stock of
any such Subsidiary, except for preferred stock issued to the Company or a
Wholly Owned Subsidiary of the Company.
Section 4.25. Advances to Subsidiaries.
All advances to Subsidiaries made by the Company from time to time after
the date of this Indenture shall be evidenced by unsecured Subsidiary
Intercompany Notes in favor of the Company that shall be pledged to the Trustee
as Note Collateral to secure the Notes. Each Subsidiary Intercompany Note shall
be payable upon demand and shall bear interest at the same rate as the Notes. A
form of Subsidiary Intercompany Note is attached as an exhibit to this
Indenture. Repayments of principal with respect to any Subsidiary Intercompany
Note shall be required to be pledged to the Trustee as Note Collateral to secure
the Notes until such amounts are advanced to a Subsidiary in accordance with
this Indenture.
Section 4.26. Collateral Documents.
Neither the Issuers nor any of their Subsidiaries shall 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 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 Plans and contracts to which
the Company is a party and the Construction Disbursement 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 4.27. Restriction on Payment of Management Fees.
The Company shall not, directly or indirectly, pay to Casino America or any
of its Affiliates any Management Fees except pursuant to the Management
Agreement as in effect on the date of, and in accordance with, this
Indenture.__Amounts payable pursuant to the Management Agreement shall not be
prepaid, and no payment of Management Fees, either current or accrued, shall be
made if at the time of payment of such Management Fees (i) a Default or an Event
of Default shall have occurred and be continuing or shall occur as a result
thereof or (ii) the Company's Fixed Charge Coverage Ratio for its most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such Management Fee is
proposed to be paid would have been less than 1.5 to 1.0
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(calculated on a pro forma basis after deducting Management Fees to the extent
paid in cash and not deferred and any Management Fees deferred from a prior
period proposed to be paid in cash during such period, but excluding any
Management Fees deferred or accrued and not paid in cash during such period).
With respect to periods following the date the Isle-Black Hawk first becomes
Operating and prior to the time when internal financial statements are available
for four full fiscal quarters following the date the Isle-Black Hawk first
becomes Operating, such Fixed Charge Coverage Ratio shall be calculated only
with respect to the number of full fiscal quarters (but in no event less than
one full fiscal quarter) for which internal financial statements are available
following the date the Isle-Black Hawk first becomes Operating. Any Management
Fees not permitted to be paid pursuant to this Section 4.27 shall be deferred
and shall accrue and may be paid only at such time that they would otherwise be
permitted to be paid hereunder. The right to receive payment of the Management
Fee shall be subordinate in right of payment to the right of the Holders to
receive payments pursuant to the Notes. The terms of the Management Agreement
cannot be amended to increase amounts to be paid thereunder, or in any other
manner which would be adverse to the Company or the Holders, including without
limitation, to amend the method of computing the Management Fee; provided,
however, that the foregoing shall not prohibit any amendment required under any
Gaming Law or by any Gaming Authority.
Section 4.28. Restrictions on Activities of Capital.
Capital may not hold any assets, become liable for any obligations or
engage in any business activities; provided, that Capital may be a co-obligor of
the Notes pursuant to the terms of this Indenture and any activities directly
related or necessary in connection therewith.
Section 4.29. Provision of Certificate Regarding Gaming Licensing Issues and
Liquor Licensing Issues.
Upon the earlier of (i) substantial completion of site preparation
activities, including excavation, on the real property comprising the Isle-Black
Hawk or (ii) March 1, 1998, the Company shall provide to the Trustee an
Officer's Certificate certifying that, after due inquiry, such Officer is not
aware of any issues raised by any Gaming Authority or Liquor Licensing Authority
which could have a material adverse effect on the ability of any applicant for a
Gaming License or a Liquor License required for the Company to own, operate or
conduct the Gaming Business or any business related thereto, including liquor
distribution, at the Isle-Black Hawk to become licensed, qualified or found
suitable by the applicable Gaming Authority or Liquor Licensing Authority.
Section 4.30. Event Of Loss
Within 360 days after any Event of Loss with respect to any Note Collateral
comprising the Isle-Black Hawk with a fair market value (or replacement cost, if
greater) in excess of $1.0 million, the Company or the affected Subsidiary of
the Company, as the case may be, may apply the Net Loss Proceeds from such Event
of Loss to the rebuilding, repair, replacement or construction of improvements
to the Isle-Black Hawk, with no concurrent obligation to make any purchase of
any Notes; provided that (i) the Company delivers to the Trustee within 60 days
of
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such Event of Loss a written opinion from a reputable architect that the Isle-
Black Hawk with at least the Minimum Facilities can be rebuilt, repaired,
replaced or constructed and Operating within 180 days of such Event of Loss,
(ii) an Officers' Certificate certifying that the Company has available from Net
Loss Proceeds or other sources sufficient funds to complete such rebuilding,
repair, replacement or construction and (iii) the Net Loss Proceeds are less
than $25.0 million. If the Net Loss Proceeds to be used for such rebuilding,
repair, replacement or construction exceed $12.0 million, then such Net Loss
Proceeds shall be deposited in the Construction Disbursement Account and
disbursed in accordance with the Cash Collateral and Disbursement Agreement. Any
Net Loss Proceeds from an Event of Loss with respect to any Note Collateral
comprising the Isle-Black Hawk on the date that it becomes Operating that are
not reinvested or not permitted to be reinvested as provided in the first
sentence of this paragraph shall be deemed "Excess Loss Proceeds." When the
aggregate amount of Excess Loss Proceeds exceeds $10.0 million, the Issuers
shall make an offer to all Holders (an "Event of Loss Offer") to purchase the
maximum principal amount of Notes that may be purchased out of the Excess Loss
Proceeds, at a purchase price in cash in an amount equal to 100% of the
principal amount thereof, plus accrued and unpaid interest (including Contingent
Interest, if any) and Liquidated Damages, if any, thereon to the date of
purchase, which date shall not be less than 30 nor more than 60 days from the
date of such Event of Loss Offer, in accordance with the procedures set forth in
this Indenture. If the aggregate principal amount of Notes tendered pursuant to
an Event of Loss Offer exceeds the Excess Loss Proceeds, the Trustee shall
select the Notes to be purchased in the manner described under Section 3.2
hereof. To the extent that the aggregate amount of Notes tendered pursuant to
any Event of Loss Offer is less than the Excess Loss Proceeds, the Company may,
subject to the other provisions of this Indenture and the Collateral Documents,
use any remaining Excess Loss Proceeds for general corporate purposes. 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, replacement or
construction or the completion of any Event of Loss Offer, the Company or the
affected Subsidiary, as the case may be, shall pledge to the Trustee as
additional Note Collateral any Net Loss Proceeds or other cash on hand required
for such permitted rebuilding, repair, replacement or construction pursuant to
the terms of the Collateral Documents relating to the Isle-Black Hawk. Such
pledged funds shall be released to the Company to pay for or reimburse the
Company for the actual cost of such permitted rebuilding, repair, replacement or
construction, or such Event of Loss Offer, pursuant to the terms of the
Collateral Documents relating to the Isle-Black Hawk. Pending the final
application of the Net Loss Proceeds, such proceeds shall be invested in Cash
Equivalents which shall be pledged to the Trustee as security for the Notes. The
Company or such Subsidiary shall be required to grant to the Trustee, on behalf
of the Holders, a first priority lien, subject to Permitted Liens, on any
properties or assets rebuilt, repaired, replaced or constructed with such Net
Loss Proceeds on the terms set forth in this Indenture and the Collateral
Documents.
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 $5.0 million, the Company (or the affected Subsidiary, as
the case may be) shall be required to receive consideration (i) at least equal
to the fair market value (evidenced by a resolution of the Managers set forth in
an Officers' Certificate delivered to the Trustee) of the assets subject to an
Event of Loss and (ii) at least 90% of which is in the form of Cash Equivalents.
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Section 4.31. Excess Cash Purchase Offer.
Within 120 days after each Operating Year of the Company, beginning with
the first Operating Year after the Isle-Black Hawk becomes Operating, the
Issuers shall make an offer to all Holders (an "Excess Cash Flow Offer") to
purchase the maximum principal amount of Notes that is an integral multiple of
$1,000 that may be purchased with 50% of the Company's Excess Cash Flow in
respect of the Operating Year then ended (the "Excess Cash Flow Offer Amount"),
at a purchase price equal to 101% of the principal amount of Notes to be
purchased, plus accrued and unpaid interest (including Contingent Interest, if
any) and Liquidated Damages, if any, to the date fixed for the closing of such
Excess Cash Flow Offer (the "Excess Cash Flow Purchase Price"), in accordance
with the procedures set forth in the Indenture. The Excess Cash Flow Offer
shall be required to remain open for 20 Business Days following its commencement
and no longer, except to the extent that a longer period is required by
applicable law. Upon the expiration of such period, the Company shall apply the
Excess Cash Flow Offer Amount to the purchase of all Notes tendered at the
Excess Cash Flow Purchase Price. If the aggregate principal amount of Notes
tendered pursuant to any Excess Cash Flow Offer exceeds the Excess Cash Flow
Offer Amount with respect thereto, the Trustee shall select the Notes to be
repurchased in the manner described under Section 3.2 hereof. To the extent
that the aggregate principal amount of Notes tendered pursuant to any Excess
Cash Flow Offer is less than the Excess Cash Flow Offer Amount with respect
thereto, the Company may, subject to the other provisions of this Indenture, use
any remaining Excess Cash Flow for general corporate purposes.
ARTICLE 5.
SUCCESSORS
Section 5.1. Merger, Consolidation or Sale of Assets.
Neither Issuer may consolidate or merge with or into (whether or not such
Issuer is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions, to another corporation, Person or entity
unless (i) such Issuer is the surviving corporation or the entity or the Person
formed by or surviving any such consolidation or merger (if other than such
Issuer) or to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the District of Columbia;
(ii) the entity or Person formed by or surviving any such consolidation or
merger (if other than such Issuer) or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made assumes all the obligations of such Issuer under the Notes, the Collateral
Documents and this Indenture pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee; (iii) immediately after such transaction
no Default or Event of Default exists; (iv) such transaction would not result in
the loss or suspension or material impairment of any Gaming License unless a
comparable replacement Gaming License is effective prior to or simultaneously
with such loss, suspension or material impairment; (v) except in the case of a
merger of such Issuer with or into a Wholly Owned Subsidiary of such Issuer,
such Issuer or the entity or Person formed by or surviving any
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such consolidation or merger (if other than such Issuer), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made (a) shall have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of such Issuer immediately
preceding the transaction and (b) shall, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 4.9 hereof and (vi) such
transaction would not require any Holder or beneficial owner of Notes to obtain
a Gaming License or be qualified or found suitable under the law of any
applicable gaming jurisdiction; provided that such Holder or beneficial owner
would not have been required to obtain a Gaming License or be qualified or found
suitable under the laws of any applicable gaming jurisdiction in the absence of
such transaction. Neither the foregoing restrictions nor any other provision in
this Indenture shall restrict or prohibit the Company from engaging in a
transaction solely constituting a Permitted C-Corp Conversion.
Section 5.2. 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
Issuers in accordance with Section 5.1 hereof, the successor corporation formed
by such consolidation or into or with which the Issuers are 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 "Issuers" shall refer instead to
the successor corporation and not to the Issuers), and may exercise every right
and power of the Issuers under this Indenture with the same effect as if such
successor Person had been named as the Issuers herein; provided, however, that
the predecessor Issuers 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 Issuers' assets that meets the
requirements of Section 5.1 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.1. Events of Default.
An "Event of Default" occurs if:
(a) the Issuers default for 30 days in the payment when due of interest
(including Contingent Interest, if any) on, or Liquidated Damages, if any, with
respect to, the Notes; 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;
(b) the Issuers default in the payment when due of the principal of or
premium, if any, on the Notes;
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(c) the Issuers fail to comply with the provisions described under
Sections 3.10, 4.7, 4.9, 4.10, 4.15, 4.22, 4.28, 4.30, 4.31 or 5.1 hereof;
(d) the Issuers fail for 30 days after notice to comply with any of its
other agreements in this Indenture or the Notes;
(e) a default under any mortgage, indenture or instrument under which
there may be issued or by which there may be 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 date
of this Indenture, which default (a) is caused by a failure to pay principal of
or premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more;
(f) the Issuers or any of their Subsidiaries fail to pay final judgments
aggregating in excess of $5.0 million, which judgments are not paid, discharged
or stayed for a period of 60 days;
(g) the Issuers breach any material representation or warranty set forth
in the Collateral Documents, or default by the Issuers in the performance of any
covenant set forth in the Collateral Documents, or repudiation by the Issuers of
their obligations under the Collateral Documents or the unenforceability of the
Collateral Documents against the Issuers for any reason;
(h) any Subsidiary of either Issuer, or any group of Subsidiaries of
either Issuer that, taken as a whole, would constitute a Significant Subsidiary
of either Issuer pursuant to or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due;
(i) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
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(i) is for relief against either Issuer, any Subsidiary of either
Issuer, or any group of Subsidiaries of either Issuer that,
taken as a whole, would constitute a Significant Subsidiary of
either Issuer in an involuntary case;
(ii) appoints a custodian of either Issuer or any Significant
Subsidiary of either Issuer or any group of Subsidiaries of
either Issuer that, taken as a whole, would constitute a
Significant Subsidiary or for all or substantially all of the
property of either Issuer or any Significant Subsidiary of
either Issuer or any group of Subsidiaries of either Issuer
that, taken as a whole, would constitute a Significant
Subsidiary of either Issuer; or
(iii) orders the liquidation of either Issuer or any Significant
Subsidiary of either Issuer or any group of Subsidiaries of
either Issuer that, taken as a whole, would constitute a
Significant Subsidiary of either Issuer;
and the order or decree remains unstayed and in effect for 60 consecutive
days;
(j) the 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 any Gaming
Facility;
(k) a default by Casino America in the performance of its obligations set
forth in the Completion Capital Commitment or repudiation of its obligations
under the Completion Capital Commitment; or
(l) the failure of the Isle-Black Hawk to be Operating by the Operating
Deadline or to remain Operating thereafter, except (i) as the hours of operation
of the Isle-Black Hawk may be limited by any Gaming Authority or Gaming Law or
(ii) for a period of time not to exceed 20 days during any 30-day period and not
to exceed 45 days during any one-year period; provided, however, that, in any
event, there shall not be an Event of Default under this clause (l) (ii) if the
failure to remain Operating during such period results from an Event of Loss
which event shall be covered by Section 4.30 hereof.
Section 6.2. Acceleration.
If any Event of Default (other than an Event of Default specified in clause
(h) or (i) of Section 6.1 hereof) occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes then outstanding may
declare all the Notes to be due and payable immediately. Upon any such
declaration, the Notes shall become due and payable immediately.
Notwithstanding the foregoing, if an Event of Default specified in clause (h) or
(i) of Section 6.1 hereof occurs with respect to the Issuers, any Significant
Subsidiary or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary, all outstanding Notes shall be due and payable
immediately without further action or notice. The Holders may not enforce this
Indenture or the Notes except as provided in this Indenture. Subject to
Section 6.5 hereof, the Holders of a majority in principal amount of the Notes
then outstanding may direct the Trustee in its exercise of any trust or power.
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If an Event of Default occurs on or after August 31, 2001, by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Issuers
with the intention of avoiding payment of the premium that the Issuers would
have had to pay if the Issuers then had elected to redeem the Notes pursuant to
Section 3.7 hereof, 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.
Section 6.3. 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 (including Contingent Interest, if any) on the Notes or to enforce the
performance of any provision of the Notes, this Indenture or any Collateral
Document.
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.
Section 6.4. Waiver of Past Defaults.
Holders of not less than 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 an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
(including Contingent Interest, if any) 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 6.5. 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. 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.
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Section 6.6. 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;
(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.
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 6.7. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest (including Contingent Interest, if any) on the
Note, on or after the respective due dates expressed in the Note (including in
connection with an offer to purchase), or to bring suit for the enforcement of
any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
Section 6.8. Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(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 Issuers for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest (including
Contingent Interest, if any) 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 6.9. 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
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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 Issuers (or any other obligor upon the
Notes), their creditors or their 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 7.7 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 7.7 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties that the Holders may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.7 hereof and amounts due to the Trustee in its capacity as
Disbursement Agent under the Cash Collateral and Disbursement Agreement,
including payment of all compensation, expense and liabilities incurred, and all
advances made, by the Trustee and the costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium and Liquidated Damages, if any, and interest (including
Contingent Interest, if any), ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal,
premium and Liquidated Damages, if any and interest (including Contingent
Interest, if any), respectively; and
Third: to the Issuers 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
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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 6.7 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 any casino that
constitutes Note Collateral by the Trustee or the appointment of a receiver of
either such Note Collateral or any part thereof, or after such taking of
possession or such appointment, the Trustee or any such receiver shall be
authorized, in addition to the rights and powers of the Trustee and such
receiver set forth elsewhere in this Indenture and the Collateral Documents, to
retain one or more experienced operators of casinos to manage such casino on
behalf of the Holders of Notes; provided, however, that any such operator shall
have all necessary legal qualifications, including all Gaming Licenses to manage
such casino.
ARTICLE 7.
TRUSTEE
Section 7.1. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in
this Indenture and no others, and no implied covenants or
obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of
this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
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(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Issuers. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
(g) Notwithstanding anything to the contrary contained in this Indenture,
or the other Collateral Documents, in the event the Trustee is entitled or
required to commence an action to foreclose on any Note Collateral or otherwise
exercise its remedies to acquire control or possession of any part of the Note
Collateral and solely to the extent that the Trustee shall have determined in
good faith that the indemnification provided to the Trustee under Section 7.7
does not or will not adequately protect and indemnify it from and against the
liability described immediately below, the Trustee shall not be required to
commence any such action or exercise any such remedy with respect to such part
of the Note Collateral if the Trustee has determined in good faith (and upon
written advice of outside counsel) that the Trustee is reasonably likely to
incur liability under any foreign, federal, state or local law or regulation
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants unless the
Trustee has received security or indemnity or other surety in an amount and in a
form reasonably satisfactory to the Trustee protecting the Trustee from all such
liability.
Section 7.2. 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
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takes or omits to take in good faith in reliance on such Officers' Certificate
or Opinion of Counsel. The Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection from liability in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Issuers shall be sufficient if signed by
an Officer of each of the Issuers.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
Section 7.3. 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 Issuers or any Affiliate of the
Issuers with the same rights it would have if it were not Trustee. However, in
the event that the Trustee acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
as trustee or resign. Any Agent may do the same with like rights and duties.
The Trustee is also subject to Sections 7.10 and 7.11 hereof.
Section 7.4. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Issuers' use of the proceeds from the Notes or any money
paid to the Issuers or upon the Issuers' direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.5. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest (including Contingent Interest, if any) on any Note, the Trustee
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may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of the Holders of the Notes.
Section 7.6. Reports by Trustee to Holders of the Notes.
(a) Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA (S) 313(a) (but if no event described in
TIA (S) 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA
(S) 313(b)(2). The Trustee shall also transmit by mail all reports as required
by TIA (S) 313(c).
(b) A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Issuers and filed with the Commission and each
stock exchange on which the Notes are listed in accordance with TIA (S) 313(d).
The Issuers shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
(c) At the expense of the Issuers, 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 Authority when requested to do so by the Issuers.
(d) At the express direction of the Issuers and at the Issuers' expense,
the Trustee shall provide any Gaming 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
Issuers so direct;
(iii) notice of any 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.
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(e) To the extent requested by the Issuers and at the Issuers' expense,
the Trustee shall cooperate with any Gaming Authority in order to provide such
Gaming Authority with the information and documentation requested and as
otherwise required by applicable law.
Section 7.7. Compensation and Indemnity.
The Issuers shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Issuers shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Issuers shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Issuers (including
this Section 7.7) and defending itself against any claim (whether asserted by
the Issuers or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Issuers promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Issuers shall not relieve the Issuers of their obligations hereunder. The
Issuers shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel and the Issuers shall pay the reasonable
fees and expenses of such counsel. The Issuers need not pay for any settlement
made without its consent, which consent shall not be unreasonably withheld.
The obligations of the Issuers under this Section 7.7 shall survive the
satisfaction and discharge of this Indenture.
To secure the Issuers' 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 6.1(h) or (i) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to the
extent applicable.
Section 7.8. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in
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this Section; provided, however, that if the Trustee does not receive the
security, indemnity or surety described in Section 7.1(g) in connection with any
potential liability described therein, the Trustee may resign effective upon 30
days written notice to the Holders and the Issuers.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Issuers. 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 Issuers in writing. The Issuers may
remove the Trustee if:
(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 Issuers shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Issuers.
If any Gaming 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
Issuers unless the Trustee declines to do so, or, if the Trustee's relationship
with the Issuers may, in the Issuers' 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 Issuers, or
the Holders of 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, after written request by any Holder of a Note who has been
a Holder of a Note for at least six months, fails to comply with Section 7.10,
such Holder of a Note 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 Issuers. 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
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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 7.7 hereof. Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Issuers' obligations under Section 7.7 hereof shall continue
for the benefit of the retiring Trustee.
Section 7.9. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee,
provided such corporation is otherwise eligible and qualified under this
Article 7.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA (S) 310(b).
Section 7.11. Preferential Collection of Claims Against Issuers.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.1. Option To Effect Legal Defeasance Or Covenant Defeasance.
The Issuers may, at the option of the Managers evidenced by a resolution
set forth in an Officers' Certificate, at any time, elect to have either Section
8.2 or 8.3 hereof be applied to all outstanding Notes upon compliance with the
conditions set forth below in this Article 8.
Section 8.2. Legal Defeasance and Discharge.
Upon the Issuers' exercise under Section 8.1 hereof of the option
applicable to this Section 8.2, the Issuers shall, subject to the satisfaction
of the conditions set forth in Section 8.4 hereof, be deemed to have been
discharged from certain of their obligations with respect to all outstanding
Notes on the date the conditions set forth below are satisfied (hereinafter,
"Legal
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Defeasance"). For this purpose, Legal Defeasance means that the Issuers shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.5 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all of their other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Issuers, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section 8.4
hereof, and as more fully set forth in such Section, payments in respect of the
principal of, premium, if any, Fixed Interest and all accrued but unpaid
Contingent Interest and Liquidated Damages, if any, on such Notes when such
payments are due, (b) the Issuers' obligations with respect to such Notes under
Article 2 and Section 4.2 hereof other than obligations with respect to the
payment of Contingent Interest (other than accrued Contingent Interest), which
shall remain outstanding until the maturity date of the Notes (c) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and the Issuers'
obligations in connection therewith and (d) this Article 8. Subject to
compliance with this Article 8, the Issuers may exercise their option under this
Section 8.2 notwithstanding the prior exercise of their option under Section 8.3
hereof.
Section 8.3. Covenant Defeasance.
Upon the Issuers' exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, the Issuers shall, subject to the satisfaction
of the conditions set forth in Section 8.4 hereof, be released from its
obligations under Sections 3.10, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.15,
4.16, 4.17, 4.18, 4.21, 4.22, 4.23, 4.24, 4.25, 4.26, 4.27, 4.28, 4.29, 4.30,
4,31 and 5.1 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 Issuers may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.1
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Issuers' exercise
under Section 8.1 hereof of the option applicable to this Section 8.3, subject
to the satisfaction of the conditions set forth in Section 8.4 hereof, Sections
6.1(c) through 6.1(g), 6.1(j), 6.1(k) and 6.1(l) hereof shall not constitute
Events of Default.
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Section 8.4. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.2 or 8.3 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Issuers 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 shall be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and Fixed Interest and
accrued Contingent Interest then to the redemption date and Liquidated Damages,
if any, on the outstanding Notes on the stated maturity or on the applicable
redemption date, as the case may be, and the Issuers 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 8.2 hereof, the Issuers shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Issuers have
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes shall not recognize income, gain or loss for federal income
tax purposes as a result of such Legal Defeasance and shall be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.3 hereof, the Issuers shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes shall not recognize income, gain or loss for federal income
tax purposes as a result of such Covenant Defeasance and shall be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default resulting
from the borrowing of funds to be applied to such deposit) or insofar as
Sections 6.1(h) or 6.1(i) hereof is concerned, at any time in the period ending
on the 91st day after the date of 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 Issuers or any of their
Subsidiaries is a party or by which the Issuers or any of their Subsidiaries are
bound;
(f) the Issuers shall have delivered to the Trustee an opinion of counsel
to the effect that after the 91st day following the deposit, the trust funds
shall not be subject to the effect of
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any applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(g) the Issuers shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Issuers with the intent
of preferring the Holders over any other creditors of the Issuers or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Issuers; and
(h) the Issuers shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Section 8.5. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.6 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 8.5, the
"Trustee") pursuant to Section 8.4 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 Issuers 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 Fixed Interest
and Contingent Interest then due, but such money need not be segregated from
other funds except to the extent required by law.
The Issuers 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 8.4 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 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Issuers from time to time upon the request of the
Issuers any money or non-callable Government Securities held by it as provided
in Section 8.4 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 8.4(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 8.6. Repayment to Issuers.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Issuers, in trust for the payment of the principal of, premium, if any, or
interest (including Contingent Interest, if any) on any Note and remaining
unclaimed for two years after such principal, and premium, if any, or interest
(including Contingent Interest, if any) has become due and payable
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shall be paid to the Issuers on its request or (if then held by the Issuers)
shall be discharged from such trust; and the Holder of such Note shall
thereafter, as a secured creditor, look only to the Issuers for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Issuers 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 Issuers 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
shall be repaid to the Issuers.
Section 8.7. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States dollars
or non-callable Government Securities in accordance with Section 8.2 or 8.3
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 Issuers' obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.2 or 8.3 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.2 or 8.3 hereof,
as the case may be; provided, however, that, if the Issuers make any payment of
principal of, premium, if any, or Liquidated Damages, if any, or interest
(including Contingent Interest, if any) on any Note following the reinstatement
of its obligations, the Issuers 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.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1 Without Consent of Holders of Notes.
Notwithstanding Section 9.2 of this Indenture, the Issuers and the Trustee
may amend or supplement this Indenture or the Notes without the consent of any
Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Issuers' obligations to the
Holders in the case of a merger or consolidation pursuant to Article 5 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders or that does not adversely affect the legal rights
hereunder or under the Collateral Documents of any Holder; or
(e) to comply with requirements of the Commission in order to effect or
maintain the qualification of this Indenture under the TIA.
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Upon the request of the Issuers accompanied by a resolution of the Managers
of the Company and the Board of Directors of Capital authorizing the execution
of any such amended or supplemental Indenture, and upon receipt by the Trustee
of the documents described in Section 7.2 hereof, the Trustee shall join with
the Issuers in the execution of any amended or supplemental Indenture authorized
or permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations that may be therein contained, but the Trustee shall
not be obligated to enter into such amended or supplemental Indenture that
affects its own rights, duties or immunities under this Indenture or otherwise.
Section 9.2. With Consent of Holders of Notes.
Except as provided below in this Section 9.2, the Issuers and the Trustee
may amend or supplement this Indenture (including Sections 3.10, 4.10, 4.15,
4.30 and 4.31 hereof), 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), and, subject to Sections 6.4 and 6.7 hereof, any
existing Default or Event of Default (other than a Default or Event of Default
in the payment of the principal of, premium or Liquidated Damages, if any, or
interest (including Contingent Interest, 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, the Notes or the Collateral Documents 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 consent of the Holders
of at least 66-2/3% in aggregate principal amount of the Notes then outstanding,
an amendment or waiver may not affect the Liens in favor of the Trustee and the
Holders created under the Collateral Documents in a manner adverse to the Holder
(other than pursuant to the release of Note Collateral in accordance with the
provisions of this Indenture and of the applicable Collateral Documents) or
release all or substantially all of the Note Collateral.
Upon the request of the Issuers accompanied by a resolution of the Managers
of the Company and the Board of Directors of Capital authorizing the execution
of any such amended or supplemental Indenture, and upon the filing with the
Trustee of evidence satisfactory to the Trustee of the consent of the Holders of
Notes as aforesaid, and upon receipt by the Trustee of the documents described
in Section 7.2 hereof, the Trustee shall join with the Issuers in the execution
of such amended or supplemental Indenture unless such amended or supplemental
Indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.2 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 Issuers shall mail to the Holders of Notes affected thereby a
notice briefly describing the
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amendment, supplement or waiver. Any failure of the Issuers 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 or waiver. Subject to
Sections 6.4 and 6.7 hereof, the Holders of a majority in aggregate principal
amount of the Notes then outstanding may waive compliance in a particular
instance by the Issuers 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 an
amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter or waive any of the provisions with respect to the redemption of the Notes
except as provided above with respect to Sections 4.10, 4.15, 4.30 and 4.31
hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest (and Contingent Interest), on any Note;
(d) waive a Default or Event of Default in the payment of principal of or
premium, or Liquidated Damages if any, interest (including Contingent 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 the 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 Defaults or the rights of Holders to receive payments of
principal of or premium or Liquidated Damages, if any, or interest (including
Contingent Interest) on the Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by Sections 4.10, 4.15, 4.30 and 4.31); or
(h) make any change in Section 6.4 or 6.7 hereof or in the foregoing
amendment and waiver provisions.
Section 9.3. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture, the Notes or the
Collateral Documents shall be set forth in a amended or supplemental Indenture
that complies with the TIA as then in effect.
Section 9.4. 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
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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 9.5. 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 Issuers 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 9.6. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The
Issuers may not sign an amendment or supplemental Indenture until the Managers
of the Company and the Board of Directors of Capital approve it. In executing
any amended or supplemental indenture, the Trustee shall be entitled to receive
and (subject to Section 7.1) shall be fully protected in relying upon, an
Officer's Certificate and an Opinion of Counsel stating that the execution of
such amended or supplemental indenture is authorized or permitted by this
Indenture.
ARTICLE 10.
COLLATERAL AND SECURITY
Section 10.1. Security.
(a) The due and punctual payment of the principal of, premium and
Liquidated Damages, if any, and interest (including Contingent Interest, if any,
then due) on all of the Notes when and as the same shall be due and payable,
whether on an Interest Payment Date, at maturity or by acceleration, repurchase,
redemption or otherwise, and interest on the overdue principal of, premium and
Liquidated Damages (to the extent permitted by law), if any, on the Notes and
performance of all other obligations of the Issuers to the Holders of Notes or
the Trustee under this Indenture and the Notes, according to the terms hereunder
or thereunder, shall be ratably secured by a Lien on the Note Collateral owned
by the Issuers.
(b) 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) as the same
may be in effect or may be amended from time to time in accordance with their
respective terms and authorizes and directs the Trustee to
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enter into the Collateral Documents and to perform its obligations and exercise
its rights thereunder in accordance therewith. The Issuers 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 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.
(c) The Issuers shall take, or shall cause their Subsidiaries to take,
promptly upon request of the Trustee, any and all actions reasonably required to
create and maintain, as security for the Obligations of the Issuers hereunder,
valid and enforceable perfected first priority Liens in and on all the Note
Collateral in favor of the Trustee for the benefit of the Holders, superior to
and prior to the rights of all third Persons and subject to no Liens other than
Permitted Liens. Notwithstanding the foregoing or anything to the contrary in
the Collateral Documents, nothing in this Indenture or the Collateral Documents
shall require the Issuers to do (or cause to be done) any of the following: (i)
create or perfect Liens in any assets otherwise expressly excluded from the Note
Collateral pursuant to the terms of the Collateral Documents, or (ii) perfect
Liens in any of the following (A) any personal property a security interest in
which must be perfected by delivery thereof to the Trustee, if delivery thereof
is not required by the Collateral Documents, (B) any automobiles or other assets
subject to a certificate of title or registration, except as required by the
Collateral Documents, and (C) any deposit accounts other than Cash Collateral
Accounts.
(d) The Net Proceeds of all Asset Sales and the Net Loss Proceeds from
Events of Loss of assets constituting Note Collateral, as well as Excess
Proceeds and Excess Loss Proceeds, shall be promptly and without any commingling
deposited with the Trustee subject to a first priority perfected Lien in favor
of the Trustee for the benefit of the Holders of the Notes unless and until
applied as permitted under Section 4.10 or 4.30 hereof. The Trustee shall
release to the Issuers any Excess Proceeds and Excess Loss Proceeds that remain
after making an offer to purchase the Notes in compliance with Section 3.10
hereof. Amounts so paid to the Trustee shall be invested or released in
accordance with the provisions of this Indenture.
(e) 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 that are specified in any of the Collateral Documents.
Section 10.2. Recording and Opinions.
The Issuers shall cause the applicable Collateral Documents including
the Deed of Trust and any financing statements, fixture filings, intellectual
property filings, 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
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in order fully to preserve and protect the Liens, and the priority thereof,
securing the obligations under the Notes pursuant to the Collateral Documents
(b) Each of the Issuers and any other obligor shall furnish to the
Trustee:
(i) promptly after the execution and delivery of this Indenture,
and promptly after the execution and delivery of any supplemental indenture or
other amendment to any Collateral Document, an Opinion of Counsel in the United
States either (i) stating that in the opinion of such counsel, this Indenture,
the 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 perfected first priority Lien intended to be
created by such Collateral Documents and other instruments and reciting the
details of such action or refer to prior Opinions of Counsel in which such
details are given, and stating that, as to such Collateral Documents and such
other instruments, such recording, registering and filing are the only
recordings, registering and filings necessary to give notice thereof and that no
re-recordings, re-registering or re-filings are necessary to maintain such
notice, and further stating that all financing statements, continuation
statements, fixture filings and intellectual property filings 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
and other instruments or (ii) stating that, 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; and
(ii) On August 31, in each year beginning with the year 1998, an
Opinion of Counsel, dated as of such date, either (i) (A) stating that, 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, fixture filings, intellectual property filings, or
other instruments of further assurance as is necessary to maintain the Liens of
this Indenture, and the Collateral Documents and other instruments 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, continuation statements, fixture filings, intellectual property
filings, have been executed and filed that are necessary to preserve and protect
the rights of the Holders and the Trustee hereunder, and under the Collateral
Documents and other instruments or (B) stating in the opinion of such counsel,
no such action is necessary to maintain such Liens, until the next Opinion of
Counsel is required to be rendered pursuant to this paragraph.
(c) The Issuers shall otherwise comply with the provisions of TIA (S)
314(b).
The Issuers shall furnish to the Trustee the certificates or opinions , as
the case may be, required by TIA Section 314(d). Such certificates or opinions
shall be subject to the terms of TIA Section 314(e).
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Section 10.3 Release of Note Collateral.
(a) Subject to subsections (b), (c) and (d) of this Section 10.3, 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 in
accordance with the provisions of the Collateral Documents or as provided
hereby. In addition, upon the request of the Issuers pursuant to an Officers'
Certificate certifying that all conditions precedent hereunder have been met and
stating whether or not such release is in connection with an Asset Sale and (at
the sole cost and expense of the Issuers) the Trustee shall release (i) Note
Collateral that is sold, conveyed or disposed of in compliance with the
provisions of this Indenture; provided, that if such sale, conveyance or
disposition constitutes an Asset Sale, the Company shall apply the Net Proceeds
in accordance with Section 4.10 hereof. 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 10.3.
(c) At any time when a Default or Event of Default shall have occurred and
be continuing and the maturity of the Notes shall have been accelerated (whether
by declaration or otherwise) and the Trustee shall have delivered a notice of
acceleration to the Trustee, no release of Note Collateral pursuant to the
provisions of the Collateral Documents shall be effective as against the Holders
of Notes.
(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 Issuers shall cause TIA (S) 313(b), relating to reports, and TIA
(S) 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 security
interest of the Collateral Documents, to be complied with. Any certificate or
opinion required by TIA (S) 314(d) may be made by an Officer of the each of the
Issuers except in cases where TIA (S) 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 10.4. Certificates of the Issuers.
Each of the Issuers shall furnish to the Trustee and the Collateral Agent,
prior to each proposed release of Pledged Collateral pursuant to the Collateral
Documents, (i) all documents required by TIA (S) 314(d) and (ii) an Opinion of
Counsel, which may be rendered by internal counsel to the Issuers, to the effect
that such accompanying documents constitute all documents
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required by TIA (S) 314(d). The Trustee may, to the extent permitted by
Sections 7.1 and 7.2 hereof, accept as conclusive evidence of compliance with
the foregoing provisions the appropriate statements contained in such documents
and such Opinion of Counsel.
Section 10.5. Protection Of The Trust Estate.
Upon prior written notice to the Issuers, 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 Issuers or any
Subsidiary 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 restrain the enforcement of or compliance with any legislative or other
governmental enactment of, 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. Upon
receipt of notice that a Subsidiary is not in compliance with any of the
requirements of the Deed of Trust, the Trustee may, but shall not have the
obligation to purchase, at the Issuers' expense, such insurance coverage
necessary to comply with the appropriate section of the deed of trust.
Section 10.6. Certificates of the Trustee.
In the event that the Issuers wish to release Note Collateral in accordance
with the Collateral Documents and have delivered the certificates and documents
required by the Collateral Documents and Sections 10.3 and 10.5 hereof, the
Trustee shall determine whether it has received all documentation required by
TIA (S) 314(d) in connection with such release and, based on such determination
and the Opinion of Counsel delivered pursuant to Section 10.4, shall deliver a
certificate to the Issuers setting forth such determination.
Section 10.7. Authorization of Actions to Be Taken by the Trustee Under the
Collateral Documents.
Subject to the provisions of Section 7.1 and 7.2 hereof, the Trustee may,
in its sole discretion and without the consent of the Holders of Notes, direct,
on behalf of the Holders of Notes, the Trustee to, 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 Issuers 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 Collateral Documents 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
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with, such enactment, rule or order would impair the security interest hereunder
or be prejudicial to the interests of the Holders of Notes or of the Trustee).
Subject to certain gaming and bankruptcy laws, 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 Issuers, 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
Issuers acknowledge and agree 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 Issuers agree that, to the extent notice of sale shall be required by
law, at least seven days' notice to the Issuers 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.
Section 10.8. Authorization of Receipt of Funds by the Trustee Under the
Collateral Documents.
(a) 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 of New York or Colorado, as
applicable, or other applicable law, and the Trustee may also upon obtaining
possession of the Note Collateral as set forth herein, without notice to the
Issuers, except as specified below, sell the Note Collateral or any part of
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 Issuers acknowledge and agree 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 Issuers agree, that to the extent
notice of sale shall be required by law, at least 10 days' notice to the Issuers
of the time and place of any public sale or the time after which any private
sales 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 sales 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.
(b) Subject to the provisions of Section 6.10 hereof, any cash that
is Note Collateral held by the Trustee and all cash proceeds received by the
Trustee in respect of any sale
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of, collection from, other realization upon all or any part of the Note
Collateral shall be held for the benefit of the Holders (unless otherwise
provided for in the Collateral Documents and after payment of any and all
amounts payable to the Trustee pursuant to this Indenture), until such time as
the Holders of the Notes shall direct the Trustee pursuant to Section 6.5 hereof
to apply such cash proceeds: (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 or to take any other appropriate action or remedy
for the benefit of the Holders of the Notes. Any surplus of such cash or cash
proceeds held by the Trustee and remaining after payment in full of all the
obligations shall be paid over to the Issuers or to whomsoever may be lawfully
entitled to receive such surplus or as a court of competent jurisdiction may
direct.
Section 10.9. Termination of Security Interest.
Upon the payment in full of all Obligations of the Issuers under this
Indenture and the Notes, or upon Legal Defeasance or Covenant Defeasance, the
Trustee shall, at the request of the Issuers, deliver a certificate to the
Trustee stating that such Obligations have been paid in full and instruct the
Trustee to release the Liens pursuant to this Indenture and the Collateral
Documents.
Section 10.10. Cooperation Of Trustee.
In the event the Issuers pledge or grant a security interest in additional
Note Collateral, the Trustee shall cooperate with the Issuers 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 Issuers engages in any transaction pursuant to Section 10.3
hereof, the Trustee shall cooperate with the Issuers in order to facilitate such
transaction in accordance with any reasonable time schedule proposed by the
Issuers, including 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 ("Collateral Agents"). 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 that 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 ratable 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.
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ARTICLE 11.
JOINT AND SEVERAL LIABILITY
Section 11.1.
(a) Notwithstanding any contrary provision contained in the Indenture, the
Notes and the Collateral Documents to which both of the Issuers are a party, the
representations, warranties, covenants, agreements and obligations of the
Issuers, and either of them, shall be deemed joint and several. Any waiver
including, without limitation, any suretyship waiver, made by either Issuer in
the Indenture, the Notes or any Collateral Document to which both of the Issuers
are a party shall be deemed to be made also by the other Issuer and references
in any such waiver to either Issuer shall be deemed to include the other Issuer
and each of them.
(b) Notwithstanding any contrary provision contained in the Indenture, the
Notes or any Collateral Document to which both of the Issuers are a party, each
such document to which both issuers are party shall be deemed to include,
without limitation, the following waivers:
Each of the Issuers hereby waives and relinquishes all rights and remedies
accorded by applicable law to sureties or guarantors and agrees not to assert or
take advantage of any such rights or remedies, including, without limitation,
(a) any right to require the Trustee or any of the Holders (each a "Benefitted
Party") to proceed against either of the Issuers or any other Person or to
proceed against or exhaust any security held by a Benefitted Party at any time
or to pursue any other remedy in the power of a Benefitted Party before
proceeding against such Issuer or other Person, (b) the defense of the statute
of limitations in any action hereunder or in any action for the collection or
performance of the Obligations under the Indenture, the Notes and any of the
Collateral Documents (collectively, the "Note Obligations"), (c) any defense
that may arise by reason of the incapacity, lack of authority, death or
disability of any Person or the failure of a Benefitted Party to file or enforce
a claim against the estate (in administration, bankruptcy or any other
proceeding) of any Person, (d) appraisal, valuation, stay, extension, marshaling
of assets, redemption, exemption, demand, presentment, protest and notice of any
kind, including, without limitation, notice of the existence, creation or
incurring of any new or additional indebtedness or obligation or of any action
or non-action on the part of a Benefitted Party, any Issuer, any endorser,
guarantor or creditor of either Issuer or on the part of any other Person under
this or any other instrument or document in connection with any Obligation or
evidence of Indebtedness held by a Benefitted Party as collateral or in
connection with the Note Obligations, (e) any defense based upon an election of
remedies by a Benefitted Party, including, without limitation, an election to
proceed by non-judicial rather than judicial foreclosure, which destroys or
otherwise impairs the subrogation rights of either Issuer, the right of either
Issuer to proceed against the other Issuer or any other Person for
reimbursement, or both, (f) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal, (g) any duty
on the part of a Benefitted Party to disclose to either Issuer any facts a
Benefitted Party may now or hereafter know about either of the Issuers or any
other Person, regardless of whether a Benefitted Party has reason to believe
that any such facts materially increase the risk beyond that which such Issuer
intends to assume, or has reason to believe that such facts are unknown to such
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Issuer, or has a reasonable opportunity to communicate such facts to the either
Issuer, because each Issuer acknowledges that each Issuer is fully responsible
for being and keeping informed of the financial condition of each of the Issuers
or any other Person and of all circumstances bearing on the risk of non-payment
of any Note Obligations, (h) any defense arising because of the election of a
Benefitted Party, in any proceeding instituted under the Federal Bankruptcy
Code, of the application of Section 1111(b)(2) of the Federal Bankruptcy Code,
(i) any defense based upon any borrowing or grant of a security interest under
Section 364 of the Federal Bankruptcy Code, (j) any claim or other rights which
it may now or hereafter acquire against the other Issuer or any other Person
that arises from the existence of performance of each Issuer of its obligations
under this Indenture, the Notes or any Collateral Document, including, without
limitation, any right of subrogation, reimbursement, exoneration, contribution,
indemnification, any right to participate in any claim or remedy by a Benefitted
Party against the other Issuer or any collateral which a Benefitted Party now
has or hereafter acquires, whether or not such claim, remedy or right arises in
equity or under contract, statute or common law, by any payment made hereunder
or otherwise, including, without limitation, the right to take or receive from
either of the Issuers or any other Person, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim or other rights, (k) any rights which it may acquire by
way of contribution under this Indenture, the Notes or any Collateral Document,
by any payment made hereunder or otherwise, including, without limitation, the
right to take or receive from any other Person, directly or indirectly, in cash
or other property or by set-off or in any other manner, payment or security on
account of such contribution rights, and (l) any defense based on one-action
laws and any other anti-deficiency protections granted to guarantors by
applicable law. No failure or delay on the Trustee's part in exercising any
power, right or privilege under this Indenture shall impair or waive one such
power, right or privilege. Each of the Issuers acknowledges and agrees that any
nonrecourse or exculpation provided for in this Indenture, the Notes or any
Collateral Document, or any other provision of this Indenture, the Notes or any
Collateral Document, limiting the Benefitted Parties' recourse to specific
collateral, or limiting the Benefitted Parties' right to enforce a deficiency
judgment against the Issuers, shall have absolutely no application to the
Issuers' liability under this Indenture, the Notes or any Collateral Documents.
(c) In the event of any inconsistency between the provisions of this
Section 11 and the corresponding provisions of the Indenture, the Notes or any
Collateral Document to which both of the Issuers are a party, the provisions of
the Indenture shall govern.
ARTICLE 12.
MISCELLANEOUS
Section 12.1. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA (S)318(c), the imposed duties shall control.
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ARTICLE 12.
MISCELLANEOUS
Section 12.1. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA (S)318(c), the imposed duties shall control.
Section 12.2. Notices.
Any notice or communication by the Issuers 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 Issuers:
Isle of Capri Black Hawk L.L.C.
Isle of Capri Black Hawk Capital Corp.
c/o Casino America, Inc., Manager
711 Washington Loop
Biloxi, Mississippi 39530
Telecopier No.: (601) 435-5998
Attention: President
With a copy to:
Mayer, Brown & Platt
190 South LaSalle Street, Suite 3100
Chicago, Illinois 60603
Telecopier No.: (312) 701-7711
Attention: Paul W. Theiss, Esq.
If to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Telecopier No.: (212) 858-2952
Attention: Corporate Trust Department
The Issuers 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.
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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 Issuers mails a notice or communication to Holders, they shall mail
a copy to the Trustee and each Agent at the same time.
Section 12.3. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA (S) 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Issuers, the
Trustee, the Registrar and anyone else shall have the protection of TIA
(S) 312(c).
Section 12.4. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Issuers to the Trustee to take any
action under this Indenture, each of the Issuers shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 12.5
hereof) stating that, all conditions precedent and covenants, if any, provided
for in this Indenture relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 12.5
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
Section 12.5. 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 (S) 314(a)(4)) shall comply with the provisions of TIA
(S) 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.
<PAGE>
Section 12.6. Certificates as to Calculation of Contingent Interest.
At least five days prior to each Interest Payment Date (as defined in the
Notes), the Chief Financial Officer of the Company shall provide to the Trustee
a certificate certifying as to (i) the amount of Contingent Interest, if any,
accrued during the immediately preceding Semiannual Period and setting forth the
calculations required to determine the amount of such Contingent Interest, (ii)
the amount of such Contingent Interest for which payment may be deferred, and
which the Company has elected to defer, pursuant to the terms of the Notes and
the calculations required to determine such amount, (iii) the amount of such
Contingent Interest that is to be paid on such Interest Payment Date and (iv)
the amount of Contingent Interest for which payment was previously deferred that
is to be paid on such Interest Payment Date. The Trustee shall be entitled to
rely on the such certificate for purposes of determining the amount of
Contingent Interest payable on such Interest Payment Date.
Section 12.7. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 12.8. No Personal Liability of Directors, Officers, Employees and
Members.
No director, officer, employee, incorporator or member of the Issuers shall
have any liability for any obligations of the Issuers under the Notes or this
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
Section 12.9. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT REGARD TO THE CONFLICTS OF LAW
PROVISIONS REQUIRING THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.
Section 12.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Issuers or their Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
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Section 12.11. Successors.
All agreements of the Issuers in this Indenture and the Notes shall bind
their successors. All agreements of the Trustee in this Indenture shall bind
its successors.
Section 12.12. Severability.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 12.13. Counterpart Originals; Legended Indenture.
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. Notwithstanding the foregoing, only one executed original of this
Indenture shall contain a legend that provides that such Indenture (the
"Legended Indenture") will serve, for purposes of Title 38 of the Colorado
Revised Statutes, as the "original evidence of debt" secured by the Deed of
Trust. The Legended Indenture will be delivered to and held by the Trustee.
The parties hereto acknowledge that the Legended Indenture shall for purposes of
Colorado law, be the original evidence of the debt secured by the Deed of Trust.
Each of the Issuers hereby (i) waive any rights to make any claim inconsistent
with the previous sentence or which could adversely effect the rights and
remedies of the Trustee or the Holders with respect thereto and (ii) agree to
take any action the Trustee requests in order to ensure that the Legended
Indenture shall be deemed such "original evidence of debt" and that the Trustee
will have all the benefits, rights and remedies arising under Colorado law as a
result of the Trustee possessing the "original evidence of debt" secured by the
Deed of Trust.
Section 12.14. 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.
Section 12.15. Gaming and Liquor Laws.
The terms and provisions of this Indenture, including, but not limited to,
all rights and remedies of the Trustee and powers of attorney and appointment,
are expressly subject to all laws, statutes, regulations and orders affecting
limited gaming or the sale of liquor (collectively, the "Gaming and Liquor
Laws"), in the State of Colorado, which may include, but not be limited to, the
necessity for the Trustee to obtain the prior approval of the regulatory
agencies enforcing the Gaming or Liquor Laws before taking any action hereunder
and to be licensed by such regulatory agencies before exercising certain rights
and remedies hereunder.
[Signatures on following page]
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SIGNATURES
Dated as of August 20, 1997 ISLE OF CAPRI BLACK HAWK L.L.C.
By: /s/ Allan B. Solomon
-------------------------------
Name: Allan B. Solomon
Title: Executive Vice President
Dated as of August 20, 1997 ISLE OF CAPRI BLACK HAWK CAPITAL
CORP.
By: /s/ Allan B. Solomon
-------------------------------
Name: Allan B. Solomon
Title: Executive Vice President
Dated as of August 20, 1997 IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ William T. Lynch
-------------------------------
Name: William T. Lynch
Title: Vice President
<PAGE>
Exhibit A
(Face of Note)
13% [Series A] [Series B] First Mortgage Note due 2004 With Contingent
Interest
No. $__________
ISLE OF CAPRI BLACK HAWK L.L.C. AND
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
promise to pay to
or registered assigns,
the principal sum of
Dollars on August 31, 2004.
Interest Payment Dates: February 28 and August 31
Record Dates: February 15 and August 15
Dated: __________, 199_
ISLE OF CAPRI BLACK HAWK L.L.C.
By:____________________________
Name:
Title:
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
By:____________________________
Name:
Title:
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By:__________________________
A-1
<PAGE>
(Back of Note)
13% [Series A] [Series B] First Mortgage Note due 2004 With Contingent
Interest
[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 Issuers or their 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/
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES
NOT TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO
THE DATE THAT IS TWO YEARS (OR SUCH SHORTER PERIOD THAT MAY
HEREAFTER BE PROVIDED UNDER RULE 144(k) AS PERMITTING RESALES BY
NON-AFFILIATES OF RESTRICTED SECURITIES WITHOUT RESTRICTION)
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST
DATE ON WHICH THE ISSUERS OR ANY AFFILIATE OF THE ISSUERS WAS THE
OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY)
EXCEPT (A) TO THE ISSUERS, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN
_______________
/1/ This paragraph should be included only if the Note is issued in global form.
A-2
<PAGE>
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATIONS UNDER
THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT THAT IS PURCHASING THE SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED
INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE ISSUERS' AND THE TRUSTEE'S RIGHT PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F)
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN
EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE TRUSTEE."/2/
Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Indenture referred to below unless otherwise indicated.
1. Interest. Isle of Capri Black Hawk L.L.C., a Colorado limited
liability company (the "Company"), and Isle of Capri Black Hawk Capital Corp., a
Colorado corporation ("Capital" and, together with the Company, the "Issuers"),
promise to pay interest on the principal amount of this Note at 13% per annum
from August 20, 1997 until maturity ("Fixed Interest") and shall pay the
Liquidated Damages, if any, payable pursuant to Section 5 of the Registration
Rights Agreement referred to below. The Notes will mature on August 31, 2004.
The Issuers will pay Fixed Interest and Liquidated Damages, if any, semi-
annually on February 28 and August 31 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date") to Holders of record at the close of business on the immediately
preceding February 15 and August 15. Fixed Interest on the Notes will accrue
from the most recent date to which Fixed Interest has been paid or, if no Fixed
Interest has been paid, from the date of issuance. Fixed Interest will be
computed on the basis of a 360-day year of twelve 30-day months. In addition,
the Notes will bear Contingent Interest, calculated as described below, from the
date on which Isle-Black Hawk becomes Operating to the date of payment of the
Notes. Installments of accrued or deferred Contingent Interest will become due
and payable semi-annually on each February 28 and August 31 after the date on
which the Isle-Black Hawk becomes Operating to the Holders of record at the
close of business on the preceding February 15 or August 15; unless all or a
portion of such installment of
____________
/2/ This paragraph should be included only if the Note is issued in global form.
A-3
<PAGE>
Contingent Interest is permitted to be deferred on such date; and provided, that
no Contingent Interest is payable with respect to any period prior to the date
on which the Isle-Black Hawk becomes Operating. 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 Notes that
matures (whether at stated maturity, upon acceleration, upon redemption, upon
maturity of repurchase obligations or otherwise) upon such maturity of such
principal amount of the 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, (i) the payment of such portion of Contingent Interest will cause
the Company's Adjusted Fixed Charge Coverage Ratio for the Company's most
recently completed Semiannual Period prior to such interest payment date to be
less than 1.5 to 1.0 on a pro forma basis after giving effect to the assumed
payment of such Contingent Interest (but may not defer such portion, which, if
paid, would not cause such Adjusted Fixed Charge Coverage Ratio to be less than
1.5 to 1.0) and (ii) 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 redemption, upon maturity of repurchase
obligation or otherwise). The aggregate amount of Contingent Interest payable
in a Semiannual Period will be reduced pro rata for reductions in the
outstanding principal amount of the Notes prior to the close of business on the
record date immediately preceding such payment of Contingent Interest.
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 Notes (whether at stated maturity, upon acceleration, upon redemption, 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 1% per annum.
Each installment of Contingent Interest accrues from (i) the end of
the most recent Semiannual Period for which Contingent Interest has been paid or
provided for or through which Contingent Interest has been calculated and
deferred (or from and including the date on which the Isle-Black Hawk becomes
Operating if no installment of Contingent Interest has been paid, provided for
or deferred) to, and including, (ii) either (A) the last day of the Semiannual
Period immediately following that referred to in clause (i) above if the
corresponding principal amount of the Notes has not become due and payable or
(B) the date of payment if the corresponding principal amount of the Notes has
become due and payable (whether at stated maturity or upon acceleration,
redemption or maturity of repurchase obligation or otherwise) (an "Accrual
Period"). With respect to each Accrual Period, interest will accrue daily on
the principal amount of each Note outstanding during such period as follows:
(1) for any portion of an Accrual Period which consists of all or part of a
Semiannual Period that ends during such Accrual Period, 1/180th of the
Contingent Interest with respect to such principal amount for such Semiannual
Period until fully accrued and (2) for any other portion of an Accrual Period,
1/180th of the Contingent Interest with respect to such principal amount for the
Semiannual Period that began and last ended after the date on which the Isle-
Black Hawk becomes Operating.
A-4
<PAGE>
2. Method of Payment. The Issuers will pay interest on the Notes (except
defaulted interest) and Liquidated Damages, if any, to Holders of record at the
close of business on the February 15 or August 15 immediately preceding the
Interest Payment Date, even if such Notes are canceled after such record date
and on or before such Interest Payment Date, except as provided in Section 2.12
of the Indenture with respect to defaulted interest. The Notes will be payable
as to principal, premium, if any, interest and Liquidated Damages, if any, at
the office or agency of the Issuers maintained for such purpose within or
without the city and state of New York, or, at the option of the Issuers,
payment of interest and Liquidated Damages, if any, 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, if any, on all Notes, the Holders of which shall have provided wire
transfer instructions to the Issuers 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, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Issuers may change any Paying Agent or Registrar without notice
to any Holder. The Issuers or any of their Subsidiaries may act in any such
capacity.
4. Indenture and Collateral Documents. The Issuers issued the Notes
under an Indenture dated as of August 20, 1997 (the "Indenture") among the
Issuers 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 (S)(S) 77aaa-77bbbb). The Notes
are subject to all such terms, and Holders are referred to the Indenture and
such Act for a statement of such terms. The Notes are secured obligations of
the Issuers limited to $75.0 million in aggregate principal amount. The Notes
are secured pursuant to the Collateral Documents referred to in the Indenture by
a first lien on the Note Collateral owned by the Issuers, whether now owned or
hereafter acquired, subject to Permitted Liens.
5. Optional Redemption.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Issuers shall not have the option to redeem the Notes prior to August 31, 2001.
Thereafter, the Issuers 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 and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning
on August 31 of the years indicated below:
YEAR PERCENTAGE
---- ----------
2001................................106.500%
2002................................103.250%
2003................................100.000%
A-5
<PAGE>
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph
5, at any time prior to August 31, 2000, the Issuers may redeem up to 35% in
aggregate principal amount of Notes at a redemption price of 113% of the
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the redemption date with the net cash proceeds of an
offering of Common Stock of the Company; provided that at least $48.75 million
in aggregate principal amount of Notes remains outstanding immediately after the
occurrence of such redemption; and provided further, that such redemption occurs
within 45 days of the date of the closing of such public offering.
(c) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, if any Gaming Authority requires that a Holder or beneficial owner
of the Notes must be licensed, qualified or found suitable under any applicable
gaming law and such 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 Authority (or such lesser period that may be required by
such Gaming Authority), or if such Holder or beneficial owner is notified by
such Gaming Authority that such Holder or beneficial owner will not be so
licensed, qualified or found suitable, the Issuers shall have the right, at
their option, (i) to require such Holder or beneficial owner to dispose of such
Holder's or beneficial owner's Notes within 30 days (or such earlier date as may
be required by the applicable Gaming Authority) of (x) the termination of the
period described above for such Holder or beneficial owner to apply for a
license, qualification or finding of suitability or (y) receipt of the notice
from such Gaming Authority that such Holder or beneficial owner will not be
licensed, qualified or found suitable by such Gaming Authority, or (ii) to
redeem 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 such Notes, together with, in either case, accrued
and unpaid interest and Liquidated Damages, if any, thereon to the earlier of
the date of redemption or such earlier date as may be required by such Gaming
Authority or the date of the finding of unsuitability by such Gaming Authority,
which may be less than 30 days following the notice of redemption. In connection
with any such redemption, and except as otherwise may be required by a Gaming
Authority, the Company shall comply with the procedures contained in Section 3.1
through 3.6 of the Indenture for redemption of the Notes. Immediately upon a
determination by any Gaming Authority that a Holder or beneficial owner of Notes
will not be licensed, qualified or found suitable by such Gaming Authority, such
Holder or beneficial owner shall have no further rights with respect to the
Notes (i) to exercise, directly or indirectly, through any trustee, nominee or
any other Person or entity, any right conferred by the Notes or (ii) to receive
any interest or any other distribution or payment with respect to the Notes, or
any remuneration in any form from the Issuers for services rendered or
otherwise, except the redemption price of the Notes. The Issuers shall not be
required to pay or reimburse any Holder or beneficial owner of Notes who is
required to apply for such license, qualification or finding of suitability for
the costs of the licensure or investigation for such qualification or finding of
suitability. Such expense will, therefore, be the obligation of such Holder or
beneficial owner.
6. Mandatory Redemption.
A-6
<PAGE>
Except as set forth in paragraph 7 below, the Issuers shall not be required
to make mandatory redemption or sinking fund payments with respect to the Notes.
7. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Issuers shall be required to make
an offer (a "Change of Control Offer") to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the date of purchase (the
"Change of Control Payment"). Within ten days following any Change of Control,
the Issuers shall mail a notice to each Holder setting forth the procedures
governing the Change of Control Offer as required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales or has an
Event of Loss, at any time that the aggregate amount of Excess Proceeds, in the
case of an Asset Sale, exceed $5.0 million, or, in the case of an Event of Loss,
exceed $10.0 million, the Company shall commence an offer to all Holders (as
"Asset Sale Offer") pursuant to Section 3.10 of the Indenture to purchase the
maximum principal amount of Notes that may be purchased out of the Excess
Proceeds at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the date of purchase, in accordance with the procedures set forth in
the Indenture. To the extent that the aggregate principal amount of Notes
tendered pursuant to an Excess Proceeds Offer is less than the Excess Proceeds
or the Excess Loss Proceeds, as the case may be, the Company (or such
Subsidiary) may, subject to the provision of the Indenture and the Collateral
Documents use any remaining Excess Proceeds or the Excess Loss Proceeds, as the
case may be, for general corporate purposes. If the aggregate principal amount
of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds,
the Trustee shall select the Notes to be purchased on a pro rata basis. Upon
completion of such offer to purchase, the amount of excess proceeds shall be
reset at zero.
(c) Notwithstanding the provisions of subparagraph (a) of this
Paragraph 5, within 120 days after each Operating Year of the Company, beginning
with the first Operating Year after the Isle-Black Hawk becomes Operating, the
Issuers shall make an offer to all Holders (an "Excess Cash Flow Offer") to
purchase the maximum principal amount of Notes that is an integral multiple of
$1,000 that may be purchased with 50% of the Company's Excess Cash Flow in
respect of the Operating Year then ended (the "Excess Cash Flow Offer Amount"),
at a purchase price equal to 101% of the principal amount of Notes to be
purchased, plus accrued and unpaid interest and Liquidated Damages, if any, to
the date fixed for the closing of such Excess Cash Flow Offer (the "Excess Cash
Flow Purchase Price"), in accordance with the procedures contained in Sections
3.1 through 3.6 of the Indenture for redemption of the Notes. To the extent that
the aggregate principal amount of Notes tendered pursuant to any Excess Cash
Flow Offer exceeds the Excess Cash Flow Offer Amount with respect thereto, the
Trustee shall select the Notes to be repurchased on a pro rata basis. To the
extent that the aggregate principal amount of Notes tendered pursuant to any
Excess Cash Flow Offer is less than the Excess Cash Flow Offer
A-7
<PAGE>
Amount with respect thereto, the Company may, subject to the other provisions of
the Indenture, use any remaining Excess Cash Flow for general corporate
purposes.
8. Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
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
Issuers may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Issuers need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it 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. The registered Holder of a Note may be treated
as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and 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 or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Issuers' obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture or the Collateral
Documents of any such Holder, or to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
12. Defaults and Remedies. Events of Default include: (i) default for 30
days in the payment when due of interest on, or Liquidated Damages, if any, with
respect to, the Notes; (ii) default in payment when due of principal of or
premium, if any, on the Notes, (iii) failure by the Issuers to comply with
Sections 3.9, 4.7, 4.9, 4.10, 4.15, 4.22, 4.28, 4.30, 4.31 or 5.1 of the
Indenture; (iv) the Issuers fail for 30 days after notice to comply with any of
its other agreements in the Indenture or the Notes; (v) default under certain
other agreements relating to Indebtedness of the Issuers which default (a) is
caused by failure to pay principal of or premium, if any, or
A-8
<PAGE>
interest on such Indebtedness prior to the applicable grace period or
(b) results in the acceleration of such Indebtedness prior to its express
maturity; (vi) certain final judgments for the payment of money that remain
undischarged or unstayed for a period of 60 days; (vii) the Issuers breach any
material representation or warranty set forth in the Collateral Documents,
default in the performance of any covenants in the Collateral Documents or
repudiate their obligations under the Collateral Documents; (viii) certain
events of bankruptcy or insolvency with respect to the Issuers or any of their
Subsidiaries; (ix) the 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 any Gaming
Facility; (x) a default by Casino America in the performance of its obligations
set forth in the Completion Capital Commitment or repudiation of its obligations
under the Completion Capital Commitment; or (xi) subject to certain limitations,
the failure of the Isle-Black Hawk to be Operating by the Operating Deadline or
to remain Operating thereafter. 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 all 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 will 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 premium, if any, or interest) if a committee of the Trustee's
Responsible Officers in good faith 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 principal of, premium and Liquidated Damages, if any, or
interest on, the Notes. The Issuers are required to deliver to the Trustee
annually a statement regarding compliance with the Indenture, and the Issuers
are required 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 the Issuers. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Issuers or their Affiliates, and may otherwise deal with the
Issuers or their Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. A director, officer, employee,
incorporator, stockholder or member of the Issuers, Subsidiary or Affiliate as
such, shall not have any liability for any obligations of the Issuers under the
Notes, the Indenture or the Collateral Documents or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
A-9
<PAGE>
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 of Transfer Restricted Securities. In
addition to the rights provided to Holders of Notes under the Indenture, Holders
of Transferred Restricted Securities shall have all the rights set forth in the
Registration Rights Agreement dated as of August 20, 1997, among the Issuers and
the parties named on the signature pages thereof (the "Registration Rights
Agreement").
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have 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 Issuers will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Isle of Capri Black Hawk L.L.C.
Isle of Capri Black Hawk Capital Corp.
c/o Casino America, Manager
711 Washington Loop
Biloxi, Mississippi 39530
Attention: Corporate Secretary
A-10
<PAGE>
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 Issuers. 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-11
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Issuers pursuant to
Section 4.10, 4.15, 4.30 or 4.31 of the Indenture, check the box below:
[_] Section 4.10 [_] Section 4.15 [_] Section 4.30 [_] Section 4.31
If you want to elect to have only part of the Note purchased by the Issuers
pursuant to Section 4.10, 4.15, 4.30 or 4.31 of the Indenture, state the amount
you elect to have purchased: $___________
Date:_______________________ Your Signature: ________________________
(Sign exactly as your name appears on
the Note)
Tax Identification No.: ________________
Signature Guarantee.
A-12
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTE/3/
The following exchanges of a part of this Global Note for Definitive Notes
have been made:
<TABLE>
<CAPTION>
Amount of Amount of increase Principal Amount Signature of
decrease in in of this Global Note authorized officer
Principal Amount Principal Amount following such of
of of decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ---------------- ----------------- ------------------ ------------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
__________________
/3/This should be included only if the Note is issued in global form.
A-13
<PAGE>
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: 13% First Mortgage Notes due 2004 With Contingent Interest of Isle of Capri
Black Hawk L.L.C. and Isle of Capri Black Hawk Capital Corp.
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 in 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 2.6 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 2.6(a)(ii)(A) or Section 2.6(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
2.6(a)(ii)(B), Section 2.6(b)(A) or Section 2.6(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 2.6(a)(ii)(B) or Section 2.6(d)(i)(B)
of the Indenture.)
________________
* Check applicable box.
B-1
<PAGE>
[_] Such Note is being transferred in accordance with Rule 144 under the
Securities Act, or pursuant to an effective registration statement under the
Securities Act (in satisfaction of Section 2.6(a)(ii)(B) or Section 2.6(d)(i)(B)
of the Indenture).
[_] Such Note is being transferred in reliance on and in compliance with
an exemption from the registration requirements of the Securities Act, other
than Rule 144A, 144 or Rule 904 under the Securities Act. An Opinion of Counsel
to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the Indenture).
__________________________________
[INSERT NAME OF TRANSFEROR]
By:_______________________________
Date:____________________________________
_________________________________________
*Check applicable box.
B-2
<PAGE>
EXHIBIT 4.2
EXECUTION COPY
13% Series A First Mortgage Note due 2004 With Contingent Interest
No. 1 $75,000,000.00
ISLE OF CAPRI BLACK HAWK L.L.C. AND
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
promise to pay to CEDE & CO.
or registered assigns,
the principal sum of SEVENTY FIVE MILLION*******************************
Dollars on August 31, 2004.
Interest Payment Dates: February 28 and August 31
Record Dates: February 15 and August 15
Dated: August 20, 1997
ISLE OF CAPRI BLACK HAWK L.L.C.
By: /s/ Allan B. Solomon
-----------------------------
Name: Allan B. Solomon
Title: Executive Vice President,
General Counsel and Secretary
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
By: /s/ Allan B. Solomon
-----------------------------
Name: Allan B. Solomon
Title: Executive Vice President,
General Counsel and Secretary
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By: /s/William T. Lynch
---------------------------
WILLIAM T. LYNCH
VICE PRESIDENT
<PAGE>
13% Series A First Mortgage Note due 2004 With Contingent Interest
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 Issuers or their 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.
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES NOT
TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE
THAT IS TWO YEARS (OR SUCH SHORTER PERIOD THAT MAY HEREAFTER BE
PROVIDED UNDER RULE 144(k) AS PERMITTING RESALES BY NON-AFFILIATES OF
RESTRICTED SECURITIES WITHOUT RESTRICTION) AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUERS OR
ANY AFFILIATE OF THE ISSUERS WAS THE OWNER OF THIS SECURITY (OR ANY
PREDECESSOR OF SUCH SECURITY) EXCEPT (A) TO THE ISSUERS, (B) PURSUANT
TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED
IN RULE 144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATIONS UNDER THE SECURITIES ACT, (E)
TO AN INSTI-
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<PAGE>
TUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS PURCHASING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE ISSUERS' AND THE TRUSTEE'S RIGHT PRIOR
TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D), (E) OR (F)
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF
THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING
ON THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE."
Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Isle of Capri Black Hawk L.L.C., a Colorado limited
liability company (the "Company"), and Isle of Capri Black Hawk Capital Corp., a
Colorado corporation ("Capital" and, together with the Company, the "Issuers"),
promise to pay interest on the principal amount of this Note at 13% per annum
from August 20, 1997 until maturity ("Fixed Interest") and shall pay the
Liquidated Damages, if any, payable pursuant to Section 5 of the Registration
Rights Agreement referred to below. The Notes will mature on August 31, 2004.
The Issuers will pay Fixed Interest and Liquidated Damages, if any, semi-
annually on February 28 and August 31 of each year, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date") to Holders of record at the close of business on the immediately
preceding February 15 and August 15. Fixed Interest on the Notes will accrue
from the most recent date to which Fixed Interest has been paid or, if no Fixed
Interest has been paid, from the date of issuance. Fixed Interest will be
computed on the basis of a 360-day year of twelve 30-day months. In addition,
the Notes will bear Contingent Interest, calculated as described below, from the
date on which Isle-Black Hawk becomes Operating to the date of payment of the
Notes. Installments of accrued or deferred Contingent Interest will become due
and payable semi-annually on each February 28 and August 31 after the date on
which the Isle-Black Hawk becomes Operating to the Holders of record at the
close of business on the preceding February 15 or August 15; unless all or a
portion of such installment of Contingent Interest is permitted to be deferred
on such date; and provided, that no Contingent Interest is payable with respect
to any period prior to the date on which the Isle-Black Hawk becomes Operating.
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 Notes that matures (whether at stated maturity, upon
acceleration, upon redemption, upon maturity of repurchase obligations or
otherwise) upon such maturity of such principal amount of the Notes.
3
<PAGE>
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, (i) the payment of such portion of Contingent Interest will cause
the Company's Adjusted Fixed Charge Coverage Ratio for the Company's most
recently completed Semiannual Period prior to such interest payment date to be
less than 1.5 to 1.0 on a pro forma basis after giving effect to the assumed
payment of such Contingent Interest (but may not defer such portion, which, if
paid, would not cause such Adjusted Fixed Charge Coverage Ratio to be less than
1.5 to 1.0) and (ii) 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 redemption, upon maturity of repurchase
obligation or otherwise). The aggregate amount of Contingent Interest payable
in a Semiannual Period will be reduced pro rata for reductions in the
outstanding principal amount of the Notes prior to the close of business on the
record date immediately preceding such payment of Contingent Interest.
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 Notes (whether at stated maturity, upon acceleration, upon redemption, 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 1% per annum.
Each installment of Contingent Interest accrues from (i) the end of
the most recent Semiannual Period for which Contingent Interest has been paid or
provided for or through which Contingent Interest has been calculated and
deferred (or from and including the date on which the Isle-Black Hawk becomes
Operating if no installment of Contingent Interest has been paid, provided for
or deferred) to, and including, (ii) either (A) the last day of the Semiannual
Period immediately following that referred to in clause (i) above if the
corresponding principal amount of the Notes has not become due and payable or
(B) the date of payment if the corresponding principal amount of the Notes has
become due and payable (whether at stated maturity or upon acceleration,
redemption or maturity of repurchase obligation or otherwise) (an "Accrual
Period") . With respect to each Accrual Period, Contingent Interest will accrue
daily on the principal amount of each Note outstanding during such period as
follows: (1) for any portion of an Accrual Period which consists of all or part
of a Semiannual Period that ends during such Accrual Period, 1/180th of the
Contingent Interest with respect to such principal amount for such Semiannual
Period until fully accrued and (2) for any other portion of an Accrual Period,
1/180th of the Contingent Interest with respect to such principal amount for the
Semiannual Period that began and last ended after the date on which the Isle-
Black Hawk becomes Operating.
2. METHOD OF PAYMENT. The Issuers will pay interest (including
Contingent Interest, if any, then due) on the Notes (except defaulted interest)
and Liquidated Damages, if any, to Holders of record at the close of business on
the February 15 or August 15 immediately preceding the Interest Payment Date,
even if such Notes are canceled after such record date and on or before such
Interest Payment Date, except as provided in Section 2.12 of the Indenture with
respect to defaulted interest. The Notes will be payable as to principal,
premium, if any, interest (including Contingent Interest, if any) and Liquidated
Damages, if any, at the office or agency of
4
<PAGE>
the Issuers maintained for such purpose within or without the city and state of
New York, or, at the option of the Issuers, payment of interest (including
Contingent Interest, if any) and Liquidated Damages, if any, 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 (including
Contingent Interest, if any), premium and Liquidated Damages, if any, on all
Notes, the Holders of which shall have provided wire transfer instructions to
the Issuers 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, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Issuers may change any Paying Agent or Registrar without notice
to any Holder. The Issuers or any of their Subsidiaries may act in any such
capacity.
4. INDENTURE AND COLLATERAL DOCUMENTS. The Issuers issued the Notes
under an Indenture dated as of August 20, 1997 (the "Indenture") among the
Issuers 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 (S)(S) 77aaa-77bbbb). The Notes
are subject to all such terms, and Holders are referred to the Indenture and
such Act for a statement of such terms. The Notes are secured obligations of
the Issuers limited to $75.0 million in aggregate principal amount. The Notes
are secured pursuant to the Collateral Documents referred to in the Indenture by
a first lien on the Note Collateral owned by the Issuers, whether now owned or
hereafter acquired, subject to Permitted Liens.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Issuers shall not have the option to redeem the Notes prior to August 31, 2001.
Thereafter, the Issuers 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, if any) and
Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on August 31 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001.............................106.500%
2002.............................103.250%
2003.............................100.000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph
5, at any time prior to August 31, 2000, the Issuers may redeem up to 35% in
aggregate principal amount of Notes at a redemption price of 113% of the
principal amount thereof, plus accrued and unpaid interest (including Contingent
Interest, if any) and Liquidated Damages, if any, thereon to the redemption date
with the net cash proceeds of an offering of Common Stock of the Company;
provided that at least $48.75 million in aggregate principal amount of Notes
remains outstanding
5
<PAGE>
immediately after the occurrence of such redemption; and provided further, that
such redemption occurs within 45 days of the date of the closing of such public
offering.
(c) Notwithstanding the provisions of subparagraph (a) of this Paragraph
5, if any Gaming Authority requires that a Holder or beneficial owner of the
Notes must be licensed, qualified or found suitable under any applicable gaming
law and such 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 Authority (or such lesser period that may be required by
such Gaming Authority), or if such Holder or beneficial owner is notified by
such Gaming Authority that such Holder or beneficial owner will not be so
licensed, qualified or found suitable, the Issuers shall have the right, at
their option, (i) to require such Holder or beneficial owner to dispose of such
Holder's or beneficial owner's Notes within 30 days (or such earlier date as may
be required by the applicable Gaming Authority) of (x) the termination of the
period described above for such Holder or beneficial owner to apply for a
license, qualification or finding of suitability or (y) receipt of the notice
from such Gaming Authority that such Holder or beneficial owner will not be
licensed, qualified or found suitable by such Gaming Authority, or (ii) to
redeem 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 such Notes, together with, in either case, accrued
and unpaid interest (including Contingent Interest, if any) and Liquidated
Damages, if any, thereon to the earlier of the date of redemption or such
earlier date as may be required by such Gaming Authority or the date of the
finding of unsuitability by such Gaming Authority, which may be less than 30
days following the notice of redemption. In connection with any such redemption,
and except as otherwise may be required by a Gaming Authority, the Company shall
comply with the procedures contained in Section 3.1 through 3.6 of the Indenture
for redemption of the Notes. Immediately upon a determination by any Gaming
Authority that a Holder or beneficial owner of Notes will not be licensed,
qualified or found suitable by such Gaming Authority, such Holder or beneficial
owner shall have no further rights with respect to the Notes (i) to exercise,
directly or indirectly, through any trustee, nominee or any other Person or
entity, any right conferred by the Notes or (ii) to receive any interest
(including Contingent Interest, if any) or any other distribution or payment
with respect to the Notes, or any remuneration in any form from the Issuers for
services rendered or otherwise, except the redemption price of the Notes. The
Issuers shall not be required to pay or reimburse any Holder or beneficial owner
of Notes who is required to apply for such license, qualification or finding of
suitability for the costs of the licensure or investigation for such
qualification or finding of suitability. Such expense will, therefore, be the
obligation of such Holder or beneficial owner.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Issuers shall not be required
to make mandatory redemption or sinking fund payments with respect to the Notes.
6
<PAGE>
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Issuers shall be required to make
an offer (a "Change of Control Offer") to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of each Holder's Notes at a purchase
price equal to 101% of the aggregate principal amount plus accrued and unpaid
interest (including Contingent Interest, if any) and Liquidated Damages, if any,
thereon to the date of purchase (the "Change of Control Payment"). Within ten
days following any Change of Control, the Issuers shall mail a notice to each
Holder setting forth the procedures governing the Change of Control Offer as
required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales or has an
Event of Loss, at any time that the aggregate amount of Excess Proceeds, in the
case of an Asset Sale, exceed $5.0 million, or, in the case of an Event of Loss,
exceed $10.0 million, the Company shall commence an offer to all Holders (as
"Asset Sale Offer") pursuant to Section 3.10 of the Indenture to purchase the
maximum principal amount of Notes that may be purchased out of the Excess
Proceeds at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest (including Contingent Interest,
if any) and Liquidated Damages, if any, thereon to the date of purchase, in
accordance with the procedures set forth in the Indenture. To the extent that
the aggregate principal amount of Notes tendered pursuant to an Excess Proceeds
Offer is less than the Excess Proceeds or the Excess Loss Proceeds, as the case
may be, the Company (or such Subsidiary) may, subject to the provision of the
Indenture and the Collateral Documents use any remaining Excess Proceeds or the
Excess Loss Proceeds, as the case may be, for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis. Upon completion of such offer to purchase, the amount of
excess proceeds shall be reset at zero.
(c) Notwithstanding the provisions of subparagraph (a) of this Paragraph
5, within 120 days after each Operating Year of the Company, beginning with the
first Operating Year after the Isle-Black Hawk becomes Operating, the Issuers
shall make an offer to all Holders (an "Excess Cash Flow Offer") to purchase the
maximum principal amount of Notes that is an integral multiple of $1,000 that
may be purchased with 50% of the Company's Excess Cash Flow in respect of the
Operating Year then ended (the "Excess Cash Flow Offer Amount"), at a purchase
price equal to 101% of the principal amount of Notes to be purchased, plus
accrued and unpaid interest (including Contingent Interest, if any) and
Liquidated Damages, if any, to the date fixed for the closing of such Excess
Cash Flow Offer (the "Excess Cash Flow Purchase Price"), in accordance with the
procedures contained in Sections 3.1 through 3.6 of the Indenture for redemption
of the Notes. To the extent that the aggregate principal amount of Notes
tendered pursuant to any Excess Cash Flow Offer exceeds the Excess Cash Flow
Offer Amount with respect thereto, the Trustee shall select the Notes to be
repurchased on a pro rata basis. To the extent that the aggregate principal
amount of Notes tendered pursuant to any Excess Cash Flow Offer is less than the
Excess Cash Flow Offer Amount with respect thereto, the Company may, subject to
the other provisions of the Indenture, use any remaining Excess Cash Flow for
general corporate purposes.
7
<PAGE>
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest (including Contingent Interest, 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
Issuers may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Issuers need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, it 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. The registered Holder of a Note may be treated
as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and 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 or the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Issuers' obligations to Holders of the Notes
in case of a merger or consolidation, to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture or the Collateral
Documents of any such Holder, or to comply with the requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest (including Contingent Interest, if any,
then due) on, or Liquidated Damages, if any, with respect to, the Notes;
(ii) default in payment when due of principal of or premium, if any, on the
Notes, (iii) failure by the Issuers to comply with Sections 3.10, 4.7, 4.9,
4.10, 4.15, 4.22, 4.28, 4.30, 4.31 or 5.1 of the Indenture; (iv) the Issuers
fail for 30 days after notice to comply with any of its other agreements in the
Indenture or the Notes; (v) default under certain other agreements relating to
Indebtedness of the Issuers which default (a) is caused by failure to pay
principal of or premium, if any, or interest on such Indebtedness prior to the
applicable grace period or (b) results in the acceleration of such Indebtedness
prior to its express maturity; (vi) certain final judgments for the payment of
money that remain undischarged or
8
<PAGE>
unstayed for a period of 60 days; (vii) the Issuers breach any material
representation or warranty set forth in the Collateral Documents, default in the
performance of any covenants in the Collateral Documents or repudiate their
obligations under the Collateral Documents; (viii) certain events of bankruptcy
or insolvency with respect to the Issuers or any of their Subsidiaries; (ix) the
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 any Gaming Facility; (x) a
default by Casino America in the performance of its obligations set forth in the
Completion Capital Commitment or repudiation of its obligations under the
Completion Capital Commitment; or (xi) subject to certain limitations, the
failure of the Isle-Black Hawk to be Operating by the Operating Deadline or to
remain Operating thereafter. 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 all 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 will 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 premium, if any, or interest (including Contingent Interest, if
any, then due)) if a committee of the Trustee's Responsible Officers in good
faith 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 principal of,
premium and Liquidated Damages, if any, or interest (including Contingent
Interest, if any, then due) on, the Notes. The Issuers are required to deliver
to the Trustee annually a statement regarding compliance with the Indenture, and
the Issuers are required 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 THE ISSUERS. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Issuers or their Affiliates, and may otherwise deal with the
Issuers or their Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator, stockholder or member of the Issuers, Subsidiary or Affiliate as
such, shall not have any liability for any obligations of the Issuers under the
Notes, the Indenture or the Collateral Documents or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
9
<PAGE>
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 OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of Notes under the Indenture, Holders
of Transferred Restricted Securities shall have all the rights set forth in the
Registration Rights Agreement dated as of August 20, 1997, among the Issuers and
the parties named on the signature pages thereof (the "Registration Rights
Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have 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 Issuers will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Isle of Capri Black Hawk L.L.C.
Isle of Capri Black Hawk Capital Corp.
c/o Casino America, Manager
711 Washington Loop
Biloxi, Mississippi 39530
Attention: Corporate Secretary
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<PAGE>
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 Issuers. 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>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Issuers pursuant to
Section 4.10, 4.15, 4.30 or 4.31 of the Indenture, check the box below:
[_] Section 4.10 [_] Section 4.15 [_] Section 4.30 [_] Section 4.31
If you want to elect to have only part of the Note purchased by the Issuers
pursuant to Section 4.10, 4.15, 4.30 or 4.31 of the Indenture, state the amount
you elect to have purchased: $___________
Date:______________ Your Signature: ____________________________
(Sign exactly as your name appears on the Note)
Tax Identification No.: _______________________
Signature Guarantee.
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTE
The following exchanges of a part of this Global Note for Definitive Notes
have been made:
<TABLE>
<CAPTION>
Amount of Amount of increase Principal Amount Signature of
decrease in in of this Global Note authorized officer
Principal Amount Principal Amount following such of
of of decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ---------------- ---------------- ------------------ -------------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT 4.3
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
Among
IBJ SCHRODER BANK & TRUST COMPANY, as the Disbursement Agent
IBJ SCHRODER BANK & TRUST COMPANY, as the Trustee
CRSS CONSTRUCTORS, INC., as the Independent Construction Consultant
ISLE OF CAPRI BLACK HAWK L.L.C., as the Company and an Issuer
and
ISLE OF CAPRI BLACK HAWK CAPITAL CORP., as Co-Issuer
dated as of
August 20, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Definitions................................................................. 2
1.1 Defined Terms......................................................... 2
1.2 Additional Defined Terms.............................................. 6
2. Establishment of Accounts................................................... 6
2.1 Appointment of Disbursement Agent..................................... 6
2.2 Establishment of Accounts............................................. 6
2.3 Pledge Agreement...................................................... 7
2.4 Investment of Funds in Accounts....................................... 7
2.5 Agency................................................................ 8
2.6 Waiver of Setoff Rights............................................... 8
3. Disbursements from Accounts................................................. 8
3.1 Conditions to Disbursement............................................ 8
3.2 Method of Disbursement................................................ 8
3.3 Disbursement of Compensation.......................................... 8
3.4 Transfer of Funds to the Trustee...................................... 9
4. Agreements of the Company, the Independent Construction Consultant, the
Disbursement Agent and the Trustee.......................................... 9
4.1 Disbursement Requests and Disbursements............................... 9
4.2 Periodic Review of Isle-Black Hawk.................................... 10
4.3 Exercise of the Hotel Option.......................................... 11
4.4 Waiver of Rights...................................................... 11
4.5 Entity Change......................................................... 11
5. Interest Reserve............................................................ 12
5.1 Interest Disbursements................................................ 12
5.2 Interest Reserve Account Amounts...................................... 12
6. Completion Reserve.......................................................... 12
6.1 Conditions Precedent to Completion Reserve Disbursements.............. 12
6.2 Disbursement to the Interest Reserve Account.......................... 12
7. Construction Disbursement Account........................................... 12
7.1 Conditions to Initial Disbursements................................... 12
7.2 Conditions to Subsequent Disbursements................................ 13
7.3 Advance Disbursements................................................. 13
7.4 Disbursements After Event of Default.................................. 14
7.5 Final Disbursement of Funds Following Operating Date.................. 14
8. Amendments to Construction Disbursement Budget Amendment to Contracts....... 15
8.1 Construction Disbursement Budget Amendment Process.................... 15
8.2 Contract Amendment Process............................................ 15
8.3 Project Cost Schedule and Cost Overruns............................... 16
9. Events of Default........................................................... 16
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
10. Disbursed Funds Accounts...................................................... 17
10.1 Rights of the Company to Disbursed Funds Accounts....................... 17
10.2 Right to Substitute Disbursed Funds Account............................. 17
11. Limitation of Liability....................................................... 18
11.1 Disbursement Agent's Limitation of Liability............................ 18
11.2 Independent Construction Consultant's Limitation of Liability........... 18
12. Indemnity and Insurance....................................................... 19
12.1 Indemnity............................................................... 19
12.2 Insurance............................................................... 19
13. Termination................................................................... 19
14. Substitution or Resignation................................................... 20
15. Account Statement............................................................. 20
16. Notice........................................................................ 21
17. Miscellaneous................................................................. 21
17.1 Waiver.................................................................. 21
17.2 Invalidity.............................................................. 21
17.3 No Authority............................................................ 21
17.4 Assignment.............................................................. 21
17.5 Benefit................................................................. 21
17.6 Time.................................................................... 21
17.7 Choice of Law........................................................... 21
17.8 Entire Agreement; Amendments............................................ 21
17.9 Notices................................................................. 22
17.10 Counterparts........................................................... 22
17.11 Captions............................................................... 22
17.12 Arbitration............................................................ 22
</TABLE>
ii
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
THIS CASH COLLATERAL AND DISBURSEMENT AGREEMENT (as amended, supplemented
or otherwise modified from time to time, the "AGREEMENT") is dated as of August
20, 1997, by and among IBJ SCHRODER BANK & TRUST COMPANY ("IBJ"), a New York
banking corporation, as trustee (the "TRUSTEE") under the Indenture (as defined
below), IBJ, as disbursement agent (the "DISBURSEMENT AGENT"), CRSS
CONSTRUCTORS, INC., as independent construction consultant under the Indenture
(the "INDEPENDENT CONSTRUCTION CONSULTANT"), ISLE OF CAPRI BLACK HAWK L.L.C., a
Colorado limited liability company (the "COMPANY" or an "ISSUER"), and ISLE OF
CAPRI BLACK HAWK CAPITAL CORP., a Colorado corporation ("CAPITAL CORP." or an
"ISSUER," and, together with the Company, the "ISSUERS").
RECITALS
A. NOTES. The Issuers have issued Seventy-Five Million Dollars
-----
($75,000,000) in aggregate principal amount of its First Mortgage Notes due 2004
(the "ORIGINAL NOTES" and, together with any new notes issued in exchange
therefor, the "NOTES") concurrently herewith. The Notes have been issued
pursuant to the provisions of an Indenture (as amended, supplemented or
otherwise modified from time to time, the "INDENTURE") dated the date hereof,
between the Issuers and the Trustee, on behalf of itself and the holders of the
Notes. Proceeds from the issuance of Notes in the amount of Fifty Two Million
Three Hundred Sixty One Thousand Five Hundred Seventy Dollars and eighty three
cents ($52,361,570.83) (the "CONSTRUCTION PROCEEDS") will be deposited
contemporaneously with the execution of this Agreement into account
#ISLCAPCONDIS, held at the Disbursement Agent (said account, or any substitute
account selected in accordance with the terms of this Agreement, is sometimes
referred to herein as the "CONSTRUCTION DISBURSEMENT ACCOUNT"), to be maintained
by the Disbursement Agent pursuant to Section 2 of this Agreement. Proceeds
---------
from the issuance of Notes in the amount of Fourteen Million One Hundred Twenty
Nine Thousand Six Hundred Fifty One Dollars and ninety four cents
($14,129,651.94) (the "INTEREST RESERVE PROCEEDS"), will be deposited
contemporaneously with the execution of this Agreement into account
#ISLCAPINTRES, held at the Disbursement Agent (said account, or any substitute
account selected in accordance with the terms of this Agreement, is sometimes
referred to herein as the "INTEREST RESERVE ACCOUNT"), to be maintained by the
Disbursement Agent pursuant to Section 2 of this Agreement. Proceeds from the
---------
issuance of Notes in the amount of Five Million Dollars ($5,000,000.00) (the
"COMPLETION RESERVE PROCEEDS," which together with the Construction Proceeds and
the Interest Reserve Proceeds shall be referred to herein as the "PROCEEDS"),
will be deposited contemporaneously with the execution of this Agreement into
account #ISLCAPCOMRES, held at the Disbursement Agent (said account, or any
substitute account selected in accordance with the terms of this Agreement, is
sometimes referred to herein as the "COMPLETION RESERVE ACCOUNT"), to be
maintained by the Disbursement Agent pursuant to Section 2 of this Agreement.
---------
B. COLLATERAL AND COLLATERAL ASSIGNMENT. As security for its obligations
------------------------------------
under the Notes and the Indenture, the Issuers have granted security interests
to the Trustee, on behalf of itself and the holders of Notes, in certain assets
and has collaterally assigned certain contracts to the Trustee. As further
security for its obligations under the Notes and the Indenture, the Issuers also
have granted, and hereby grant, a security interest to the Trustee, on behalf of
itself and the holders of the Notes, in all of its right, title and interest in
the Construction Disbursement Account, the Completion Reserve Account, the
Interest
1
<PAGE>
Reserve Account, the Disbursed Funds Account (as defined herein), and any
Proceeds or other amounts held in any such accounts.
C. PURPOSE. The parties intend that portions of the Proceeds be used to
-------
develop, design, construct, equip and operate the Isle-Black Hawk (as defined
herein) and provide for working capital and operating funds for the Company.
The parties have entered into this Agreement in order to set forth the
conditions upon which, and the manner in which, funds will be disbursed in order
to permit the Company to develop, design, construct, equip and operate the Isle-
Black Hawk, subject only to Permitted Liens (as defined herein), and to permit
the Company to conduct its operations.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions
------------
1.1 Defined Terms. In this Agreement, the terms defined in this
-------------
Section 1 shall have the meanings herein specified, such definitions to be
- ---------
equally applicable to both the singular and plural forms of any of the terms
defined:
"ACCOUNTS" means the Interest Reserve Account, the Completion Reserve
Account and the Construction Disbursement Account.
"ADDITIONAL REVENUE" means revenue (including, without limitation,
investment income (loss), less any losses or costs associated therewith,
earned on amounts in the Construction Disbursement Account, the Completion
Reserve Account and the Disbursed Funds Account, but not the Interest
Reserve Account) generated by, or other funds of, the Company (other than
from disposition of its assets), but only to the extent that such revenue
is held by the Company, free and clear of any claims of any other parties
whatsoever, other than claims of the Trustee and holders of the Notes;
provided, however, that as of any date of measurement, Additional Revenue
-------- -------
also shall include investment income (loss), less any losses or costs
associated therewith, which the Company reasonably determines will be
earned on funds in the Construction Disbursement Account, the Completion
Reserve Account and the Disbursed Funds Account through the date that the
Isle-Black Hawk becomes Operating (or, if the Company exercises the Hotel
Option, through the Hotel Substantial Completion Date, if later).
"ADVANCE DISBURSEMENTS" means a disbursement from the Construction
Disbursement Account to the Company in accordance with the Construction
Disbursement Budget, notwithstanding the fact that not all certifications
and lien releases have been obtained or other disbursement conditions have
not been satisfied; provided that the aggregate amount of Advance
--------
Disbursements outstanding at any time shall not exceed an amount greater
than One Million Five Hundred Thousand Dollars ($1,500,000).
"AVAILABLE FUNDS" means, at any given time, (a) the Proceeds deposited
in the Construction Disbursement Account and the Completion Reserve
Account, less disbursements made from the Construction Disbursement Account
and the Completion Reserve Account, (b) so long as there is no Default or
Event of Default, Additional Revenue, and (c) Realized Savings theretofore
achieved and not previously reallocated in the Construction Disbursement
Budget.
2
<PAGE>
"BORROWER'S CLOSING CERTIFICATION" means an Officers' Certificate in
the form attached hereto as EXHIBIT B-1.
------------
"CONSTRUCTION CONTRACT" means the Design/Build Agreement for the
design and construction of the Isle-Black Hawk executed by the General
Contractor and the Company, dated July 22, 1997.
"CONSTRUCTION DISBURSEMENT BUDGET" means the Initial Construction
Disbursement Budget, as the same may be amended from time to time pursuant
to this Agreement.
"CONSTRUCTION EXPENSES" means expenses incurred in connection with the
construction of the Isle-Black Hawk, excluding, however, (a) any such
Construction Expenses paid on or prior to the Issue Date, (b) any Debt
Financing Costs, and (c) any Issuance Fees and Expenses.
"CONSTRUCTION SCHEDULES" mean, collectively, schedules describing the
sequencing of the components of work to be undertaken in connection with
the Isle-Black Hawk, which schedules (as the same may be amended to the
extent permitted herein) demonstrate that the Isle-Black Hawk will be
Operating prior to the Operating Deadline (without giving effect to the
construction of the hotel, and, if the Company exercises the Hotel Option,
will be completed prior to the Hotel Substantial Completion Date).
"CONTRACT" means a contract pertaining to the design or construction
of the Isle-Black Hawk, including, without limitation, any contract,
license and performance and payment bond or guarantee, if any.
"CONTRACTOR" means a contractor which is a party to a Contract.
"DEBT FINANCING COSTS" means all principal, interest, Liquidated
Damages, premium fees and other amounts payable or accrued from time to
time under the Notes.
"DEED OF TRUST" means the Deed of Trust to Public Trustee, Security
Agreement, Fixture Filing and Assignment of Rents, Leases and Leasehold
Interests and Assignment of Leases and Rents executed by each of the
Issuers to encumber their respective interests in the Property, if any, in
favor of the Trustee, on behalf of itself and the holders of Notes.
"DEFAULT" means any event, omission or failure of a condition that is,
or with the passage of time or the giving of notice or both could be, an
Event of Default herein.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like
account maintained with a bank, savings and loan association, credit union,
or like organization, including an account evidenced by a writing.
"DISBURSED FUNDS ACCOUNT" means the Disbursed Funds Account, account
number ISLCAPFDSDIS held at the IBJ Schroder Bank & Trust Company, in the
name of the Company, or any substitute account selected in accordance with
this Agreement, which account shall be funded from disbursements from the
Construction Disbursement Account and shall be pledged as collateral to the
Trustee, for the benefit of itself and the holders of the Notes, and from
which the Company shall have general check writing authority.
3
<PAGE>
"DISBURSEMENT REQUEST" means any Initial Disbursement Request,
Construction Disbursement Request, Completion Reserve Disbursement Request,
Interest Disbursement Request, and any other request for disbursement from
the Accounts made pursuant to this Agreement.
"GENERAL CONTRACTOR" means Haselden Construction, Inc., and its
successors identified by notice from the Company to the Disbursement Agent.
"HARD COSTS" means the costs and expenses in respect of supplying
goods, materials and labor for the construction of improvements relating to
the Isle-Black Hawk or other amounts payable pursuant to the Construction
Contract.
"HOTEL OPTION" means an option the Company may exercise by March 1,
1998, to have a hotel added to the Isle-Black Hawk, pursuant to the terms
of the Construction Contract.
"HOTEL SUBSTANTIAL COMPLETION DATE" shall mean October 15, 1999.
"INDEPENDENT CONSTRUCTION CONSULTANT" means CRSS Constructors, Inc.,
and its successors, or any substitute Independent Construction Consultant
appointed by the Trustee in accordance with the terms of this Agreement.
"INITIAL CONSTRUCTION DISBURSEMENT BUDGET" means, collectively, the
itemized schedule setting forth on a line item basis all of the costs which
the Company anticipates to expend from and after the Issue Date in
connection with the development, construction, equipping and operating of
the Isle-Black Hawk and the conduct of the business of the Company,
attached as EXHIBIT 1 to the Borrower's Closing Certification, which costs
---------
in the aggregate, to the extent they are anticipated to be funded from the
Accounts (other than the Interest Reserve Account) shall not exceed the
Construction Proceeds.
"INITIAL DISBURSEMENTS CERTIFICATE" means an Officers' Certificate
from the Company in the form attached hereto as EXHIBIT A.
---------
"INTEREST PAYMENT DATE" means each of February 28, 1998, August 31,
1998 and February 28, 1999.
"ISLE-BLACK HAWK" means the pending project to develop, construct,
equip and operate the Isle of Capri Black Hawk Casino and related
amenities, which are required to be Operating as of the Operating Deadline,
and, in the event the Hotel Option is exercised, the Isle of Capri Black
Hawk hotel and related amenities as contemplated by the Construction
Contract.
"ISSUANCE FEES AND EXPENSES" means fees and expenses incurred on or
before the Issue Date by the Company or for which the Company is liable in
connection with the offering of the Notes.
"ISSUE DATE" means the date of the closing of the offering of the
Notes.
"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.
4
<PAGE>
"OFFICERS' CERTIFICATE" means a certificate signed by two officers of
the Company on whose behalf or for whose benefit the certificate is being
executed or delivered, in either case including one of the following
officers of the Company: the Chairman of the Board, Chief Executive
Officer, President, Chief Financial Officer, Executive Vice President, Vice
President, Treasurer or Assistant Treasurer.
"OPERATING DEADLINE" means June 15, 1999.
"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.
"PLEDGE AGREEMENT" means each of the Pledge and Assignment Agreement,
Blocked Account Agreement, and/or Control Letter Agreement, among any of
the Disbursement Agent, the Trustee and the Issuers, relating to the
Trustee's security interest in the Accounts and the Disbursed Funds Account
and the proceeds thereof.
"PROJECT COST SCHEDULE" means an itemized schedule in the form of
Schedule 1 to a Disbursement Request, a form of which is attached hereto as
----------
SCHEDULE 1 to EXHIBIT E.
---------- ---------
"PROPERTY" means the real property located in Black Hawk, Colorado on
which the Company will construct the Isle-Black Hawk.
"REALIZED SAVINGS" means the excess of the amount budgeted in the
Construction Disbursement Budget for a line item over the amount of funds
expended or owed by the Company to complete the tasks set forth in such
line item and for the materials and services used to complete such tasks,
so long as the terms for such tasks are final and unconditional (other than
the satisfactory completion of such tasks); provided, however, that
-------- -------
Realized Savings for any line item shall be deemed to be (i) zero if such
savings are obtained in a manner that materially detracts from the overall
value, quality and amenities of the Isle-Black Hawk, and (ii) reduced to
the extent previously reallocated in the Construction Disbursement Budget.
"REMAINING COSTS" means, at any given time, the amount necessary to
pay, through the time the Isle-Black Hawk is Operating (or, if the Company
exercises the Hotel Option, the hotel is completed), all theretofore unpaid
costs (including Retainage Amounts) to be incurred or payable in connection
with the Isle-Black Hawk through the date on which the Isle-Black Hawk is
Operating (or, if the Company exercises the Hotel Option, the date on which
the hotel is completed).
"RETAINAGE AMOUNTS" means at any given time amounts which have accrued
and are owing under the terms of the Construction Contract for work or
services already provided but which at such time (and in accordance with
the terms of the Construction Contract) are being withheld from payment to
the Contractor until certain subsequent events (e.g., completion
benchmarks) have been achieved under the Construction Contract.
"SOFT COSTS" means all costs and expenses (other than Hard Costs, but
including Working Capital Expenses) set forth in the Construction
Disbursement Budget, including, without limitation, pre-opening costs.
"TITLE INSURER" means First American Title Insurance Company.
5
<PAGE>
"TITLE POLICY" means the lender's policy or policies of title
insurance to be provided by the Title Insurer to the Trustee with respect
to the Property, together with all endorsements thereto, in the form
attached as EXHIBIT I.
---------
"WORKING CAPITAL EXPENSES" means operating expenses and other working
capital requirements of the Company, as contemplated in and to the extent
permitted by the Construction Budget.
1.2 Additional Defined Terms. In addition, the terms listed below in
------------------------
the left column below shall have the respective meanings assigned to such terms
in the Section of this Agreement listed opposite such terms in the right column
below. All other capitalized terms not defined herein, but defined in the
Indenture, shall have the meaning ascribed to them in the Indenture.
<TABLE>
<CAPTION>
Defined Term Section
------------ -------
<S> <C>
AGREEMENT................................... Introduction
COMPANY..................................... Introduction
COMPLETION RESERVE ACCOUNT.................. A of Recitals
COMPLETION RESERVE DISBURSEMENT REQUEST..... 4.1
COMPLETION RESERVE PROCEEDS................. A of Recitals
CONSTRUCTION DISBURSEMENT ACCOUNT........... A of Recitals
CONSTRUCTION DISBURSEMENT REQUEST........... 4.1
CONSTRUCTION PROCEEDS....................... A of Recitals
DISBURSEMENT AGENT.......................... Introduction
EVENT OF DEFAULT............................ 9
FINAL DISBURSEMENT.......................... 7.5
INDENTURE................................... A of Recitals
INITIAL DISBURSEMENTS....................... 7.1
INTEREST DISBURSEMENT REQUEST............... 4.1
INTEREST RESERVE ACCOUNT.................... A of Recitals
INTEREST RESERVE PROCEEDS................... A of Recitals
NOTES....................................... A of Recitals
ORIGINAL NOTES.............................. A of Recitals
PROCEEDS.................................... A of Recitals
TRUSTEE..................................... Introduction
</TABLE>
2. Establishment of Accounts.
--------------------------
2.1 Appointment of Disbursement Agent. The Trustee and the Company
----------------------------------
hereby appoint the Disbursement Agent, and the Disbursement Agent hereby accepts
appointment, as disbursement agent under the terms and conditions of this
Agreement. The Disbursement Agent agrees to act in good faith at all times
herein.
2.2 Establishment of Accounts. Concurrently with the execution and
--------------------------
delivery hereof, the Disbursement Agent shall establish the Accounts at the
Disbursement Agent and credit thereto, in accordance with the provisions of
RECITAL A hereof, the Proceeds. All funds in the Accounts shall be held in
- ---------
trust and not commingled with any deposit or commercial bank account. The
Disbursement Agent hereby waives any and all liens, claims, encumbrances and
rights of set off which it may have in the Accounts, including all rights of
offset, deductions and liens, whether statutory or otherwise afforded by law,
agreement or otherwise set forth herein. All funds accepted by the Disbursement
Agent pursuant to
6
<PAGE>
this Agreement shall be held in the appropriate Account for the benefit of the
Company subject to the terms and conditions of this Agreement and any Pledge
Agreement (including, without limitation, the rights of the Trustee hereunder
and thereunder). The Disbursement Agent may, upon the request of the Company,
establish sub-accounts for accounting purposes within the Accounts, it being
understood and agreed that the creation of such sub-accounts shall in no way
affect the pledge of the Trustee in the accounts hereunder.
2.3 Pledge Agreement. Pursuant to the Pledge Agreement, the Company
-----------------
has granted to the Trustee, for the benefit of the holders of the Notes, a first
priority security interest in the Accounts and all funds and assets from time to
time deposited therein, and all products and proceeds thereof. The Disbursement
Agent shall note in its records that all funds and other assets in the Accounts
have been pledged to the Trustee and that the Disbursement Agent is holding such
items as agent for the Trustee, as secured party. The Disbursement Agent shall
maintain dominion and control over the Accounts and the funds and assets therein
solely for the benefit of the Trustee, as secured party, and for no other
parties or Persons; provided, however, that the Company shall be able to obtain
-------- -------
disbursements in accordance with the terms hereof. Accordingly, it is the
intention of the parties that all such funds and assets shall not be within the
bankruptcy "estate" (as such term is used in 11 U.S.C. (S) 541, as amended) of
the Disbursement Agent. All such funds and all earnings accruing from time to
time thereon shall be held in the applicable Account until disbursed or
transferred in accordance with the terms hereof or until transferred to such
other account as the Trustee and the Company may direct the Disbursement Agent
to establish.
2.4 Investment of Funds in Accounts. All funds from time to time
--------------------------------
credited to the Accounts shall be invested as follows:
2.4.1 Construction Disbursement Account and Completion
------------------------------------------------
Reserve Account. All funds contained in the Construction Disbursement Account
- ---------------
(other than those to be disbursed pursuant to the Initial Disbursement Request,
which shall be so disbursed on the Issue Date) and the Completion Reserve
Account shall be invested in Investment Grade Securities from time to time by
written instructions by the Company delivered to the Disbursement Agent, pending
disbursement of such funds pursuant to this Agreement; provided, however, that
-------- -------
the Disbursement Agent shall have concluded that such investments conform with
the requirements of the Indenture and Pledge Agreement and that appropriate
steps have been taken with respect to such investment so as to assure the
continuing perfection of the Trustee's first priority security interest in such
investment (it being agreed that Investment Grade Securities described in
subparagraph (vi) of the definition of "Investment Grade Securities" in the
Indenture shall mean securities purchased by the money market fund of the type
described in the clauses (i) - (v) therein without regard to the maturities of
such type of securities, so long as the money market fund referred to in clause
(vi) therein provides daily liquidity to its investors). For purposes of
determining the steps to be taken in order to achieve and maintain such
perfection, the Disbursement Agent shall have the right to require the delivery
of, and to rely upon, an opinion of counsel to the Company or the Disbursement
Agent (the expense of which shall be paid by the Company) specifying (A) that
the counsel is familiar with the laws applicable to the perfection of security
interests in said investments and (B) the steps required to perfect and maintain
a first priority security interest in favor of the Trustee in such investments.
If no such instructions are received by the Disbursement
Agent after request or after the occurrence of a Default or Event of Default,
such funds shall be invested in Investment Grade Securities selected by the
Disbursement Agent.
2.4.2 Interest Reserve Account. All funds in the Interest
-------------------------
Reserve Account shall be invested only in Government Securities selected by the
Company from time to time by written instructions delivered to the Disbursement
Agent by the Company, pending disbursement of such
7
<PAGE>
funds pursuant to this Agreement; provided, however, that such investments
-------- -------
conform with the requirement of the Indenture and the Pledge Agreement and that
appropriate steps have been taken with respect to such investments so as to
assure the continuing perfection of the Trustee's first priority security
interest in such investment. For purposes of determining the steps to be taken
in order to achieve and maintain such perfection, the Disbursement Agent shall
have the right to require the delivery of, and to rely upon, an opinion of
counsel to the Company or the Disbursement Agent (the expense of which shall be
paid by the Company) specifying (A) that the counsel is familiar with the laws
applicable to the perfection of security interests in said investments and (B)
the steps required to perfect and maintain a first priority security interest in
favor of the Trustee in such investments.
If no such instructions are received by the Disbursement Agent
after request or after the occurrence of a Default or Event of Default, such
funds shall be invested in Government Securities selected by the Disbursement
Agent.
2.5 Agency. The Disbursement Agent shall act solely as the Trustee's
------
agent in connection with its duties under this Agreement, notwithstanding any
other provision contained herein, without any authority to obligate the Trustee
or to compromise or pledge its security interest hereunder; provided, however,
-------- -------
that the Disbursement Agent is authorized to make disbursements from the
Accounts on behalf of the Trustee pursuant to the terms of this Agreement. The
Company acknowledges and agrees that in no event shall the Trustee or the
holders of the Notes be liable for, nor shall the obligations of the Company
under the Indenture, the Notes or the other Collateral Documents be affected or
diminished as a consequence of, any action or inaction of the Disbursement Agent
with respect to the Accounts or any funds or other assets credited thereto or
deposited herein.
2.6 Waiver of Setoff Rights. The Disbursement Agent hereby
-----------------------
acknowledges the Trustee's security interest as set forth herein and waives any
security interest or other lien in the Accounts or any funds or other assets
credited thereto or deposited herein and further waives any right to set off
said funds, assets or investments now or in the future against any indebtedness
of the Company to the Disbursement Agent. The waivers set forth in this Section
are of rights which may exist now or hereafter in favor of the Disbursement
Agent in its individual capacity, and not of any such rights which may exist now
or hereafter in favor of the Disbursement Agent in its capacity as agent for the
Trustee. Nothing in this Section shall be construed as waiving, limiting or
diminishing any rights of the Trustee vis-a-vis the Company.
3. Disbursements from Accounts.
----------------------------
3.1 Conditions to Disbursement. The Disbursement Agent shall
---------------------------
disburse funds from the Accounts only upon satisfaction of the applicable
conditions to disbursement set forth herein.
3.2 Method of Disbursement. Upon satisfaction of the applicable
-----------------------
conditions to disbursement set forth herein, the Disbursement Agent shall
disburse funds from the applicable Account as specified in the applicable
Disbursement Request.
3.3 Disbursement of Compensation.
-----------------------------
3.3.1 Disbursement Agent's Compensation. As long as the
---------------------------------
Trustee also serves as Disbursement Agent hereunder, the Disbursement Agent
shall not, except as otherwise provided in Section 13, be entitled to an
----------
additional fee for its services hereunder, but shall be entitled to
reimbursement for its reasonable expenses, including, without limitation, the
reasonable fees and expenses of the Disbursement Agent's counsel. The
Disbursement Agent shall receive such payments without the
8
<PAGE>
requirement of obtaining any further consent or action on the part of the
Company with respect to the payment; provided, however, that, without limiting
the foregoing, the Disbursement Agent shall provide written itemization of
requested reimbursement of such fees and expenses within thirty (30) days of
receiving a written request therefor from the Company. Disbursements for each
calendar month shall be made on the first day of the subsequent calendar month.
Until such time that the Company provides written notice to the Disbursement
Agent and the Independent Construction Consultant, in accordance with the terms
hereof, all amounts payable to the Disbursement Agent shall be deducted from the
"Other Expenses and Working Capital" line item in the Construction Disbursement
Budget.
3.3.2 Independent Construction Consultant's Compensation.
--------------------------------------------------
For each calendar month during the term of this Agreement, the Disbursement
Agent shall disburse from the Construction Disbursement Account Three Thousand
Two Hundred Seventy Dollars ($3,270.00) plus reasonable expenses, to the
Independent Construction Consultant, as compensation for services to be
performed under this Agreement, unless the Company or the Trustee has sent
written notice to the Independent Construction Consultant that it is in default
under this Agreement. Any such expenses shall be described in reasonable detail
in an invoice provided no less than thirty (30) days prior to such disbursement.
In addition, the Independent Construction Consultant may from time to time
provide written notice to the Disbursement Agent as to the place to which such
disbursement should be made. The Independent Construction Consultant shall
receive such payments without the requirement of obtaining any further consent
or action on the part of the Company or the Disbursement Agent with respect to
the payment. Until such time that the Company provides written notice to the
Disbursement Agent and the Independent Construction Consultant, in accordance
with the terms hereof, all amounts payable to the Independent Construction
Consultant shall be deducted from the "Other Expenses and Working Capital" line
item in the Construction Disbursement Budget. Disbursements for each calendar
month shall be made on the first day of the subsequent calendar month.
3.4 Transfer of Funds to the Trustee. Upon the receipt of written
---------------------------------
notice executed by the Trustee, which certifies that an Event of Default
hereunder has occurred and is continuing and that the Trustee is entitled to the
funds in the Accounts, the Disbursement Agent shall deliver to the Trustee all
funds in the Accounts, other than amounts then permitted to be disbursed under
clauses (i), (ii) and (iii) of SECTION 7.4 hereof.
-----------
4. Agreements of the Company, the Independent Construction Consultant,
-------------------------------------------------------------------
the Disbursement Agent and the Trustee. The Company, the Independent
- ---------------------------------------
Construction Consultant, the Disbursement Agent and the Trustee severally agree
as follows:
4.1 Disbursement Requests and Disbursements.
---------------------------------------
(a) The Company shall concurrently with the execution and
delivery of this Agreement submit or cause to be submitted the documents
necessary for the Initial Disbursements to be made as of the date hereof.
(b) The Company or, as set forth in ARTICLE 5, the Trustee,
---------
shall have the right to submit to the Disbursement Agent, with a copy to the
Trustee, a request for the disbursement of funds from the Interest Reserve
Account to pay the interest due on the Notes, each in the form of EXHIBIT C
---------
attached hereto (an "INTEREST DISBURSEMENT REQUEST").
(c) The Company shall have the right from time to time during the
course of this Agreement (but no more often than semi-monthly, unless otherwise
permitted by the Disbursement
9
<PAGE>
Agent), to submit to the Disbursement Agent, with a copy to Trustee and the
Independent Construction Consultant, a request for the disbursement of funds
from the Completion Reserve Account to the Construction Disbursement Account,
each in the form of EXHIBIT D attached hereto (a "COMPLETION RESERVE
---------
DISBURSEMENT REQUEST"), together with the exhibits attached thereto.
(d) The Company shall have the right from time to time during the
course of this Agreement (but no more often than semi-monthly (other than
disbursements related to the Initial Disbursements Certificate), unless
otherwise permitted by the Disbursement Agent), to submit to the Disbursement
Agent, with a copy to the Trustee and the Independent Construction Consultant, a
request for the disbursement of funds from the Construction Disbursement Account
to the Disbursed Funds Account, in the form of EXHIBIT E-1 attached hereto (a
-----------
"CONSTRUCTION DISBURSEMENT REQUEST"), or in the form of EXHIBIT E-2 attached
-----------
hereto (an "ADVANCE DISBURSEMENT REQUEST"), in each case together with the
exhibits attached thereto.
(e) The Disbursement Agent shall review each Disbursement Request
submitted pursuant to SECTIONS 4.1(A) THROUGH (D) above to determine that they
---------------------------
conform in form to the requirements of EXHIBITS A THROUGH E-2, respectively and
----------------------
that, to the best of the Disbursement Agent's actual knowledge, all other the
conditions applicable to such Disbursement Request have been satisfied. Except
as to the Initial Disbursement, which shall be made on the Issue Date, the
Disbursement Agent shall notify the Company as soon as reasonably possible (and
in any event within two (2) business days after the Disbursement Agent receives
the required documents) if any Disbursement Request, or any portion thereof, is
disapproved and the reason(s) therefor.
(f) Provided that a Disbursement Request submitted pursuant to
SECTIONS 4.1(A) THROUGH (B) above is not disapproved by the Disbursement Agent,
- ---------------------------
then, within two (2) business days following submission of such Disbursement
Request, the Disbursement Agent shall disburse the funds requested in such
Disbursement Request (other than those to be disbursed pursuant to the Initial
Disbursement Request, which shall be disbursed on the Issue Date), or such
portion thereof as is approved by the Disbursement Agent.
4.2 Periodic Review of Isle-Black Hawk.
-----------------------------------
(a) The Disbursement Agent shall exercise commercially reasonable
efforts and utilize commercially prudent practices in the performance of its
duties hereunder consistent with those of similar institutions disbursing
construction funds. Commencing upon execution and delivery hereof, the
Disbursement Agent shall have the right, but shall have no obligation, to meet
periodically at reasonable times with representatives of the Company, the
Independent Construction Consultant and such other employees, consultants or
agents as the Disbursement Agent shall reasonably request to be present for such
meetings. In addition, the Disbursement Agent shall have the right, but shall
have no obligation, at reasonable times upon prior notice to review, to the
extent it deems necessary or appropriate, all information (including Contracts)
supporting the Disbursement Requests and any certificates in support of any of
the foregoing. The Disbursement Agent shall be entitled to examine, copy and
make extracts of the books, records, accounting data and other documents of the
Company, including, without limitation, bills of sale, statements, receipts,
contracts or agreements, which relate to any materials, fixtures or articles
incorporated into the Isle-Black Hawk. The rights of the Disbursement Agent
under this Section shall not be construed as an obligation, it being understood
that the Disbursement Agent's duty is limited to act upon certificates and draw
requests submitted by the Company and the Trustee hereunder.
10
<PAGE>
(b) The Independent Construction Consultant shall exercise
commercially reasonable efforts and utilize commercially prudent practices in
the performance of its duties hereunder consistent with those of similar
institutions disbursing disbursement control funds and reviewing construction
progress. Commencing upon execution and delivery hereof, the Independent
Construction Consultant shall have the right to meet periodically at reasonable
times, however no less frequently than monthly, with representatives of the
Company, the General Contractor and such other employees, consultants or agents
as the Independent Construction Consultant shall reasonably request to be
present for such meetings. The Independent Construction Consultant may perform
such inspections of the Property then owned by the Company and the Isle-Black
Hawk as it deems reasonably appropriate in the performance of its duties
hereunder, however no less frequently than semi-monthly. In addition, the
Independent Construction Consultant shall have the right at reasonable times
upon prior notice to review, to the extent it deems necessary or appropriate,
all information (including Contracts) supporting the amendments to the
Construction Disbursement Budget, amendments to any Contracts, the Disbursement
Requests and any certificates in support of any of the foregoing, to inspect
materials stored on the Property then owned by the Company, to review the
insurance required pursuant to the terms of the Indenture, and to examine the
Plans and all shop drawings relating to the Isle-Black Hawk. The Independent
Construction Consultant is authorized to contact any payee for purposes of
confirming receipt of progress payments. The Independent Construction
Consultant shall be entitled to examine, copy and make extracts of the books,
records, accounting data and other documents of the Company, including, without
limitation, bills of sale, statements, receipts, conditional and unconditional
lien releases, contracts or agreements, which relate to any materials, fixtures
or articles incorporated into the Isle-Black Hawk. From time to time, at the
request of the Independent Construction Consultant, the Company shall make
available to the Independent Construction Consultant a Isle-Black Hawk Cost
Schedule and/or a Construction Schedule for the Isle-Black Hawk. The Company
agrees to cooperate with the Independent Construction Consultant in assisting
the Independent Construction Consultant to perform its duties hereunder and to
take such further steps as the Independent Construction Consultant reasonably
may request in order to facilitate the Independent Construction Consultant's
performance of its obligations hereunder.
4.3 Exercise of the Hotel Option. In the event the Company exercises
-----------------------------
the Hotel Option, the Company shall (i) simultaneously with sending notice
pursuant to the Construction Contract, send to each of the parties hereto a copy
of the notice to the General Contractor, informing the General Contractor of the
Company's exercise of the Hotel Option, and (ii) immediately take all actions
necessary to remain in compliance with the terms hereof.
4.4 Waiver of Rights. Capital Corp. hereby agrees and acknowleges
----------------
that it shall have no rights with respect to the proceeds from the issuance and
sale of the Notes, the Accounts or the funds therein, the Isle-Black Hawk and
the property on which the Isle-Black Hawk is located or to make Requests, direct
investments, make any claims, propose any Contract or budget or other
amendments, or otherwise take any action hereunder, or receive notice with
respect to any of the foregoing or any other provision contained herein. Any
such rights are hereby waived, and Capital Corp. hereby irrevocably appoints the
Company as Capital Corp.'s attorney-in-fact to take any action otherwise
required hereunder, which appointment is coupled with an interest, with full
authority in the place and stead of Capital Corp. and in the name of Capital
Corp. or otherwise, and the Company hereby irrevocably acepts.
4.5 Entity Change. In the event either Issuer engages in a Permitted
-------------
C-Corp Conversion or any other change to its name, identity or corporate
structure, the Issuers shall provide 45 days' advance written notice of such
transaction and evidence reasonably satisfactory to the Trustee (which shall
include title insurance and/or an opinion of counsel) regarding the maintenance
of the perfection, priority and proof of security interest of the Trustee in the
Note Collateral granted herein.
11
<PAGE>
5. Interest Reserve.
-----------------
5.1 Interest Disbursements. Ten (10) days prior to each Interest
-----------------------
Payment Date, the Company shall deliver to the Disbursement Agent an Interest
Disbursement Request describing the amount required to be paid and the Interest
Payment Date upon which such payment is due and payable. On the Interest
Payment Date, the Disbursement Agent shall liquidate Government Securities (to
the extent required) held in the Interest Reserve Account, and disburse to the
Trustee the amounts described in the Interest Disbursement Request as due and
payable on that date; provided, however, that the Trustee may direct the
-------- -------
Disbursement Agent to liquidate the Government Securities (to the extent
required), and disburse to the Trustee the amounts necessary to pay the amounts
required to be paid on the Notes in the event that the Company fails to deliver
the Interest Disbursement Request. In the event there are insufficient funds in
the Interest Reserve Account to pay any amount due pursuant to an Interest
Disbursement Request or direction so given by the Trustee, the Company shall,
within three (3) Business Days of the applicable Interest Payment Date, deposit
in cash into the Interest Reserve Account an amount equal to such deficiency;
provided, however, that the Trustee shall direct the Disbursement Agent to
- -------- -------
disburse an amount equal to such deficiency from the Completion Reserve Account
to the Interest Reserve Account in the event such amounts are not received from
the Company on a timely basis. The Company acknowledges that the Company's
failure to provide notice or deposit funds referenced in this Section shall not
in any way exonerate or diminish the Company's obligation to make all payments
under the Notes as and when due.
5.2 Interest Reserve Account Amounts. Upon payment in full of all
---------------------------------
interest payments due on the Notes on the final Interest Payment Date, the
Disbursement Agent shall transfer any excess amounts in the Interest Reserve
Account to the Construction Disbursement Account with such amount being
Additional Revenue.
6. Completion Reserve.
-------------------
6.1 Conditions Precedent to Completion Reserve Disbursements. The
---------------------------------------------------------
Disbursement Agent shall disburse funds from the Completion Reserve Account to
the Construction Disbursement Account in an amount equal to that specified on
the applicable Completion Reserve Disbursement Request upon satisfaction of the
following conditions:
(a) The Completion Reserve Disbursement Request on its face has been
completed as to the information required therein, and the required exhibits and
attachments, if any, are attached; and
(b) The Disbursement Agent shall not have received written notice
from any parties hereto that a Default or Event of Default exists.
6.2 Disbursement to the Interest Reserve Account. Notwithstanding
--------------------------------------------
the foregoing, disbursements may be made from the Completion Reserve Account
pursuant to Sections 5.2, 7.4 and 7.5 hereof.
-------------------------
7. Construction Disbursement Account.
----------------------------------
7.1 Conditions to Initial Disbursements. Upon satisfaction of the
------------------------------------
conditions described below in this Section, on the Issue Date the Disbursement
Agent shall make the disbursements described in the Initial Disbursements
Certificate in the form of EXHIBIT A (the "INITIAL DISBURSEMENTS"). The
---------
conditions to the Initial Disbursements shall consist of the following:
(a) The Disbursement Agent shall have received the Proceeds;
12
<PAGE>
(b) The Disbursement Agent shall have received the Initial
Disbursements Certificate, Closing Certification from the Company in the form of
EXHIBIT B-1 attached hereto, the Closing Certification from the Independent
- -----------
Construction Consultant in the form of EXHIBIT B-2 attached hereto and the
-----------
Closing Certification from the Trustee in the form of EXHIBIT B-4 attached
-----------
hereto, in each case, together with all exhibits thereto. Each such document on
its face shall have been completed as to the information required therein, and
the required exhibits and attachments, if any, shall be attached; and
(c) The Disbursement Agent shall have received confirmation from
the Trustee that it has received the Initial Disbursement Certificate, the
Closing Certification from the Company in the form of EXHIBIT B-1 attached
-----------
hereto, the Closing Certification from the Independent Construction Consultant
in the form of EXHIBIT B-2 attached hereto and the Closing Certification from
-----------
the Disbursement Agent in the form of EXHIBIT B-3, in each case, together with
-----------
all exhibits and attachments thereto.
7.2 Conditions to Subsequent Disbursements. Upon satisfaction of the
---------------------------------------
conditions described below in this Section, the Disbursement Agent shall make
the disbursements described in the corresponding Construction Disbursement
Request (provided that the conditions set forth in SECTION 7.1 above shall have
-----------
previously been satisfied), to the Disbursed Funds Account or otherwise as
directed in such Construction Disbursement Request):
(a) The Company shall have submitted to the Disbursement Agent,
the Trustee, and the Independent Construction Consultant, a Construction
Disbursement Request in the form set forth in EXHIBIT E-1 pertaining to the
-----------
amounts requested for disbursement, together with a completed SCHEDULE 1 in the
----------
form contemplated thereby and the certifications of the Independent Construction
Consultant in the form of EXHIBIT 1 attached to the Construction Disbursement
---------
Request, and in the event that the requested disbursement includes Hard Costs,
the certifications of the General Contractor, in the form of EXHIBIT 2 attached
---------
to the Construction Disbursement Request.
(b) The Construction Disbursement Request on its face shall have
been completed as to the information required therein, and the required exhibits
and attachments, if any, shall be attached.
(c) The Disbursement Agent shall not have received written notice
from any party hereto that a Default or Event of Default exists.
(d) The Company certifies that any amounts deposited into the
Disbursed Funds Account pursuant to any previous Construction Disbursement
Requests (other than Advance Disbursements permitted to be outstanding under
this Agreement) shall have been paid to the respective parties identified on the
SCHEDULE 1 of each such previous Disbursement Request, except for such limited
- ----------
payments as the Independent Construction Consultant determines to have been
withheld for good cause.
(e) With respect to a Disbursement Request immediately following
completion of any foundation for any building within the Isle-Black Hawk, the
Disbursement Agent and the Independent Construction Consultant shall have
received from the Title Insurer, on a building-by-building basis, its foundation
endorsement insuring that such foundation is constructed wholly within the
boundaries of the Property then owned in fee simple or leased by the Company,
and does not encroach on any easement or violate any covenants, conditions or
restrictions of record.
7.3 Advance Disbursements. The Company shall have the right from
----------------------
time to time (but no more frequently than once per calendar month, unless
otherwise permitted by the Disbursement Agent) to deliver to the Disbursement
Agent an Advance Disbursement Request in the form of EXHIBIT E-2,
-----------
13
<PAGE>
together with the certification of the Independent Construction Consultant in
the form of EXHIBIT 1 attached thereto, which Disbursement Request shall not be
---------
required to include or attach the supporting documentation required for all
other Disbursement Requests; provided, however, that in the event a Default or
-------- -------
Event of Default subsequently exists (in addition to any other rights and
remedies hereunder or permitted by law), the Company shall promptly take all
action reasonably required to cause all supporting documentation with respect
thereto that would otherwise be required for disbursement from the Construction
Disbursement Account. The Disbursement Agent shall approve any Advance
Disbursement Request, so long as (a) the Advance Disbursement Request on its
face has been completed as to the information required therein and the
Disbursement Agent shall not have received written notice by any party hereto
that a Default or an Event of Default exists and is continuing.
7.4 Disbursements After Event of Default. In the event that the
-------------------------------------
Disbursement Agent receives notice from any party hereto (which notice has not
been revoked or cancelled by the Trustee), that a Default or Event of Default
exists and is continuing the Disbursement Agent shall not approve any
disbursement of funds for the Isle-Black Hawk from the Construction Disbursement
Account or the Completion Reserve Account; provided, however, that with the
-------- -------
consent of the Trustee, the following payments can be made at the discretion of
the Trustee:
(i) if all other conditions in SECTION 7.2 (including those stated
-----------
in SECTION 7.1 hereof) are met, funds from the Construction
-----------
Disbursement Account, as approved by the Independent
Construction Consultant in writing for work completed or
materials purchased on or prior to the date that such Default
or Event of Default first occurred;
(ii) payments not to exceed Two Million Dollars ($2,000,000) in the
aggregate to prevent the condition of the Isle-Black Hawk from
deteriorating or to preserve any work completed on the Isle-
Black Hawk, certified to the Disbursement Agent and the Trustee
in writing by the Independent Construction Consultant to be
reasonably necessary or advisable; provided, however, that the
-------- -------
foregoing limitation may be increased or decreased by the
Trustee by written notice to the Disbursement Agent; and
(iii) if such condition continues for a period of three (3)
consecutive months or more, at the written request of the
Company, Retainage Amounts for work completed; provided that
--------
the Company and the Independent Construction Consultant certify
to the Disbursement Agent and the Trustee in writing the amount
required to be paid for such Retainage Amounts and that the
conditions for paying such amounts (other than that the Isle-
Black Hawk will be Operating or that the hotel will be
completed) are met.
7.5 Final Disbursement of Funds Following Operating Date. If any
-----------------------------------------------------
funds remain in the Construction Disbursement Account and/or the Completion
Reserve Account and (a) the Isle-Black Hawk is Operating and has been Operating
for at least the preceding thirty (30) days uninterrupted (and, in the event the
Company exercised the Hotel Option, the hotel was completed more than thirty
(30) days prior to the date hereof), subject only to Permitted Liens, (b) there
is no ongoing construction in connection with the Isle-Black Hawk, including in
connection with the hotel if the Company has exercised the Hotel Option, and
(c) there exists no Default or Event of Default, then the Company shall have the
right to request that the Disbursement Agent disburse all remaining funds in the
Construction Disbursement Account and the Completion Reserve Account. Upon
receipt by the Disbursement Agent of (a) a written certification from
14
<PAGE>
the Company that (i) the Isle-Black Hawk is Operating and has been Operating for
at least the preceding thirty (30) days uninterrupted (and, in the event the
Company exercised the Hotel Option, the hotel was completed more than thirty
(30) days prior to the date hereof), subject only to Permitted Liens, (ii) there
is no ongoing construction in connection with the Isle-Black Hawk or the hotel,
if the Company exercised the Hotel Option, and (iii) the Disbursement Agent has
not received written notice by any party hereto that a Default or Event of
Default exists, and (b) a written certification from the Independent
Construction Consultant concurring with the certifications set forth in
subsection (a)(i) and (ii) hereof, then the Disbursement Agent shall disburse
all remaining funds in the Construction Disbursement Account and the Completion
Reserve Account, as directed by the Company (the "FINAL DISBURSEMENT");
provided, however, that the Disbursement Agent shall first disburse funds to the
- -------- -------
Disbursed Funds Account in amounts certified in writing by the Independent
Construction Consultant as sufficient to pay any then unpaid Retainage Amounts
(which shall be applied accordingly), and no additional sums shall be
distributed until the Disbursement Agent shall have received a certificate from
the Independent Construction Consultant certifying that it has received
unconditional lien waivers from all contractors, subcontractors, materialmen or
suppliers relating to construction of the Isle-Black Hawk; provided, further,
-------- -------
that all funds disbursed to the Company pursuant to this Section shall be used
by the Company as required pursuant to the Indenture.
8. Amendments to Construction Disbursement Budget, Amendments to
-------------------------------------------------------------
Contracts.
----------
8.1 Construction Disbursement Budget Amendment Process. The
---------------------------------------------------
Construction Disbursement Budget may be amended from time to time in the manner
set forth herein. Subject to SECTION 8.2 below, the Company shall have the
-----------
right from time to time to amend the Construction Disbursement Budget to change
the amounts allocated for specific line item components of the work required to
complete the Isle-Black Hawk, including Soft Costs. Any such amendment shall be
in writing and be submitted to the Disbursement Agent and the Independent
Construction Consultant by an Officers' Certificate in the form of EXHIBIT F
---------
hereto, together with the Independent Construction Consultant's certification,
as provided in EXHIBIT 1 to the Construction Disbursement Budget Amendment
---------
Certificate, and (if and to the extent such amendment relates to Hard Costs) the
General Contractor's certification, as provided in EXHIBIT 2 to the Construction
---------
Disbursement Budget Amendment Certificate. Upon receipt by the Disbursement
Agent of an Officers' Certificate in the form of EXHIBIT F and the attachments,
---------
all of which must be completed as to the information required therein, such
amendment shall become effective hereunder and the Construction Disbursement
Budget shall thereafter be as so amended.
8.2 Contract Amendment Process. The Company shall have the right
---------------------------
from time to time to amend any Contract to which it is a party to change the
scope of the work and the Company's payment obligations thereunder. Any such
amendment that (i) results in a cost increase in excess of Twenty-Five Thousand
Dollars ($25,000) in a Contract to which the Company is party, the value of
which is at least One Hundred Thousand Dollars ($100,000), (ii) results in a
material lessening of the scope or quality of the work constituting the design
or construction of the Isle-Black Hawk, the value of which is in excess of
Twenty-Five Thousand Dollars ($25,000) in a Contract to which the Company is a
party and the value of which is at least One Hundred Thousand Dollars
($100,000), or (iii) results in the likely addition of no less than one week of
construction, shall be in writing and shall identify with particularity all
changes being made. The Company shall deliver to the Disbursement Agent (a) an
executed copy of the Contract amendment (the effectiveness of which will be
subject only to satisfaction of the conditions in this Section); and (b) an
Officers' Certificate in the form attached hereto as EXHIBIT G, together with
---------
the Independent Construction Consultant's certification as provided in EXHIBIT 1
---------
to the Contract Amendment Certificate, and in the event that such Contract
relates to Hard Costs, the General Contractor's certification as provided in
EXHIBIT 2 to the Contract Amendment Certificate, in each case, completed as to
- ---------
the information required
15
<PAGE>
therein. The Contract Amendment shall be deemed approved upon receipt by the
Company of the Disbursement Agent's acknowledgment of receipt of items required
under this Section.
8.3 Project Cost Schedule and Cost Overruns.
----------------------------------------
(a) The Company covenants to promptly cure any cost overrun for any
line item by (i) providing sufficient funds to cover in full such cost overrun
from (A) previously unallocated Available Funds or other Additional Revenue as
permitted in this Agreement (but in each case only to the extent that the same
have not previously been expended or dedicated (including Retainage Amounts) to
the payment of line items contained in the Construction Disbursement Budget) or
(B) if the conditions precedent to a disbursement from the Completion Reserve
Account are satisfied, from funds in the Completion Reserve Account; and/or
(ii) effecting a Construction Disbursement Budget Amendment.
(b) Each Project Cost Schedule shall set forth (i) the actual
investment income (loss), less any losses or costs associated therewith, earned
on the Construction Disbursement Account and the Completion Reserve Account
through the date of such Project Cost Schedule, and (ii) so long as there is no
Default or Event of Default, the additional amount of investment income which
the Company reasonably anticipates will be earned in the Construction
Disbursement Account and the Completion Reserve Account from such date through
the earlier of the Operating Deadline (or, if the Company exercises the Hotel
Option, the Hotel Substantial Completion Date) and the anticipated date on which
the Isle-Black Hawk first will be Operating (or, if the Company exercises the
Hotel Option, the anticipated date on which the Isle-Black Hawk will be
completed). If at any time the Company submits a Project Cost Schedule pursuant
to this Section and can no longer reasonably anticipate that the Additional
Revenue earned (and anticipated to be earned as determined above) from
investments of funds in the Construction Disbursement Account will equal the
amount of such Additional Revenue anticipated as set forth in the Construction
Disbursement Budget, then, so long as the Disbursement Agent has no actual
knowledge that a Default or Event of Default exists and is continuing:
(i) if the total amount of such Additional Revenue at such date
earned or anticipated to be earned is less than the total amount of such
Additional Revenue anticipated as of the date of the last disbursement, then the
Available Funds shall be deemed reduced by the amount of such deficiency and the
Company (as a condition to the next Construction Disbursement Request) shall
provide or allocate additional Available Funds or, if necessary disburse funds
from the Completion Reserve Account (so long as the conditions precedent are
satisfied), and/or otherwise amend the Construction Disbursement Budget if
necessary so that the total costs to cause the Isle-Black Hawk to be Operating
prior to the Operating Deadline (without giving effect to the construction of
the hotel, and, if the Company exercises the Hotel Option, prior to the Hotel
Substantial Completion Date), subject only to Permitted Liens, do not exceed the
total Available Funds; or
(ii) if the total amount of such Additional Revenue at such date
earned or anticipated to be earned is greater than the total amount of such
Additional Revenue anticipated as of the date of the last disbursement, then the
Available Funds shall be deemed increased by the amount of such excess.
9. Events of Default. The occurrence of any of the following specified
------------------
events shall be an "EVENT OF DEFAULT" hereunder:
9.1 Evidence of a default or an event of default under the Indenture
(as such terms are defined therein).
16
<PAGE>
9.2 The Disbursement Agent, after appropriate consultation with the
Company and the Independent Construction Consultant, is unable to approve a
Disbursement Request or an amendment to the Construction Disbursement Budget due
to the failure of the Company to satisfy the conditions precedent thereto set
forth herein, including, without limitation, the condition precedent that the
Independent Construction Consultant deliver the certificates required under this
Agreement.
9.3 The Independent Construction Consultant reports to the
Disbursement Agent, the Trustee and the Company an exception to a prior
disbursement relating to the Isle-Black Hawk in excess of $50,000 which is not
remedied within ten (10) days.
9.4 Any representation, warranty, certification or statement by the
Company in this Agreement, or any certificate, request, budget or statement
delivered pursuant to this Agreement, shall be untrue in any material respect on
the date given or made and such untruthfulness continues for a period of five
(5) business days after notice hereof.
9.5 Any time that the amount remaining in the Construction
Disbursement Account and the Completion Reserve Account is less than the amount
required in the Construction Disbursement Budget to cause the Isle-Black Hawk to
become Operating on or before its Operating Deadline (without giving effect to
the hotel, or, if the Company exercises the Hotel Option, prior to the Hotel
Substantial Completion Date, if later), subject only to Permitted Liens, and
such deficiency continues for a period of thirty (30) days.
9.6 The Company shall have not complied with any other term set
forth herein, and such breach shall not have been remedied in thirty (30) days.
9.7 The failure of the Company to deliver any documents required by
a Pledge Agreement and such failure continues for a period of five (5) days.
10. Disbursed Funds Accounts.
-------------------------
10.1. Rights of the Company to Disbursed Funds Accounts. All amounts
--------------------------------------------------
disbursed from the Construction Disbursement Account shall either be paid
directly to a Person described in and pursuant to a Construction Disbursement
Request or to the Disbursed Funds Account. The Disbursed Funds Account shall be
maintained in the name of the Company and all funds deposited or held in such
account shall belong to the Company, against which the Company may draw for
permitted expenditures from time to time. All funds deposited and held in the
Disbursed Funds Account shall, pending disbursement in accordance with this
Agreement, be invested in cash or Government Securities as directed by the
Company, except as otherwise provided in the Pledge Agreement. Pursuant to the
Pledge Agreement, the Company has granted to the Trustee (for the benefit of
itself and the holders of the Notes) a first priority security interest in its
Disbursed Funds Account. Funds in the Disbursed Funds Account shall be
disbursed solely in accordance with the terms and conditions of this Agreement
and the Indenture. Further, the Company shall note in its records that all
funds and other assets in the Disbursed Funds Account have been pledged to the
Trustee.
10.2 Right to Substitute Disbursed Funds Account. The Company, from
--------------------------------------------
time to time shall have the right to designate a substitute account to serve as
the Disbursed Funds Account; provided that no such substitute account shall
--------
become the "Disbursed Funds Account" until (a) the depository financial
institution at which the substitute account is located shall have acknowledged
in a manner satisfactory to the Trustee that such institution has waived its
right of set off in such account or any liens thereto, statutory or
17
<PAGE>
otherwise and will have entered into an agreement substantially similar to a
Pledge Agreement, and (b) the Trustee shall have received notice of the location
and account number of such new substitute account.
11. Limitation of Liability.
------------------------
11.1 Disbursement Agent's Limitation of Liability. The Disbursement
--------------------------------------------
Agent's responsibility and liability under this Agreement shall be limited as
follows: (a) the Disbursement Agent does not represent, warrant or guaranty to
the Trustee or the holders of the Notes the performance of the Company, the
Independent Construction Consultant, the General Contractor, or any contractor,
subcontractor or provider of materials or services in connection with
construction of the Isle-Black Hawk; (b) the Disbursement Agent shall have no
responsibility to the Company, the Trustee or the holders of the Notes as a
consequence of performance by the Disbursement Agent hereunder, except for any
gross negligence or willful misconduct of the Disbursement Agent; (c) the
Company shall remain solely responsible for all aspects of its business and
conduct in connection with its Property and the Isle-Black Hawk, the accuracy of
all applications for payment, and the proper application of all disbursements;
(d) the Disbursement Agent is not obligated to supervise, inspect or inform the
Company, the Trustee or any third party of any aspect of the construction of the
Isle-Black Hawk or any other matter referred to above; and (e) the Disbursement
Agent owes no duty of care to the Company, to protect against, or to inform the
Company of, any negligent, faulty, inadequate or defective design or
construction of the Isle-Black Hawk. The Disbursement Agent shall have no
duties or obligations hereunder, except as expressly set forth herein, shall be
responsible only for the performance of such duties and obligations, shall not
be required to take any action otherwise than in accordance with the terms
hereof and shall not be in any manner liable or responsible for any loss or
damage arising by reason of any act or omission to act by it hereunder or in
connection with any of the transactions contemplated hereby, including, but not
limited to, any loss that may occur by reason of forgery, false representations,
the exercise of its discretion, or any other reason, except for its negligence
or willful misconduct.
11.2 Independent Construction Consultant's Limitation of Liability.
-------------------------------------------------------------
The Independent Construction Consultant's responsibility and liability under
this Agreement shall be limited as follows: (a) the Independent Construction
Consultant does not represent, warrant or guaranty to the Trustee or the holders
of the Notes the performance of the Company, the Disbursement Agent, the General
Contractor or any contractor, subcontractor or provider of materials or services
in connection with construction of the Isle-Black Hawk, (b) except to the extent
the Independent Construction Consultant has actual knowledge, the Independent
Construction Consultant shall not be responsible for, and shall not be obligated
to make any specific inquiry with respect to, matters pertaining to: Historical
Architecture Review, Gaming Authorities, Gaming Licenses, Liens against the Isle
Black Hawk (except in connection with the responsibilities of the Independent
Construction Consultant set forth herein), and whether the Isle Black Hawk is in
a condition to receive customers in the ordinary course of business; (c) in
connection with a request for disbursement to pay Soft Costs, the Independent
Construction Consultant shall only be responsible for certifying that there is
adequate availability in the applicable line item under the Construction
Disbursement Budget with respect such Soft Cost Disbursement Request and the
other certifications contained in the Certificate of Independent Construction
Consultant for Disbursement Request for Construction Expenses, substantially as
set forth in Exhibit 1 to Exhibit E-1 attached hereto, and (d) the Company shall
------------------------
remain solely responsible for all aspects of its business and conduct in
connection with its Property and the Isle-Black Hawk, the accuracy of all
applications for payment, and the proper application of all disbursements. The
Independent Construction Consultant shall have no duties or obligations
hereunder, except as expressly set forth herein, shall be responsible only for
the performance of such duties and obligations, shall not be required to take
any action otherwise than in accordance with the terms hereof and shall not be
in any manner liable or responsible for any loss or damage arising by reason of
any act or
18
<PAGE>
omission to act by it hereunder or in connection with any of the transactions
contemplated hereby, including, but not limited to, any loss that may occur by
reason of forgery, false representations, the exercise of its discretion, or any
other reason, except for its negligence or willful misconduct. The Independent
Construction Consultant shall have the right to rely (so long as such reliance
is reasonable and in good faith) on certificates received form the Company, and
the General Contractor. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Independent Construction Consultant be
liable to any party heretofore any form of special, indirect or consequential
damages, including, without limitation, damages for economic loss (such as
business interruption or loss of profits, however, the same may be caused).
12. Indemnity and Insurance.
------------------------
12.1. Indemnity. The Company indemnifies, protects, holds harmless
----------
and agrees to defend each of the Independent Construction Consultant and the
Disbursement Agent and each of their respective officers, directors, agents and
employees, from and against any and all claims, actions, obligations,
liabilities and expenses, including defense costs, investigative fees and costs,
legal fees, and claims for damages, arising from the performance by the
Independent Construction Consultant or the Disbursement Agent, as applicable,
under this Agreement, except to the extent that such liability, expense or claim
is attributable to the negligence or willful misconduct of the Independent
Construction Consultant or the Disbursement Agent, as applicable.
12.2. Insurance. The Disbursement Agent, at its sole cost and
---------
expense, shall purchase and maintain throughout the term of this Agreement, the
following insurance policies:
12.2.1. Comprehensive general liability insurance, with minimum
limits of Two Million Dollars ($2,000,000) combined single limit per occurrence,
covering all bodily injury and property damage arising out of its operation
under this Agreement.
12.2.2. Workers' compensation insurance covering all of its
employees and volunteers.
Said policies shall provide for thirty (30) days' prior written notice to the
Trustee and the Company of cancellation or material change. If any of such
insurance is written on a claims made form, following termination of this
Agreement, coverage shall survive for the maximum reporting period available at
each anniversary date of such insurance, or not less than five (5) years,
whichever is greater. The limits of coverage required under subparagraph (a)
above shall not in any way limit the liability of the Company hereunder.
13. Termination. This Agreement shall terminate automatically thirty (30)
------------
days following such time as all amounts in the Accounts have been distributed
pursuant to and in accordance with the terms hereof and the Isle-Black Hawk is
Operating (and, in the event the Company exercised the Hotel Option, the hotel
is completed), subject only to Permitted Liens; provided, however, that (a) the
-------- -------
obligations of the Company under SECTION 12 of this Agreement shall survive
----------
termination of this Agreement and (b) if, following an Event of Loss, there
exist Net Loss Proceeds that (in accordance with the Indenture) are deliverable
to the Trustee and are eligible for distribution to the Company for rebuilding,
repair, replacement, or construction, then, the Company, the Disbursement Agent
and the Independent Construction Consultant shall execute and deliver to the
Trustee such documentation as the Trustee reasonably deems appropriate in order
to cause (i) the Trustee to possess a first priority perfected security interest
in said funds, and (ii) the Disbursement Agent and the Independent Construction
Contractor to
19
<PAGE>
administer the disbursement of said funds for such rebuilding, repair,
replacement or construction pursuant to disbursement control procedures
substantially akin to those set forth herein. In the event that the Net Loss
Proceeds are so distributed, the Disbursement Agent shall be paid a sum not to
exceed $1,000.00 per month until all such funds are disbursed.
14. Substitution or Resignation.
----------------------------
14.2.1 The Trustee shall have the right, upon the expiration
of thirty (30) days following delivery of written notice of substitution to
Disbursement Agent, the Independent Construction Consultant, and the Company, to
cause the Disbursement Agent to be relieved of its duties hereunder and to
select a substitute disbursement agent to serve hereunder. The Disbursement
Agent may resign at any time upon thirty (30) days' written notice to all
parties hereto. Such resignation shall take effect upon receipt by the
Disbursement Agent of an instrument of acceptance executed by a successor
disbursement agent and consented to by the other parties hereto. Upon selection
of such substitute disbursement agent, the Trustee, the Company (so long as
there is no Default or Event of Default) and the substitute disbursement agent
shall enter into an agreement substantially identical to this Agreement and,
thereafter, the Disbursement Agent shall be relieved of its duties and
obligations to perform hereunder, except that the Disbursement Agent shall
transfer to the substitute disbursement agent upon request therefor originals of
all books, records, and other documents in the Disbursement Agent's possession
relating to this Agreement. The Independent Construction Consultant acknowledge
and agree that the Trustee and the Company (so long as there is no Default or
Event of Default) shall have the right to change the party acting as the
"Disbursement Agent" pursuant to this Agreement, and the Trustee and the Company
agrees to provide written notice to the Independent Construction Consultant of
any such change.
14.2.2 The Trustee shall have the right, upon the expiration
of thirty (30) days following delivery of written notice of substitution to the
Disbursement Agent, the Independent Construction Consultant, and the Trustee, to
cause the Independent Construction Consultant to be relieved of its duties
hereunder and to select a substitute independent construction consultant to
serve hereunder. The Independent Construction Consultant may resign at any time
upon thirty (30) days' written notice to all parties hereto. Such resignation
shall take effect upon receipt by the Independent Construction Consultant of an
instrument of acceptance executed by a successor independent construction
consultant and consented to by the other parties hereto. Upon selection of such
substitute independent construction consultant, the Trustee, the Disbursement
Agent and the substitute independent construction consultant shall enter into a
side letter wherein the substitute independent construction consultant agrees to
perform the duties of the independent construction consultant pursuant to the
terms hereof and for the benefit of the Trustee and the holders of the Notes
and, thereafter, the Independent Construction Consultant shall be relieved of
its duties and obligations to perform hereunder, except that the Independent
Construction Consultant shall transfer to the substitute independent
construction consultant upon request therefor originals of all books, records,
and other documents in the Independent Construction Consultant's possession
relating to this Agreement. The substitute independent construction consultant
selected by the Trustee shall be recognized nationally or in Colorado as an
expert in connection with the oversight of construction practices and
construction disbursement procedures for construction projects of similar size
and scope. The Disbursement Agent and the Company acknowledge and agree that the
Trustee shall have the right to change the party acting as the "Independent
Construction Consultant" pursuant to this Agreement, and the Trustee agrees to
provide written notice to the Disbursement Agent and the Company of any such
change.
15 Account Statement. Upon the request of the Trustee, the Company or
------------------
the Independent Construction Consultant, the Disbursement Agent shall deliver to
the Company, the Independent Construction Consultant and Trustee a statement
prepared by the Disbursement Agent in a form satisfactory
20
<PAGE>
to the Independent Construction Consultant, the Trustee and the Company, setting
forth with reasonable particularity the balance of funds then in the Interest
Reserve Account, the Completion Reserve Account, the Construction Disbursement
Account, and/or the Disbursed Funds Accounts and the manner in which such funds
are invested; provided, however, that the Disbursement Agent shall not be
-------- -------
required to provide such statements more often than weekly.
16 Notice. The parties hereto irrevocably instruct the Disbursement
-------
Agent that on the first date upon which the balance in any of the Completion
Reserve Account and/or the Construction Disbursement Account is reduced to zero,
the Disbursement Agent shall deliver to the Trustee, the Independent
Construction Consultant, and the Company a notice that the balance in such
account(s) has been reduced to zero (0).
17 Miscellaneous.
--------------
17.1 Waiver. Any party hereto may specifically waive any breach of
-------
this Agreement by any other party, but no such waiver shall be deemed to have
been given unless such waiver is in writing, signed by the waiving party and
specifically designates the breach waived, nor shall any such waiver constitute
a continuing waiver of similar or other breaches.
17.2 Invalidity. If, for any reason whatsoever, anyone or more of
-----------
the provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid provision shall be construed as if it were written so
as to effectuate, to the maximum extent possible, the parties' intent.
17.3 No Authority. Neither the Disbursement Agent nor the
-------------
Independent Construction Consultant shall have any authority to, and neither
shall, make any warranty or representation or incur any obligation on behalf of,
or in the name of, the Trustee.
17.4 Assignment. This Agreement is personal to the parties hereto,
-----------
and the rights and duties of any party hereunder shall not be assignable except
with the prior written consent of the other parties. In any event, this
Agreement shall inure to and be binding upon the parties and their successors
and permitted assigns.
17.5 Benefit. The parties hereto, the holders from time to time of
--------
the Notes, and their respective successors and assigns, but no others, shall be
bound hereby and entitled to the benefits hereof.
17.6 Time. Time is of the essence of each provision of this
-----
Agreement.
17.7 Choice of Law. The existence, validity, construction, operation
--------------
and effect of any and all terms and provisions of this Agreement shall be
determined in accordance with and governed by the substantive laws of the State
of New York, without giving effect to its conflicts of law principles.
17.8 Entire Agreement; Amendments. This Agreement contains the
----------------------------
entire agreement among the parties with respect to the subject matter hereof and
supersedes any and all prior agreements, understandings and commitments, whether
oral or written. This Agreement may be amended only by a writing signed by duly
authorized representatives of all parties.
21
<PAGE>
17.9 Notices. All notices and other communications required or
--------
permitted to be given or made under this Agreement shall be in writing and shall
be deemed to have been duly given and received, regardless of when and whether
received, either; (a) on the day of hand delivery; (b) on the date of
confirmation of receipt of electronic facsimile transmission; or (c) on the
third day after sent, when sent by United States certified mail, postage and
certification fee prepaid, return receipt requested, addressed as follows:
To the Disbursement Agent or the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Telecopier No.: (212) 858-2952
To the Issuers:
Isle of Capri Black Hawk L.L.C.
Isle of Capri Black Hawk Capital Corp.
c/o Casino America, Inc., Manager
711 Washington Loop
Biloxi, Mississippi 39530
Telecopier No.: (601) 435-5998
To the Independent Construction Consultant:
CRSS Constructors, Inc.
1670 Broadway, Suite 3200
Denver, Colorado 80202
Telecopier No.: (303) 860-6994
or at such other address as the specified entity most recently may have
designated in writing in accordance with this paragraph to the others.
17.10 Counterparts. This Agreement may be executed in one or more
-------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
17.11 Captions. Captions in this Agreement are for convenience only
---------
and shall not be considered or referred to in resolving questions of
interpretation of this Agreement.
17.12 Arbitration. (a) Any disagreement with respect to the release
------------
of funds from the Completion Reserve Account or, the Construction Disbursement
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.
(b) In the event that either party should fail to choose an
arbitrator within fifteen (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 fifteen (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
22
<PAGE>
candidates by drawing lots. Each party shall present its case to the arbitrators
within fifteen (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. Any such arbitration shall take place in
New York, 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 Account.
(c) 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 American Arbitration Association's Construction
Industry Arbitration Rules. Judgment on the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof.
(d) Notwithstanding any provisions contained herein to the contrary,
the provisions contained in this Section shall not prohibit the Trustee from
exercising any of its rights or remedies set forth in the Indenture, the Notes
or the other Collateral Documents.
23
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Cash
Collateral and Disbursement Agreement as of the day first above written.
DISBURSEMENT AGENT: IBJ SCHRODER BANK & TRUST COMPANY,
a New York banking corporation
By: William T. Lynch
-----------------------------------
Name: William .T. Lynch
------------------------------
Title: Vice President
----------------------------
TRUSTEE: IBJ SCHRODER BANK & TRUST COMPANY,
a New York banking corporation
By: William T. Lynch
----------------------------------
Name: William .T. Lynch
-----------------------------
Title: Vice President
----------------------------
INDEPENDENT CONSTRUCTION
CONSULTANT: CRSS CONSTRUCTORS, INC.,
a______________________
By: __________________________________
Name: ____________________________
Title: ___________________________
COMPANY: ISLE OF CAPRI BLACK HAWK L.L.C.,
a Colorado limited liability company
By: Allan B. Solomon
----------------------------------
Name: Allan B. Solomon
-----------------------------
Title: Secretary
----------------------------
CO-ISSUER: ISLE OF CAPRI BLACK HAWK CAPITAL CORP.,
a Colorado corporation
By: Allan B. Solomon
----------------------------------
Name: Allan B. Solomon
----------------------------
Title: Secretary
---------------------------
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Cash
Collateral and Disbursement Agreement as of the day first above written.
DISBURSEMENT AGENT: IBJ SCHRODER BANK & TRUST COMPANY,
a New York banking corporation
By:_________________________________
Name:____________________________
Title:___________________________
TRUSTEE: IBJ SCHRODER BANK & TRUST COMPANY,
a New York banking corporation
By:_________________________________
Name:____________________________
Title:___________________________
INDEPENDENT CONSTRUCTION
CONSULTANT: CRSS CONSTRUCTORS, INC.,
a Deleware Corporation
-------------------------
By: Warren M. Dean
--------------------------------
Name: Warren M. Dean
--------------------------
Title: Chief Execute Office
-------------------------
COMPANY: ISLE OF CAPRI BLACK HAWK L.L.C.,
a Colorado limited liability company
By:_________________________________
Name: ___________________________
Title: __________________________
CO-ISSUER: ISLE OF CAPRI BLACK HAWK CAPITAL CORP.,
a Colorado corporation
By:_________________________________
Name:____________________________
Title:___________________________
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT A
FORM OF INITIAL DISBURSEMENTS CERTIFICATE
-----------------------------------------
August 20, 1997
IBJ Schroder Bank & Trust Company,
as Disbursement Agent
One State Street
New York, NY 10004
IBJ Schroder Bank & Trust Company,
as Trustee
One State Street
New York, NY 10004
CRSS Constructors, Inc.
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, CO 80202
Re: Isle of Capri Black Hawk L.L.C., a Colorado limited liability company
Cash Collateral and Disbursement Agreement
Initial Disbursements
---------------------
Ladies and Gentlemen:
This Initial Disbursements Certificate is delivered to you pursuant to that
certain Cash Collateral and Disbursement Agreement dated as of August __, 1997
(the "DISBURSEMENT AGREEMENT"), by and among IBJ Schroder Bank & Trust Company,
as Disbursement Agent, IBJ Schroder Bank & Trust Company, as Trustee, CRSS
Constructors, Inc., as Independent Construction Consultant, Isle of Capri Black
Hawk L.L.C., a Colorado limited liability company, as an issuer (the "COMPANY"),
and Isle of Capri Black Hawk Capital Corp., as a co-issuer. Capitalized terms
used herein shall have the meanings assigned to such terms in the Disbursement
Agreement.
A-1
<PAGE>
The Company hereby irrevocably instructs the Disbursement Agent to disburse
funds from the Construction Disbursement Account to the parties and for the
amounts set forth on SCHEDULE A attached hereto.
----------
ISLE OF CAPRI BLACK HAWK L.L.C.,
a Colorado limited liability company
By:__________________________________
Name:________________________________
Title:_______________________________
By:__________________________________
Name:________________________________
Title:_______________________________
A-2
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
SCHEDULE A
INITIAL DISBURSEMENTS
---------------------
[To be provided.]
A-3
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT B-1
FORM OF BORROWER'S CLOSING CERTIFICATION
----------------------------------------
August __, 1997
IBJ Schroder Trust & Banking Corporation,
as Trustee
One State Street
New York, NY 10004
IBJ Schroder Trust & Banking Corporation,
as Disbursement Agent
One State Street
New York, NY 10004
CRSS Constructors, Inc.
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, CO 80202
Re: Isle of Capri Black Hawk L.L.C., a Colorado limited liability company
Cash Collateral and Disbursement Agreement
Borrower's Closing Certification
--------------------------------
Ladies and Gentlemen:
This Closing Certification is delivered to you pursuant to that certain
Cash Collateral and Disbursement Agreement dated as of August 20, 1997 (as
amended, supplemented or otherwise modified from time to time, the "DISBURSEMENT
AGREEMENT"), by and among IBJ Schroder Bank & Trust Company, as Disbursement
Agent, IBJ Schroder Bank & Trust Company, as Trustee, CRSS Constructors, Inc.,
as Independent Construction Consultant, Isle of Capri Black Hawk L.L.C., a
Colorado limited liability company, as an issuer (the "COMPANY"), and Isle of
Capri Black Hawk Capital Corp., as a co-issuer. Capitalized terms used herein
shall have the meanings assigned to such terms in the Disbursement Agreement.
The Company hereby certifies to each of you as follows:
1. As of the date hereof, there is no reason to believe that the date on
which the Isle-Black Hawk will become Operating will not occur on or prior to
the Operating Deadline.
B-1
<PAGE>
2. The Initial Construction Disbursement Budget attached hereto as
Exhibit 1 constitutes the Construction Disbursement Budget presently in effect
- ---------
for the Isle-Black Hawk.
3. The Initial Construction Disbursement Budget accurately and completely
sets forth (i) the anticipated Construction Expenses through the date that the
Isle-Black Hawk is Operating, and (ii) the various components of the Isle-Black
Hawk identified thereon as line items and the respective anticipated line item
amounts.
4. As of the date hereof, there are sufficient Available Funds to pay for
(i) the anticipated costs described in paragraph 3 above in accordance with the
Disbursement Agreement, and (ii) any other expenses that the Company believes
will need to be incurred in order to cause the Isle-Black Hawk to be Operating
on or before its Operating Deadline (after giving effect to the Initial
Disbursements and excluding interest to be paid on each of the Interest Payment
Dates).
5. Immediately prior and upon giving effect to the Initial Disbursement,
there is no and will not be any Event of Default, or any event, omission or
failure of a condition which would constitute an Event of Default after notice
or lapse of time or both.
6. Attached hereto as Exhibit 2 is (i) a list of all contractors,
---------
subcontractors, suppliers and materialmen that have provided work, supplies
and/or labor in connection with the Isle-Black Hawk to date, and that will
receive payment pursuant to the Initial Disbursement Certificate, and (ii) lien
releases (unconditional if such contractors, subcontractors, suppliers and
materialmen have been paid to date and conditional if such contractors,
subcontractors, suppliers and materialmen have not been paid to date) from such
contractors, subcontractors, suppliers and materialmen.
B-2
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in authorizing and making the Initial Disbursements.
ISLE OF CAPRI BLACK HAWK L.L.C.,
a Colorado limited liability company
By:____________________________________
Name:__________________________________
Title:_________________________________
By:____________________________________
Name:__________________________________
Title:_________________________________
B-3
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 1 TO EXHIBIT B-1
INITIAL CONSTRUCTION DISBURSEMENT BUDGET FOR ISLE-BLACK HAWK
------------------------------------------------------------
CONSTRUCTION DISBURSEMENT BUDGET
SEE ATTACHED
B-4
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 2 TO EXHIBIT B-1
MECHANIC'S LIENS FOR ISLE-BLACK HAWK
------------------------------------
Haselden Construction, Inc.
Parkhill-Ivins Architects
Lien releases are attached.
B-5
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT B-2
INDEPENDENT CONSTRUCTION CONSULTANT'S CLOSING CERTIFICATION
-----------------------------------------------------------
August 20, 1997
IBJ Schroder Bank & Trust Company,
as Disbursement Agent
IBJ Schroder Bank & Trust Company,
as Trustee
One State Street
New York, NY 10004
Attn: Corporate Trust Administration
Re: Isle of Capri Black Hawk L.L.C., a Colorado limited liability company
Cash Collateral and Disbursement Agreement
Independent Construction Consultant's Closing Certification
------------------------------------------------------------
Ladies and Gentlemen:
This Closing Certification is delivered to you pursuant to that certain
Cash Collateral and Disbursement Agreement dated as of August 20, 1997 (as
amended, supplemented or otherwise modified from time to time, the "DISBURSEMENT
AGREEMENT"), by and among IBJ Schroder Bank & Trust Company, as Disbursement
Agent, IBJ Schroder Bank & Trust Company, as Trustee, CRSS Constructors, Inc.,
as Independent Construction Consultant, Isle of Capri Black Hawk L.L.C., a
Colorado limited liability company (the "COMPANY"), and Isle of Capri Black Hawk
Capital Corp. Capitalized terms used herein shall have the meanings assigned to
such terms in the Disbursement Agreement.
The Independent Construction Consultant hereby certifies to you as follows
as contemplated by the Disbursement Agreement:
1. The Independent Construction Consultant has received certified copies
of all Plans and Contracts applicable to the construction of the Isle-Black Hawk
and described on SCHEDULE A hereto and, in the Independent Construction
----------
Consultant's professional opinion, such Plans and Contracts will permit the
Isle-Black Hawk to be substantially completed in all material respects in
accordance therewith and all applicable building and other laws, ordinances and
regulations, prior to the Operating Deadline (without giving effect to the
construction of the hotel, and, if the Company exercises the Hotel Option, prior
to the Hotel Substantial Completion Date), subject only to Permitted Liens.
2. The Construction Disbursement Budget accurately sets forth the
anticipated costs of constructing the Isle-Black Hawk, so that the Isle-Black
Hawk is substantially completed in all material respects in accordance therewith
and all applicable building and other laws, ordinances and regulations, prior to
the Operating Deadline (without giving effect to the construction of the hotel,
and, if the Company
B-6
<PAGE>
exercises the Hotel Option, prior to the Hotel Substantial Completion Date),
subject only to Permitted Liens.
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to reply on the
foregoing in authorizing and making the Initial Disbursements.
CRSS CONSTRUCTORS, INC.
as Independent Construction Consultant
By:____________________________
Name:__________________________
Title:_________________________
B-7
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
SCHEDULE A TO EXHIBIT B-2
LIST OF PLANS AND CONTRACTS
---------------------------
See Attached
B-8
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT B-3
FORM OF DISBURSEMENT AGENT'S CLOSING CERTIFICATION
--------------------------------------------------
August 20, 1997
IBJ Schroder Bank & Trust Company,
as Trustee
One State Street
New York, NY 10004
Attn: Corporate Trust Administration
Re: Isle of Capri Black Hawk L.L.C., a Colorado limited liability company
Cash Collateral and Disbursement Agreement
Disbursement Agent's Closing Certification
------------------------------------------
Ladies and Gentlemen:
This Closing Certification is delivered to you pursuant to that certain
Cash Collateral and Disbursement Agreement dated as of August 20, 1997 (as
amended, supplemented or otherwise modified from time to time, the "DISBURSEMENT
AGREEMENT"), by and among IBJ Schroder Bank & Trust Company, as Disbursement
Agent, IBJ Schroder Bank & Trust Company, as Trustee, CRSS Constructors, Inc.,
as Independent Construction Consultant, Isle of Capri Black Hawk L.L.C., a
Colorado limited liability company, (the "COMPANY"), and Isle of Capri Black
Hawk Capital Corp. Capitalized terms used herein shall have the meanings
assigned to such terms in the Disbursement Agreement.
The Disbursement Agent hereby certifies to you as follows as contemplated
by the Disbursement Agreement:
1. The Accounts have been established as contemplated by the Disbursement
Agreement.
2. The Disbursement Agent has reviewed (a) an executed Initial
Disbursements Certificate from the Company in the form attached to the
Disbursement Agreement as EXHIBIT A, (b) an executed Closing Certificate from
---------
the Company in the form attached to the Disbursement Agreement as EXHIBIT B-1,
-----------
(c) an executed Closing Certificate from the Independent Construction Consultant
in the form attached to the Disbursement Agreement as EXHIBIT B-2, and (d) an
-----------
executed Closing Certificate from the Trustee in the form attached to the
Disbursement Agreement as EXHIBIT B-4, in each case, with any exhibits attached.
-----------
B-9
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and you are entitled to rely on the foregoing in connection
with the Initial Disbursements.
IBJ SCHRODER BANK & TRUST COMPANY,
as Disbursement Agent
By:_______________________________
Name:_____________________________
Title:____________________________
B-10
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT B-4
FORM OF TRUSTEE'S CLOSING CERTIFICATION
---------------------------------------
August 20, 1997
IBJ Schroder Bank & Trust Company,
as Disbursement Agent
One State Street
New York, NY 10004
Re: Isle of Capri Black Hawk L.L.C., a Colorado limited liability company
Cash Collateral and Disbursement Agreement
Trustee's Closing Certification
-------------------------------
Ladies and Gentlemen:
This Closing Certification is delivered to you pursuant to that certain
Cash Collateral and Disbursement Agreement dated as of August 20, 1997 (as
amended, supplemented or otherwise modified from time to time, the "DISBURSEMENT
AGREEMENT"), by and among IBJ Schroder Bank & Trust Company, as Disbursement
Agent, IBJ Schroder Bank & Trust, as Trustee, CRSS Constructors, Inc.., as
Independent Construction Consultant, Isle of Capri Black Hawk L.L.C., a Colorado
limited liability company, as an issuer (the "COMPANY"), and Isle of Capri Black
Hawk Capital Corp., a Colorado corporation Capitalized terms used herein shall
have the meanings assigned to such terms in the Disbursement Agreement.
The Trustee hereby certifies to you as follows as contemplated by the
above-referenced Disbursement Agreement:
1. The Trustee has received (a) an executed Initial Disbursements
Certificate from the Company in the form attached to the Disbursement Agreement
as EXHIBIT A, (b) an executed Closing Certification from the Company in the form
---------
attached to the Disbursement Agreement as EXHIBIT B-1, and (c) an executed
-----------
Closing Certification from the Disbursement Agent in the form attached to the
Disbursement Agreement as EXHIBIT B-3, in each case, with all exhibits and
-----------
attachments attached.
2. The Trustee has received from the Title Insurer the Title Policy, or a
pro forma of the Title Policy with a letter agreement from the Title Insurer
agreeing to issue title in the form of such pro forma.
B-11
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and you are entitled to rely on the foregoing in
connection with the Initial Disbursements.
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By:___________________________
Name:_________________________
Title:________________________
B-12
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT C
FORM OF INTEREST DISBURSEMENT REQUEST
-------------------------------------
IBJ Schroder Bank & Trust Company,
as Disbursement Agent
One State Street
New York, NY 10004
IBJ Schroder Bank & Trust Company,
as Trustee
One State Street
New York, NY 10004
Re: Isle of Capri Black Hawk L.L.C., a Colorado limited liability company
Cash Collateral and Disbursement Agreement
Interest Disbursement Request
-----------------------------
Date: [Draw Date]
---------
Ladies and Gentlemen:
This Interest Disbursement Request is delivered to you pursuant to that
certain Cash Collateral and Disbursement Agreement dated as of August 20, 1997
(as amended, supplemented or otherwise modified from time to time, the
"DISBURSEMENT AGREEMENT"), among IBJ Schroder Bank & Trust Company, as
Disbursement Agent, IBJ Schroder Bank & Trust Company, as Trustee, CRSS
Constructors, Inc., as Independent Construction Consultant, Isle of Capri Black
Hawk L.L.C., a Colorado limited liability company, (the "COMPANY"), and Isle of
Capri Black Hawk Capital Corp. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Disbursement Agreement.
Pursuant to SECTIONS 4.1 AND 5.1 of the Disbursement Agreement, you are
--------------------
hereby directed to liquidate Government Securities (to the extent required) in
the Interest Reserve Account and pay to the Trustee on _____________ (the
"INTEREST PAYMENT DATE") $_____________ of funds from the Interest Reserve
Account. The undersigned hereby certifies that payments in an amount equal to
such sums will be due and payable on the Notes on the Interest Payment Date.
C-1
<PAGE>
Please confirm the transfer described above by returning a notice of
confirmation to the undersigned at the address set forth above.
ISLE OF CAPRI BLACK HAWK L.L.C.,
a Colorado limited liability company
By:_______________________________
Name:_____________________________
Title:____________________________
By:_______________________________
Name:_____________________________
Title:____________________________
C-2
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT D
FORM OF COMPLETION RESERVE DISBURSEMENT REQUEST AND CERTIFICATE
---------------------------------------------------------------
[Date]
IBJ Schroder Bank & Trust Company,
as Disbursement Agent
One State Street
New York, NY 10004
Re: Completion Reserve Disbursement Request No. _____________ under
Cash Collateral and Disbursement Agreement
Amount Requested: $
--------------------
Ladies and Gentlemen:
Isle of Capri Black Hawk L.L.C., a Colorado limited liability company
(the "COMPANY"), hereby submits this Completion Reserve Disbursement Request and
Certificate (this "REQUEST") pursuant to that certain Cash Collateral and
Disbursement Agreement dated as of August 20, 1997 (as amended, supplemented or
otherwise modified from time to time, the "DISBURSEMENT AGREEMENT"), to which
you are a party. Capitalized terms used herein without definition shall have
the meanings assigned in the Disbursement Agreement.
The Company hereby requests that you, in your capacity under the
Disbursement Agreement, disburse $___________________ (the "DISBURSEMENT") from
the Completion Reserve Account to the Construction Disbursement Account, so that
the Company may use the funds disbursed to complete and operate the Isle-Black
Hawk.
In connection with the requested Disbursement, the Company represents,
warrants and certifies as follows:
1. The funds disbursed pursuant to this requested Disbursement will
not be used in violation of the terms of the Indenture, the Disbursement
Agreement or the other Collateral Documents.
2. The funds disbursed pursuant to this Request shall be used, upon
disbursement from the Construction Disbursement Account, solely for the
completion of construction of the Isle-Black Hawk and such funds are reasonably
necessary to permit completion of construction of the Isle-Black Hawk in
accordance with the Final Plans.
3. The following circumstances resulted in the cost to complete the
Isle-Black Hawk to exceed the Initial Construction Disbursement Budget and, if
the Initial Construction Disbursement Budget has previously been amended, the
Construction Disbursement Budget:
D-1
<PAGE>
__________________________________________________________________
__________________________________________________________________
4. The circumstances described in the preceding paragraph were not
reasonably anticipated by the Company in preparing the Initial Construction
Disbursement Budget and, if the Initial Construction Disbursement Budget has
been amended, in preparing the latest amendment to the Construction Disbursement
Budget, for the following reasons:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
5. After giving effect to the above requested Disbursement, the
funds in the Construction Disbursement Account are sufficient to pay for the
anticipated costs to complete the Isle-Black Hawk in accordance with the
Construction Disbursement Budget, as amended pursuant to the attached
Construction Disbursement Budget Certificate, prior to the Operating Deadline
(without giving effect to the construction of the hotel, and, if the Company
exercises the Hotel Option, prior to the Hotel Substantial Completion Date), and
the Company does not believe that any other expenses will need to be incurred by
the Company in order to cause the Isle-Black Hawk to be Operating on or prior to
the Operating Deadline (without giving effect to the construction of the hotel,
and, if the Company exercises the Hotel Option, the Isle-Black Hawk will be
completed prior to the Hotel Substantial Completion Date), subject only to
Permitted Liens.
6. The Company believes that the Isle-Black Hawk will be Operating
prior to the Operating Deadline (without giving effect to the construction of
the hotel, and if the Company exercises the Hotel Option, the Isle-Black Hawk
will be completed prior to the Hotel Substantial Completion Date).
7. Immediately prior and upon giving effect to the above requested
Disbursement, there is no Default or Event of Default.
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in making the Disbursement.
D-2
<PAGE>
Attached to this Disbursement Request is (i) a certificate from the
Independent Construction Consultant, (ii) a certificate from the General
Contractor, and (iii) a Construction Disbursement Budget Amendment Certificate.
ISLE OF CAPRI BLACK HAWK L.L.C.,
a Colorado limited liability company
By:_______________________________
Name:_____________________________
Title:____________________________
By:_______________________________
Name:_____________________________
Title:____________________________
Received and Reviewed:
- ----------------------
CASINO AMERICA, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
CRSS CONSTRUCTORS, INC., as
the Independent Construction Consultant
By:_______________________________
Name:_____________________________
Title:____________________________
D-1
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 1 TO EXHIBIT D
FORM OF CERTIFICATE OF INDEPENDENT CONSTRUCTION CONSULTANT
----------------------------------------------------------
COMPLETION RESERVE DISBURSEMENT REQUEST
---------------------------------------
[Date]
IBJ Schroder Bank & Trust Company,
as Disbursement Agent
One State Street
New York, NY 10004
Re: Completion Reserve Disbursement Request No. ___________________ Under
the Cash Collateral and Disbursement Agreement of Isle of Capri Black
------------------------------------------------------------
Hawk L.L.C.
----------
Ladies and Gentlemen:
The undersigned (the "INDEPENDENT CONSTRUCTION CONSULTANT") hereby
certifies as follows:
1. The Independent Construction Consultant has reviewed the above-
referenced Disbursement Request and the Cash Collateral and Disbursement
Agreement dated as of August 20, 1997 (as amended, supplemented or otherwise
modified from time to time, the "DISBURSEMENT AGREEMENT"), to which Isle of
Capri Black Hawk L.L.C., a Colorado limited liability company (the "COMPANY"),
is a party. Capitalized terms used herein and not otherwise defined shall have
the same meanings as those set forth in the Disbursement Agreement.
2. [FOR DISBURSEMENTS OTHER THAN THE FINAL DISBURSEMENT:] The
Independent Construction Consultant represents, warrants and certifies that (a)
the funds requested under the Completion Reserve Disbursement Request are
reasonably necessary to permit completion of construction of the Isle-Black Hawk
in accordance with the Final Plans, (b) after giving effect to the requested
Disbursement, the funds in the Construction Disbursement Account are sufficient
to pay for the anticipated costs to complete the Isle-Black Hawk in accordance
with the Construction Disbursement Budget, as amended to date, prior to the
Operating Deadline (without giving effect to the construction of the hotel, and,
if the Company exercises the Hotel Option, prior to the Hotel Substantial
Completion Date), and the Independent Construction Consultant is not aware at
this time of any other expenses that the Company will need to incur in order to
cause the Isle-Black Hawk to be Operating prior to the Operating Deadline
(without giving effect to the construction of the hotel, and, if the Company
exercises the Hotel Option, to cause the Isle-Black Hawk to be completed prior
to the Hotel Substantial Completion Date), subject only to Permitted Liens,
(c) nothing has come to the attention of the Independent Construction Consultant
that would cause it to believe the Isle-Black Hawk will not be operating prior
to the Operating Deadline (without giving effect to the construction of the
hotel, and, if the Company exercises the Hotel Option, that the Isle-Black Hawk
will not be completed prior to the Hotel Substantial Completion Date) and
(d) the Independent Construction Consultant has no actual knowledge of (i) any
Default or Event of Default that exists or which may occur as a result of this
D-2
<PAGE>
requested disbursement, or (ii) any material errors, inaccuracies, misstatements
or omissions of fact in the Completion Disbursement Request or any exhibit or
attachment thereto.
3. Pursuant to its duties under the Disbursement Agreement, the
Independent Constructor Consultant has inspected the Isle-Black Hawk within the
previous four weeks of the date of this certificate.
4. [FOR THE FINAL DISBURSEMENT:] The Isle-Black Hawk is complete in
accordance with the Final Plans, and (ii) there are no material errors,
inaccuracies, misstatements or omissions of fact in the Completion Disbursement
Request or any exhibit or attachment thereto. The Isle-Black Hawk has been
Operating for at least the previous thirty (30) days and, in the event the
Company exercised the Hotel Option, the hotel was completed more than thirty
(30) days prior to the date hereof, in either event, (to our knowledge), subject
only to Permitted Liens. To our actual knowledge, (i) immediately prior to and
after giving effect to this requested disbursement, there is no and will not be
any Defaults or Events of Default, and (ii) there are no material errors,
inaccuracies, misstatements or omissions of fact in the Completion Disbursement
Request or any exhibit or attachment thereto. There is no ongoing construction
in connection with the Isle-Black Hawk, including, in connection with the hotel
if the Company exercised the Hotel Option.
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in authorizing and making the Disbursement.
CRSS CONSTRUCTORS, INC., as
Independent Construction Consultant
By:_______________________________
Name:_____________________________
Title:____________________________
D-3
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 2 TO EXHIBIT D
FORM OF CERTIFICATE OF GENERAL CONTRACTOR
-----------------------------------------
COMPLETION RESERVE DISBURSEMENT REQUEST
---------------------------------------
[Date]
IBJ Schroder Bank & Trust Company, as
Disbursement Agent
One State Street
New York, NY 10004
CRSS Constructors, Inc., as
Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, CO 80202
Re: Completion Reserve Disbursement Request No. ___________________ Under
the Cash Collateral and Disbursement Agreement of Isle of Capri Black
------------------------------------------------------------
Hawk L.L.C.
-----------
Ladies and Gentlemen:
The undersigned (the "GENERAL CONTRACTOR") hereby certifies as
follows:
1. The General Contractor has reviewed the above referenced
Disbursement Request and the Cash Collateral and Disbursement Agreement dated as
of August __, 1997 (as amended, supplemented or otherwise modified from time to
time, the "DISBURSEMENT AGREEMENT"), to which Isle of Capri Black Hawk L.L.C., a
Colorado limited liability company (the "COMPANY"), is a party, to the extent
necessary to understand the defined terms contained herein and in the Completion
Disbursement Request that are incorporated by reference from the Disbursement
Agreement and to provide the certification contained herein. Capitalized terms
used herein and not otherwise defined shall have the meanings ascribed to them
in the Disbursement Agreement
2. The General Contractor hereby represents, warrants and certifies
that (a) the funds requested under the Completion Reserve Disbursement Request
are reasonably necessary to permit completion of construction of the Isle-Black
Hawk in accordance with the Final Plans, and (b) after giving effect to the
requested Disbursement, the funds in the Construction Disbursement Account are
sufficient to pay for the anticipated costs to complete the Isle-Black Hawk in
accordance with the Construction Disbursement Budget, as amended to date, and
the General Contractor is not aware at this time of any other expenses that the
Company will need to incur in order to cause the Isle-Black Hawk to be Operating
prior to the Operating Deadline (without giving effect to the construction of
the hotel, and, if the Company exercises the Hotel Option, prior to the Hotel
Substantial Completion Date), subject only to Permitted Liens.
D-4
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and the Independent Construction Consultant is entitled to
rely on the foregoing in authorizing and making the Disbursement.
W.S. HASELDEN CONSTRUCTION INC.,
as General Contractor
By:_______________________________
Name:_____________________________
Title:____________________________
D-5
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT E-1
FORM OF CONSTRUCTION DISBURSEMENT REQUEST AND CERTIFICATE
---------------------------------------------------------
[Date]
IBJ Schroder Bank & Trust Company,
as Disbursement Agent
One State Street
New York, NY 10004
IBJ Schroder Bank & Trust Company,
as Trustee
One State Street
New York, NY 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, CO 80202
Re: Construction Disbursement Request No. ____________ under
Cash Collateral and Disbursement Agreement
Amount Requested: $
--------------------
Ladies and Gentlemen:
Isle of Capri Black Hawk L.L.C., a Colorado limited liability company (the
"COMPANY"), hereby submits this Construction Disbursement Request and
Certificate (the "DISBURSEMENT REQUEST") pursuant to that certain Cash
Collateral and Disbursement Agreement dated as of August __, 1997 (as amended,
supplemented or otherwise modified from time to time, the "DISBURSEMENT
AGREEMENT"), to which each of you are a party.__Capitalized terms used herein
without definition shall have the meanings assigned in the Disbursement
Agreement.
The Company hereby requests the Disbursement Agent, and requests the
Independent Construction Consultant to authorize the Disbursement Agent, to make
a disbursement of $______________ for Hard Costs and $____________ for Soft
Costs (collectively, the "DISBURSEMENT") from the Construction Disbursement
Account to the Disbursed Funds Account, so that the Company may distribute
checks or issue wire transfers drawn on the Disbursed Funds Account to the
parties identified on SCHEDULE 1 attached hereto and in the respective amounts
----------
listed for such parties on SCHEDULE 1 (the "PROJECT COST SCHEDULE").
----------
In connection with the requested Disbursement, the Company represents,
warrants and certifies as follows:
E-1
<PAGE>
[1.] [FOR HARD COST DISBURSEMENTS ONLY:] SCHEDULE 1 accurately lists each
----------
party for whom payment is requested and, for each line item and for each party
to whom payment is requested with respect to such line item, the following:
(i) the name of the payee to be paid; (ii) the current payment requested;
(iii) the increase or decrease in accrued but unpaid Retainage Amount, if any,
for such payee since the last Disbursement Request (after giving effect to the
payment contemplated by the Disbursement Request); (iv) the total amount
contemplated to be payable to such payee under the terms of its applicable
Contract through completion of all work and delivery of all materials
contemplated by the Contract (i.e., the total contract amount); (v) the total
payments made to such payee under its applicable Contract as of the Issue Date;
(vi) the total payments made to such payee since the Issue Date (after giving
effect to the payment contemplated by this Disbursement Request); (vii) the sum
of all payments made to such payee (after giving effect to the payment
contemplated by this Disbursement Request) (i.e., the sum of (v) and (vi)
above); (viii) the aggregate accrued Retainage Amounts which shall continue to
be owed with respect to such Contract (after giving effect to the payment
contemplated by the Disbursement Request); and (ix) the percentage of the work
actually completed, or the materials actually delivered, under the Contract
through the date for which payment is made hereunder (expressed as a percentage
of the total work and materials contemplated by the Contract through
completion), or, if payment is to be made based on invoice, confirmation that a
copy of the applicable invoice is attached, and a description of the purpose of
such payment, specifying the line item relating to each such payment. In the
event that any Advance Disbursements have been made and have not otherwise been
documented as required hereunder and under the Disbursement Agreement, SCHEDULE
--------
1 also includes each party to whom payment was made from such Advance
- -
Disbursement and a description of the purpose of such payments specifying the
line item relating to each such payment. The information set forth in SCHEDULE
--------
1 is true, correct and complete.
- -
[1.] [FOR SOFT COST DISBURSEMENTS ONLY:] SCHEDULE 1 accurately lists each
----------
party and/or purpose for which payment is requested and, for each line item and
for each party and/or purpose for which payment is requested with respect to
such line item, the following: (i) the name of the payee to be paid or if it is
for Working Capital Expenses, and, (ii) the current payment requested, and
(iii) a description of the purpose of such payment, specifying the line item
relating to each such payment. In the event that any Advance Disbursements have
been made and have not otherwise been documented as required hereunder and under
the Disbursement Agreement, SCHEDULE 1 also includes each party to whom payment
----------
was made from such Advance Disbursement and a description of the purpose of such
payments specifying the line item relating to each such payment. The
information set forth in SCHEDULE 1 is true, correct and complete.
----------
[2.] [FOR HARD COST DISBURSEMENTS ONLY:] The Company has delivered or
caused to be delivered to the Independent Construction Consultant (a) true and
complete invoices that have been tendered for all Hard Costs for which
Disbursement is requested, (b) duly executed conditional lien releases from all
contractors, subcontractors, suppliers and materialmen having provided work,
materials and/or services relating to the Isle-Black Hawk (except as to
Retainage Amounts and such amounts as the Independent Construction Consultant
determines to have been reasonably withheld) for all Disbursements identified on
this Disbursement Request, and (c) duly executed acknowledgments of payment and
unconditional (except as to Retainage Amounts) lien releases, in form and
substance satisfactory to the Independent Construction Consultant, from all
payees identified on the previous Disbursement Request for payment of Hard Costs
and acknowledging the receipt by such payee of all sums payable to such
Contractor from previous Disbursement Requests (except as to Retainage Amounts
and such amounts as Independent Construction Consultant determines to have been
reasonably withheld).
[3.] The Construction Disbursement Budget presently in effect for the Isle-
Black Hawk is dated _________________ and includes all amendments through
Construction Disbursement Budget Amendment
E-2
<PAGE>
No. ____. Said Construction Disbursement Budget accurately sets forth the
anticipated costs to complete the Isle-Black Hawk construction through the date
that the Isle-Black Hawk is Operating (without giving effect to the hotel, and,
in the event the Company has exercised the Hotel Option, the Hotel Substantial
Completion Date), subject only to Permitted Liens. The total payments by the
Company with respect to each line item component described in the Construction
Budget (plus any Retainage Amounts held for such line item) after giving effect
to the requested disbursements shall not exceed the amount budgeted on the
Construction Budget for such line item. Further, to the extent the work or
payment required in connection with any line item has not yet been completed,
there is no reason to believe that the estimated cost to complete such work or
payment will exceed the difference between: (i) the amount budgeted for such
line item on the Construction Budget; and (ii) the sum of (A) the total payments
theretofore disbursed from the Disbursed Funds Accounts with respect to such
line item and (B) any Retainage Amounts then held with respect to such line
item.
5. After giving effect to the requested disbursement from the
Construction Disbursement Account and the payments contemplated from the
Disbursed Funds Account in connection therewith, and, in the event any Advance
Disbursements have been made and have not otherwise been documented as required,
such Advance Disbursement from the Construction Disbursement Account, there are
sufficient Available Funds to pay for the anticipated costs described in
paragraph 4 above (and the component parts thereof) in accordance with the
aggregate amounts (and line items) set forth in the Construction Disbursement
Budget, and the Company does not believe that any other expenses will need to be
paid or incurred by the Company in order to cause the Isle-Black Hawk to be
Operating prior to the Operating Deadline (without giving effect to the
construction of the hotel, and, if the Company exercises the Hotel Option, prior
to the Hotel Substantial Completion Date), subject only to Permitted Liens,
prior to the Operating Deadline (without giving effect to the construction of
the hotel, and, if the Company exercises the Hotel Option, the Isle-Black Hawk
will be completed prior to the Hotel Substantial Completion Date).
6. Immediately prior and upon giving effect to this Request, there is no
and will not be any Event of Default or any event, omission or failure of a
condition which would constitute an Event of Default after notice or lapse of
time or both.
7. [HARD COSTS ONLY:] As of the date hereof, the Company has submitted
to the Independent Construction Consultant all Plans applicable to the
Disbursement requested herein which, as of the date hereof, constitute Final
Plans. The construction performed as of the date hereof is in accordance with
the Plans for the Isle-Black Hawk and the disbursement is appropriate in light
of the percentage of construction completed and the amount of stored materials,
and/or the invoices submitted, as applicable. Further, all disbursements
requested under this Disbursement Request are for the payment of Construction
Expenses incurred for work consistent with Plans which the Company reasonably
believes ultimately will become Final Plans and which will permit the Company to
complete construction of the Isle-Black Hawk prior to the Operating Deadline
(without giving effect to the construction of the hotel, and if the Company
exercises the Hotel Option, prior to the Hotel Substantial Completion Date),
subject only to Permitted Liens.
8. All Disbursements previously requested by the Company and made by the
Disbursement Agent into the Disbursed Funds Account (other than Advance
Disbursements permitted to be outstanding under the Disbursement Agreement) have
been disbursed by the Company in substantially the manner certified by the
Company in the applicable Construction Disbursement Request .
9. This Disbursement Request, as well as the Disbursement requested, is,
and such Disbursement will be used, in compliance with the Disbursement
Agreement.
E-3
<PAGE>
10. The Company has previously delivered to the Independent Construction
Consultant copies of all Contracts to which the Company is a party for the Isle-
Black Hawk with payment obligations of at least Thirty Thousand Dollars
($30,000) and, with respect to each such Contract: (i) a consent to collateral
assignments in the form attached hereto as EXHIBIT H signed by the third-party
---------
Contractor under each such Contract; and (ii) copies of such performance and/or
payment bonds (naming the Company and the Trustee as additional insureds), if
any, as the Company may require to be provided to the Company pursuant to any
Contract. Each such bond continues to be enforceable and has not been
terminated or canceled.
11. [FOR DISBURSEMENTS IMMEDIATELY FOLLOWING COMPLETION OF ANY FOUNDATION
FOR ANY BUILDING WITHIN THE ISLE-BLACK HAWK:] The Company shall have delivered
to the Independent Construction Consultant, on a building-by-building basis, a
foundation endorsement from the Title Company insuring that the foundations for
each building within the Isle-Black Hawk are constructed wholly within the
boundaries of the Property then owned in fee simple by the Company and does not
encroach on any easements or violate any covenants, conditions or restrictions
of record.
12. Immediately after such disbursement, no more than One Million Five
Hundred Thousand Dollars ($1,500,000) of disbursements for Soft Costs shall be
in the Disbursement Funds Account.
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in authorizing and making the Disbursement.
Attached to this Disbursement Request are certificate(s) for the Hard
Costs, if any.
ISLE OF CAPRI BLACK HAWK L.L.C.,
a Colorado limited liability company
By:_______________________________
Name:_____________________________
Title:____________________________
By:_______________________________
Name:_____________________________
Title:____________________________
E-4
<PAGE>
Received and Reviewed:
- ----------------------
CRSS CONSTRUCTORS, INC.,
as Independent Construction Consultant
By:_______________________________
Name:_____________________________
Title:____________________________
E-5
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
SCHEDULE 1 TO EXHIBIT E-1
PROJECT COST SCHEDULE FOR DISBURSEMENT REQUEST AND CERTIFICATE
--------------------------------------------------------------
[To be attached.]
E-6
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 1 TO EXHIBIT E-1
FORM OF CERTIFICATE OF INDEPENDENT CONSTRUCTION CONSULTANT FOR
DISBURSEMENT REQUEST FOR CONSTRUCTION EXPENSES
----------------------------------------------
[Date]
IBJ Schroder Bank & Trust Company,
as Disbursement Agent
One State Street
New York, NY 10004
Re: Disbursement Request No. __________ Under Cash Collateral and
Disbursement
Agreement of Isle of Capri Black Hawk L.L.C.
--------------------------------------------
Ladies and Gentlemen:
The undersigned (the "INDEPENDENT CONSTRUCTION CONSULTANT") hereby
certifies as follows:
1. The Independent Construction Consultant has reviewed the above-
referenced Disbursement Request and the Cash Collateral and Disbursement
Agreement dated as of August __, 1997 (as amended, supplemented or otherwise
modified from time to time, the "DISBURSEMENT AGREEMENT"), to which Isle of
Capri Black Hawk L.L.C., a Colorado limited liability company (the "COMPANY"),
is a party. All capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Disbursement Agreement.
2. The Independent Construction Consultant has received from the Company
all Plans applicable to the Disbursement requested pursuant to the Disbursement
Request and, in the Independent Construction Consultant's professional opinion,
the construction performed as of the date hereof is in accordance with the Plans
and the disbursement is appropriate in light of the percentage of construction
completed and the amount of stored materials, and/or invoices submitted, as
applicable. Further, all disbursements requested under this Disbursement
Request that are for the payment of Hard Costs have been incurred for work
consistent with Plans, which will permit the Company to complete construction of
the Isle-Black Hawk prior to the Operating Deadline (without giving effect to
the construction of the hotel, and, if the Company exercises the Hotel Option,
prior to the Hotel Substantial Completion Date), subject only to Permitted
Liens.
3. The Independent Construction Consultant has reviewed all disbursements
made from the Construction Disbursement Account and compared the invoices or
other documentation supporting the disbursements with the Construction
Disbursement Budget category and confirms that the total disbursements to date
in such category do not exceed the budgeted amount for such category.
E-7
<PAGE>
4. The Independent Construction Consultant does not dispute the
appropriateness of any item or items the value of which exceeds Thirty Thousand
Dollars ($30,000) funded with the proceeds of a previous Construction
Disbursement Request.
5. The Construction Disbursement Budget accurately sets forth the
anticipated costs of completion of the Isle-Black Hawk through the date that the
Isle-Black Hawk is Operating prior to the Operating Deadline (without giving
effect to the construction of the hotel, and, if the Company exercises the Hotel
Option, the Isle-Black Hawk is completed prior to the Hotel Substantial
Completion Date), subject only to Permitted Liens.
6. After giving effect to the requested disbursement from the
Construction Disbursement Account and the payments contemplated from the
Disbursed Funds Account in connection therewith, there are sufficient Available
Funds to pay for the anticipated costs to complete construction of the Isle-
Black Hawk (and component parts thereof) in accordance with the aggregate
amounts (and line items) set forth in the Construction Disbursement Budget, and
the Independent Construction Consultant is not aware of any other expenses that
will be needed to be paid or incurred by the Company in order to cause the Isle-
Black Hawk to be Operating prior to the Operating Deadline (without giving
effect to the construction of the hotel, and if the Company exercises the Hotel
Option, prior to the Hotel Substantial Completion Date), subject only to
Permitted Liens. The Independent Construction Consultant believes that the
Isle-Black Hawk will be Operating prior to the Operating Deadline (without
giving effect to the construction of the hotel, and, if the Company exercises
the Hotel Option, the Isle-Black Hawk will be completed prior to the Hotel
Substantial Completion Date).
7. Pursuant to its duties under the Disbursement Agreement, the
Independent Construction Consultant has inspected the Isle-Black Hawk within the
previous four weeks of the date of this certificate.
8. [FOR THE FINAL DISBURSEMENT ONLY:] The Isle-Black Hawk is complete in
accordance with the Final Plans, and (ii) there are no material errors,
inaccuracies, misstatements or omissions of fact in the Completion Disbursement
Request or any exhibit or attachment thereto. The Isle-Black Hawk has been
Operating for at least the previous thirty (30) days and, in the event the
Company exercised the Hotel Option, the hotel was completed more than thirty
(30) days prior to the date hereof, in either event (to our knowledge), subject
only to Permitted Liens. To our actual knowledge, (i) immediately prior to and
after giving effect to this requested disbursement, there is not and will not be
any Defaults or Events of Default, and (ii) there are no material errors,
inaccuracies, misstatements or omissions of fact in the Completion Disbursement
Request or any exhibit or attachment thereto. There is no ongoing construction
in connection with the Isle-Black Hawk, including, in connection with the hotel
if the Company exercised the Hotel Option.
9. [FOR HARD COSTS ONLY] The Independent Construction Consultant has
received (a) duly executed conditional lien releases from all contractors,
subcontractors, suppliers and materialmen having provided work, materials and/or
services constituting completed construction or stored materials relating to the
Isle-Black Hawk (except as to Retainage Amounts and such amounts as the
Independent Construction Consultant determines to have been reasonably withheld)
for all Disbursements identified on the Disbursement Request, and (b) duly
executed acknowledgments of payment and unconditional (except as to Retainage
Amounts) lien releases, in form and substance satisfactory to Independent
Construction Consultant, from all payees identified on the previous Disbursement
Request for payment of Hard Costs and acknowledging the receipt by such payee of
all sums payable to such Contractor from previous Disbursement Requests (except
as to Retainage Amounts and such amounts as Independent Construction Consultant
determines to have been reasonably withheld).
E-8
<PAGE>
10. The Independent Construction Consultant has previously received from
the Company copies of all Contracts to which the Company is a party for the
Isle-Black Hawk with payment obligations of at least Thirty Thousand Dollars
($30,000) and, with respect to each such Contract: (i) a consent to collateral
assignments in the form attached hereto as EXHIBIT H signed by the third-party
---------
Contractor under each such Contract; and (ii) copies of such performance and/or
payment bonds (naming the Company and the Trustee as additional insureds), if
any, as the Company may require to be provided to the Company pursuant to any
Contract. To the knowledge of the Independent Construction Consultant, each
such bond continues to be enforceable and has not been terminated or canceled.
11. The Independent Construction Consultant has reviewed (a) all
disbursements made from the Construction Disbursement Account in excess of
$100,000 and (b) a sampling of at least 20% of those disbursements from the
Construction Disbursement Account individually less than $100,000, and
comparison of the documentation supporting disbursements with the Construction
Budget category to confirm that the total disbursements to date, in such
category do not exceed the budgeted amount for such category.
12. [FOR DISBURSEMENTS IMMEDIATELY FOLLOWING COMPLETION OF ANY FOUNDATION
FOR ANY BUILDING WITHIN THE ISLE-BLACK HAWK:] The Independent Construction
Consultant shall have received a copy of a foundation endorsement, on a building
by building basis, from the Title Company insuring that the foundations for each
building within the Isle-Black Hawk are constructed wholly within the boundaries
of the Property then owned in fee simple by the Company and that such
foundation(s) does not encroach on any easements or violate any covenants,
conditions or restrictions of record.
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in authorizing and making the Disbursement.
CRSS CONSTRUCTORS, INC.,
as Independent Construction Consultant
By:_______________________________
Name:_____________________________
E-9
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 2 TO EXHIBIT E-1
FORM OF CERTIFICATE OF GENERAL CONTRACTOR FOR
DISBURSEMENT REQUEST FOR CONSTRUCTION EXPENSES
----------------------------------------------
[Date]
IBJ Schroder Bank & Trust Company,
as Disbursement Agent
One State Street
New York, NY 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, CO 80202
Re: Disbursement Request No. __________ Under Cash Collateral and Disbursement
Agreement of Isle of Capri Black Hawk L.L.C.
--------------------------------------------
Ladies and Gentlemen:
Haselden Construction, Inc. (the "GENERAL CONTRACTOR") hereby certifies as
follows:
1. The General Contractor has reviewed the above referenced Disbursement
Request and the Cash Collateral and Disbursement Agreement dated as of August
20, 1997 (as amended, supplemented or otherwise modified from time to time, the
"DISBURSEMENT AGREEMENT"), to which Isle of Capri Black Hawk L.L.C., a Colorado
limited liability company (the "COMPANY") is a party, to the extent necessary to
understand the defined terms contained herein and in the Disbursement Request
that are incorporated by reference from the Disbursement Agreement and to
provide the certification contained herein. Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to them in the
Disbursement Agreement.
2. The General Contractor hereby certifies and confirms the accuracy of
the certifications in paragraphs 1, 3, 4, 5 and 7 of the above-referenced
Disbursement Request.
3. The General Contractor hereby certifies that, to the best of its
knowledge, the Isle-Black Hawk may be constructed in accordance with its
Construction Disbursement Budget presently in effect.
E-10
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in authorizing and making the Disbursement.
HASELDEN CONSTRUCTION, INC.
By:_______________________________
Name:_____________________________
Title:____________________________
E-11
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT E-2
FORM OF ADVANCE DISBURSEMENT REQUEST AND CERTIFICATE
----------------------------------------------------
[Date]
IBJ Schroder Bank & Trust Company,
as Disbursement Agent
One State Street
New York, NY 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, CO 80202
Re: Advance Disbursement Request No. __________ Under Cash Collateral
and Disbursement Agreement
Amount Requested: $
--------------------
Ladies and Gentlemen:
Isle of Capri Black Hawk L.L.C., a Colorado limited liability company (the
"COMPANY"), hereby submits this Advance Disbursement Request and Certificate
(the "DISBURSEMENT REQUEST") pursuant to that certain Cash Collateral and
Disbursement Agreement dated as of August 20, 1997 (as amended, supplemented or
otherwise modified from time to time, the "DISBURSEMENT AGREEMENT"), to which
each of you is a party. Capitalized terms used herein without definition shall
have the meanings assigned to such terms in the Disbursement Agreement.
The Company hereby requests that the Disbursement Agent make a
disbursement of $_________ [aggregate Advance Disbursements not to exceed
$1,500,000] from the Construction Disbursement Account to the Disbursed Fund
Account.
The Company hereby represents, warrants and certifies that (a) amounts
disbursed pursuant to this Disbursement Request shall be used solely for the
following purposes: ______________, (b) prior to and after giving effect to this
disbursement, there is and there will be no Default or Event of Default, and (c)
the amount of the requested Disbursement hereunder, together with Advance
Disbursements previously made to the Company which have not otherwise been
documented as required in the Disbursement Agreement for other disbursements, do
not exceed the amount of One Million Five Hundred Thousand Dollars ($1,500,000).
The Construction Disbursement Budget presently in effect for the Isle-
Black Hawk is dated _____________ and includes all amendments through
Construction Disbursement Budget Amendment No.
E-12
<PAGE>
_____. Said Construction Disbursement Budget accurately sets forth the
anticipated costs to complete the Isle-Black Hawk construction through the date
that the Isle-Black Hawk is Operating (without giving effect to the hotel, and,
in the event the Company has exercised the Hotel Option, the Hotel Substantial
Completion Date), subject only to Permitted Liens. The total payments by the
Company with respect to each line item component described on the Construction
Budget (plus any Retainage Amounts held for such line item) after giving effect
to the requested disbursements shall not exceed the amount budgeted on the
Construction Budget for such line item. Further, to the extent the work or
payment required in connection with any line item has not yet been completed,
there is no reason to believe that the estimated cost to complete such work or
payment will exceed the difference between: (i) the amount budgeted for such
line item on the Construction Budget; and (ii) the sum of (A) the total payments
theretofore disbursed from the Disbursed Funds Accounts with respect to such
line item and (B) any Retainage Amounts then held with respect to such line
item.
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in authorizing and making the disbursement.
ISLE OF CAPRI BLACK HAWK L.L.C.,
a Colorado limited liability company
By:_______________________________
Name:_____________________________
Title:____________________________
By:_______________________________
Name:_____________________________
Title:____________________________
E-13
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 1 TO EXHIBIT E-2
FORM OF CERTIFICATE OF INDEPENDENT CONSTRUCTION CONSULTANT FOR
ADVANCE DISBURSEMENT REQUEST FOR CONSTRUCTION EXPENSES
------------------------------------------------------
[Date]
IBJ Schroder Bank & Trust Company,
as Disbursement Agent
One State Street
New York, NY 10004
Re: Advance Disbursement Request No. __________ Under Cash Collateral and
Disbursement
Agreement of Isle of Capri Black Hawk L.L.C.
--------------------------------------------
Ladies and Gentlemen:
The undersigned (the "INDEPENDENT CONSTRUCTION CONSULTANT") hereby
certifies as follows:
1. The Independent Construction Consultant has reviewed the above-
referenced Advance Disbursement Request and the Cash Collateral and Disbursement
Agreement dated as of August 20, 1997 (as amended, supplemented or otherwise
modified from time to time, the "DISBURSEMENT AGREEMENT"), to which Isle of
Capri Black Hawk L.L.C., a Colorado limited liability company (the "COMPANY"),
is a party. All capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Disbursement Agreement.
2. The Independent Construction Consultant has no actual knowledge (from
the facts set forth in any Disbursement Request or any certificate, exhibit or
attachment attached thereto or any other notice) that a Default or an Event of
Default under the Indenture or this Agreement exists and is continuing. The
Independent Construction Consultant has no actual knowledge of any material
errors, misstatements or omissions of fact in the Advance Disbursement Request
or any certificate, exhibit or attachment thereto, or information otherwise
provided by the Company.
3. The Construction Disbursement Budget accurately sets forth the
anticipated costs of completion of the Isle-Black Hawk through the date that the
Isle-Black Hawk is Operating prior to the Operating Deadline (without giving
effect to the construction of the hotel, and, if the Company exercises the Hotel
Option, the Isle-Black Hawk is completed prior to the Hotel Substantial
Completion Date), subject only to Permitted Liens.
4. After giving effect to the requested disbursement from the
Construction Disbursement Account and the payments contemplated from the
Disbursed Funds Account in connection therewith, there are sufficient Available
Funds to pay for the anticipated costs to complete construction of the Isle-
Black Hawk (and component parts thereof) in accordance with the aggregate
amounts (and line items set forth in the Construction Disbursement Budget), and
the Independent Construction Consultant is not aware of any
E-14
<PAGE>
other expenses that will be needed to be paid or incurred by the Company in
order to cause the Isle-Black Hawk to be Operating prior to the Operating
Deadline (without giving effect to the construction of the hotel, and if the
Company exercises the Hotel Option, prior to the Hotel Substantial Completion
Date), subject only to Permitted Liens.
5. Pursuant to its duties under the Disbursement Agreement, the
Independent Construction Consultant has inspected the Isle-Black Hawk within the
previous four weeks of the date of this certificate.
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in authorizing and making the Disbursement.
CRSS CONSTRUCTORS, INC.,
as Independent Construction Consultant
By:_______________________________
Name:_____________________________
E-15
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT F
FORM OF CONSTRUCTION DISBURSEMENT BUDGET AMENDMENT CERTIFICATE
--------------------------------------------------------------
[Date]
IBJ Schroder Bank & Trust Company,
as Disbursement Agent
One State Street
New York, NY 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, CO 80202
Re: Isle of Capri Black Hawk L.L.C. Amendment No. ___________
to Construction Disbursement Budget for the Isle-Black Hawk
-----------------------------------------------------------
Ladies and Gentlemen:
Isle of Capri Black Hawk L.L.C., a Colorado limited liability company ("THE
COMPANY"), requests that the Construction Disbursement Budget for the Isle-Black
Hawk (the "CONSTRUCTION DISBURSEMENT BUDGET") be amended as set forth on
SCHEDULE 1 to this certificate. This certificate is delivered pursuant to that
- ----------
certain Cash Collateral and Disbursement Agreement dated as of August 20, 1997
(as amended, supplemented or otherwise modified from time to time, the
"DISBURSEMENT AGREEMENT"), to which you are a party. Capitalized terms used in
this certificate that are otherwise not defined shall have the meaning assigned
in the Disbursement Agreement. In connection with the requested Construction
Disbursement Budget amendment, the Company hereby represents, warrants and
certifies as follows:
1. The proposed amendment is set forth in SCHEDULE 1 hereto. The
----------
proposed amendment is reasonably necessary or desirable in order to
complete the work represented by any line item or line items in the
Construction Disbursement Budget and will not result in a material
lessening of the scope or quality of the work constituting the design
or construction of the Isle-Black Hawk.
2. The following circumstances resulted in the reasonable necessity or
desirability of the proposed amendment:
___________________________________________________________
___________________________________________________________
F-1
<PAGE>
___________________________________________________________
[3. [FOR REQUESTED AMENDMENTS OTHER THAN AS A RESULT OF THE EXERCISE OF
THE HOTEL OPTION]. The circumstances described in paragraph 2 above
were not reasonably anticipated by the Company in preparing the
Initial Construction Disbursement Budget, and if the Initial
Construction Budget has been previously amended, as of the date of the
last such amendment for the following reasons:
___________________________________________________________
___________________________________________________________
___________________________________________________________
[3. [FOR REQUESTED AMENDMENTS AS A RESULT OF THE EXERCISE OF THE HOTEL
OPTION]. Upon exercise of the Hotel Option there will be sufficient
funds to complete the hotel by the Hotel Substantial Completion Date
because:
___________________________________________________________
___________________________________________________________
___________________________________________________________
4. The Construction Disbursement Budget in effect immediately prior to
the proposed amendment is attached to this Construction Disbursement
Budget Amendment Certificate as SCHEDULE 2, and the Construction
----------
Disbursement Budget which will be in effect upon effectiveness of the
proposed amendment is attached to this Construction Disbursement
Budget Amendment as SCHEDULE 3.
----------
5. Immediately following the proposed amendment: (i) the Construction
Disbursement Budget will include all costs to be incurred in causing
the Isle-Black Hawk to be Operating prior to the Operating Deadline
(without giving effect to the construction of the hotel, and, if the
Company exercises the Hotel Option, prior to the Hotel Substantial
Completion Date), subject only to Permitted Liens; (ii) the funds in
the Construction Disbursement Account (and, if the Company exercises
the Hotel Option, the Completion Reserve Account) will be sufficient
to cause the Isle-Black Hawk to be Operating (and if the Company
exercises the Hotel Option, the hotel to be completed) (and, in each
case, the component parts hereof), subject only to Permitted Liens, in
accordance with the aggregate amounts (and line items) set forth in
the Construction Disbursement Budget, and (iii) the Construction
Disbursement Budget will continue to reasonably establish the line
item components of the work required to be undertaken in order to
complete construction of the Isle-Black Hawk, and will continue to
reasonably establish the cost of completing each line item component
of such work.
6. After giving effect to the proposed amendment, the Construction
Disbursement Budget accurately sets for the anticipated Construction
Expenses through completion of the construction of the Isle-Black Hawk
and the various line item components thereof identified on the
Construction Disbursement Budget, all within the line item allocations
established for those components set forth in the Construction
Disbursement Budget.
F-2
<PAGE>
7. [IF ANY LINE ITEM ON THE CONSTRUCTION DISBURSEMENT BUDGET IS REDUCED:]
The Company reasonably expects that the work represented by the line
item entitled ______________ will be completed for a total cost of
$________, which amount is less than $___________ [should correspond
to $ amount set forth in the Construction Disbursement Budget prior to
proposed amendment] and such savings will be reallocated, pursuant to
the amendment, to another line item.
8. The construction performed as of the date hereof is in accordance with
the Plans. The undersigned have no reason to believe that the date on
which the Isle-Black Hawk will become Operating will not occur on or
prior to its Operating Deadline (and, if the Company exercises the
Hotel Option, the hotel will not be completed prior to the Hotel
Substantial Completion Date).
9. Immediately prior to and upon giving effect to the Construction
Disbursement Budget Amendment, there is and will be no Default or
Event of Default.
The undersigned certifies that the Construction Disbursement Budget
Amendment contemplated hereby is permitted pursuant to the Disbursement
Agreement and the Indenture, and all conditions precedent thereto have been met.
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent and the Independent Construction
Consultant are entitled to rely on the foregoing.
Attached to this Construction Disbursement Budget Amendment Certificate are
certificates from the Independent Construction Consultant and (if, and to the
extent, such amendment related to Hard Costs) the General Contractor.
ISLE OF CAPRI BLACK HAWK L.L.C.,
a Colorado limited liability company
By:______________________________
Name:____________________________
Title:___________________________
By:______________________________
Name:____________________________
Title:___________________________
F-3
<PAGE>
Received and Reviewed:
- ----------------------
CASINO AMERICA, INC.,
By:_____________________________________
Name:___________________________________
Title:__________________________________
CRSS CONSTRUCTORS, INC.,
as Independent Construction Consultant
By: ____________________________________
Name: __________________________________
Title: _________________________________
F-4
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
SCHEDULE 1 TO EXHIBIT F
PROPOSED CONSTRUCTION DISBURSEMENT BUDGET AMENDMENT
---------------------------------------------------
Amendment No. __ to Construction Disbursement Budget.
I. INCREASES TO LINE ITEMS:
The Following Line Item Is Increased: _______________________________
Old Amount of Line Item: ________________________________
Amount of Increase: ________________________________
New Total For Line Item: ________________________________
Source of Funds For Increase:
Source Amount
------ ------
Realized Savings _______________/1/
Additional Revenue _______________
Allocation of Funds from
Completion Reserve Account _______________
Total _______________
II. DECREASES TO LINE ITEMS:
The Following Line Item Is
Decreased: ________________________________
Old Amount of Line Item: ________________________________
Amount of Decrease: ________________________________
New Amount of Line Item: ________________________________
____________________
/1/ Source and documentation (e.g., receipts for purchased goods or invoices
for services) for Realized Savings are attached.
F-5
<PAGE>
Reason For Decrease of Line Item:
Source Amount
------ ------
Realized Savings _______________/1/
III. NEW CONSTRUCTION DISBURSEMENT BUDGET TOTALS
a. The total Construction Disbursement Budget for the
Isle-Black Hawk is now: $_____________
b. The amount disbursed to date for the
Isle-Black Hawk is: $_____________
c. Remaining amounts to be spent: $_____________
d. Available Funds for the Isle-Black Hawk: $_____________/1/
________________________
/1/
F-6
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
SCHEDULE 2 TO EXHIBIT F
EXISTING CONSTRUCTION DISBURSEMENT BUDGET/1/
--------------------------------------------
[To be attached.]
_______________
/1/ (or portion thereof being amended)
F-7
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
SCHEDULE 3 TO EXHIBIT F
PROPOSED REVISED CONSTRUCTION DISBURSEMENT BUDGET
-------------------------------------------------
[To be attached.]
F-8
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 1 TO EXHIBIT F
FORM OF CERTIFICATE OF INDEPENDENT CONSTRUCTION CONSULTANT
CONSTRUCTION DISBURSEMENT BUDGET AMENDMENT
------------------------------------------
[Date]
IBJ Schroder Bank & Trust Company,
as Disbursement Agent
One State Street
New York, NY 10004
Re: Construction Disbursement Budget Amendment Certificate dated
________________,
199_ of Isle of Capri Black Hawk L.L.C., a Colorado limited liability
---------------------------------------------------------------------
company
-------
Ladies and Gentlemen:
CRSS Constructors, Inc. (the "INDEPENDENT CONSTRUCTION CONSULTANT"), hereby
certifies as follows:
1. The Independent Construction Consultant has reviewed the above-
referenced Construction Disbursement Budget Amendment Certificate and the Cash
Collateral and Disbursement Agreement dated as of August 20, 1997 (as amended,
supplemented or otherwise modified from time to time, the "DISBURSEMENT
AGREEMENT") to which Isle of Capri Black Hawk L.L.C., a Colorado limited
liability company (the "COMPANY"), is a party. Capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to them in the
Disbursement Agreement.
2. Pursuant to its duties under the Disbursement Agreement, the
Independent Construction Consultant has inspected the Isle-Black Hawk within the
previous four weeks of the date of this certificate.
3. The Independent Construction Consultant hereby certifies and confirms
the accuracy of the certifications contained in the above-referenced
Construction Disbursement Budget Amendment Certificate.
F-9
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing in authorizing and making the amendment to the Construction
Disbursement Budget.
CRSS CONSTRUCTORS, INC.,
as Independent Construction Consultant
By: ________________________________
Name: ______________________________
Title: _____________________________
F-10
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 2 TO EXHIBIT F
FORM OF CERTIFICATE OF GENERAL CONTRACTOR
CONSTRUCTION DISBURSEMENT BUDGET AMENDMENT
------------------------------------------
[Date]
IBJ Schroder Bank & Trust Company,
as Disbursement Agent
One State Street
New York, NY 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, CO 80202
Re: Construction Disbursement Budget Amendment Certificate dated
________________,
199_ of Isle of Capri Black Hawk L.L.C., a Colorado limited liability
---------------------------------------------------------------------
company
-------
Ladies and Gentlemen:
The undersigned (the "GENERAL CONTRACTOR") hereby certifies as follows:
1. The General Contractor has reviewed the above referenced Construction
Disbursement Budget Amendment Certificate and the Cash Collateral and
Disbursement Agreement dated as of August 20, 1997 (as amended, supplemented or
otherwise modified from time to time, the "DISBURSEMENT AGREEMENT"), to which
Isle of Capri Black Hawk L.L.C., a Colorado limited liability company (the
"COMPANY"), is a party, to the extent necessary to understand the defined terms
contained herein and in the Construction Disbursement Budget Amendment
Certificate that are incorporated by reference from the Disbursement Agreement,
and to provide the certification contained herein. Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to them in the
Disbursement Agreement.
2. The General Contractor hereby certifies and confirms, with respect to
that portion of the amendment relating to its Hard Costs, the accuracy of the
certifications in the above-referenced Construction Disbursement Budget
Amendment Certificate.
F-11
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent and the Independent Construction
Consultant are entitled to rely on the foregoing in authorizing and making the
amendment to the Construction Disbursement Budget.
HASELDEN CONSTRUCTION, INC.
By: ________________________________
Name: ______________________________
Title: _____________________________
F-12
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT G
FORM OF CONTRACT AMENDMENT CERTIFICATE
--------------------------------------
[Date]
IBJ Schroder Bank & Trust Company,
as Disbursement Agent
One State Street
New York, NY 10004
CRSS Constructors, Inc.,
as Independent Construction Consultant
1670 Broadway, Suite 3200
Denver, CO 80202
Re: Isle of Capri Black Hawk L.L.C. Amendment No. ___ to Contract dated
________ (the "CONTRACT"), between Isle of Capri Black Hawk, L.L.C., a
Colorado limited limited liability company (the "COMPANY"), and _____
-----------------------------------------------------
___ ("CONTRACTOR")
-----------------
Ladies and Gentlemen:
The Company requests that the above-referenced Contract be amended as set
forth on SCHEDULE 1 to this certificate. This certificate is delivered pursuant
----------
to that certain Cash Collateral and Disbursement Agreement dated as of August
__, 1997 (as amended, supplemented or otherwise modified from time to time, the
"DISBURSEMENT AGREEMENT"), to which you are a party. Capitalized terms used in
this certificate that are otherwise not defined shall have the meaning assigned
in the Disbursement Agreement. In connection with the requested Contract
amendment, the Company hereby represents, warrants and certifies as follows:
1. The proposed amendment is attached as SCHEDULE 1 hereto. The
----------
amendment is reasonably necessary or desirable in order to complete the
development, construction, equipping and operation of the Isle-Black Hawk so
that it is Operating prior to the Operating Deadline (without giving effect to
the construction of the hotel, and, if the Company exercises the Hotel Option,
prior to the Hotel Substantial Completion Date).
2. The following circumstances resulted in the necessity or desirability
of the proposed amendment:
__________________________________
__________________________________
__________________________________
G-1
<PAGE>
3. After giving effect to such amendment (and any related amendment to
the Construction Disbursement Budget for the Isle-Black Hawk):
(a) Such Construction Disbursement Budget will continue to call for
construction of improvements constituting the Isle-Black Hawk;
(b) The amendment will not materially affect the scope, quality or
value of the Isle-Black Hawk for the following reasons:
__________________________________
__________________________________
__________________________________
(c) The Company will continue to be able to complete the work within
the line items pertaining to the Contract: (i) in a timely manner so as to
permit the date on which the Isle-Black Hawk becomes Operating to occur on or
prior to the Operating Deadline (and, if the Company exercises the Hotel Option,
prior to the Hotel Substantial Completion Date); and (ii) within the aggregate
amounts specified for the line items on its Construction Disbursement Budget.
4. After giving effect to the proposed amendment (and any related
amendment to the Construction Disbursement Budget), the Construction
Disbursement Budget accurately sets forth the anticipated Construction Expenses
through completion of the construction of the Isle-Black Hawk and the various
components of the Isle-Black Hawk, all within the line item allocations
established for those components set forth in the Construction Disbursement
Budget.
5. Prior to and after giving effect to the amendment, there is and will
be no Default or Event of Default.
The undersigned certifies that this Contract Amendment Certificate is
authorized hereby is permitted pursuant to the Disbursement Agreement and the
Indenture, and all conditions precedent thereto have been met.
G-2
<PAGE>
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent and the Independent Construction
Consultant is entitled to rely on the foregoing.
Attached to this Contract Amendment Certificate is a certificate from the
Independent Construction Consultant [FOR CONTRACTS RELATING TO HARD COSTS ONLY:]
and a certificate from the General Contractor.
ISLE OF CAPRI BLACK HAWK L.L.C.,
a Colorado limited liability company
By: _______________________________
Name: _____________________________
Title: ____________________________
By: _______________________________
Name: _____________________________
Title: ____________________________
Received and Reviewed:
- ----------------------
CASINO AMERICA, INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
CRSS CONSTRUCTORS, INC., as
Independent Construction Consultant
By: ________________________________
Name: ______________________________
Title: _____________________________
G-1
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
SCHEDULE 1 TO EXHIBIT G
COPY OF EXECUTED CONTRACT AMENDMENT
-----------------------------------
[To be attached.]
G-2
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 1 TO EXHIBIT G
FORM OF CERTIFICATE OF INDEPENDENT CONSTRUCTION CONSULTANT
----------------------------------------------------------
CONTRACT AMENDMENT
------------------
[Date]
IBJ Schroder Bank & Trust Company,
as Disbursement Agent
One State Street
New York, NY 10004
Re: Amendment No. ___ to Contract dated __________ (the "CONTRACT")
between Isle of Capri Black Hawk L.L.C., a Colorado limited liability
company and _____________________ ("CONTRACTOR")
----------------------------------------
Ladies and Gentlemen:
CRSS Constructors, Inc., the "INDEPENDENT CONSTRUCTION CONSULTANT"), hereby
certifies as follows:
1. The Independent Construction Consultant has reviewed the above
referenced Contract Amendment Certificate and the Cash Collateral and
Disbursement Agreement dated as of August 20, 1997 (as amended, supplemented or
otherwise modified from time to time, the "DISBURSEMENT AGREEMENT"), to which
the Company is a party. Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Disbursement Agreement.
2. The Independent Construction Consultant hereby certifies and confirms
the accuracy of the certifications in the above-referenced Contract Amendment
Certificate.
The foregoing representations, warranties and certifications are true,
complete and correct and the Disbursement Agent is entitled to rely on the
foregoing relative to the amendment to the Contract.
CRSS CONSTRUCTORS, INC.,
as Independent Construction Consultant
By: ___________________________________
Name: _________________________________
Title: ________________________________
G-3
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT 2 TO EXHIBIT G
FORM OF CERTIFICATE OF GENERAL CONTRACTOR
-----------------------------------------
CONTRACT AMENDMENT
------------------
[Date]
IBJ Schroder Bank & Trust Company,
as Disbursement Agent
One State Street
New York, NY 10004
Re: Amendment No. ___ to Contract dated __________ (the "CONTRACT")
between Isle of Capri Black Hawk L.L.C., a Colorado limited liability
company, and _____________________ ("CONTRACTOR")
----------------------------------------
Ladies and Gentlemen:
The undersigned (the "GENERAL CONTRACTOR") hereby certifies as follows:
1. The General Contractor has reviewed the above-referenced Contract, as
well the above referenced Contract Amendment Certificate and the Cash Collateral
and Disbursement Agreement dated as of August 20, 1997 (as amended,
supplemented or otherwise modified from time to time, the "DISBURSEMENT
AGREEMENT"), to which the Company is a party, to the extent necessary to
understand the defined terms contained herein and in the Contract Amendment
Certificate that are incorporated by reference from the Disbursement Agreement,
and to provide the certification contained herein.
2. The General Contractor hereby certifies and confirms the accuracy of
the certifications in the above-referenced Contract Amendment Certificate, as
such certifications relate to the Construction Contract costs.
The foregoing representations, warranties and certifications are true,
complete and correct and the Independent Construction Consultant and the
Disbursement Agent are entitled to rely on the foregoing relative to the
amendment to the Contract.
HASELDEN CONSTRUCTION , INC.
By: _________________________________
Name: _______________________________
Title: ______________________________
G-4
<PAGE>
CASH COLLATERAL AND DISBURSEMENT AGREEMENT
EXHIBIT H
FORM OF CONSENT TO COLLATERAL ASSIGNMENT OF CONTRACT
----------------------------------------------------
SEE ATTACHED
H-1
<PAGE>
CASH COLLATERAL AND DISBURSEMENT ACCOUNT
EXHIBIT I
FORM OF PRO FORMA TITLE POLICY
------------------------------
SEE ATTACHED
I-1
<PAGE>
EXHIBIT 4.4
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement (this "Agreement") dated as of August 20,
---------
1997, among Isle of Capri Black Hawk L.L.C., a Colorado limited liability
company (the "Company"), Isle of Capri Black Hawk Capital Corp., a Colorado
-------
corporation and a wholly owned subsidiary of the Company ("Capital" and,
-------
together with the Company, the "Issuers"), and Jefferies & Company, Inc. (the
-------
"Initial Purchaser"), who has agreed to purchase the Issuers, 13% Series A First
- ------------------
Mortgage Notes due 2004 With Contingent Interest (the "Series A Notes") pursuant
--------------
to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement dated August 14,
1997 (the "Purchase Agreement"), among the Issuers and the Initial Purchaser.
------------------
In order to induce the Initial Purchaser to purchase the Series A Notes, the
Issuers have 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 Section 2 of 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.
---
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
-------------
Closing Date: The date of this Agreement.
------------
Commission: The Securities and Exchange Commission.
----------
Consummate: A Registered Exchange Offer shall be deemed "Consummated" for
----------
purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (ii) 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 (iii) the delivery by the Issuers
to the Registrar under the Indenture of Series B Notes in the same aggregate
principal amount as the aggregate principal amount of Series A Notes that were
tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Series A Notes, each Interest
--------------------
Payment Date.
Effectiveness Target Date: As defined in Section 5 hereof.
-------------------------
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
<PAGE>
Exchange Offer: The registration by the Issuers under the Act of the
--------------
Series B Notes pursuant to a Registration Statement pursuant to which the
Issuers offer the Holders of all outstanding Transfer Restricted Securities the
opportunity to exchange all such outstanding Transfer Restricted Securities held
by such Holders for Series B 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 Series A 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) or
(7) of Regulation D under the Act ("Accredited Institutions").
-----------------------
Holders: As defined in Section 2(b) hereof.
-------
Indemnified Holder: As defined in Section 8(a) hereof.
------------------
Indenture: The Indenture dated as of August 20, 1997, among the Issuers
---------
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.
Initial Purchaser: As defined in the preamble hereto.
-----------------
Interest Payment Date: As defined in the Indenture and the Notes.
---------------------
NASD: National Association of Securities Dealers, Inc.
----
Notes: Collectively, the Series A Notes and the Series B Notes.
-----
Person: An individual, partnership, limited liability company,
------
corporation, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement, 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.
Record Holder: With respect to any Damages Payment Date relating to the
-------------
Notes, each Person who is a Holder of Notes on the record date with respect to
the Interest Payment Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
--------------------
Registration Statement: Any registration statement of the Issuers relating
----------------------
to (i) an offering of Series B Notes pursuant to an Exchange Offer or (ii) the
registration for resale of
2
<PAGE>
Transfer Restricted Securities pursuant to the Shelf Registration Statement,
which is filed pursuant to the provisions of this Agreement, in each case,
including the Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all exhibits and material
incorporated by reference therein.
Series B Notes: The Issuers 13% Series B First Mortgage Notes due 2004
--------------
With Contingent Interest to be issued pursuant to the Indenture in the Exchange
Offer.
Shelf Filing Deadline: As defined in Section 4(a) hereof.
---------------------
Shelf Filing Event: As defined in Section 4(a) hereof.
------------------
Shelf Registration Statement: As defined in Section 4(a) 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 Series A Note, until the earliest to
------------------------------
occur of (i) the date on which such Series A Note is exchanged by a person other
than a broker-dealer for a Series B Note in the Exchange Offer, (b) following
the exchange by a broker-dealer in the Exchange Offer of a Series A Note for a
Series B Note, the date on which such Series B 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, (iii) the
date on which such Series A Note has been effectively registered under the Act
and disposed of in accordance with the Shelf Registration Statement or (iv) the
date on which such Series A Note is distributed to the public pursuant to Rule
144 under the Act.
Underwritten Registration or Underwritten Offering: A registration in
------------------------- ---------------------
which securities of the Issuers are sold to an underwriter for reoffering to the
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities. The securities entitled to the
------------------------------
benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. 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 permissible under applicable
law or Commission policy (after the procedures set forth in Section 6(a) below
have been complied with), the Issuers shall (i) cause to be filed with the
Commission as soon as practicable after the Closing Date, but in no event later
than 60 days after the Closing Date, a Registration Statement under the Act
relating to the Series B Notes and the Exchange Offer, (ii) use their best
efforts to cause such Registration Statement to become effective at the earliest
possible time, but in no
3
<PAGE>
event later than 120 days after the Closing Date, (iii) in connection with the
foregoing, file (A) all pre-effective amendments to such Registration Statement
as may be necessary in order to cause such Registration Statement to become
effective, (B) if applicable, a post-effective amendment to such Registration
Statement pursuant to Rule 430A under the Act and (C) cause all necessary
filings in connection with the registration and qualification of the Series B
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 Registration Statement, commence the Exchange Offer. The Exchange Offer
shall be on the appropriate form permitting registration of the Series B Notes
to be offered in exchange for the Transfer Restricted Securities and to permit
resales of Notes held by Broker-Dealers as contemplated by Section 3(c) below.
(b) The Issuers 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 Issuers shall cause
the Exchange Offer to comply with all applicable federal and state securities
laws. No securities other than the Notes shall be included in the Exchange
Offer Registration Statement. The Issuers shall use their 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 Issuers shall indicate in a "Plan of Distribution" section
contained in the Prospectus contained in the Exchange Offer Registration
Statement that any Broker-Dealer who holds Series A Notes that are Transfer
Restricted Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Issuers), may exchange such
Series A Notes 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 any resales of the Series B Notes received by such Broker-Dealer
in the Exchange Offer, which prospectus delivery requirement 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 resales by Broker-Dealers
that the Commission may require in order to permit such resales pursuant
thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer
or disclose the amount of Notes held by any such Broker-Dealer except to the
extent required by the Commission.
The Issuers shall use their 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 resales of Notes acquired by Broker-Dealers for
their own accounts as a result of market-making activities or other trading
activities, 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 of one year from the date on which the
Exchange Offer Registration Statement is declared effective.
4
<PAGE>
The Issuers shall provide sufficient copies of the latest version of such
Prospectus to Broker-Dealers promptly upon request at any time during such one-
year period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Issuers are not required to file an
Exchange Offer Registration Statement 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) below have
been complied with) or (ii) if any Holder of Transfer Restricted Securities
shall notify the Issuers within 20 days of the Consummation of the Exchange
Offer that (A) such Holder is prohibited by applicable law or Commission policy
from participating in the Exchange Offer, (B) such Holder may not resell the
Series B Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder or (C) such Holder is a Broker-Dealer and holds Series A Notes acquired
directly from the Issuers or an affiliate of the Issuers (each such event
referred to in clauses (i) and (ii) above a "Shelf Filing Event"), then the
Issuers shall:
(x) cause to be filed 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") on or prior to 45 days after such obligations arises (such date
being the "Shelf Filing Deadline"), which Shelf Registration Statement
shall provide for resales of all Transfer Restricted Securities the Holders
of which shall have provided the information required pursuant to Section
4(b) hereof, and
(y) use their best efforts to cause such Shelf Registration Statement
to be declared effective by the Commission on or before the 120th day after
the Shelf Filing Deadline.
The Issuers shall use their best efforts to keep such Shelf Registration
Statement 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 resales of Notes by the Holders of Transfer Restricted
Securities 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 of at least two years following the Closing Date (or for such shorter
period that will terminate when all of the Notes covered by the Shelf
Registration Statement have been sold pursuant thereto or cease to be
outstanding); provided, however, that the Issuers may, on one occasion, by
notice to all persons to whom it has provided a copy of the prospectus contained
in such Shelf Registration Statement, suspend the use thereof for a period not
to exceed 20 consecutive days in the event that, in the opinion of counsel to
the Issuers, there are material non-public circumstances that would render such
resale prospectus materially inaccurate or misleading.
(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
5
<PAGE>
unless and until such Holder furnishes to the Issuers in writing, within 20
business days after receipt of a request therefor, such information as the
Issuers may reasonably request 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 used its best
efforts to provide all such reasonably requested information. Each Holder as to
which any Shelf Registration Statement is being effected agrees to furnish
promptly to the Issuers all information required to be disclosed in order to
make the information previously furnished to the Issuers by such Holder not
materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement is not
filed with the Commission on or prior to 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 in this Agreement (the "Effectiveness Target Date"), (iii) the
-------------------------
Exchange Offer has not been Consummated within 45 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (iv) any Registration Statement required by this Agreement is
declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded immediately by a post-
effective amendment to such Registration Statement that cures such failure and
that is itself immediately declared effective (each such event referred to in
clauses (i) through (iv), a "Registration Default"), the Issuers agree to pay
--------------------
liquidated damages to each Holder of Transfer Restricted Securities 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 Transfer Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues; provided, however, that
upon the occurrence of an event described in clause (iv) above with respect to
the failure of a Shelf Registration Statement to be effective or usable in
connection with resales of Transfer Restricted Securities, only those Holders
whose Notes were registered pursuant to such Shelf Registration Statement shall
be entitled to collect liquidated damages. The amount of the liquidated damages
shall increase by an additional $.05 per week per $1,000 in principal amount of
Transfer Restricted Securities with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
liquidated damages of $.25 per week per $1,000 principal amount of Transfer
Restricted Securities. All accrued liquidated damages shall be paid to Record
Holders by the Issuers on each Damages Payment Date by wire transfer of
immediately available funds or by federal funds check on each Damages Payment
Date, as provided in the Indenture. Following the cure of all Registration
Defaults relating to any particular Transfer Restricted Securities, the accrual
of liquidated damages with respect to such Transfer Restricted Securities will
cease.
All obligations of the Issuers 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 Transfer Restricted
Security shall have been satisfied in full.
6
<PAGE>
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
-------------------------------------
Exchange Offer, the Issuers shall comply with all of the provisions of Section
6(c) below, shall use their best efforts to effect such exchange to permit the
sale of Transfer Restricted 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 in the reasonable opinion of counsel to the Issuers there is
a question as to whether the Exchange Offer is permitted by applicable law,
the Issuers agree to seek a no-action letter or other favorable decision
from the Commission allowing the Issuers to Consummate an Exchange Offer
for such Series A Notes. The Issuers agree to pursue the issuance of such a
decision to the Commission staff level but shall not be required to take
commercially unreasonable action to effect a change of Commission policy.
The Issuers agree, however, to (A) participate in telephonic conferences
with the Commission, (B) deliver to the Commission staff an analysis
prepared by counsel to the Issuers setting forth the legal bases, if any,
upon which such counsel has concluded that such an Exchange Offer should be
permitted and (C) diligently pursue 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 Issuers, prior to the
Consummation thereof, a written representation to the Issuers (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
either of the Issuers, (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 Series B Notes to be issued in the
Exchange Offer and (C) it is acquiring the Series B Notes in its ordinary
course of business. In addition, all such Holders of Transfer Restricted
Securities shall otherwise cooperate in the Issuers' preparations for the
Exchange Offer. 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 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 should 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 Series B Notes obtained by such Holder in exchange
for Series A Notes acquired by such Holder directly from the Issuers.
7
<PAGE>
(b) Shelf Registration Statement. In connection with the Shelf
----------------------------
Registration Statement, the Issuers shall comply with all the provisions of
Section 6(c) below and shall use their 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, and
pursuant thereto the Issuers 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 method or
methods of distribution thereof.
(c) General Provisions. In connection with any Registration Statement and
------------------
any Prospectus required by this Agreement to permit the sale or resale of
Transfer Restricted Securities (including, without limitation, any Registration
Statement and the related Prospectus required to permit resales of Notes by
Broker-Dealers), the Issuers shall:
(i) use their best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements for
the period specified in Section 3 or 4 of this Agreement, 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 Issuers shall file promptly an appropriate amendment to such
Registration Statement, in the case of clause (A), correcting any such
misstatement or omission, and, in the case of either clause (A) or (B), use
their best efforts to cause such amendment to be declared effective and
such Registration Statement and the related Prospectus to become usable for
their intended purpose(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 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
the applicable provisions of Rules 424 and 430A 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, to 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
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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) after obtaining knowledge thereof, 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 or the Prospectus in order to make the
statements therein not misleading and (E) of the suspension of
effectiveness of the Shelf Registration Statement pursuant to the terms of
Section 4(a) hereof. 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
Issuers shall use their best efforts to obtain the withdrawal or lifting of
such order at the earliest possible time;
(iv) 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 the underwriter(s), all financial and other
records, pertinent corporate documents and properties of the Issuers and
cause the Issuers' officers, directors and employees to supply all
information reasonably requested by any such Holder, underwriter, attorney
or accountant in connection with such Registration Statement subsequent to
the filing thereof and prior to its effectiveness; provided, however, that
the Issuers may, prior to furnishing any such information, require each
recipient to execute a confidentiality agreement reasonably satisfactory to
the Issuers to keep confidential any non-public information relating to the
Issuers received by such person and not to disclose such information until
such information has been made generally available to the public unless the
release of such information is required by law;
(v) if requested by any selling Holders or the underwriter(s), if
any, promptly incorporate 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 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
Issuers are notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment;
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(vi) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated or to maintain the rating thereof with
the appropriate rating agencies, if so requested by the Holders of a
majority in aggregate principal amount of Notes covered thereby or the
underwriter(s), if any;
(vii) furnish to each selling Holder and each of the underwriter(s),
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 incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(viii) 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 Issuers hereby consent 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;
(ix) enter into such agreements (including 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, all to such extent
as may be requested by the Initial Purchaser or 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
whether or not an underwriting agreement is entered into and whether or not
the registration is an Underwritten Registration, the Issuers shall:
(A) furnish to the Initial Purchaser, each selling Holder and
each underwriter, if any, in such substance and scope as they may
request and as are customarily made by issuers to underwriters in
primary underwritten offerings, upon the date of the Consummation of
the Exchange Offer and, if applicable, the effectiveness of the Shelf
Registration Statement:
(1) an Officer's Certificate, dated the date of the
Consummation of the Exchange Offer or the date of effectiveness
of the Shelf Registration Statement, as the case may be, signed
by (y) the President or any Vice President and (z) a principal
financial or accounting officer of each of the Issuers,
confirming, as of the date thereof, the matters set forth in
clauses (a)(i), (a)(ii) and (a)(iii) of Section 11 of the
Purchase Agreement and such other matters as such parties may
reasonably request;
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for each
of the Issuers, Casino
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America and Nevada Gold covering the matters set forth in
clauses (a)(v), (a)(vi), (a)(vii) and (a)(viii) of Section 11
of the Purchase Agreement and such other matter as such parties
may reasonably request, and in any event including a statement
to the effect that such counsel has participated in conferences
with officers and other representatives of the Issuers,
representatives of the independent public accountants for the
Issuers, the Initial Purchaser's representatives and the
Initial Purchasers' counsel 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 officers and
other representatives of the Issuers and without independent
check or verification), 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 light of the circumstances under
which they were made, not misleading. Without limiting the
foregoing, such counsel may state further that 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
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
Consummation of the Exchange Offer or the date of effectiveness
of the Shelf Registration Statement, as the case may be, from
the Issuers' independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters by underwriters in connection with primary underwritten
offerings, and affirming the matters set forth in the comfort
letters delivered pursuant to clause(a)(x) Section 11 of the
Purchase Agreement, without material exception;
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(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, 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 Issuers
pursuant to this clause (ix), if any.
If at any time the representations and warranties of the Issuers
contemplated in clause (A)(1) above cease to be true and correct, the Issuers
shall so advise the Initial Purchaser and the underwriter(s), if any, and each
selling Holder promptly and, if requested by such Persons, shall confirm such
advice in writing;
(x) 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) 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 Shelf Registration Statement; provided, however, the Issuers
shall not be required to register or qualify as a foreign corporation where
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;
(xi) shall issue, upon the request of any Holder of Series A Notes
covered by the Shelf Registration Statement, Series B Notes, having an
aggregate principal amount equal to the aggregate principal amount of
Series A Notes surrendered to the Issuers by such Holder in exchange
therefor or being sold by such Holder; such Series B Notes to be registered
in the name of such Holder or in the name of the purchaser(s) of such
Notes, as the case may be; in return, the Series A Notes held by such
Holder shall be surrendered to the Issuers for cancellation;
(xii) 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 enable such Transfer Restricted Securities to be
in such denominations and registered in such names as the Holders or the
underwriter(s), if any, may request at least two business days prior to any
sale of Transfer Restricted Securities made by such underwriter(s);
(xiii) use their 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 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 (x) above;
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<PAGE>
(xiv) if any fact or event contemplated by clause (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 Initial Purchasers of
Transfer Restricted Securities and for the period specified in Sections 3
and 4 hereof, 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 not misleading;
(xv) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of the Registration Statement 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;
(xvi) 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 reasonable 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;
(xvii) otherwise use their best efforts to comply with all applicable
rules and regulations of the Commission, and make generally available to
its security holders, as soon as practicable, a consolidated earnings
statement meeting the requirements of Rule 158 (which need not be audited)
for the twelve-month period (A) commencing at the end of any fiscal quarter
in which Transfer Restricted Securities are sold to underwriters in a firm
or best efforts Underwritten Offering or (B) if not sold to underwriters in
such an offering, beginning with the first month of the Issuers' first
fiscal quarter commencing after the effective date of the Registration
Statement;
(xviii) 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 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;
(xix) cause all Transfer Restricted Securities covered by the
Registration Statement to be listed on each securities exchange on which
similar securities issued by the Issuers 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
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(xx) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 and
Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security that,
upon receipt of any notice from the Issuers of the existence of any fact of the
kind described in Section 6(c)(iii)(D) or (E) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement (i) in the case of Section (c)(iii)(D) hereof,
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(xv) hereof, or until it is advised in
writing (the "Advice") by the Issuers that the use of the Prospectus may be
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resumed, and has received copies of any additional or supplemental filings that
are incorporated by reference in the Prospectus and (ii) in the case of Section
(c)(iii)(E) hereof, until 20 days after the date of such notice. If so directed
by the Issuers, each Holder will deliver to the Issuers (at the Issuers'
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 Issuers
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 Issuers' performance of or compliance
with this Agreement will be borne by the Issuers, regardless of whether a
Registration Statement becomes effective, including without limitation: (i) all
registration and filing fees and expenses of any "qualified independent
underwriter" and its counsel that 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 Series B 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 each of the Issuers and, subject
to Section 7(b) below, the Holders of Transfer Restricted Securities; (v) as
applicable or required, all application and filing fees in connection with
listing Notes on a national securities exchange or automated quotation system
pursuant to the requirements hereof; and (vi) all fees and disbursements of
independent certified public accountants of the Issuers (including the expenses
of any special audit and comfort letters required by or incident to such
performance).
The Issuers will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of their respective 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 Issuers.
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(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Issuers 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, who shall be
Latham & Watkins or such other counsel as may be chosen by the 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 Issuers, jointly and severally, agree 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 referred 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
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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 (i) 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 Issuers by any of the Holders expressly for use
therein and (ii) that the foregoing indemnity with respect to any untrue
statement contained in or omission from a Registration Statement or Prospectus
shall not inure to the benefit of any Indemnified Holder from whom the person
asserting any such loss, claim, damage, liability or expense purchased any of
the Notes which are the subject thereof if such loss, claim, damage, liability
or expense arose by reason of the failure by any Holder to comply with the
prospectus delivery requirements to which such Holder is subject under the Act
so long as (i) delivery of the prospectus to the person asserting any such loss,
claim, damage, liability or expense was required by the Act, (ii) such loss,
claim, damage, liability or expense related solely to the failure to deliver a
copy of the Prospectus and (iii) delivery of such Prospectus would have
corrected such loss, claim, damage, liability or expense.
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
Issuers, such Indemnified Holder (or the
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<PAGE>
Indemnified Holder controlled by such controlling person) shall promptly notify
the Issuers in writing (provided, that the failure to give such notice shall not
relieve the Issuers of their 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 by the Issuers
(unless it is ultimately determined that an Indemnified Holder is not entitled
to indemnification hereunder). The Issuers 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 Issuers shall be liable for any settlement of any such action or
proceeding effected with the Issuers' prior written consent, which consent shall
not be withheld unreasonably, and the Issues agree 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
written consent of the Issuers. The Issuers 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 Issuers, and their respective
directors, officers, and any person controlling (within the meaning of Section
15 of the Act or Section 20 of the Exchange Act) the Issuers, and the respective
officers, directors, partners, employees, representatives and agents of each
such person, to the same extent as the foregoing indemnity from the Issuers to
each of the Indemnified Holders, but only with respect to claims and actions (i)
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 Issuers or their respective directors or
officers 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 Issuers and the Issuers or their respective
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 Registrable
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 the relative benefits received by the
Issuers on the one hand and the Holders on the
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<PAGE>
other hand from their sale of Transfer Restricted Securities or if such
allocation is not permitted by applicable law, the relative fault of the Issuers
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 Issuers 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 relates to information supplied by the
Issuers 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 limitations 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.
The Issuers 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 proceeds
received by such Holder from sales of Series A Notes exceeds the sum of (i) the
amount paid by such Holder for such Series A Notes plus (ii) the amount 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 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. The Holders' obligations to contribute
pursuant to this Section 8(c) are several in proportion to the respective
principal amount of Series A Notes held by each of the Holders hereunder and not
joint.
SECTION 9. RULE 144A
The Issuers hereby agree with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective Initial Purchaser of such Transfer Restricted
Securities from 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.
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SECTION 10. PARTICIPATION IN 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 approved by the Persons
entitled hereunder to approve such arrangements 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.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or 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 Issuers.
SECTION 12. MISCELLANEOUS
(a) Remedies. The Issuers agree that monetary damages (including the
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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 Issuers will not on or after the date
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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 Issuers have 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 Issuers' securities under any agreement in effect on the date
hereof.
(c) Adjustments Affecting the Notes. The Issuers will not take any
-------------------------------
action, or permit any change to occur, with respect to the Notes that would
materially and 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 Issuers have obtained the
written consent of Holders of a majority of the then 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
18
<PAGE>
of a majority of the outstanding principal amount of Transfer Restricted
Securities being tendered or registered.
(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), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at 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 Issuers:
Isle of Capri Black Hawk L.L.C.
Isle of Capri Black Hawk Capital Corp.
c/o Casino America, Manager
711 Washington Loop
Biloxi, Mississippi 39530
Telecopier No.: (601) 435-5998
Attention: Chief Financial Officer
With a copy to:
Mayer, Brown & Platt
190 S. LaSalle Street, Suite 3100
Chicago, Illinois 60603
Telecopier No.: (312) 701-7711
Attention: Paul Theiss
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt 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 only to the extent such successor or assign
acquired Transfer Restricted Securities from such Holder.
(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
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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 Issuers 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>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
ISLE OF CAPRI BLACK HAWK L.L.C.
By: /s/ Allan B. Solomon
-------------------------------------
Name: Allan B. Solomon
-----------------------------------
Title: Executive Vice President
----------------------------------
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
By: /s/ Allan B. Solomon
-------------------------------------
Name: Allan B. Solomon
-----------------------------------
Title: Executive Vice President
----------------------------------
JEFFERIES & COMPANY, INC.
By: /s/ David P. St. Jean
-------------------------------
Name: David P. St. Jean
Title: Managing Director
21
<PAGE>
EXHIBIT 4.5
Recording at the Request of and
when Recorded Mail Original to:
Latham & Watkins
633 W. Fifth Street, Suite 4000
Los Angeles, California 90071
Attention: Dena Bloom, Esq.
DEED OF TRUST TO PUBLIC TRUSTEE,
SECURITY AGREEMENT, FIXTURE FILING AND
ASSIGNMENT OF RENTS, LEASES AND LEASEHOLD INTERESTS
(GILPIN COUNTY, COLORADO)
THIS DEED OF TRUST TO PUBLIC TRUSTEE, SECURITY AGREEMENT, FIXTURE
FILING AND ASSIGNMENT OF RENTS, LEASES AND LEASEHOLD INTERESTS (as the same may
be amended, supplemented or otherwise modified from time to time, this "Deed of
Trust") is made and entered into as of August 20, 1997 by ISLE OF CAPRI BLACK
HAWK L.L.C., a Colorado limited liability company (the "Company"), whose address
is c/o Casino America Inc., 711 Washington Loop, Biloxi, Mississippi 39530 and
whose federal taxation identification number is 84-1422931, and by ISLE OF CAPRI
BLACK HAWK CAPITAL CORP., a Colorado corporation ("Capital Corp." and, together
with the Company and any successor or assign thereof, collectively, the
"Trustors" and each, a "Trustor") and whose address is c/o Casino America, Inc.,
711 Washington Loop, Biloxi, Missouri 39530 and whose federal taxpayer
identification number is 91-1842690, to the PUBLIC TRUSTEE OF THE COUNTY OF
GILPIN, COLORADO ("Trustee"), for the benefit of IBJ SCHRODER BANK & TRUST
COMPANY, a New York banking corporation, whose address is One State Street, New
York, New York 10004, in its capacity as trustee under the Indenture referred to
below ("Beneficiary") for its benefit and the benefit of the Holders (as defined
herein).
RECITALS
A. Beneficiary and Trustors are the parties to that certain
Indenture dated as of August 20, 1997 (as the same may be amended, supplemented
or otherwise modified from time to time, the "Indenture"). Unless otherwise
defined herein, capitalized terms used in this Deed of Trust shall have the
meanings given such terms in Annex A attached hereto.
B. Trustors have, under the Indenture, issued their 13% First
Mortgage Notes Due 2004 With Contingent Interest in the original principal
amount of $75,000,000 (together with any amendments, supplements, modifications,
renewals or extensions thereof
<PAGE>
and any notes issued in replacement thereof or exchange therefor from time to
time, the "Notes"). The Notes, the Indenture, the Collateral Documents and all
other documents, agreements and instruments (in each case, as amended,
supplemented or otherwise modified from time to time) now or hereafter executed
and delivered in connection with the Indenture and transactions described
therein are collectively hereinafter referred to as the "Transaction Documents."
C. The Indenture requires that the obligations of Trustors under the
Notes, the Indenture and the other Transaction Documents be secured by liens and
security interests covering certain property of Trustors. In connection
therewith, Trustors are executing and delivering this Deed of Trust in
accordance with the Indenture.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Trustors agree as follows:
ARTICLE I - GRANT OF DEED OF TRUST
1.1 Grant of Deed of Trust. Each Trustor does hereby irrevocably grant,
----------------------
assign, bargain, convey, transfer, warrant and set over unto Trustee, IN TRUST,
WITH POWER OF SALE, under and subject to the terms and conditions hereof, for
the benefit and security of Beneficiary and for the ratable benefit and security
of the Holders, all of such Trustor's right, title and interest in and to all of
the following property, to the extent assignable under applicable law, whether
now owned or hereafter acquired (collectively, the "Trust Property"):
(a) the real property described in Exhibit A attached hereto and by
---------
this reference incorporated herein, including, without limitation, all air
rights with respect thereto (the "Land");
(b) any and all buildings, constructions, facilities and fixtures,
pipelines and all other improvements now on, or hereafter located or constructed
on or in, the Land or any portion thereof (collectively, "Improvements"), and
all fixtures, construction materials, goods (including, without limitation,
consumer goods, equipment and inventory) and other articles of real and personal
property which are now or hereafter affixed to, placed upon or used in
connection with the Trust Property;
(c) tenements and hereditaments of whatever kind or description and
wherever situated and all of such Trustor's right, title and interest in and to
any land lying within the right of way of any street, open or proposed,
adjoining the Land, any and all sidewalks, and any land lying between the
boundaries of the Land and the center line of any adjacent street, road, avenue
or alley, whether existing, vacated or proposed;
(d) any and all furniture, fittings and fixtures (whether actually or
constructively attached, and including all trade fixtures), equipment, machinery
(including, without limitation, any and all equipment, machinery and apparatus
used for or in connection
2
<PAGE>
with maintaining and operating gaming facilities, gaming devices including slot
machines, poker tables and blackjack tables, lodging, restaurants, bars or
entertainment facilities), appliances, construction materials, personal
property, supplies, tools, paintings, sculptures, murals, art work, books, and
now or hereafter or from time to time situated on, in or under the Land and/or
any Improvements or used or usable in connection with any present or future use
of the Land, whether or not affixed to the realty, including, but not limited
to, power, lighting, heating, electrical, ventilating, air conditioning, gas,
electricity, water sprinkling and sprinkler protection, mechanical and plumbing
materials, waste removal, refrigeration, ventilation, freezing, laundry,
incinerating and power equipment; fixtures and supplies; fences and fencing;
water and power systems; irrigation systems and equipment; plumbing, lifting,
cleaning, fire prevention, fire extinguishing, ventilating, cooling and
communication apparatus and equipment; engines; boilers; furnaces; elevators;
escalators; pipes; pumps; tanks; switchboards; ducts; conduits; conveyor belts;
motors; refrigeration facilities plants; vacuum cleaning systems; awnings;
shrubbery, trees, vines and other plants of every kind and nature; ranges;
furnaces; ovens; burners; refrigerators; cabinets; dishwashers; disposals;
shades; awnings; blinds; drapes; attached floor coverings, including carpeting;
screens, storm doors and windows; rugs and carpets; draperies; beds, bureaus,
chests, desks, lamps, bookcases, tables, chairs and couches; radios and
television sets; china, glassware, silverware, tableware, linens, towels,
bedding and blankets; kitchen equipment and utensils; bars and bar fixtures;
uniforms; safes, vaults, cash registers, accounting and duplicating machines;
statuary, hangings, mirrors, decorations, pictures and ornaments;
(e) all contract rights of whatever nature, whenever acquired,
relating to the other Trust Property described in this Section 1.1, including,
-----------
without limitation, architectural and engineering plans, plans and
specifications, drawings, tests, reports or studies relating to the construction
and Improvements on or to the Land, contracts for goods or services and
management contracts, all warranties and guaranties under such contracts and all
rights under architects' contracts, construction contracts, supply contracts,
completion bonds, performance bonds and payment bonds, all accounts, general
intangibles, documents, instruments and chattel paper arising from or in
connection with such other Trust Property, including all books and records in
connection therewith, all rights, claims, suits or demands that such Trustor now
has or may hereafter acquire with respect to any damage to the Collateral (as
defined below);
(f) any and all rights of such Trustor under any leases or other
agreements entered into by such Trustor (as a "landlord," "sublandlord,"
"lessor," "sublessor" or similar capacity) now in existence or hereafter arising
and providing for the use and occupancy of all or any portion of the Trust
Property (each, as amended, supplemented or otherwise modified from time to
time, a "Tenants Lease," and collectively, the "Tenants Leases");
(g) any and all additions, betterments and improvements hereafter
acquired or constructed upon or in connection with any other property, real or
personal, now or at any time hereafter subject to the lien of this Deed of
Trust;
(h) any and all easements, rights of way, servitudes, surface rights,
interests in land, permits, licenses, grants affecting land, and all amendments
thereof,
3
<PAGE>
relating or appurtenant to the Land and/or any of the Improvements, fixtures,
personal property, easements, rights, interests and/or other items described in
this Section 1.1, now or hereafter belonging or pertaining to the Land,
-----------
including, without limitation, all franchises, privileges, reservations,
allowances, immunities, powers, rights, ordinances, permits, licenses, grants,
leases, consents, possessory and prescriptive rights of such Trustor in, on,
over, under, across and through lands, roads, highways, railroads, canals,
channels, waterways, ditches, bridges or structures, or elsewhere, together with
such Trustor's interest (now owned or hereafter acquired) in all fixtures,
Improvements and personal property now or hereafter from time to time situated
on, in, over, under, across or through, attached to or used in connection with
such Trust Property and all rights and appurtenances incident thereto;
(i) any and all rights, powers, franchises, privileges, immunities,
permits and licenses now or hereafter owned or possessed by such Trustor that
now or at any time hereafter may be necessary or useful for, or appurtenant to,
the use, operation, management, maintenance, renewal, alteration or improvement
of any of the other Trust Property;
(j) all income, rents, receipts, security or similar deposits,
revenues, issues, royalties, profits, earnings, products and proceeds from any
and all of the Land or any buildings or other Improvements, now owned or
hereafter acquired (collectively, the "Rents, Issues and Profits"), together
with the right to collect and apply the same to any indebtedness secured
hereunder, subject, however, to the right hereafter given to such Trustor to
collect the Rents, Issues and Profits as long as such Trustor is not in default
hereunder;
(k) any and all rights and estates in reversion or remainder;
(l) all oil and gas or other mineral rights in or pertaining to the
Land and all royalty, leasehold and other rights of such Trustor pertaining
thereto, now owned or hereafter acquired;
(m) all monies in the possession of Beneficiary or any Holder
(including, without limitation, retainages and deposits for taxes and
insurance), and all refundable utility, tenant, escrow and governmental fees and
deposits, and all refundable fees and deposits of every other nature, now owned
or hereafter acquired;
(n) any and all rights to obtain water, sewer and other services from
municipalities and service districts;
(o) all water and water rights, ditches and ditch rights, reservoirs
and storage rights, wells and well rights, springs and spring rights,
groundwater rights (whether tributary, nontributary or not-nontributary), water
contracts, water allotments, water taps, shares in ditch or reservoir companies,
and all other rights of any kind or nature in or to the use of water, which are
appurtenant to, historically used on or in connection with, or located on or
under the Land, including, without limitation, shares of stock evidencing the
foregoing and all deposits made with or other security given to utility
companies by such Trustor with
4
<PAGE>
respect to the Land or any buildings or other Improvements, together with any
and all easements, rights of way, fixtures, personal property, contract rights,
permits or decrees associated with or used in connection with any such rights;
(p) all shrubbery, trees, vines, flowers, plants and landscaping
features of every kind and nature and all crops of every type and nature, annual
and perennial, now or hereafter located on, under or above the Land, all
harvested crops wherever stored and any document of title or other document
representing a storage obligation, including, but not limited to, warehouse
receipts, negotiable or nonnegotiable, which may be received for crops in which
such Trustor has any right, title or interest wherever stored;
(q) all claims or demands relating to insurance which such Trustor now
has or may hereafter acquire with respect to any Trust Property, including,
without limitation, all advance payments of insurance premiums made by such
Trustor with respect thereto;
(r) all awards and payments, including, without limitation, interest
payments, resulting from the exercise of any right of condemnation or eminent
domain or from any other public or private taking of, injury to or decrease in
the value of, any of the Land or Improvements, or any agreement or conveyance in
lieu of any such action;
(s) all goods, inventory, equipment, building and other materials,
supplies, and other tangible personal property of every nature now owned or
hereafter acquired by such Trustor and used or intended for use in the
construction, development, or operation of the Land or any Improvements
(including, without limitation, all opened and unopened food and liquor
supplies);
(t) all of the records and books, computer programs, tapes, discs,
software and other like records and information now or hereafter maintained by
or on behalf of such Trustor in connection with the use of the Land and the
Improvements;
(u) all franchise, operating and management agreements, liquor and
gaming licenses (in each case, to the full extent legally assignable),
restaurant, occupancy, hotel, motel and other licenses, permits and
authorizations relating to the operation of the Improvements;
(v) deposit accounts and other bank or similar accounts of such
Trustor (together with all amounts in any such accounts), monies, accounts,
accounts receivable, contract rights and general intangibles (whether now owned
or existing or hereafter created or acquired, and including proceeds thereof)
relating in any way to, or arising in any manner from, such Trustor's ownership,
use, operation, leasing, or sale of all or any part of the property, rights and
interests described in this Section 1.1 (including, without limitation, all
-----------
monies, rents, receipts, proceeds and compensation of every kind whatsoever
received by or on behalf of such Trustor and produced from (i) the use or
occupancy of all or any part of the Improvements by the public or others, for
lodging, dwelling, office or residential purposes, (ii) gains arising from the
sale or other disposition of capital assets, including furniture, fixtures and
equipment, (iii) compensation awards, or proceeds in lieu thereof, (iv)
5
<PAGE>
all food and beverage sales, (v) garage and parking rentals, (vi) meeting space
rental, (vii) telephone, telecopy and telex income, (viii) income from vending
machines and newsstands, (ix) recreational fees, (x) hotel rentals; and (xi)
entertainment revenues;
(w) any other real property acquired by such Trustor after the date
hereof whether or not it is adjacent or contiguous to the Land, and is acquired
by such Trustor as a continuation, completion, correction or supplement to the
Land;
(x) any and all other rights and interests of every name and nature in
all property, whether real, personal or mixed, tangible or intangible, now or
hereafter owned or leased by such Trustor, forming a part of or used in
connection with or relating to the Land and the construction, operation and
convenience of the Improvements (including without limitation, any excavation
permits and other permits issued by Governmental Authorities);
(y) subject to the provisions and limitations contained in the
Indenture, all proceeds of any sales or other dispositions of the property or
rights described in the foregoing clauses to this Section 1.1 or any part
-----------
thereof whether voluntary or involuntary, provided, however, that the foregoing
shall not be deemed to permit such sales, transfers, or other dispositions
except as specifically permitted herein;
(z) to the extent permitted by applicable law, all of such Trustor's
right, title, and interest in and to any and all licenses, permits, variances,
special permits, franchises, certificates, rulings, certifications, validations,
exemptions, filings, registrations, authorizations, consents, approvals,
waivers, orders, rights and agreements (including, without limitation, options,
option rights and contract rights) now or hereafter obtained by such Trustor
from any governmental authority having or claiming jurisdiction over the Land,
the FF&E, the Project, or any other element of the Trust Property or providing
access thereto, or the operation of any business on, at, or from the Land, other
than any Gaming Licenses and the Liquor License (including, without limitation,
any Gaming Licenses (except for any registrations, licenses, findings of
suitability or approvals issued by the Gaming Authority or any other gaming
licenses which are non-assignable); provided, that upon an Event of Default
--------
hereunder or under the Indenture, if Beneficiary is not qualified under the
Gaming Laws to hold such Gaming Licenses, then Beneficiary shall designate an
appropriately qualified third party to which an assignment of such Gaming
Licenses can be made in compliance with the Gaming Laws;
(aa) any and all monies and other property, real or personal, which
may from time to time be subjected to the lien hereof by such Trustor or by
anyone on its behalf or with its consent, or which may come into the possession
or be subject to the control of Beneficiary pursuant to this Deed of Trust or
any Collateral Document, including, without limitation, any protective advances
under this Deed of Trust;
(bb) such Trustor's rights further to assign, sell, lease, encumber or
otherwise transfer or dispose of the property described in the foregoing clauses
of this Section 1.1, for debt or otherwise, or to evidence or secure a Permitted
-----------
Lien or Permitted Disposition;
6
<PAGE>
(cc) all after-acquired property in the same categories as any of the
foregoing clauses of this Section 1.1; and all additions and/or accessions to,
-----------
and all renewals, substitutions and replacements of any of the foregoing, and
all other things of whatsoever kind and in any way or at any time belonging or
appurtenant to, or used in connection with, any of the other Trust Property
described in this Section; and
(dd) to the extent not otherwise included in the foregoing, all
proceeds and products of any and all of the foregoing and, to the extent
permitted by applicable law, proceeds of any and all Gaming and Liquor Licenses
even if such Gaming and Liquor Licenses are not subject to the liens granted
hereunder and all collateral security and guarantees given by any person with
respect to any of the foregoing, and in any event, including, without
limitation, any and all (i) proceeds of any insurance, indemnity, warranty or
guarantee payable to Beneficiary or to such Trustor from time to time with
respect to any of the Trust Property, (ii) payments (in any form whatsoever)
made or due and payable to such Trustor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Trust Property by any governmental authority (or any person acting
under color of a governmental authority), (iii) products of the Trust Property,
(iv) other amounts from time to time paid or payable under or in connection with
any of the Trust Property, and (v) subject to the provisions and limitations
contained in the Indenture, whatever is now or hereafter receivable or received
by the Trustor upon the sale, exchange, collection or other disposition of any
item of Trust Property, whether voluntary or involuntary, including, without
limitation, the proceeds of a Permitted Disposition.
Notwithstanding the foregoing, the Trust Property shall not
include FF&E or the proceeds of an FF&E Financing (to the extent that (i) the
purchase of such FF&E was not financed with the proceeds of the Notes and (ii)
such Trustor is permitted to enter into an FF&E Financing for such FF&E under
the Indenture.
TO HAVE AND TO HOLD the Trust Property unto Trustee, its successors
and assigns forever, FOR THE PURPOSE OF SECURING, in such order of priority as
Trustee and Beneficiary may elect, the indebtedness and obligations described in
Section 1.3 hereof.
- -----------
Each Trustor, for itself and its successors and assigns, covenants and
agrees to and with Beneficiary that, at the time or times of the execution of
and delivery of these presents or any instrument of further assurance with
respect thereto, such Trustor has good right, full power and lawful authority to
assign, grant, convey, warrant, transfer, bargain or sell its interests in the
Trust Property in the manner and form as aforesaid, and that the Trust Property
is free and clear of all liens and encumbrances whatsoever, except the Permitted
Liens, and such Trustor shall warrant and forever defend the Trust Property in
the quiet and peaceable possession of Beneficiary and its successors and assigns
against all and every Person or Persons lawfully or otherwise claiming or to
claim the whole or any part thereof, except for the Permitted Liens. Each
Trustor agrees that any greater title to the Trust Property hereafter acquired
by such Trustor during the term hereof shall be automatically subject hereto.
7
<PAGE>
1.2 Status of Title; Defense of Actions and Costs.
---------------------------------------------
Each Trustor has the right to mortgage and convey the Trust Property
to Trustee and Beneficiary and will warrant and defend the same to Trustee and
Beneficiary and their respective successors and assigns against the lawful
claims and demands of every person or party whomsoever claiming or to claim the
same. Each Trustor agrees to protect, preserve and defend Trustee's and
Beneficiary's interests in the Trust Property and title thereto; to appear and
defend this Deed of Trust in any action or proceeding affecting or purporting to
affect the Trust Property, the lien or security interest of this Deed of Trust
thereon, or any of the rights of Trustee or Beneficiary hereunder, and to pay
all reasonable costs and expenses incurred by Trustee or Beneficiary in or in
connection with any such action or proceeding, including reasonable attorneys'
fees, whether or not any such action or proceeding progresses to judgment and
whether or not brought by or against Trustee or Beneficiary. Trustee and
Beneficiary shall be reimbursed for any such reasonable costs and expenses in
accordance with the provisions of this Deed of Trust and the other Transaction
Documents. Trustee or Beneficiary may, but shall not be under any obligation
to, appear or intervene in any such action or proceeding, retain counsel
therein, defend the same or otherwise take such action therein as it be advised
and may settle or compromise the same. In connection therewith Beneficiary or
Trustee, as the case may be, in that behalf and for any of such purposes, but
without obligation, may expend and advance such sums of money as it reasonably
may deem necessary, and shall be reimbursed therefor in accordance with the
provisions of this Deed of Trust and the other Transaction Documents.
1.3 Obligations Secured. This Deed of Trust is given for the purpose of
-------------------
securing the payment and performance in full when due (whether at stated
maturity, upon redemption or required repurchase, by acceleration or otherwise)
of all obligations of every type and nature of the Trustors to Trustee, any
other trustee under any other Deed of Trust, Beneficiary or any Holder
(including, without limitation, any and all amounts which may at any time be or
become due and payable and any and all interest accruing after the maturity of
the Notes and interest accruing after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to either Trustor, whether or not a claim for post-filing or post-
petition interest is allowed in such proceeding and interest, to the extent
permitted by law, on the unpaid interest), whether direct or indirect, absolute
or contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, the Indenture, the Notes,
the Capital Completion Commitment, this Deed of Trust, the other Collateral
Documents, or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, premium, interest,
fees, Liquidated Damages, indemnities, costs, expenses or otherwise (including,
without limitation, all fees and disbursements of counsel to the Trustee or to
the Holders that are required to be paid by the Trustors pursuant to the terms
of the Indenture, the Notes, the Completion Capital Commitment, this Deed of
Trust, any other Collateral Document, or any other document entered into by the
Trustors, or either of them, in connection with any of the foregoing
(collectively, the "Obligations"). Notwithstanding the scope of such
definition, however, for purposes of any provision of Title 38 of the Colorado
Revised Statutes, the only "original evidence of debt" secured by this
8
<PAGE>
Deed of Trust is the single counterpart of the Indenture which bears a legend in
the following form:
The counterpart of the Indenture on which this legend
appears is, for purposes of Title 38 of the Colorado Revised
Statutes, the "original evidence of debt" secured by the
Deed of Trust, as defined herein.
In no event shall Trustee require Beneficiary to produce any or all of the Notes
or other Loan Documents, other than the single counterpart of the Indenture
referred to above, to support Beneficiary's written request for full or partial
release of this Deed of Trust or for the sale of the Trust Property by Trustee
and each Trustor hereby waives any defense that such single counterpart of the
Indenture is not, for purposes of Title 38 of the Colorado Revised Statutes, the
"original evidence of debt" secured by this Deed of Trust. Each Trustor shall
pay and perform the Obligations at the times and places and in the manner
specified in the Notes, the Indenture and the other Transaction Documents. This
Deed of Trust shall secure unpaid balances of all loans and other such
extensions of credit made to either Trustor under the Transaction Documents,
whether made pursuant to an obligation of Beneficiary or any Holder to make such
loans or extensions or otherwise. Such Obligations and other extensions of
credit may or may not be evidenced by notes executed pursuant to the Indenture.
All future advances will have the same priority as the original advance. Any
agreement hereafter made by either Trustor and Beneficiary pursuant to this Deed
of Trust shall be superior to the rights of the holder of any intervening lien
or encumbrance to the extent allowed by law.
PROVIDED, HOWEVER, that if the principal and interest and all other
sums due or to become due under the Notes shall have been indefeasibly paid in
full at the time and in the manner stipulated herein and all other sums payable
hereunder and all other indebtedness secured hereby shall have been indefeasibly
paid in full, then in such case, the estate, right, title and interest of
Trustee and Beneficiary in the Trust Property shall cease, and upon written
notice from Beneficiary that all of the indebtedness secured hereby has been
indefeasibly paid in full, cancellation of the Notes, secured hereby, surrender
of this Deed of Trust and the Indenture to Trustee and payment by Trustors of
Trustee's fees and costs, all other amounts payable to Trustee hereunder and all
recording costs, Trustee shall release this Deed of Trust and the Trust Property
shall become wholly free of the liens, security interests, conveyances and
assignments created and evidenced hereby.
1.4 After-Acquired Property. If either Trustor hereafter acquires (a) any
-----------------------
property that is of the kind or nature described in Section 1.1 hereof and is or
-----------
is intended to become a part thereof, or (b) an interest in any of the Trust
Property greater than the interest now held, then such property or interest
shall, immediately upon such acquisition, become subject to the lien of this
Deed of Trust as fully and completely and with the same effect as though now
owned by such Trustor and specifically described herein, without need for the
delivery and/or recording of a supplement to this Deed of Trust or any other
instrument, all to the extent permitted by applicable law; but nevertheless such
Trustor shall from time to time, if requested by Beneficiary and at such
Trustor's expense, execute and deliver any and all such
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further assurances, conveyances and assignments thereof as Beneficiary may
reasonably require for the purpose of expressly and specifically subjecting to
the lien of this Deed of Trust any and all such property or interest.
1.5 Security Agreement; Fixture Filing. As additional security for the
----------------------------------
Obligations, each Trustor grants to Beneficiary a security interest in the Trust
Property. This Deed of Trust shall also, as to any part of the Trust Property
that may or might now or hereafter be deemed to be personal property, fixtures
or other property covered by Article 9 of the Colorado Uniform Commercial Code
(the "Personal Property"), be deemed to constitute a security agreement, and
each Trustor, as debtor, hereby grants to Beneficiary, as secured party, a
security interest therein pursuant to the Colorado Uniform Commercial Code. To
the extent that any Personal Property has been or may be acquired with funds
advanced under the Transaction Documents, this security interest granted
hereunder is a purchase money security interest. Each Trustor agrees, upon
request of Beneficiary, and at such Trustor's expense, to execute any
supplements to this Deed of Trust, any separate security agreement and any
financing statements and continuation statements in order to include
specifically said Personal Property or otherwise to perfect the security
interest granted hereby. Upon the occurrence and continuance of any Event of
Default, Beneficiary shall have all of the rights and remedies therein provided
or otherwise provided by law or by this Deed of Trust, including, but not
limited to the right to require Trustors, or either of them, to assemble the
Personal Property and make it available to the Beneficiary at a place to be
designated by Beneficiary which is reasonably convenient to both parties, the
right to take possession of such Personal Property with or without demand and
with or without process of law and the right to sell and dispose of the same and
distribute the proceeds according to law. The parties hereto agree that any
requirement of reasonable notice shall be met if Beneficiary sends such notice
to Trustors at least ten (10) days prior to the date of sale, disposition or
other event giving rise to the required notice, and that the proceeds of any
disposition of any such Personal Property may be applied by Beneficiary first to
the reasonable expenses in connection therewith, including reasonable attorneys'
fees and legal expenses incurred, and then to payment of the other Obligations.
The parties hereto further agree that any sale of the Personal Property held
contemporaneously with any sale of the Land or other Trust Property and upon the
same notice as required in the Colorado Uniform Commercial Code shall be deemed
to be a public sale conducted in a commercially reasonable manner. With respect
to any Personal Property that has become so attached to the real property
covered hereby that an interest therein arises under the real property law of
the State of Colorado, this Deed of Trust shall also constitute a financing
statement and a fixture filing under Sections 4-9-313 and 4-9-402(6) of the
Colorado Uniform Commercial Code.
ARTICLE II - COVENANTS CONCERNING THE TRUST PROPERTY
2.1 Taxes and Governmental Impositions.
----------------------------------
(a) Payment. Subject to Section 2.1(c), each Trustor will pay, or
------- --------------
cause to be paid, prior to delinquency, all taxes, assessments, charges, fees
including gaming and liquor license fees, fines and impositions of every nature
whatsoever charged, imposed,
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levied or assessed or to be charged, imposed, levied or assessed upon or against
the Trust Property or any part thereof, or upon the interest of Trustee or
Beneficiary in the Trust Property, including without limitation (i) all income
taxes (excluding income taxes of Trustee or Beneficiary), assessments and other
governmental charges lawfully levied and imposed by the United States or any
state, county, municipality or other taxing or assessing authority in respect of
the Trust Property or any part thereof, (ii) all non-governmental levies or
assessments, such as maintenance charges, owner's association dues, charges or
fees, levies or charges resulting from covenants, conditions and restrictions
affecting the Trust Property or any part thereof, and (iii) any other charge
that, if unpaid, would or could become a lien or charge upon the Trust Property,
or any part thereof (all of which are hereinafter collectively referred to as
the "Impositions").
(b) Alternative Impositions. If at any time after the date hereof
-----------------------
there shall be assessed or imposed (i) a tax or assessment on either Trustor's
interest in the Trust Property in lieu of or in addition to the Impositions
payable by such Trustor pursuant to subparagraph (a) above, or (ii) a license
fee, tax or assessment imposed on Trustee or Beneficiary and measured by or
based in whole or in part upon the amount of the outstanding obligation secured
hereby (but excluding any state or federal income or franchise tax), then all
such taxes, assessments, or fees shall be deemed to be included within the term
"Impositions" as defined in Section 2.1(a) above, and such Trustor shall pay and
--------------
discharge the same as herein provided with respect to the payment of
Impositions.
(c) Contests. Each Trustor shall have the right, before the
--------
occurrence of any delinquency of any Imposition, to contest or object to the
amount or validity of any such Imposition by appropriate legal proceedings, but
such right shall not be deemed or construed in any way as relieving, modifying
or extending such Trustor's covenant to pay any such Imposition at the time and
in the manner provided in Section 2.1(a) hereof, unless such Trustor has given
--------------
prior written notice to Beneficiary of such Trustor's intent so to contest or
object to an Imposition, and unless: (i) the legal proceedings shall operate
conclusively to prevent the sale of the Trust Property, or any part thereof, to
satisfy such Impositions prior to final determination of such proceedings; or
(ii) such Trustor shall furnish a good and sufficient bond or surety in the
amount of the Impositions that are being contested, plus any interest and
penalty that may be imposed thereon and that could become a lien against the
Trust Property and in a manner to stay or prevent the sale, or other security
satisfactory to Beneficiary; or (iii) such Trustor shall have provided a good
and sufficient undertaking as may be required or permitted by law to accomplish
a stay of such proceedings; or (iv) such Trustor shall have paid such
Impositions under protest and is suing to recover any refunds thereof. Subject
to the foregoing, and if Beneficiary shall so request, within thirty (30) days
after the date when an Imposition is due and payable, each Trustor shall deliver
to Beneficiary evidence reasonably acceptable to Beneficiary showing the payment
of such Imposition. In the event that either Trustor contests or objects to an
Imposition in accordance with the foregoing, then such Trustor shall promptly
and diligently proceed to resolve the dispute concerning the Imposition in a
manner not prejudicial to Beneficiary or its rights hereunder or the Transaction
Documents.
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(d) Payment by Beneficiary. Beneficiary shall have the right to pay
----------------------
any Imposition after the date such Imposition shall have become delinquent, if
either Trustor's failure to pay such Imposition constitutes or would constitute,
with or without the giving of notice by Beneficiary or the passage of time, an
Event of Default (unless such Trustor shall be contesting such Imposition
pursuant to Section 2.1(c) hereof), and to add to the Obligations the amount so
--------------
paid, together with interest thereon from the date of such payment at the then
applicable interest rate on the Notes plus 1% per annum (the "Default Rate") and
nothing herein contained shall affect such right and such remedy. Any sums paid
by Beneficiary or Trustee in discharge of any Impositions shall be (i) a future
advance hereunder and a lien on the Trust Property secured hereby prior to any
right or title to, interest in, or claim upon the Trust Property subordinate to
the lien of this Deed of Trust, and (ii) payable on demand.
(e) No Credit. Trustors shall not claim, demand or be entitled to
---------
receive any credit or credits towards the satisfaction of this Deed of Trust or
on any interest payable thereon for any taxes assessed against the Trust
Property or any part thereof, and shall not claim any deduction from the taxable
value of the Trust Property by reason of this Deed of Trust.
(f) Deposits for Impositions or Insurance Premiums. (i) At any time
----------------------------------------------
after the occurrence of an Event of Default, upon request by the Beneficiary,
the Trustors shall deposit with the Beneficiary (1) on the first day of each
month following such request a sum equal to 1/12 of the annual Impositions or
insurance premiums (as required by the Beneficiary) reasonably estimated by the
Beneficiary to become due with respect to the Trust Property for the ensuing
year, and (2) thirty (30) days prior to the next due date of any Impositions or
insurance premiums, an additional sum equal to the aggregate of the payments of
such Impositions or insurance premiums, less the aggregate of the amounts on
deposit and the amounts to be deposited pursuant to clause (1) of this
subsection (f)(i). If the amounts on deposit under this Section 2.1(f) shall
--------------
exceed the amounts required, the excess shall be credited to the subsequent
deposits to be made by the Trustors. If the amounts on deposit under this
Section 2.1(f) shall be insufficient, upon request, the Trustors shall
- --------------
immediately deposit the deficiency with the Beneficiary. Except as required
under applicable law, the deposits under this Section 2.1(f) shall be for the
--------------
exclusive benefit of the Beneficiary and all right, title and interest in and to
such deposits shall be subject to the exclusive dominion and control of the
Beneficiary. In no event will Beneficiary be liable for any interest on any
amount so deposited. Beneficiary shall have no responsibility to ensure the
adequacy of the amounts deposited hereunder. At any time the Beneficiary may
notify the Trustors that it need no longer make deposits under this Section
-------
2.1(f), whereupon the Trustors shall cease making such deposits; provided that
- ------ --------
any such notice shall be without prejudice to the Beneficiary's right to require
thereafter that the Trustors make deposits under this Section.
(ii) If deposits are made under this Section 2.1(f), the Beneficiary
--------------
shall make payments of the Impositions or insurance premiums for which such
deposits are made as the same become due, but only following actual receipt by
the Beneficiary of the bills therefor, which the Trustors shall furnish to the
Beneficiary not later than ten (10) Business Days prior to the due date thereof,
and only to the extent that the amounts on deposit with
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the Beneficiary at the time are sufficient to make such payments.
Notwithstanding the foregoing or the fact any amounts deposited under this
Section 2.1(f) may be deposited with respect to certain Impositions or insurance
- --------------
premiums, the Beneficiary may use any amounts on deposit under this Section
-------
2.1(f) to pay any Impositions or insurance premiums as the same become due.
- ------
(iii) If an Event of Default or Default is continuing, the
Beneficiary shall have the right, but not the obligation, to apply the deposits
held under this Section toward the cure of such Event of Default or Default.
2.2 Mechanic's and Other Liens; Subrogation. Trustors will not suffer any
---------------------------------------
mechanic's, laborer's, materialmen's, statutory or other lien or any security
interest or encumbrance (including, without limitation, any deed of trust or
mortgage) to be created or to remain outstanding (other than Permitted Liens) on
any of the Trust Property. Trustors will promptly pay and discharge any and all
amounts which are now or hereafter become Liens against the Trust Property,
which Liens are not Permitted Liens, whether or not superior to the lien hereof
or to any assignment of rents and leases given to Beneficiary. The lien
covenants of this Section shall survive any foreclosure and sale of the Trust
Property and any conveyance thereof by deed in lieu of foreclosure with respect
to any such liens in existence as of the date of transfer of title. To the
extent that proceeds of the Notes and any other advances representing the
Obligations are used to pay indebtedness secured by any outstanding Lien or
prior encumbrance against the Trust Property, such proceeds have been advanced
at Trustors' request and Beneficiary shall be subrogated to any and all rights,
security interests and Liens owned by any owner or holder of such outstanding
Liens or encumbrances, irrespective of whether said Liens or encumbrances are
released and it is expressly understood that in consideration of the payment of
such indebtedness, each Trustor hereby waives and releases all demands and
causes of action for offsets, payments and rentals to, upon and in connection
with said indebtedness. Notwithstanding the foregoing, however, Trustors will
not be deemed to be in default under this Section if and so long as Trustors (a)
contest in good faith the validity or amount of any asserted lien and diligently
prosecute or defend an action appropriate to obtain a binding determination of
the disputed matter, and (b) provide Beneficiary with such security as
Beneficiary may in its reasonable discretion require to protect Beneficiary
against all loss, damage, and expense including, without limitation, attorneys'
fees, which Beneficiary might incur if the asserted lien is determined to be
valid.
2.3 Utilities. Trustors will pay, or cause to be paid, prior to
---------
delinquency any charges for utilities, whether public or private, with respect
to the Trust Property or any part thereof.
2.4 Insurance.
---------
(a) Maintenance. Trustors will obtain and maintain insurance with
-----------
respect to the Trust Property in accordance with the provisions of the
Indenture. From and after the entry of judgment of foreclosure, all rights and
powers of Beneficiary hereunder, and under
13
<PAGE>
the Indenture to settle or participate in the settlement of losses under
policies of insurance or to hold and disburse or otherwise control use of
insurance proceeds shall continue in full force and effect in Beneficiary as
judgment creditor or mortgagee until confirmation of sale.
(b) Proceeds. If the Trust Property is materially damaged or
--------
destroyed, Trustors shall give prompt notice thereof to Beneficiary and all
insurance proceeds shall be paid to Trustors, or either of them, subject to the
terms of Section 4.30 of the Indenture.
2.5 Condemnation. Immediately upon obtaining knowledge of the institution
------------
of any proceedings for the condemnation of the Trust Property, or any material
portion thereof, Trustors will notify Beneficiary of the pendency of such
proceedings. All condemnation proceeds shall be applied in accordance with the
provisions of Section 4.30 of the Indenture.
2.6 Restoration. Restoration of any of the Trust Property after partial
-----------
or complete casualty or condemnation shall be performed in accordance with the
applicable provisions of the Indenture.
2.7 Care of the Trust Property.
--------------------------
(a) Preservation and Maintenance.
----------------------------
(i) Trustors will preserve and maintain the Trust Property in
accordance with the applicable provisions of the Indenture. Further, each
Trustor shall keep all of the Trust Property in good condition and repair and
expressly agrees that it will neither permit nor commit any waste upon the Trust
Property nor do any other act or suffer or permit any act to be done, whereby
the Lien hereof may be impaired. Trustors shall comply in all material respects
with all zoning laws, building codes, subdivision laws, gaming and liquor laws
including, without limitation, the Colorado Liquor Code and the Colorado Limited
Gaming Act and their respective regulations, and other applicable laws and shall
not become involved in conduct that would cause either the gaming or liquor
licenses to be suspended or revoked. Trustors agree not to initiate or
acquiesce in any zoning variance or reclassification which would prohibit the
use of the Trust Property for its intended purposes. Trustors shall at all
times comply in all material respects with applicable restrictive covenants and
the terms and conditions of all other Permitted Liens related to the Trust
Property. Notwithstanding anything above to the contrary, to the extent
expressly permitted by the Indenture, Trustors may remove or sell any fixture,
equipment, machinery or appliance in or on the Trust Property incident to the
replacement of such items with replacements leased or purchased by Trustors with
the proceeds of FF&E Financing.
(ii) Without granting to Trustors any right to incur Indebtedness
or Liens not expressly permitted by the Indenture, Trustors may make alterations
or construct other improvements on the Land to the extent not prohibited by the
Indenture or under any other documents creating a Lien on the Trust Property
(any of the foregoing are called herein a "Permitted Alteration"); provided that
--------
such work is done in a good and workmanlike manner, in compliance with all laws
including, without limitation, the Colorado Liquor Code and the Colorado Limited
Gaming Act.
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<PAGE>
(b) Notice of Damage. If the Trust Property or any part thereof is
----------------
materially damaged by fire or any other cause, Trustors will give prompt written
notice thereof to Beneficiary.
(c) Right to Inspect. Beneficiary or its representative is hereby
----------------
authorized, with reasonable advance notice to Trustors, to enter upon and
inspect the Trust Property at any time during normal business hours and at any
other reasonable time.
2.8 Future Tenants Leases.
---------------------
(a) Any future Tenants Leases permitted by the Indenture must be
subordinate to the lien of this Deed of Trust, unless otherwise permitted by the
Indenture. Each future Tenants Lease must contain a provision that, at
Beneficiary's election, upon notice to tenant by Beneficiary, such Tenants Lease
shall become superior, in whole or in part, to the lien of this Deed of Trust.
Further, each future Tenants Lease of real property shall obligate the tenant
thereunder to attorn, at the option of the purchaser of the Trust Property, to
any purchaser at foreclosure or other successor owner of the Trust Property.
(b) Each Trustor will furnish to Beneficiary a true and complete copy
of each Tenants Lease, amendment, modification, extension, or renewal of any
Tenants Lease hereafter made by such Trustor within thirty (30) days after
delivery of each such Tenants Lease, amendment, modification, extension, or
renewal by the parties thereto.
(c) Each Trustor shall, at such Trustor's cost and expense, perform
each and every material covenant, condition, promise and obligation on the part
of the lessor to be performed pursuant to the terms of each and every Tenants
Lease hereafter made with respect to the Trust Property or any part or parts
thereof.
(d) Each Trustor shall promptly furnish to Beneficiary any and all
material information which Beneficiary may request concerning the performance
and observance of all covenants, agreements and conditions contained in the
Tenants Leases by the lessor thereunder to be kept, observed and performed and
concerning the compliance with all terms and conditions of the Tenants Leases.
(e) In the event of any failure by either Trustor to keep, observe or
perform any material covenant, agreement or condition contained in the Tenants
Leases or to comply with the terms and conditions of any Tenants Leases, any
performance, observance or compliance by Beneficiary pursuant to this Deed of
Trust on behalf of such Trustor shall not remove or waive, as between such
Trustor and Beneficiary, the corresponding Default or Event of Default under the
terms of this Deed of Trust.
(f) Any proceedings or other steps taken by Beneficiary to foreclose
this Deed of Trust, or otherwise to protect the interests of Beneficiary
hereunder, shall not automatically operate to terminate the rights of any
present or future tenant under any Tenants Lease, notwithstanding that said
rights may be subject and subordinate to the lien of this Deed of Trust. The
failure to make any such tenant a defendant in any such foreclosure
15
<PAGE>
proceeding and to foreclose such tenant's rights will not be asserted by either
Trustor or any other defendant in such foreclosure proceeding as a defense to
any proceeding instituted by Beneficiary to foreclose this Deed of Trust or
otherwise protect the interests of Beneficiary hereunder.
2.9 Further Encumbrance.
-------------------
(a) Each Trustor covenants that at all times prior to the discharge of
the Indenture, except for Permitted Liens, Permitted Dispositions and
dispositions permitted under Section 2.10, such Trustor shall neither make nor
------------
suffer to exist, nor enter into any agreement for, any sale, assignment,
exchange, mortgage, transfer, Lien, hypothecation or encumbrance of all or any
part of the Trust Property, including, without limitation, the Rents, Issues and
Profits. As used herein, "transfer" includes the actual transfer or other
disposition, whether voluntary or involuntary, by law, or otherwise, except
those transfers specifically permitted herein, provided, however, that
"transfer" shall not include the granting of utility or other beneficial
easements with respect to the Trust Property which have been granted by such
Trustor and are reasonably necessary to the construction, maintenance or
operation of the Project.
(b) Each Trustor agrees that in the event the ownership of the Trust
Property or any part thereof becomes vested in a Person other than such Trustor,
Beneficiary may, without notice to such Trustor, deal in any way with such
successor or successors in interest with reference to this Deed of Trust, the
Notes and other Obligations hereby secured without in any way vitiating or
discharging such Trustor's or any guarantor's, surety's or endorser's liability
hereunder or upon the Obligations hereby secured. No sale of the Trust Property
and no forbearance to any Person with respect to this Deed of Trust and no
extension to any Person of the time for payment of the Notes, and other sums
hereby secured given by Beneficiary shall operate to release, discharge, modify,
change or affect the original liability of such Trustor, or such guarantor,
surety or endorser either in whole or in part.
(c) This Deed of Trust, as applied to property subject to an FF&E
Financing, shall be subordinated to the liens of any FF&E Financing if required
by such FF&E Financing (or if required by an FF&E Financing, it shall be
released; provided that, upon the payment of the indebtedness represented by any
--------
such FF&E Financing, then the property previously subject thereto shall become
and be subject to this Deed of Trust thereafter) and any future or further
advances made thereunder and to any modifications, renewals or extensions
thereof to which the lien of this Deed of Trust attaches; provided, further,
-------- -------
however, that any such FF&E Financing shall encumber only that FF&E specifically
- -------
subject to the FF&E Financing. Each Trustor covenants and agrees to comply with
all of the terms and conditions set forth in any FF&E Financing with respect to
which Beneficiary has taken a lien hereunder. If either Trustor shall fail to
make any payment of principal of or interest on the sums secured by such
security interest or any payment in order to perform or observe any other term,
covenant, condition or agreement of any FF&E Financing with respect to which
Beneficiary has taken a lien hereunder on its part to be performed or observed,
except where such Trustor is contesting such payment in good faith, then
Beneficiary may make such payment of the principal of or interest on the sums
secured by
16
<PAGE>
such security interest or may make any payment in order to perform or observe
any other term, covenant, condition or agreement of any FF&E Financing on such
Trustor's part to be performed or observed and any and all sums so expended by
Beneficiary shall be Obligations and shall be secured by this Deed of Trust and
shall be repaid by such Trustor upon demand, together with interest thereon at
the Default Rate from the date of advance. In furtherance of such subordination
or release, as applicable, Beneficiary, upon receipt of an officer's certificate
from such Trustor certifying that the requirements of this Section 2.9(c) have
--------------
been satisfied, shall execute, acknowledge and deliver to such Trustor, at such
Trustor's expense, any and all such evidence and documents necessary to evidence
the subordination or release of this Deed of Trust in accordance with the
foregoing provisions of this Section 2.9(c).
--------------
2.10 Partial Releases of Trust Property.
----------------------------------
(a) Each Trustor may from time to time (i) transfer a portion of the
Trust Property (including any temporary taking) to any Person legally empowered
to exercise the power of eminent domain, (ii) make a Permitted Disposition, or
(iii) grant utility easements reasonably necessary for the construction and
operation of the Project, which grant or transfer is for the benefit of the
Trust Property. In each such case, and at Trustor's sole expense, Beneficiary
shall execute and deliver any instruments necessary or appropriate to effectuate
or confirm any such transfer or grant, free from the lien of this Deed of Trust;
provided, however, that Beneficiary shall execute a lien release or
- -------- -------
subordination agreement, as appropriate, for matters described in clauses (i)
and (iii) above only if:
(A) Beneficiary shall have received an Officer's Certificate or
Opinion of Counsel required or authorized by Section 10.4 of the Indenture;
(B) No Default or Event of Default shall have occurred and be
continuing and the conditions of this Section 2.10 have been fulfilled, and
------------
such transfer, grant or release is permitted by the Indenture;
(C) Beneficiary shall have received a counterpart of the
instrument pursuant to which such transfer, grant or release is to be made,
and each instrument which Beneficiary is requested to execute in order to
effectuate or confirm such transfer, grant or release;
(D) Beneficiary shall have received such other instruments,
certificates (including evidence of authority) and opinions as Beneficiary
may reasonably request or as required or authorized under the Indenture,
including, but not limited to, opinions that the proposed release is
permitted by this Section 2.10.
------------
(b) Any consideration received for a transfer to any Person empowered
to exercise the right of eminent domain shall be subject to Section 2.5 hereof.
-----------
17
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ARTICLE III - ASSIGNMENT OF LEASES AND RENTS
3.1 Assignment of Leases and Rents. As additional consideration for the
------------------------------
Obligations, each Trustor hereby absolutely and unconditionally assigns and
transfers to Beneficiary the following:
(a) the Tenants Leases;
(b) any and all guaranties of the obligations of the tenants (the
"Tenants") under any of such Tenants Leases; and
(c) the immediate and continuing right to collect and receive all of
the Rents, Issues and Profits now due or that may become due or to which such
Trustor may now or hereafter (whether during any applicable period of
redemption, or otherwise) become entitled or may demand or claim, arising or
issuing from or out of the Tenants Leases, or from or out of the Trust Property
or any part thereof.
3.2 Trustors' Limited License. Provided that no Event of Default
-------------------------
hereunder exists, each Trustor shall have the right under a license granted
hereby and Beneficiary hereby grants to such Trustor a license to collect, but
not more than one month in advance, all of the Rents, Issues and Profits arising
from or out of the Tenants Leases or any renewals or extensions thereof, or from
or out of the Trust Property or any part thereof, but only as trustee for the
benefit of Beneficiary. Each Trustor shall apply the Rents, Issues and Profits
so collected first to payment of any and all amounts due and payable under the
Indenture. Thereafter, so long as no Event of Default hereunder exists, such
Trustor may use the Rents, Issues and Profits in any manner not inconsistent
with the Indenture. The license granted hereby shall be revoked automatically
upon the occurrence of an Event of Default hereunder.
3.3 Limitation. The acceptance by Beneficiary of the assignment provided
----------
in this Article III, together with all of the rights, powers, privileges and
-----------
authority created in this Article III or elsewhere in this Deed of Trust, shall
-----------
not, prior to entry upon and taking possession of the Trust Property by
Beneficiary, be deemed or construed to constitute Beneficiary a "mortgagee in
possession," nor thereafter or at any time or in any event obligate Beneficiary
to appear in or defend any action or proceeding relating to the Tenants Leases,
the Rents, Issues and Profits or the Trust Property or to take any action
hereunder or to expend any money or incur any expenses or perform or discharge
any obligation or responsibility for any security deposits or other deposits
delivered to either Trustor by any Tenant and not assigned and delivered to
Beneficiary, nor shall Beneficiary be liable in any way for any injury or damage
to person or property sustained by any person or persons, firm or corporation in
or about the Trust Property.
3.4 Performance by Trustors. Each Trustor shall perform its obligations
-----------------------
under the Tenants Leases in accordance with their terms. Each Trustor shall not
default in the performance of any obligation of such Trustor under any Tenants
Lease if, by reason of such default, the Tenant or other party thereunder has
the right to cancel such Tenants Lease or to claim any diminution or offset
against future Rents, Issues or Profits.
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3.5 No Merger of Leases. If the estates of all parties to any Tenants
-------------------
Lease shall at any time become vested in one owner, this Deed of Trust and the
lien created hereby shall not be destroyed or terminated by application of the
doctrine of merger, and in such event, Beneficiary shall continue to have and
enjoy all of the rights and privileges of Beneficiary as to the separate
estates. In addition, upon the foreclosure of the lien created by this Deed of
Trust, any Tenants Leases then existing and affecting all or any portion of the
Trust Property shall not be destroyed or terminated by application of the law of
merger or as a matter of law or as a result of such foreclosure, unless
Beneficiary or any purchaser at any such foreclosure sale shall so elect in
writing. No act by or on behalf of Beneficiary or any such purchaser shall
constitute a termination of any Tenants Lease or sublease unless Beneficiary or
such purchaser shall give written notice thereof to the lessee or sublessee
under such Tenants Lease.
3.6 Remedies. If an Event of Default has occurred and is continuing, in
--------
addition to all other rights and remedies of Beneficiary as set forth under
Article IV hereof, Beneficiary shall have the following rights and remedies:
- ----------
(a) Possession and/or Collection of Rent. Beneficiary, without first
------------------------------------
being required to (i) foreclose, (ii) take any actions to foreclose, (iii)
institute any legal proceedings of any kind whatsoever or (iv) exercise any
other actions or remedies hereunder or at law or in equity, shall have the
exclusive right and power (but not the obligation) (A) to enter upon and take
possession of the Trust Property or any part thereof, (B) to rent or re-rent the
same, either in the name of Beneficiary or Trustors, or either of them, and/or
(C) to receive all Rents, Issues and Profits from the Trust Property.
Beneficiary shall apply any Rents, Issues and Profits received by Beneficiary
first, to the costs and expenses incurred by Beneficiary in protecting and
operating the Trust Property, and next, to the payment of the Obligations in
such manner and in such order of priority as Beneficiary shall determine
consistent with the provisions of the Indenture. Any such action by Beneficiary
shall not operate as a waiver of the Event of Default in question, or as an
affirmance of any Tenants Leases or of the rights of any Tenant in the event
title to that part of the Trust Property covered by the Tenants Leases or held
by the Tenant should be acquired by Beneficiary or other purchaser at a
foreclosure sale. The right of Beneficiary to receive all Rents, Issues and
Profits from the Trust Property upon the occurrence and during the continuance
of any Event of Default shall be applicable whether or not Beneficiary has
entered upon, foreclosed, taken any actions to foreclose or taken possession of
the Trust Property, whether or not Beneficiary has instituted any legal
proceedings of any kind whatsoever, or whether or not Beneficiary has otherwise
attempted to exercise any other actions or remedies hereunder or at law or in
equity. If any such Rents, Issues and Profits are paid to or received by either
Trustor, such Trustor shall hold same in trust for Beneficiary and immediately
pay the same to Beneficiary (in the form received, except for any necessary
endorsement), without the necessity of any request or demand therefor. Until
receipt from Beneficiary of notice of the occurrence of an Event of Default
hereunder and during the continuance thereof, all Tenants of the Tenants Leases
and any successors to the leasehold interest of such Tenants may pay Rents,
Issues and Profits directly to such Trustor, but after notice of the occurrence
of any Event of Default and during the continuance of same, such Trustor
covenants to and shall hold all Rents, Issues and Profits paid to such Trustor
in trust for Beneficiary. Each Trustor hereby authorizes and
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directs all Tenants of the Tenants Leases herein described, and any successors
to the leasehold interest of said Tenants, upon receipt of any notice from
Beneficiary stating that an Event of Default hereunder has occurred, to pay to
Beneficiary the Rents, Issues and Profits due and to become due under said
Tenants Leases. Each Trustor agrees that said Tenants shall have the right to
rely upon any such notice and request by Beneficiary without any obligation or
right to inquire as to whether an Event of Default actually exists and
notwithstanding any notice from or claim of such Trustor to the contrary, and
such Trustor shall have no right or claim against said Tenants for any such
Rents, Issues and Profits so paid by the Tenants to Beneficiary. In such event,
receipt by Beneficiary of Rents, Issues and Profits from such Tenants or their
successors shall be a release of such Tenants or their successors to the extent
of all amounts so received by Beneficiary.
(b) Management. Beneficiary, at its option, may take over and assume
----------
the management, operation and maintenance of the Trust Property and perform all
acts necessary and proper and expend such sums out of the income of the Trust
Property as may be needful in connection therewith including applying for
appropriate approvals from the Liquor and Gaming License Authorities, in the
same manner and to the same extent as Trustors theretofore might do, including,
without limitation, the right to enter into new leases, to cancel or surrender
existing Tenants Leases, to alter or amend the terms of existing Tenants Leases,
to renew existing Tenants Leases, or to make concessions to Tenants. Each
Trustor hereby releases all claims against Beneficiary arising out of such
management, operation and maintenance, including, without limitation, such
claims as may arise from the negligence of Beneficiary, but not the gross
negligence or willful misconduct of Beneficiary and not any liability of
Beneficiary to account as hereinafter set forth.
(c) Receiver. Upon or at any time after the occurrence of any Event
--------
of Default, Beneficiary shall at once become entitled to the possession, use and
enjoyment of the Trust Property and the Rents, Issues and Profits, from the date
of such occurrence and continuing during the pendency of any proceedings for
sale by the public trustee or foreclosure proceedings, and the period of
redemption, if any. Beneficiary shall be entitled to a receiver for the Trust
Property, and of the Rents, Issues and Profits, after any such default,
including, without limitation, the time covered by any proceedings for sale by
the public trustee or foreclosure proceedings and the period of redemption, if
any. Beneficiary shall be entitled to such receiver as a matter of right,
without regard to the solvency or insolvency of Trustors, or of the then owner
of the Trust Property, and without regard to the value thereof, and such
receiver may be appointed by any court of competent jurisdiction upon ex parte
-- -----
application, and without notice, notice being hereby expressly waived. All
Rents, Issues and Profits, income and revenue therefrom shall be applied by such
receiver to the payment of the Obligations according to the orders and
directions of the court, or in the absence of such orders or directions, in the
manner set forth in Section 3.7 below.
-----------
3.7 Application of Income. Beneficiary shall, after payment of all proper
---------------------
charges and expenses, including reasonable compensation to any managing agent as
it shall select and employ, and after the accumulation of a reserve to meet
taxes, assessments and insurance as herein required in requisite amounts, credit
the net amount of income received by it from the Trust Property by virtue of
this absolute assignment to any amounts due and owing to it by
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Trustors under the terms hereof, but the manner of the application of said net
income and what items shall be credited shall be determined pursuant to the
Indenture, or otherwise in the sole discretion of Beneficiary. Without
impairing its rights hereunder, Beneficiary may, at its option, at any time and
from time to time, release to Trustors Rents, Issues and Profits received by
Beneficiary, or any portion of such Rents, Issues and Profits. Beneficiary
shall not be liable for its failure to collect, or its failure to exercise
diligence in the collection of Rents, Issues and Profits, but shall be
accountable only for Rents, Issues and Profits that Beneficiary shall actually
receive. Beneficiary shall not be accountable for more monies than it actually
receives from the Trust Property nor shall it be liable for failure to collect
Rents, Issues and Profits.
3.8 Term. This absolute assignment shall remain in full force and effect
----
so long as the Obligations or any part thereof to Beneficiary remains unpaid or
unsatisfied, in whole or in part.
3.9 Actions of Trustee. All provisions hereof shall inure to the benefit
------------------
of and all actions authorized hereunder shall be exercisable by Trustee or any
substitute Trustee at Beneficiary's request.
3.10 PARTIES INTENT. AS BETWEEN BENEFICIARY AND TRUSTORS, AND ANY PERSON
--------------
OR ENTITY CLAIMING THROUGH OR UNDER TRUSTORS, OTHER THAN ANY TENANT UNDER ANY OF
THE TENANTS LEASES (OR THE SUCCESSOR OF ANY SUCH TENANT) WHO HAS NOT RECEIVED
ANY NOTICE OF AN EVENT OF A DEFAULT HEREUNDER, THE ASSIGNMENT CONTAINED IN THIS
ARTICLE III IS INTENDED TO BE ABSOLUTE, UNCONDITIONAL AND PRESENTLY EFFECTIVE,
- -----------
AND THESE PROVISIONS ARE INTENDED SOLELY FOR THE BENEFIT OF EACH TENANT UNDER
ANY OF THE TENANTS LEASES (OR THE SUCCESSOR OF ANY SUCH TENANT) AND SHALL NEVER
INURE TO THE BENEFIT OF TRUSTORS OR ANY PERSON CLAIMING THROUGH OR UNDER
TRUSTORS, OTHER THAN A TENANT UNDER ANY OF THE TENANTS LEASES (OR THE SUCCESSOR
OF ANY SUCH TENANT) WHO HAS NOT RECEIVED SUCH NOTICE. IT SHALL NEVER BE
NECESSARY FOR BENEFICIARY TO INSTITUTE LEGAL PROCEEDINGS OF ANY KIND WHATSOEVER
OR TO TAKE ANY OTHER ACTIONS HEREUNDER OR AT LAW OR IN EQUITY TO ENFORCE THE
PROVISIONS OF THIS ARTICLE III.
-----------
ARTICLE IV - DEFAULTS AND REMEDIES
4.1 Events of Default. An Event of Default shall mean the occurrence of
-----------------
any Event of Default set forth in Annex A attached hereto.
4.2 Performance of Defaulted Acts. From and after the occurrence of an
-----------------------------
Event of Default, Beneficiary may (without prejudice to its other rights and
remedies), but need not, make any payment or perform any act required of
Trustors herein or in the Indenture, or in any other Transaction Document in any
form and manner deemed expedient, including,
21
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without limitation, making full or partial payments of principal or interest on
prior encumbrances, if any, and purchasing, discharging, compromising or
settling any tax lien or other prior lien or title or claim thereof, or
redeeming from any tax sale or forfeiture affecting the Trust Property or
contesting any tax or assessment. All moneys paid for any of the purposes
herein authorized and all expenses paid or incurred in connection therewith,
including reasonable attorneys' fees (including reasonable fees of in-house
counsel), shall be included among the Obligations and shall be due and payable
upon demand and with interest thereon from the date of such payment or expense
at the Default Rate. Inaction of Beneficiary shall never be considered as a
waiver of any right accruing to it hereunder on account of any default on the
part of either Trustor. Beneficiary, in making any payment hereby authorized
relating to taxes or assessments, may do so according to any bill, statement or
estimate procured from the appropriate public office without inquiry into the
accuracy of such bill, statement or estimate or into the validity of any tax,
assessment, sale, forfeiture, tax lien or title or claim thereof.
4.3 Remedies. Upon the occurrence of any Event of Default, Beneficiary
--------
may, at its option (in each case, subject to and in accordance with any
applicable terms of the Indenture):
(a) in accordance with and subject to the terms of the Indenture,
declare all sums secured hereby to be immediately due and payable, and the same
shall thereupon become immediately due and payable without any presentment,
demand, protest or notice of any kind;
(b) terminate each Trustor's right and license to collect the Rents,
Issues and Profits and either in person or by agent, with or without bringing
any action or proceeding, or by a receiver appointed by a court, and without
regard to the adequacy of its security, enter upon and take possession of the
Trust Property, or any part thereof, in its own name or in the name of Trustee,
and do any acts which it deems necessary or desirable to preserve the value,
marketability or rentability of the Trust Property, or any part thereof or
interest therein, make, modify, enforce, cancel or accept the surrender of any
Tenants Lease, take actions which may affect the income therefrom or protect the
security hereof, and with or without taking possession of the Trust Property,
sue for or otherwise collect the Rents, Issues and Profits, including, without
limitation, those past due and unpaid, and apply the same, less costs and
expenses of operation and collection, including, without limitation, reasonable
attorneys' fees (including reasonable charges for in house counsel), upon any
Obligations secured hereby, all in such order as Beneficiary may determine.
From and after receipt of written instrument from Beneficiary to pay Rents,
Issues and Profits directly to Beneficiary or another party designated by
Beneficiary, each Tenant shall pay all such payments under its Tenants Lease in
the manner instructed by Beneficiary. The entering upon and taking possession
of the Trust Property or any portion thereof, the collection of the Rents,
Issues and Profits and the application thereof as aforesaid, or any of such
acts, shall not cure or waive any default or notice of default hereunder or
invalidate any act done in response to such default or pursuant to such notice,
and notwithstanding the continuance in possession of the Trust Property or the
collection, receipt and application of the Rents, Issues and Profits, Trustee or
Beneficiary shall be entitled to exercise every right provided for in
22
<PAGE>
any of the Indenture, the Notes, or the other Transaction Documents or by law
upon the occurrence of any Event of Default, including, without limitation, the
right to exercise the power of sale provided herein;
(c) notwithstanding the availability of legal remedies, obtain
specific performance, mandatory or prohibitory injunctive relief, or other
equitable relief requiring Trustors to cure or refrain from repeating any
default;
(d) with or without accelerating the maturity of the Obligations, sue
from time to time for any payment due under any of the Indenture, the Notes or
the other Transaction Documents, or for money damages resulting from any
Trustor's default under any of the Indenture, the Notes or the other Transaction
Documents;
(e) exercise all rights and remedies set forth in Section 1.5 and all
-----------
rights of a secured party under the Uniform Commercial Code;
(f) foreclose this Deed of Trust, insofar as it encumbers the Trust
Property, by way of a trustee's sale pursuant to the provisions of Title 38,
Article 38, Colorado Revised Statutes, as currently in effect, as amended, or in
any other manner then permitted by law. If this Deed of Trust encumbers more
than one parcel of real estate, foreclosure may be by separate parcel or en
--
masse, as Beneficiary may elect in its sole discretion. Foreclosure through
- -----
Trustee will be initiated by Beneficiary's filing of its notice of election and
demand for sale with Trustee. Upon the filing of such notice of election and
demand for sale, Trustee shall promptly comply with all notice and other
requirements of the laws of Colorado then in force with respect to such sales,
and shall give four weeks' public notice of the time and place of such sale by
advertisement weekly in some newspaper of general circulation then published in
the County or City and County in which the Trust Property is located. The right
to foreclose this Deed of Trust as a mortgage by appropriate proceedings in any
court of competent jurisdiction is also hereby given;
(g) exercise all other rights and remedies provided herein, in the
Indenture, the Notes, the other Transaction Documents or in any other document
or agreement now or hereafter securing all or any portion of the Obligations, or
at law or in equity, or any combination of any such rights or remedies, to the
extent permitted by law.
Upon request by Beneficiary, Trustors shall assemble and make available to
Beneficiary at the Land any of the Trust Property which is not located on the
Land or which has been removed therefrom.
4.4 Foreclosure.
-----------
(a) All fees, costs and expenses of any kind incurred by Beneficiary
in connection with foreclosure of this Deed of Trust, including, without
limitation, the costs of any appraisals of the Trust Property obtained by
Beneficiary, all costs of any receivership for the Trust Property advanced by
Beneficiary, and all reasonable attorneys' and consultants'
23
<PAGE>
fees incurred by Beneficiary, appraisers' fees, outlays for documentary and
expert evidence, stenographers' charges, publication costs and costs (which may
be estimates as to items to be expended after entry of the decree) of procuring
all such abstracts of title, title searches and examination, title insurance
policies and similar data and assurances with respect to title, as Trustee or
Beneficiary may reasonably deem necessary either to prosecute such suit or to
evidence to bidders at the sales that may be had pursuant to such proceedings
the true conditions of the title to or the value of the Trust Property, together
with and including a reasonable compensation to Trustee, shall constitute a part
of the Obligations and may be included as part of the amount owing from Trustors
to Beneficiary at any foreclosure sale.
(b) The proceeds of foreclosure sale of the Trust Property shall be
distributed and applied in the following order of priority: first, on account
of all costs and expenses incident to the foreclosure proceedings, including,
without limitation, all such items as are mentioned in Section 4.4(b) hereof;
--------------
second, to the payment of all sums expended under the terms hereof not then
repaid, with accrued interest at the Default Rate; third, to the payment of all
other Obligations; and lastly, the remainder, if any, to the person or persons
legally entitled thereto.
(c) In case of an insured loss after judicial foreclosure or Trustee's
sale proceedings have been instituted, the proceeds of any insurance policy or
policies, if not applied to rebuilding or restoring the buildings or
improvements, shall be used to pay the amount due upon the Obligations. In the
event of judicial foreclosure or Trustee's sale, Beneficiary or Trustee is
hereby authorized, without the consent of Trustors, to assign any and all
insurance policies to the purchaser at the sale, or to take such other steps as
Beneficiary or Trustee may deem advisable to cause the interest of such
purchaser to be protected by any of the said insurance policies.
(d) To the fullest extent allowable by law, each Trustor hereby
expressly waives any right which it may have to direct the order in which any
Trust Property shall be sold in the event of any sale or sales pursuant to this
Deed of Trust.
(e) Nothing in this Section dealing with foreclosure procedures or
specifying particular actions to be taken by Beneficiary or by Trustee or any
similar officer shall be deemed to contradict or add to the requirements and
procedures now or hereafter specified by Colorado law, and any such
inconsistency shall be resolved in favor of Colorado law applicable at the time
of foreclosure.
4.5 Rescission of Notice of Default. Beneficiary may from time to time
-------------------------------
withdraw any notice of election and demand for sale in accordance with Section
38-38-101(11) of the Colorado Revised Statutes. The exercise by Beneficiary of
such right shall not constitute a waiver of any breach or default then existing
or subsequently occurring, or impair the right of Beneficiary to execute and
deliver to Trustee, as above provided, other declarations or notices of default
to satisfy the Obligations under this Deed of Trust or the other Obligations,
nor otherwise affect any provision, covenant or condition of any of the
Indenture, the Notes or the other Transaction Documents or any of the rights,
obligations or remedies of Trustee or Beneficiary hereunder or thereunder.
24
<PAGE>
4.6 Appointment of Receiver. Each Trustor waives any right to any hearing
-----------------------
or notice of hearing prior to the appointment of a receiver. Such receiver and
its agents shall be empowered (a) to take possession of the Trust Property and
any businesses conducted by Trustors or any other person (excluding the business
of tenants of Trustors) thereon and any business assets used in connection
therewith and, if the receiver deems it appropriate, to operate the same, (b) to
exclude Trustors and Trustors' agents, servants, and employees from the Trust
Property, (c) to collect the rents, issues, profits, and income therefrom, (d)
to complete any construction which may be in progress, (e) to do such
maintenance and make such repairs and alterations as the receiver deems
necessary, (f) to use all stores of materials, supplies, and maintenance
equipment on the Trust Property, (g) to pay all taxes and assessments against
the Trust Property and all premiums for insurance thereon, (h) to pay all
utility and other operating expenses, and all sums due under any prior or
subsequent encumbrance, and (i) generally to do anything which Trustors could
legally do if Trustors were in possession of the Trust Property. All expenses
incurred by the receiver or his agents shall constitute a part of the
Obligations. Any revenues collected by the receiver shall be applied first to
the expenses of the receivership, including attorneys' fees incurred by the
receiver and by Beneficiary, together with interest thereon at the Default Rate
from the date incurred until repaid, and the balance shall be applied toward the
Obligations or in such other manner as the court may direct. Unless sooner
terminated with the express consent of Beneficiary, any such receivership will
continue until the Obligations have been discharged in full, or until title to
the Trust Property has passed after foreclosure sale and all applicable periods
of redemption have expired.
4.7 Remedies Not Exclusive; Waiver.
------------------------------
(a) Trustee and Beneficiary, and each of them, shall be entitled to
enforce the payment and performance of any Obligations and to exercise all
rights and powers under this Deed of Trust or under any other Transaction
Document or other agreement or any laws now or hereafter in force,
notwithstanding the fact that some or all of the Obligations may now or
hereafter be otherwise secured, whether by mortgage, deed of trust, pledge,
lien, assignment or otherwise. Neither the acceptance of this Deed of Trust nor
its enforcement, whether by court action or pursuant to the power of sale or
other powers contained herein, shall prejudice or in any manner affect Trustee's
or Beneficiary's right to realize upon or enforce any other rights or security
now or hereafter held by Trustee or Beneficiary. Trustee and Beneficiary, and
each of them, shall be entitled to enforce this Deed of Trust and any other
rights or security now or hereafter held by Beneficiary or Trustee in such order
and manner as they or either of them may in their absolute discretion determine.
No remedy herein or by law provided or permitted shall be exclusive of any other
remedy, but each shall be cumulative and in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity. Every power or
remedy given by any of the Transaction Documents to Trustee or Beneficiary, or
to which either of them may be otherwise entitled, may be exercised,
concurrently or independently, from time to time and as often as may be deemed
expedient by Trustee or Beneficiary, and either of them may pursue inconsistent
remedies. By exercising or by failing to exercise any right, option or election
hereunder, Beneficiary shall not be deemed to have waived any provision hereof
or to have released either Trustor from any of the Obligations secured hereby
unless such waiver or release is in
25
<PAGE>
writing and signed by Beneficiary. The waiver by Beneficiary of either
Trustor's failure to perform or observe any term, covenant, or condition
referred to or contained herein to be performed or observed by such Trustor
shall not be deemed to be a waiver of such term, covenant or condition on any
other occasion or any subsequent failure of such Trustor to perform or observe
the same or any other such term, covenant or condition referred to or contained
herein, and no custom or practice which may develop between such Trustor and
Beneficiary during the term hereof shall be deemed a waiver of or in any way
affect the right of Beneficiary to insist upon the performance by such Trustor
of the Obligations secured hereby in strict accordance with the terms hereof or
any other Transaction Document.
4.8 Casino. Each Trustor acknowledges that part of the Trust Property
------
consists of a casino and gaming property (the "Casino") which is subject to
Gaming Laws and the jurisdiction of the Gaming Authorities and that, under the
applicable Gaming Laws, the operation of the Casino by a person other than a
person properly licensed by the Gaming Authorities to operate a casino and
gaming business (a "Licensee") is prohibited and may result in the closing of
the Casino, the loss of customers, employees, revenues and good will, and the
severe diminution in the value of the Trust Property, all to the economic
jeopardy and extreme detriment of Beneficiary. In order to mitigate such
adverse consequences, each Trustor agrees that, if an Event of Default is
continuing, either before or after seeking an appointment of a receiver, in
addition to any other right or remedy available to Beneficiary hereunder or
under applicable law (but subject to any applicable requirements of the
applicable Gaming Laws), (a) Beneficiary shall have the right to solicit any
Licensee or other person with the capacity to become a Licensee to purchase,
lease and/or operate the Casino as a receiver of the Trust Property, as a
supervisor of the Casino, as a purchaser of the Trust Property or Casino at any
foreclosure sale, or in any other appropriate capacity permitted under the
applicable Gaming Laws; (b) any such Licensee or other person and Beneficiary
may, to the extent permitted under the applicable Gaming Laws, apply to and
appear before the Gaming Authorities and any other appropriate authority for a
license or a finding of suitability to permit such Licensee or other person to
operate the Casino; and (c) each Trustor shall cooperate fully with any action
taken by Beneficiary and any such Licensee or other person pursuant to this
Section 4.8.
- -----------
4.9 Multiple Collateral.
-------------------
(a) No recovery of any judgment by Trustee or Beneficiary and no levy
of an execution under any judgment upon the Trust Property or upon any property
of Trustors encumbered by any other Collateral Document shall affect in any
manner or to any extent the lien of this Deed of Trust upon the Trust Property
or any part thereof, and any liens, rights, powers and remedies of Trustee or
Beneficiary shall continue unimpaired.
(b) Each Trustor agrees that it shall not at any time insist upon,
plead, seek or in any manner whatever claim or take any benefit or advantage of
a judgment, declaration or a determination that:
26
<PAGE>
(i) the Trust Property or any other property of either Trustor
encumbered by a Transaction Document represents, on an individual basis, an
allocable portion of the then outstanding aggregate principal amount of the
Notes or the Obligations;
(ii) a surplus results from an action taken by Trustee or
Beneficiary against the Trust Property or any other property of either Trustor
encumbered by a Transaction Document to recover the Obligations or any portion
thereof;
(iii) the lien of this Deed of Trust or of any other Transaction
Document has been released, unless the Obligations have been satisfied and paid
in full;
(iv) a deficiency judgment with respect to any action taken by
Trustee or Beneficiary against the Trust Property or any other property of
either Trustor encumbered by a Transaction Document extinguishes all or any
portion of the remaining Obligations, or precludes Trustee or Beneficiary from
proceeding against the Trust Property or to satisfy such remaining Obligations;
or
(v) Trustee's or Beneficiary's commencement, prosecution, or
taking to judgment of any action (including, without limitation, Trustee's or
Beneficiary's acceptance of a deed in lieu of foreclosure) or Trustee's or
Beneficiary's application for or use of any remedy (including, without
limitation, the appointment of a receiver for the Trust Property or any other
property of either Trustor encumbered by a Transaction Document) against the
Trust Property or any other property of either Trustor encumbered by a
Transaction Document precludes or bars Trustee or Beneficiary (under a "single
action" rule, "security first" rule or similar rule) from commencing,
prosecuting or taking to judgment any other action or applying for or using any
remedy against the Trust Property or any other property of either Trustor
encumbered by a Transaction Document.
(c) Beneficiary may, at its option, in such order, and utilizing such
combinations of remedies with respect to the Trust Property and/or any other
property of Trustors encumbered by a Transaction Document as Beneficiary shall
so elect, pursue its remedies against (i) the Trust Property, individually, or
any other property of Trustors encumbered by a Transaction Document,
individually; (ii) the Trust Property and any combination of the other property
of Trustors encumbered by a Transaction Document; (iii) the Trust Property and
all of the other property of Trustors encumbered by a Transaction Document; or
(iv) all or any combination of the other property of Trustors encumbered by a
Transaction Document, in separate proceedings or in one proceeding in any order
which Beneficiary deems appropriate.
4.10 Extensions and Partial Payments. Each Trustor agrees that without
-------------------------------
affecting the liability of any person for payment of the Obligations or
affecting the lien of this Deed of Trust upon the Trust Property or any part
thereof Beneficiary may at any time and from time to time, on request of such
Trustor, without notice to any person liable for payment of any Obligations,
extend the time or agree to alter the terms of payment of all or any part of
such Obligations. Acceptance by Beneficiary of any payment in an amount less
than the amount then due on the Obligations shall be deemed an acceptance on
account only, and the failure
27
<PAGE>
to pay the entire amount then due shall continue to be an Event of Default
hereunder. At any time thereafter and until the entire amount then due on the
Obligations has been paid, Beneficiary shall be entitled to exercise all rights
conferred upon it in this Deed of Trust upon the occurrence of an Event of
Default hereunder.
4.11 Protective Advances. All advances, disbursements and expenditures
-------------------
made or incurred by Beneficiary before and during a foreclosure, and before and
after judgment of foreclosure, and at any time prior to sale, and, where
applicable, after sale, and during the pendency of any related proceedings, for
the following purposes, in addition to those otherwise authorized by this Deed
of Trust or by applicable law (collectively "Protective Advances"), shall have
the benefit of all applicable provisions of law, including, without limitation,
those referred to below:
(a) all advances by Beneficiary in accordance with the terms of this
Deed of Trust to: (i) preserve, maintain or repair any Trust Property, or
restore or rebuild the improvements upon the Trust Property; (ii) preserve the
lien of this Deed of Trust or the priority hereof; or (iii) enforce this Deed of
Trust;
(b) payments by Beneficiary of: (i) principal, interest or other
obligations in accordance with the terms of any prior lien or encumbrance on the
Trust Property; (ii) real estate taxes and assessments, general and special and
other taxes and assessments of any kind or nature whatsoever that are assessed
or imposed upon the Trust Property or any part thereof; (iii) amounts in
connection with any Tenants Lease pursuant to Section 4.3 hereof; (iv) other
-----------
obligations authorized by this Deed of Trust; or (v) any other amounts in
connection with other liens, encumbrances or interests reasonably necessary to
preserve the status of title to the Trust Property;
(c) advances by Beneficiary in settlement or compromise of any claims
asserted by claimants under any prior liens;
(d) reasonable attorneys' fees and other costs incurred (including
reasonable charges for in house counsel): (i) in connection with a judicial
foreclosure or trustee's sale; (ii) in connection with any action, suit or
proceeding brought by or against Beneficiary for the enforcement of this Deed of
Trust or arising from the interest of Beneficiary hereunder; or (iii) in
preparation for or in connection with the commencement, prosecution or defense
of any other action that could materially adversely affect the lien of this Deed
of Trust or the Trust Property;
(e) expenses deductible from proceeds of sale; and
(f) expenses incurred and expenditures made by Beneficiary for any one
or more of the following: (i) premiums for casualty and liability insurance
paid by Beneficiary whether or not Beneficiary or a receiver is in possession
and all renewals thereof; (ii) repair or restoration of damage or destruction in
excess of available insurance proceeds or condemnation awards; (iii) payments
deemed by Beneficiary to be required for the benefit of the Trust Property or
required to be made by the owner of the Trust Property under any
28
<PAGE>
grant or declaration of easement, easement agreement, agreement with any
adjoining land owners or instruments creating covenants or restrictions for the
benefit of or affecting the Trust Property; (iv) shared or common expense
assessments payable to any association or corporation in which the owner of the
Trust Property is a member in any way affecting the Trust Property; and (v) any
costs incurred in connection with obtaining approvals and licenses from Gaming
Authorities including investigation costs.
All Protective Advances shall be additional Obligations secured by this Deed of
Trust, and shall become immediately due and payable upon demand and with
interest thereon from the date of the advance until paid at the Default Rate.
This Deed of Trust shall be a lien for all Protective Advances as to subsequent
purchasers and judgment creditors from the time this Deed of Trust is recorded.
All Protective Advances shall, except to the extent, if any, that any of the
same is clearly contrary to or inconsistent with the applicable provisions of
law, apply to and be included in: (a) any determination of the amount of
indebtedness secured by this Deed of Trust at any time; (b) the indebtedness
found due and owing to Beneficiary in the judgment of foreclosure and any
subsequent supplemental judgments, orders, adjudications or findings by the
court of any additional indebtedness becoming due after such entry of judgment,
it being agreed that in any foreclosure judgment, the court may reserve
jurisdiction for such purpose; and (c) application of income in the hands of any
receiver or mortgagee in possession.
4.12 Environmental Matters. The provisions of that certain Environmental
---------------------
Indemnity, dated as of the date hereof, by the Trustors in favor of the
Beneficiary are hereby incorporated by reference herein with the same force and
effect as if set forth herein.
ARTICLE V - GENERAL PROVISIONS
5.1 Extension; Release. The lien hereof shall remain in full force and
------------------
effect during any postponement or extension of the time of payment of the
Obligations, or of any part thereof, and any number of extensions or
modifications hereof, or any renewals, modifications, extensions, replacements,
or substitutions of the Notes or any additional notes taken by Beneficiary or
any Holder, shall not affect the lien hereof or the liability of either Trustor
or of any subsequent obligor to pay the Obligations, unless and until such lien
or liability shall have been expressly released in writing by Beneficiary by
proper instrument in accordance with the terms of the Indenture. Upon written
request from Beneficiary, Trustee shall fully reconvey, without warranty, this
Deed of Trust and the lien hereof by proper instrument in accordance with the
terms of the Indenture. The recitals in any such reconveyance of any matters of
facts shall be conclusive proof of the truthfulness thereof. The grantee in
such reconveyance may be described as "the person or persons legally entitled
thereto." Beneficiary shall have no obligation to record any release
instrument.
5.2 Trustors. This Deed of Trust and all provisions hereof, shall extend
--------
to and be binding upon Trustors and all persons claiming under or through
Trustors. Whenever in this Deed of Trust there is reference made to any of the
parties hereto, such reference shall be
29
<PAGE>
deemed to include, wherever applicable, a reference to the heirs, executors and
administrators or successors and assigns (as the case may be) of Trustors,
Trustee and Beneficiary. Either Trustor's successors and assigns shall include,
without limitation, a receiver, trustee or debtor-in-possession of or for such
Trustor.
5.3 Additional Documents. Each Trustor agrees that upon request of
--------------------
Beneficiary it will from time to time execute, acknowledge and deliver all such
additional instruments and further assurances of title and will do or cause to
be done all such further acts and things as may be reasonably necessary to fully
protect, preserve, perfect and maintain the security of Beneficiary hereunder
and otherwise effectuate the intent of this Deed of Trust.
5.4 Statute of Limitations. To the fullest extent allowed by law, the
----------------------
right to plead, use or assert any statute of limitations as a plea or defense or
bar of any kind, or for any purpose, to any debt, demand or obligation secured
or to be secured hereby, or to any complaint or other pleading or proceeding
filed, instituted or maintained for the purpose of enforcing this Deed of Trust
or any rights hereunder, is hereby waived by Trustors.
5.5 Severability. The invalidity of any one or more covenants, phrases,
------------
clauses, sentences or paragraphs of this Deed of Trust shall not affect the
remaining portions of this Deed of Trust or any part thereof, and the same shall
be construed as if such invalid covenants, phrases, clauses, sentences or
paragraphs, if any, had not been inserted herein. If the lien of this Deed of
Trust is invalid or unenforceable as to any part of the Obligations secured
hereby, or if the lien is invalid or unenforceable as to any part of the Trust
Property, the unsecured or partially secured portion of such Obligations shall
be completely paid prior to the payment of the remaining and secured or
partially secured portion of such Obligations, and all payments made on such
Obligations, whether voluntary or under foreclosure, trustee's sale, or other
enforcement action or procedure, shall be considered to have been first paid on
and applied to the full payment of that portion of such indebtedness which is
not secured or fully secured by the lien of this Deed of Trust.
5.6 Interaction with Indenture.
--------------------------
(a) Incorporation by Reference. Any capitalized term used in this
--------------------------
Deed of Trust without definition, but defined in the Indenture, shall have the
same meaning here as in the Indenture.
(b) Conflicts. Notwithstanding any other provision of this Deed of
---------
Trust, the terms and provisions of this Deed of Trust shall be subject and
subordinate to the terms of the Indenture. To the extent that the Indenture
provides Trustors with a particular cure or notice period, or establishes any
limitations or conditions on Beneficiary's actions with regard to a particular
set of facts, Trustors shall be entitled to the same cure periods and notice
periods, and Beneficiary shall be subject to the same limitations and
conditions, under this Deed of Trust, as under the Indenture, in place of the
cure periods, notice periods, limitations and conditions provided for under this
Deed of Trust; provided, however, that such cure periods, notice periods,
-------- -------
limitations and conditions shall not be cumulative as between the Indenture and
this Deed of Trust. In the event of any conflict or inconsistency
30
<PAGE>
between the provisions of this Deed of Trust 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.
5.7 Other Collateral. This Deed of Trust is one of a number of security
----------------
agreements to secure the debt delivered by or on behalf of Trustors pursuant to
the Indenture and the other Collateral Documents and securing the Obligations
secured hereunder. All potential junior Lien claimants are placed on notice
that, under any of the Collateral Documents or otherwise (such as by separate
future unrecorded agreement between Trustors and Beneficiary), other collateral
for the Obligations secured hereunder (i.e., collateral other than the Trust
Property) may, under certain circumstances, be released without a corresponding
reduction in the total principal amount secured by this Deed of Trust. Such a
release would decrease the amount of collateral securing the same indebtedness,
thereby increasing the burden on the remaining Trust Property created and
continued by this Deed of Trust. No such release shall impair the priority of
the lien of this Deed of Trust. By accepting its interest in the Trust
Property, each and every junior Lien claimant shall be deemed to have
acknowledged the possibility of, and consented to, any such release. Nothing in
this paragraph shall impose any obligation upon Beneficiary.
5.8 Notices. All notices and other communications under this Deed of
-------
Trust shall be in writing, except as otherwise provided in this Deed of Trust.
A notice, if in writing, shall be considered as properly given if given in
accordance with the provisions of Annex B attached hereto.
5.9 No Waiver of Remedies. By accepting payment of any amount secured
---------------------
hereby after its due date, or an amount which is less than the amount then due,
or performance of any obligation required hereunder after the date required for
such performance, Beneficiary does not waive its right to require prompt payment
or performance when due of all other amounts or obligations so secured or to
declare a default by reason of the failure to so pay or perform.
5.10 Trustee's Powers. At any time or from time to time without liability
----------------
therefor and without notice to Trustors, upon written request of Beneficiary and
presentation of the original or certified copies of this Deed of Trust, and
without affecting the personal liability of any person for payment of the
Obligations secured hereby or the effect of this Deed of Trust upon the
remainder of the Trust Property, Trustee may (a) release any part of the Trust
Property, (b) consent in writing to the making of any map or plat of all or any
part of the Property, (c) join in granting any easement on any part of the Trust
Property, or (d) join in any extension agreement or any agreement subordinating
the lien or charge of this Deed of Trust.
5.11 Beneficiary's Powers. Without affecting the liability of Trustors or
--------------------
any other person liable for the payment of any Obligation secured hereby, and
without affecting the lien or charge of this Deed of Trust upon any portion of
the Trust Property not then or theretofore released as security for the full
amount of all unpaid Obligations, Beneficiary may, from time to time and without
notice (a) release any person so liable, (b) extend the
31
<PAGE>
maturity or alter any of the terms of any such obligation, or join in any
agreement modifying the terms of the Indenture or any Transaction Document, (c)
waive any provision hereof or grant other indulgences, (d) release or reconvey,
or cause to be released or reconveyed, at any time at Beneficiary's option, all
or any part of the Trust Property, (e) take or release any other or additional
security for any obligation herein mentioned, (f) make compositions or other
arrangements with debtors in relation thereto, or (g) subordinate the lien or
charge of this Deed of Trust.
5.12 Additional Security. If Beneficiary at any time holds additional
-------------------
security for any of the Obligations secured hereby, all such security shall be
taken, considered and held as cumulative, and Beneficiary may enforce the sale
thereof or otherwise realize upon the same, at its option, either before or
concurrently with the exercise of any of its rights or remedies hereunder or
after a sale is made hereunder. The taking of additional security, execution of
partial releases of the security, or any extension of the time of payment of the
indebtedness secured hereby shall not diminish the force, effect or impair the
liability of any maker, surety or endorser for the payment of any such
indebtedness.
5.13 Captions. The captions or headings at the beginning of each Section
--------
hereof are for the convenience of the parties and are not to be construed as a
part of this Deed of Trust.
5.14 Trust Irrevocable; No Offset. The Trust created hereby is irrevocable
----------------------------
by Trustors. No offset or claim that either Trustor now has or may in the future
have against Beneficiary or Trustee shall relieve either Trustor from paying the
amounts or performing the Obligations contained herein or secured hereby.
5.15 Corrections. Trustors shall, upon request of Trustee, promptly
-----------
correct any defect, error or omission which may be discovered in the contents of
this Deed of Trust or in the execution or acknowledgment hereof, and will
execute, acknowledge and deliver such further instruments and do such further
acts as may be necessary or as may be reasonably requested by Trustee to carry
out more effectively the purposes of this Deed of Trust, to subject to the lien
and security interest hereby created any of Trustors' properties, rights or
interest covered or intended to be covered hereby, and to perfect and maintain
such lien and security interest.
5.16 Attorneys' Fees. All references to "attorneys' fees" in this Deed of
---------------
Trust shall include, without limitation, such reasonable amounts as may then be
charged by Beneficiary for legal services furnished by attorneys in the employ
of Beneficiary (including reasonable charges for in-house counsel).
5.17 Amendments. This Deed of Trust cannot be waived, changed, discharged
----------
or terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of any waiver, change, discharge or termination is
sought.
5.18 Acceptance by Trustee. Trustee accepts this Trust when this Deed of
---------------------
Trust, duly executed and acknowledged, is made a public record as provided by
law.
32
<PAGE>
5.19 Authorization to Rely. Trustee, upon presentation to it of an
---------------------
affidavit signed by or on behalf of Beneficiary, setting forth any fact or facts
showing a default by Trustors, or either of them, under any of the terms or
conditions of this Deed of Trust, is authorized to accept as true and conclusive
all facts and statements in such affidavit and to act hereunder in complete
reliance thereon.
5.20 GOVERNING LAW. THIS DEED OF TRUST SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO.
5.21 Time of Essence. Time is of the essence of this Deed of Trust and of
---------------
every part hereof of which time is an element.
5.22 Future Advances. To the extent Beneficiary may make advances pursuant
---------------
hereto or to the terms of the Indenture, the parties hereto acknowledge and
intend that all such advances, if any, whenever hereafter made, shall be secured
by this Deed of Trust with the same priority as the initial amounts advanced and
secured by this Deed of Trust.
5.23 Actions by Beneficiary to Preserve. Should an Event of Default occur,
----------------------------------
Beneficiary, in its own discretion, without obligation so to do and without
further notice to or demand upon Trustors and without releasing Trustors from
any Obligation, may make or do the same in such manner and to such extent as it
may deem necessary to protect the security hereof. In connection therewith
(without limiting Beneficiary's general powers), Beneficiary shall have and is
hereby given the right, but not the obligation (a) to enter upon and take
possession of the Trust Property, (b) to make additions, alterations, repairs
and improvements to the Trust Property which it may consider necessary or proper
to keep the Trust Property in good condition and repair the same as needed, (c)
to appear and participate in any action or proceeding affecting or which may
affect the security hereof or the rights or powers of Beneficiary hereunder, (d)
to pay, purchase, contest or compromise any encumbrance, claim, charge, lien or
debt which in the judgment of either may affect or appear to affect the security
of this Deed of Trust or be or appear to affect the security of this Deed of
Trust or be or appear to be prior or superior hereto, and (e) in exercising such
powers, to pay necessary expenses and employ necessary or desirable consultants
including, without limitation, in connection with applying for gaming approvals
under applicable Gaming Laws and approvals for transfers of ownership for any
liquor license.
5.24 Reimbursement. Trustors shall pay immediately upon demand all sums
-------------
expended for expenses paid or incurred by Beneficiary, including, without
limitation, court costs, expenses for evidence of title, appraisals and surveys,
license fees, trustees' fees and reasonable attorneys' fees (including
reasonable charges for in-house counsel), under any of the terms of this Deed of
Trust, including, without limitation, the provisions of Section 5.22, together
------------
with interest on the amount of each expenditure from the date of such
expenditure at the Default Rate.
5.25 Usury Savings Clause. It is the intention of the parties to conform
--------------------
strictly to the usury laws, whether state or federal, that are applicable to the
transaction of which this
33
<PAGE>
Deed of Trust is a part. All agreements between Trustors, or either of them,
and the Beneficiary, whether now existing or hereafter arising and whether oral
or written, are hereby expressly limited so that in no contingency or event
whatsoever shall the amount paid or agreed to be paid by Trustors for the use,
forbearance or detention of the money to be loaned or advanced under the
Indenture, the Notes, the Completion Capital Commitment, this Deed of Trust, any
other Collateral Document, or any other agreement or instrument relating
thereto, or for the payment or performance of any covenant or obligation
contained herein or therein, exceed the maximum amount permissible under
applicable federal or state usury laws. If under any circumstances whatsoever
fulfillment of any such provision, at the time performance of such provision
shall be due, shall involve exceeding the limit of validity prescribed by law,
then the obligation to be fulfilled shall be reduced to the limit of such
validity. If under any circumstances Trustors shall have paid an amount deemed
interest by applicable law, which would exceed the highest lawful rate, such
amount that would be excessive interest under applicable usury laws shall be
applied to the reduction of the principal amount owing in respect of the
Obligations and not to the payment of interest, or if such excessive interest
exceeds the unpaid balance of principal and any other amounts due hereunder, the
excess shall be refunded to the Trustors. All sums paid or agreed to be paid
for the use, forbearance or detention of the principal under any extension of
credit or advancement of funds by the Beneficiary or any Holder shall, to the
extent permitted by applicable law, and to the extent necessary to preclude
exceeding the limit of validity prescribed by law, be amortized, prorated,
allocated and spread from the date of the Indenture until payment in full of the
Obligations so that the actual rate of interest on account of such principal
amounts is uniform throughout the term hereof.
5.26 Jurisdiction and Venue. At the sole option of Beneficiary, any action
----------------------
concerning this Deed of Trust or any other Transaction Document may be brought
in the Colorado District Court for the County in which Beneficiary is located or
in the United States District Court for the District of Colorado, and each
Trustor consents to venue and personal jurisdiction with respect thereto.
5.27 Waiver of Jury Trial. Each Trustor hereby waives any right to jury
--------------------
trial of any claim, cross-claim or counter-claim relating to or arising out of
or in connection with this Deed of Trust and/or any of the other Transaction
Documents.
5.28 Waiver of Homestead and Other Exemptions. To the extent permitted by
----------------------------------------
law, each Trustor hereby waives all rights to any homestead or other exemption
to which such Trustor would otherwise be entitled under any present or future
constitutional, statutory, or other provision of applicable state or federal
law.
5.29 Construction Deed of Trust. This Deed of Trust secures indebtedness
--------------------------
for construction purposes as described in Section 4-9-313, Colorado Revised
Statutes (1973), as amended.
5.30 Gaming Laws. The grant of, and terms and provisions of, this Deed of
-----------
Trust, including, but not limited to, all rights and remedies of Beneficiary and
powers of attorney and appointment, are expressly subject to all laws, statutes,
regulations and orders affecting
34
<PAGE>
limited gaming or the sale of liquor (collectively, the "Gaming Laws"), in the
State of Colorado, which may include, but not be limited to, the necessity for
the Beneficiary to obtain the prior approval of the regulatory agencies
enforcing the Gaming Laws before taking any action hereunder and to be licensed
by such regulatory agencies before exercising certain rights and remedies
hereunder.
[Remainder of page intentionally blank]
35
<PAGE>
IN WITNESS WHEREOF, Trustors have duly executed and delivered this
Deed of Trust to Public Trustee, Security Agreement, Fixture Filing and
Assignment of Rents, Leases and Leasehold Interests (Gilpin County, Colorado)
as of the day and year first above written.
ISLE OF CAPRI BLACK HAWK L.L.C.,
a Colorado limited liability company
By: /s/ Allan B. Solomon
-------------------------------
Name: Allan B. Solomon
Title: Secretary
By: /s/ H. Thomas Winn
-------------------------------
Name: H. Thomas Winn
Title: Vice President
ISLE OF CAPRI BLACK HAWK CAPITAL CORPORATION,
a Colorado corporation
By: /s/ Allan B. Solomon
-------------------------------
Name: Allan B. Solomon
Title: Secretary
<PAGE>
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On August 19, before me, Yvonne M. Gutierrez, Notary Public, personally
appeared Allan B. Solomon [_] personally known to me OR [X] proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
[SEAL APPEARS HERE]
/s/ Yvonne M Gutierrez
------------------------------
Signature of Notary
<PAGE>
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On August 19, before me, Yvonne M. Gutierrez, Notary Public, personally
appeared Harold Thomas Winn, [_] personally known to me OR [X] proved to me on
the basis of satisfactory evidence to be the person whose name is subscribed to
the within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
[SEAL APPEARS HERE]
/s/ Yvonne M Gutierrez
------------------------------
Signature of Notary
<PAGE>
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On August 19, before me, Yvonne M. Gutierrez, Notary Public, personally
appeared Allan B. Solomon [_] personally known to me OR [X] proved to me on the
basis of satisfactory evidence to be the person whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his
authorized capacity, and that by his signature on the instrument the person, or
the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
[SEAL APPEARS HERE]
/s/ Yvonne M Gutierrez
------------------------------
Signature of Notary
<PAGE>
Exhibit A
---------
(Attached to and forming a part of the Deed of Trust to Public
Trustee, Security Agreement, Financing Statement and Assignment
of Rents and Leases, dated August 20, 1997 to the Public Trustee of
the County of Gilpin, Colorado, from
Isle of Capri Black Hawk L.L.C. and
Isle of Capri Black Hawk Capital Corp. for the benefit of
IBJ Schroder Bank & Trust Company)
LEGAL DESCRIPTION
-----------------
A PARCEL OF LAND IN SECTION 7, TOWNSHIP 3 SOUTH, RANGE 72 WEST OF THE 6TH
PRINCIPAL MERIDIAN, CITY OF BLACK HAWK, COUNTY OF GILPIN, STATE OF COLORADO,
MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE SOUTHERLY
RIGHT-OF-WAY OF MAIN STREET AND THE NORTHWESTERLY CORNER OF LOT 5, BLOCK 51 OF
THE CITY OF BLACK HAWK, FROM WHENCE TRIANGULATION STATION NO. 7 BEARS N73
29'55"W A DISTANCE OF 6105.74 FEET AND FROM WHENCE TRIANGULATION STATION NO. 9
BEARS N73 06'08"W A DISTANCE OF 4250.25 FEET AND FROM WHENCE THE SOUTH QUARTER
CORNER OF SAID SECTION 7 BEARS S46 15'20"W A DISTANCE OF 1622.07 FEET; THENCE,
DEPARTING FROM SAID RIGHT-OF-WAY N56 05'15"E A DISTANCE OF 21.21 FEET ALONG
AMENDED RIGHT OF WAY; THENCE, CONTINUING ALONG SAID AMENDED RIGHT-OF-WAY S78
54'45"E A DISTANCE OF 713.45 FEET TO A POINT ON THE NORTHERLY LINE OF BLOCK 52,
SAID CITY OF BLACK HAWK AND ALSO THE SOUTHERLY RIGHT-OF-WAY OF MAIN STREET AS
PER ADG ENGINEERING SURVEY CURRENT IN OCTOBER 1995, N83 38'00"E A DISTANCE OF
41.60 FEET; THENCE, DEPARTING FROM SAID RIGHT-OF-WAY S06 22'00"E A DISTANCE OF
0.18 FEET; THENCE N83 38'00"E ALONG THE NORTHERLY LINE OF SAID BLOCK 52 A
DISTANCE OF 88.31 FEET; THENCE, CONTINUING ALONG SAID NORTHERLY LINE S82 55'00"E
A DISTANCE OF 291.38 FEET; THENCE, CONTINUING ALONG SAID NORTHERLY LINE S72
00'00"E A DISTANCE OF 264.50 FEET TO THE NORTHEASTERLY CORNER OF LOT 18, SAID
BLOCK 52; THENCE S18 00'00"W A DISTANCE OF 100.00 FEET TO THE SOUTHEASTERLY
CORNER OF SAID LOT 18; THENCE N72 00'00"W A DISTANCE OF 254.94 FEET ALONG THE
SOUTHERLY LINE OF SAID BLOCK 52; THENCE N82 55'00"W A DISTANCE OF 270.03 FEET
CONTINUING ALONG SAID SOUTHERLY LINE; THENCE S83 38'00"W A DISTANCE OF 33.06
FEET TO THE INTERSECTION OF THE SOUTHERLY LINE OF LOT 4, SAID BLOCK 52 AND LINE
4-1 OF THE STEVENS LODE; THENCE, DEPARTING FROM SAID SOUTHERLY LINE AND ALONG
LINE 4-1 OF SAID STEVENS LODE S73 45'00"W A DISTANCE OF 143.20 FEET TO CORNER
NO. 3 OF THE RUNNING LODE U.S. SURVEY NO. 592; THENCE S14 25'00"E A DISTANCE OF
150.10 FEET TO CORNER NO. 4 OF SAID RUNNING LODE; THENCE, ALONG LINE 4-1 OF SAID
RUNNING LODE S73 45'00"W A DISTANCE OF 228.64 FEET; THENCE N78 52'00"W A
DISTANCE OF
<PAGE>
326.18 FEET TO SAID LINE 4-1 OF SAID STEVENS LODE; THENCE, ALONG SAID LINE 4-1
S73 45'00"W A DISTANCE OF 400.00 FEET TO CORNER NO. 1 OF SAID STEVENS LODE AND
TO INTERSECT WITH LINE 4-1 OF THE WABASH LODE, U.S. MINERALS SURVEY NO. 42;
THENCE N18 06'46"E ALONG LINE 4-1 OF SAID WABASH LODE A DISTANCE OF 328.65 FEET;
THENCE N68 28'58"W A DISTANCE OF 85.12 FEET; THENCE, N30 32'16"E A DISTANCE OF
130.71 FEET TO A POINT ON THE SOUTHERLY LINE OF SAID BLOCK 51; THENCE, S62
03'00"E ALONG SAID SOUTHERLY LINE A DISTANCE OF 69.21 FEET; THENCE, S78 52'00"E
A DISTANCE OF 41.23 FEET TO THE SOUTHWESTERLY CORNER OF LOT 5, SAID BLOCK 51;
THENCE, N11 08'00"E A DISTANCE OF 99.99 FEET TO THE POINT OF BEGINNING,
CONTAINING 397,291.07 SQUARE FEET OR 9.1205 ACRES, MORE OR LESS.
<PAGE>
ANNEX A
-------
(Attached to and forming a part of the Deed of Trust to Public
Trustee, Security Agreement, Financing Statement and Assignment
of Rents and Leases, dated August 20, 1997 to the Public Trustee of
the County of Gilpin, Colorado, from
Isle of Capri Black Hawk L.L.C. and Isle of Capri Black Hawk Capital Corp.
for the benefit of IBJ Schroder Bank & Trust Company)
DEFINED TERMS
-------------
As used in this Deed of Trust, the following terms have the meanings set
forth below. Any capitalized term used in this Deed of Trust which is not
defined herein shall have the meaning ascribed to such term in the Deed of
Trust.
"Affilate" 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 that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets (including, without limitation, by way of a sale and leaseback)
(provided that the sale, lease, conveyance or other disposition of all or
substantially all of the assets of the Company and its Subsidiaries, taken as a
whole, shall be governed by Section 4.15 and 5.1 of the Indenture and not by
Section 4.10 of the Indenture) and (ii) the issue or sale by the Company or any
of its Subsidiaries of Equity Interests of any of the Company's Subsidiaries, in
the case of either clause (i) or (ii), whether in a single transaction or a
series of related transactions (a) that have a fair market value in excess of
$250,000 or (b) for net proceeds in excess of $250,000. Notwithstanding the
foregoing: (i) a transfer of assets by the Company to a Wholly Owned Subsidiary
or by a Wholly Owned Subsidiary to the Company or to another Wholly Owned
Subsidiary, (ii) an issuance of Equity Interests by a Wholly Owned Subsidiary to
the Company or to another Wholly Owned Subsidiary, (iii) a Restricted Payment
that is permitted by Section 4.7 of the Indenture and (iv) a transfer of all
Public Improvements (as defined in the Subdivision Agreement) and all installed
physical facilities (as described in the Subdivision Agreement) required to be
transferred by the Company to the city of Black Hawk, Colorado pursuant to the
terms of the Subdivision Agreement shall not be deemed to be Asset Sales.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments
i
<PAGE>
during the remaining term of the lease included in such sale and leaseback
transaction (including any period for which such lease has been extended or
may, at the option of the lessor, be extended).
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Business Day" means any day other than a Legal Holiday.
"Capital" means Isle of Capri Black Hawk Capital Corp., a Colorado
corporation and a wholly owned subsidiary of the Company.
"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 on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited), (iv) in the case of a limited liability company,
membership interests and (v) any other interest or participation that confers on
a Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Collateral and Disbursement Agreement" means the Cash Collateral and
Disbursement Agreement among the Issuers, the Trustee, the Independent
Construction Consultant and the Disbursement Agent, in connection with the Isle-
Black Hawk.
"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 domestic commercial bank having
capital and surplus in excess of $500 million and a Keefe Bank Watch Rating of
"B" or better, (iv) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the qualifications
specified in clause (iii) above, (v) commercial paper having the highest rating
obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation
and in each case maturing within six months after the date of acquisition and
(vi) investment funds investing solely in securities of the types described in
(ii), (iii), (iv) or (v) above if such fund has net assets of at least $500
million.
"Casino America" means Casino America, Inc., a Delaware corporation.
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"Change of Control" means the occurence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries, taken as
a whole, to any "person" (as such term is used in Section 13(d)(3) of the
Exchange Act) other than Casino America or any of its Affiliates (ii) the
expiration or termination of the Management Agreement or the replacement of
Casino America or any of its Affiliates as manager under the Management
Agreement with any Person other than a successor to Casino America, (iii) the
adoption of a plan relating to the liquidation or dissolution of the Company
or Casino America, (iv) the liquidation or dissolution of the Company or
Casino America or any successor thereto, (v) prior to the consummation of an
Initial Public Offering, the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that Casino
America and Nevada Gold, or a successor to Casino America or Nevada Gold, cease
to collectively control a majority of the voting power of the Company, (vi)
after an Initial Public Offering, the Company's becoming aware of (by way of a
report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy
vote, written notice or otherwise) the acquisition by any Person or related
group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act, or any successor provision to either of the foregoing, including
any "group" acting for the purpose of acquiring, holding or disposing of
securities within the meaning of Rule 13d-5(b)(l) under the Exchange Act), other
than Casino America and Nevada Gold, or a successor to Casino America or Nevada
Gold, in a single transaction or in a related series of transactions, by way of
merger, consolidation or other business combination or purchase of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any
successor provision) of 50% or more of the total voting power entitled to vote
in the election of the Managers or Board of Directors of such other Person
surviving the transaction and, at such time, Casino America and Nevada Gold, or
a successor to Casino America or Nevada Gold, shall fail to beneficially own,
directly or indirectly, securities representing greater than the combined voting
power of the Company's or such other Person's Capital Stock as is beneficially
owned by such Person or group; (vii) the first day on which the Company fails to
own 100% of the issued and outstanding Equity Interests of Capital; and (vii)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Managers (together with any new mangers or board
members, as the case may be, whose election or appointment by such committee or
whose nomination for election by the members or shareholders of the Company, as
the case may be, was approved by a vote of a majority of the managers or board
members, as the case may be, then still in office who were either managers or
board members at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constituted a
majority of the Managers then in office; provided, however, that a Change of
Control shall not occur solely by reason of a Permitted C-Corp. Conversion.
"Closing Date" means the closing date for the sale and original issurance
of the Notes.
"Collateral Documents" means, collectively, this Deed of Trust, the
Security Agreement by the Issuers in favor of the Trustee, the Assignments of
Patent, Trademark and Copyright, the Collateral Assignments by the Issuers in
favor of the Trustee, the Cash Collateral and
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Disbursement Agreement, the Issuer Pledge Agreement by the Company in favor of
the Trustee, the Pledge and Assignment by the Issuers in favor of the Trustee,
the Manager Subordination Agreement, Uniform Commercial Code financing
statements and fixture filings, and any other agreements, instruments,
documents, pledges or filings that evidence, set forth or limit the Lien of the
Trustee in the Note Collateral.
"Company" means Isle of Capri Black Hawk L.L.C., a Colorado limited
liability company.
"Completion Capital Commitment" means the Completion Capital Commitment
dated as of the date of the Indenture executed by Casino America in favor of
the Trustee for the benefit of the Holders.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with
an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) Consolidated Interest Expense of such Person and its Sudsidiaries for
such period, to the extent that any such expense was deducted in computing such
Consolidated Net Income, plus (iv) depreciation and amortization (including
amortization of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) of such Person and its
Subsidiaries for such period to the extent that such depreciation and
amortization were deducted in computing such Consolidated Net Income, in each
case, on a consolidated basis and determined in accordance with GAAP.
Notwithstanding the foregoing, the provision for taxes on the income or profits
of, and the depreciation and amortization of, a Subsidiary of the referent
Person shall be added to Consolidated Net Income to compute Consolidated Cash
Flow only to the extent (and in the same proportion) that the Net Income of such
Subsidiary was included in calculating the Consolidated Net Income of such
Person and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.
"Consolidated Interest Expense" means, with respect to any person for any
period, without duplication, (i) the consolidated interest expense of such
Person and its Subsidiaries for such period, whether paid or accured (including,
without limitation, amortization or original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations), (ii) the consolidated interest expense of such Person and its
Subsidiaries that was capitalized during such period, (iii) any interest expense
on
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Indebtedness of another Person that is Guaranteed by such Person or one of its
Subsidiaries or secured by a Lien on assets of such Person or one of its
Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iv) 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 consolidated basis, determined in accordance with GAAP, provided
that (i) the Net Income (but not loss) 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 to the
referent Person or a Wholly Owned Subsidiary thereof, (ii) the Net Income of any
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary of such Net Income is not
at the date of determination permitted without any prior such governmental
approval (that has not been obtained) or, directly or indirectly, by operation
of the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to such Subsidiary or
its stockholders, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded and (iv) the cumulative effect of a change in accounting principles
shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups (other than
write-ups resulting from foreign currency translations and write-ups of tangible
assets of a going concern business made within 12 months after the acquisition
of such business) subsequent to the date of the Indenture in the book value of
any asset owned by such Person or a consolidated Subsidiary of such Person, (y)
all investments as of such date in unconsolidated Subsidiaries and in Person
that are not Subsidiaries (except, in each case, Permitted Investments) and (z)
all unamortized debt discount and expense and unamortized deferred charges as of
such date, all of the foregoing determined in accordance with GAAP.
"Construction Disbursement Account" means the account, to be maintained by
the Disbursement Agent and pledged to the Trustee, pursuant to the terms of the
Cash Collateral and Disbursement Agreement, into which approximately $52.5
million of the net proceeds of the Offering shall be deposited.
"Construction Disbursement Budget" means itemized scheduled setting forth
on a line item basis all of the costs (including financing costs) estimated to
be incurred in connection with the financing, design, development, construction
and equipping of the Isle-Black Hawk, as such
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schedules are delivered to the Disburesment Agent on the Closing Date and as
amended from time to time in accordance with the terms of the Cash Collateral
and Disbursement Agreement.
"Contingent Interest" means with respect to any principal amount of the
Notes as of any date after the Isle-Black Hawk becomes Operating, an amount
equal to the product of (i) 5% 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 $75.0 million.
"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.
"Design-Build Agreement" means the Design-Build Agreement dated July 22,
1997 between the Company and Haselden Construction, Inc.
"Disbursement Agent" means IBJ Schroder Bank & Trust Company, as
disbursement agent.
"Disqualified Stock" means any Capital Stock that, 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 opinion of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature.
"Environmental Indemnity" means the Environmental Indemnity, dated as of
August 20, 1997, by the Trustors in favour of the Beneficiary.
"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 Default" occurs if:
(a) the Issuers default for 30 days in the payment when due of interest
on, or Liquidated Damages, if any, with respect to, the Notes;
(b) the Issuers default in the payment when due of the principal of or
premium, if any, on the Notes;
(c) the Issuers fail to comply with the provisions described under
Sections 3.9, 4.7, 4.9, 4.10, 4.15, 4.22, 4.28, 4.30, 4.31 or 5.1 of the
Indenture;
(d) the Issuers fail for 30 days after notice to comply with any of its
other agreements in the Indenture or the Notes;
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(e) a default under any mortgage, indenture or instrument under which
there may be issued or by which there may be 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 date
of the Indenture, which default (a) is caused by a failure to pay principal of
or premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more;
(f) the Issuers or any of their Subsidiaries fail to pay final judgments
aggregating in excess of $5.0 million, which judgments are not paid, discharged
or stayed for a period of 60 days;
(g) the Issuers breach any material representation or warranty set forth
in the Collateral Documents, or default by the Issuers in the performance of any
covenant set forth in the Collateral Documents, or repudiation by the Issuers
of their obligations under the Collateral Documents or the unenforceability of
the Collateral Documents against the Issuers for any reason;
(h) either Issuer, any Subsidiary of either Issuer, or any group of
Subsidiaries of either Issuer that, taken as a whole, would constitute a
Significant Subsidiary of either Issuer certain events of bankruptcy or
insolvency with respect to the Issuer or any of their Subsidiaries;
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due;
(i) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against either Issuer, any Subsidiary of either
Issuer, or any group of Subsidiaries of either Issuer that,
taken as a whole, would constitute a Significant Subsidiary of
either Issuer in an involuntary case;
(ii) appoints a custodian of either Issuer or any Significant
Subsidiary of either Issuer or any group of Subsidiaries of
either Issuer that, taken as a whole,
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would constitute a Significant Subsidiary or for all or
substantially all of the property of either Issuer or any
Significant Subsidiary of either Issuer or any group of
Subsidiaries of either Issuer that, taken as a whole, would
constitute a Significant Subsidiary of either Issuer; or
(iii) orders the liquidation of either Issuer or any Significant
Subsidiary of either Issuer or any group of Subsidiaries of
either Issuer that, taken as a whole, would constitute a
Significant Subsidiary of either Issuer;
and the order or decree remains unstayed and in effect for 60 consecutive
days;
(j) the 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 any Gaming
Facility;
(k) a default by Casino America in the performance of its obligations set
forth in the Completion Capital Commitment or repudiation of its obligations
under the Completion Capital Commitment;
(l) the failure of the Isle-Black Hawk to be Operating by the Operating
Deadline or to remain Operating thereafter, expect (i) as the hours of operation
of the Isle-Black Hawk may be limited by any Gaming Authority or Gaming Law or
(ii) for a period of time not to exceed 20 days during any 30-day period and not
to exceed 45 days during any one-year period; provided, however, that, in any
event, there shall not be an Event of Default under this clause (l) (ii) if the
failure to remain Operating during such period results from an Event of Loss
which event shall be covered by Section 4.30 of the Indenture; or
(m) any failure by the Issuers to repurchase Notes tendered pursuant to a
Change of Control Offer (as defined below). Upon the occurrence of a Change of
Control, each Holder shall have the right to require the Issuers to repurchase
all or any part (equal to $1,000 or an integral multiple thereof) of such
Holder's Notes pursuant to the offer described below (the "Change of Control
Offer") at an offer price in cash equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the date of repurchase (the "Change of Control Payment"). Within ten
days following any Change of Control, the Issuers shall mail a notice to each
Holder describing the transaction or transactions that constitute the Change of
Control and offering to repurchase Notes on the date specified in such notice,
which date shall be no earlier than 30 days and no later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date"), pursuant
to the procedures required by the Indenture and described in such notice. The
Issuers 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
and regulations are applicable in connection with the repurchase of the Notes as
a result of a Change of Control.
On the Change of Control Payment Date, the Issuers shall, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control
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Offer, (ii) deposit with the Paying Agent an amount to the Change of Control
Payment in respect of all Notes or portions thereof so tendered and (iii)
deliver or cause to be delivered to the Trustee the Notes so accepted together
with an Officers' Certificate stating the aggregate principal amount of Notes or
portions thereof being purchased by the Issuers. The Paying Agent shall promptly
mail to each Holder of Notes so tendered the Change of Control Payment for such
Notes, and the Trustee shall promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Note equal in principal amount
to any unpurchased portion of the Notes surrendered, if any; provided that each
such new Note shall be in a principal amount of $1,000 or an integral multiple
thereof. The Issuers shall publicy announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control Payment Date.
The Change of Control provisions described above shall be applicable
whether or not any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the Holders to require that the Issuers
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction.
The source of funds for any repurchase of Notes upon a Change of Control
shall be the Issuers' cash or cash generated from operations or other sources,
including borrowings (if available and permitted pursuant to the terms of the
Indenture) or sales of assets; however, there can be no assurance that
sufficient funds shall be available at the time of any Change of Control to make
any required purchases of Notes.
Notwithstanding the foregoing, the Issuers shall not be required to make a
Change of Control Offer upon a Change of Control if a third party makes the
Change of Control Offer in the manner, at the times and otherwise in compliance
with the requirements set forth in the Indenture applicable to a Change of
Control Offer made by the Issuers and purchases all Notes validly tendered and
not withdrawn under such Change of Control Offer.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Issuers and their Subsidiaries, taken as a whole. Although
there is a developing body of case law interpreting the phrase "substantially
all," there is no precise established definition of the phrase under applicable
law. Accordingly, the ability of a Holder to require the Issuers to repurchase
Notes as a result of a sale, lease transfer, conveyance or other disposition of
less than all of the assets of the Issuers and their Subsidiaries, takes as a
whole, to another Person or group may be uncertain.
"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 clauses(ii) or (iii) above.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FF&E" means furniture, fixtures or equipment used in the ordinary course
of the business of the Company and its Subsidiaries.
"FF&E Financing" means the incurrence of Indebtedness, the proceeds of
which are utilized solely to finance or refinance the acquisition of (or entry
into a capital lease by the Company or a Subsidiary with respect to) FF&E.
"Final Plans" with respect to any particular work or improvement means
Plans which (i) have received final approval from all governmental authorities
required to approve such Plans prior to completion of the work or improvements
and (ii) contain sufficient specificity to permit the completion of the work or
improvement.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Subsidiaries for such period to the Fixed Charges of such Person and its
Subsidiaries for such period. In the event that the Issuers or any of their
Subsidiaries incur, assume, guarantee or redeem any Indebtedness (other than
revolving credit borrowings) or issue preferred stock subsequent to the
commencement of the period for which the Fixed Charge Coverage Ratio is being
calculated but prior to the date on which the event for which the calculation of
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as of the same had occurred at the
beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, (i) acquisitions that have
been made by the Issuers or any of their Subsidiaries, including through mergers
or consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (iii) of
the proviso set forth in the definition of Consolidated Net Income, and (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges shall
not be obligations of the referent Person or any of its Subsidiaries following
the Calculation Date.
"Fixed Charges" means, with respect to any Person for any period, without
duplication, the sum of (i) Fixed Interest, (ii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Subsidiaries or secured by a Lien on assets of such Person or one of its
Subsidiaries (whether or not such Guarantee or Lien is called upon) and (iii)
the product of (a) all dividend payments, whether or not in cash, on any series
of preferred stock of such Person or any or its Subsidiaries, other than
dividend payments on Equity Interests
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payable solely in Equity Interests of the Issuers, times (b) 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 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 on the principal amount of the Notes at 13%
per annum from August 20, 1997 until maturity.
"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, which are in effect from time to time.
"Gaming Authority" means any agency, authority, board, bureau, commission,
department, office or instrumentality of any nature whatsoever of the United
States federal or foreign government, any state, province or any city or other
political subdivision or otherwise, and whether now or hereafter in existence,
or any officer or official thereof, including the Colorado Limited Gaming
Control Commission and any other applicable gaming regulatory authority with
authority to regulate any gaming operation (or proposed gaming operation) owned,
managed or operated by the Company, Casino America or Nevada Gold or any of
their respective Subsidiaries.
"Gaming Business" means the gaming business and includes all
businesses either licensed or unlicensed by a Gaming Authority necessary for,
incident to or connected with or arising out of the operation of a gaming
establishment or facility (including developing and operating lodging, retail
and restaurant facilities, sports or entertainment facilities, transportation
services or other related activities or enterprises and any additions or
improvements thereto) and any businesses incident and useful to the gaming
business, including, without limitation, food and beverage distribution
operations to the extent that they are operated in connection with a gaming
business.
"Gaming Facility" means any tangible building or other structure used or
expected to be used to enclose space in which a Gaming Business is conducted and
(i) wholly or partially owned; directly or indirectly, by the Company or any
Subsidiary or (ii) any portion or aspect of which is managed or used, or
expected to be managed or used, by the Company or Subsidiary; provided that the
term Gaming Facility does not include any real property whether or not such
building or other structure is located thereon or adjacent thereto or any
furniture, fixtures and equipment, including gaming equipment, used in
connection with any Gaming Business.
"Gaming Law" means the gaming laws of any jurisdiction or jurisdictions to
which the Company or any of its Subsidiaries is, or may at any time after the
date of the Indenture, be subject.
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"Gaming License" means any license, permit, franchise or other
authorization from any Gaming Authority required on the date of the Indenture or
at any time thereafter to own, lease, operate or otherwise conduct the Gaming
Business of the Company, including all licenses granted under the gaming laws of
any jurisdiction to which the Company is, or may at any time after the date of
the Indenture, be subject.
"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.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Holders" means the record holders from time to time of the Notes.
"Hotel Option" means the Company's option, subject to the terms and
conditions set forth in the Design-Build Agreement, to build a hotel in
connection with the development of the Isle-Black Hawk.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money (including
accrued and unpaid Contingent Interest) or evidenced by bonds, notes, debentures
or similar instruments or letters of credit (or reimbursements agreements in
respect thereof) or banker's acceptances or representing Capital Lease
Obligations or the balance deferred and unpaid of the purchase price of any
property or representing any Hedging Obligations, except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing indebtedness (other than letters of credit, performance or other
surety bonds and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, as well as all
indebtedness secured by a Lien on any asset of such Person (whether or not such
indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other Person.
"Indenture" means the Indenture dated as of August 20, 1997, among the
Company, Capital and the Trustee, as trustee.
"Independent Construction Consultant" means the independent construction
consultant to be retained in connection with the construction of the Isle-Black
Hawk, or any successor independent construction consultant appointed by the
Trustee pursuant to the terms of the Cash Collateral and Disbursement Agreement.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons in the forms of direct or indirect loans (including
guarantees of Indebtedness or other
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obligations), advances (excluding commission, travel and similar advances to
officers and employees made in the ordinary course of business), capital
contributions, purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, together with all items that
are or would be classified as investments on a balance sheet prepared in
accordance with GAAP; provided that an acquisition of assets, Equity Interests
or other securities by the Company for consideration consisting of common equity
securities of the Company shall not be deemed to be an Investment. If the
Company or any Subsidiary of the Company sells or otherwise disposes of any
Equity Interests of any direct or indirect Subsidiary of the Company such that,
after giving effect to any such sale or disposition, such Person is no longer a
Subsidiary of the Company, the Company shall be deemed to have made an
Investment on the date of any such sale or disposition equal to the fair market
value of the Equity Interests of such Subsidiary not sold or disposed of.
"Isle-Black Hawk" means the pending project to develop, construct, equip
and operate the Isle of Capri Casino and related amenities, as described in the
Offering Circular of the Issuers dated August 14, 1997, relating to the Series A
Notes.
"Issuers" means the Company and Capital.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
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 Commerical Code (or equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.
"Management Agreement" means the Amended and Restated Management Agreement
dated as of July 29, 1997, between the Company and Casino America relating to
the management of the Isle-Black Hawk.
"Management Subordination Agreement" means the Manager Subordination
Agreement dated as of the date of the Indenture among the Company, Casino
America and the Trustee.
"Minimum Facilities" means, with respect to the Isle-Black Hawk, a casino
which has in operation at least 1,025 slot machines and ten table games, related
amenities (including a restaurant, buffet restaurant, a bar and an event area)
and has parking for at least 900 vehicles,
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including parking for up to 150 vehicles which may be temporarily unavailable in
the event that the Company exercises the Hotel Option.
"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 by such Person or any of its Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Subsidiaries,
(ii) any extraordinary or nonrecurring gain (but not loss), together with any
related provision for taxes on such extraordinary or nonrecurring gain (but not
loss), (iii) in the case of any Person that is treated as a pass-through entity
for United States federal income tax purposes, the provision for taxes based on
income or profits of such Person and its Subsidiaries for such period that would
be applicable if such Person were taxable as a subchapter "C" corporation and
(iv) solely for the purpose of calculating the Fixed Charge Coverage Ratio to
determine compliance by the Issuers with Sections 4.7, 4.9 and 4.27 of the
Indenture, pre-opening expenses as determined in accordance with GAAP incurred
by such Person in connection with the opening of the Isle-Black Hawk up to a
maximum of $2.5 million.
"Nevada Gold" means Nevada Gold, Inc., a Nevada corporation.
"Note Collateral" means all assets, now owned or hereafter acquired, of the
Issuers or any of their respective Subsidiaries, that are pledged or assigned,
or required to be pledged or assigned under the Indenture or the Collateral
Documents, to the Trustee pursuant to the Collateral Documents, which shall
initially include all real estate, improvements and all personal property owned
by the Issuers and all accounts held by or for the benefit of the Issuers,
together with all proceeds thereof (including, without limitation, the proceeds
of Assets Sales), in each case excluding FF&E acquired with FF&E Financing,
gaming and liquor licenses, and certain other exceptions.
"Notes" means the 13% Series A Notes due 2004 With Contingent Interest,
together with the 13% Series B Notes due 2004 With Contingent Interest.
"Offering" means the Offering of the Notes by the Issuers.
"Offering Circular" means that certain offering circular, dated August 14,
1997, relating to the offering of Notes, and all supplements, schedules or other
attachment thereto.
"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 Treasure, the Controller, the
Secretary or any Vice-President of such Person.
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"Officers' Certificate" means a certificate signed on behalf of the Company
or Capital, as the case may be, by two Officers of the Company or Capital, as
the case may be, one of whom must be the principal executive officer, the
principal financial officer, the treasurer or the principal accounting officer
of the Company or Capital, as the case may be, that meets the requirements of
Section 12.5 of the Indenture.
"Operating" means, with respect to the Isle-Black Hawk, the first time that
(i) all 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 development, construction and equipping of,
and beginning operations at, the Isle-Black Hawk have been discharged or, if
payment is not yet due or if such payment is contested in good faith by the
Issuers, sufficient funds remain in the Construction Disbursement Account to
discharge such Liens and the Issuers have taken any action (including the
institution of legal proceedings) necessary to prevent the sale of any or all of
the Isle-Black Hawk or the real property on which the Isle-Black Hawk shall be
constructed, (iii) the Independent Construction Consultant, the general
contractor and the architect of the Isle-Black Hawk shall have delivered a
certificate to the Trustee certifying that the Isle-Black Hawk is substantially
complete in all material respects in accordance with the Final Plans with
respect to the Minimum Facilities and all applicable building and other laws,
ordinances and regulations, (iv) the Isle-Black Hawk is in a condition
(including installation of furnishings, fixtures and equipment) to receive
customers in the ordinary course of business, (v) the Minimum Facilities are
open to the general public and operating in accordance with all applicable laws
and (vi) a temporary certificate of occupancy has been issued for the Isle-Black
Hawk by the appropriate governmental authorities.
"Operating Deadline" means June 15, 1999.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 12.5 of the
Indenture. The counsel may be an employee of or counsel to either the Issuers or
the Trustee.
"Paying Agent" means an office or agency where Notes may be presented for
payment.
"Permitted C-Corp. Conversion" shall mean a transaction resulting in the
Company becoming a subchapter "C" corporation pursuant to the United States
Internal Revenue Code; provided, that in connection with such transaction, (i)
the subchapter "C" corporation resulting from such transaction is a corporation
organized and existing under the laws of any state of the United States or the
District of Columbia and the beneficial holders of the Equity Interests of the
subchapter "C" corporation resulting from such transaction shall be the same,
and shall be in the same percentages, as the beneficial holders of the Equity
Interests of the Company immediately prior to such transaction; (ii) the
subchapter "C" corporation resulting from such transaction assumes all the
obligations of the Company under the Notes, the Collateral Documents and the
Indenture pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee; (iii) the Trustee is provided 45 days' advance notice of such
transaction and evidence reasonably satisfactory to the Trustee (which shall
include but not to be limited to title insurance and/or an opinion of counsel)
regarding the maintenance of the perfection, priority and proof of the security
xv
<PAGE>
interest of the Trustee in the Note Collateral; (iv) after giving effect to such
transaction no Default or Event of Default exists; (v) such transaction would
not result in the loss or suspension or material impairment of any Gaming
License unless a comparable replacement Gaming License is effective prior to or
simultaneously with such loss, suspension or material impairment; (vi) the
subchapter "C" corporation resulting from such transaction will have
Consolidated Net Worth immediately after the transaction equal to or greater
than the Consolidated Net Worth of the Company immediately preceding the
transaction and after giving pro forma effect as if the transaction had occurred
at the beginning of the applicable four-quarter period, the Fixed Charge
Coverage Ratio after the transaction of the subchapter "C" corporation resulting
from such transaction shall be equal to or greater than the Fixed Charge
Coverage Ratio of the Company immediately preceding the transaction; (vii) such
transaction would not require any Holder or beneficial owner of Notes to obtain
a Gaming License or be qualified or found suitable under the law of any
applicable gaming jurisdiction; provided that such Holder or beneficial owner
would not have been required to obtain a Gaming License or be qualified or
found suitable under the laws of any applicable gaming jurisdiction in the
absence of such transaction; (viii) the Company shall have delivered to the
Trustee an opinion of counsel in the United States reasonably acceptable to the
Trustee to the effect that the Holders will not recognize income gain or loss
for federal income tax purposes as a result of such Permitted C-Corp.
Conversion; and (ix) the Issuers shall have delivered to the Trustee an
Officers' Certificate as to compliance with all of the above conditions.
"Permitted Dispositions" means the sale, transfer, lease or other
disposition of assets in the Trust Property, in the ordinary course of business,
of inventory held in the ordinary course of business and other sales, transfers,
or other dispositions of assets in the Trust Property in the ordinary course of
business; provided that all provisions of the Indenture are complied with,
including, without limitation, Sections 4.10 and 4.23.
"Permitted Investments" means (i) any Investment in the Issuers or in a
Wholly Owned Subsidiary of the Issuers that is engaged in the Gaming Business
and that is evidenced by Capital Stock or Subsidiary Intercompany Notes that are
pledged to the Trustee as Note Collateral; (ii) any Investment in Cash
Equivalents; (iii) any Investment by the Issuers or any Subsidiary of the
Issuers in a Person that is evidenced by Capital Stock or Subsidiary
Intercompany Notes that are pledged to the Trustee as Note Collateral, if as a
result of such Investment (a) such Person becomes a Wholly Owned Subsidiary of
the Issuers engaged in the Gaming Business or (b) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Issuers or a Wholly Owned
Subsidiary of the Issuers and that is engaged in the Gaming Business; (iv) any
Restricted Investment made as a result of the receipt of non-cash consideration
from an Asset Sale that was made pursuant to and in compliance with Section 4.10
of the Indenture; (v) any acquisition of assets solely in exchange for the
issuance of Equity Interests (other than Disqualified Stock) of the Issuers; and
(vi) after the Isle-Black Hawk is Operating, any purchases from time to time by
the Company of Notes.
"Permitted Liens" means (i) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the Issuers or any
Subsidiary of the Issuers; provided
xvi
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that such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Issuers; (ii) Liens on property existing at
the time of acquisition thereof by the Issuers or any Subsidiary of the Issuers
(other than materials, supplies or FF&E acquired in connection with developing,
constructing or equipping of, or commencing operations at, the Isle-Black Hawk),
provided that such Liens were in existence prior to the contemplation of such
acquisition; (iii) Liens existing on the date of the Indenture and previously
disclosed to the Trustee in writing; (iv) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded; provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor; (v)
statutory Liens of landlords and carriers, warehousemen, mechanics, suppliers,
materialmen, repairmen or other like Liens arising in the ordinary course of
business and with respect to amounts not yet delinquent or being contested in
good faith by an appropriate process of law, and for which a reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been
made, and, with respect to such Liens arising in connection with the Isle-Black
Hawk, (a) the work or supplies provided which gave rise to such lien were
contemplated by the Design-Build Agreement; (b) there is no Default or Event of
Default under the Cash Collateral and Disbursement Agreement and (c) the payment
for such work or supplies is payable under the payment bond obtained by Haselden
Construction, Inc. pursuant to the Design-Build Agreement; (vi) Liens on FF&E to
secure Indebtedness permitted by clauses (ii) and (viii) of the second paragraph
of Section 4.9 of the Indenture; (vii) Liens securing obligations in respect of
the Indenture or the Notes; (viii) pledges or deposits in the ordinary course of
business to secure lease obligations or nondelinquent obligations under workers'
compensation, unemployment insurance or similar legislation; (ix) easements,
rights-of-way, restrictions, minor defects or irregularities in title and other
similar charges or encumbrances not interfering in any material respect with the
business or assets of the Company or any Subsidiary incurred in the ordinary
course of business; and (x) Liens arising from filing Uniform Commercial Code
financing statements for a precautionary purpose in connection with true leases
of personal property that are otherwise permitted under the Indenture and under
which the Issuers or any Subsidiary is lessee.
"Person" means an individual, partnership, limited liability company,
corporation, trust or unincorporated organization and a government agency or a
political subdivision thereof.
"Plans" means the plans, specifications, working drawings, change orders,
correspondence and related items, which may be amended by the Company, as the
case may be, as necessary or appropriate, that collectively; (i) provide for and
detail the manner of development, construction and equipping of the Isle-Black
Hawk; (ii) call for construction which shall permit the Isle-Black Hawk to be
Operating on or prior to the Operating Deadline, subject only to Permitted
Liens; (iii) call for construction which shall cause the Isle-Black Hawk to be
Operating for a total cost consistent with its Construction Disbursement Budget
(as defined in the Cash Collateral and Disbursement Agreement) and the line
items set forth therein; (iv) provide for and detail the manner of development,
construction and equipping of, and the related budget for, the hotel which may
be built in connection with the Isle-Black Hawk pursuant to the
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that such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Issuers; (ii) Liens on property existing at
the time of acquisition thereof by the Issuers or any Subsidiary of the Issuers
(other than materials, supplies or FF&E acquired in connection with developing,
constructing or equipping of, or commencing operations at, the Isle-Black Hawk),
provided that such Liens were in existence prior to the contemplation of such
acquisition; (iii) Liens existing on the date of the Indenture and previously
disclosed to the Trustee in writing; (iv) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded; provided that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor; (v)
statutory Liens of landlords and carriers, warehousemen, mechanics, suppliers,
materialmen, repairmen or other like Liens arising in the ordinary course of
business and with respect to amounts not yet delinquent or being contested in
good faith by an appropriate process of law, and for which a reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been
made, and, with respect to such Liens arising in connection with the Isle-Black
Hawk, (a) the work or supplies provided which gave rise to such lien were
contemplated by the Design-Build Agreement; (b) there is no Default or Event of
Default under the Cash Collateral and Disbursement Agreement and (c) the payment
for such work or supplies is payable under the payment bond obtained by Haselden
Construction, Inc. pursuant to the Design-Build Agreement; (vi) Liens on FF&E to
secure Indebtedness permitted by clauses (ii) and (viii) of the second paragraph
of Section 4.9 of the Indenture; (vii) Liens securing obligations in respect of
the Indenture or the Notes; (viii) pledges or deposits in the ordinary course of
business to secure lease obligations or nondelinquent obligations under workers'
compensation, unemployment insurance or similar legislation; (ix) easements,
rights-of-way, restrictions, minor defects or irregularities in title and other
similar charges or encumbrances not interfering in any material respect with the
business or assets of the Company or any Subsidiary incurred in the ordinary
course of business; and (x) Liens arising from filing Uniform Commercial Code
financing statements for a precautionary purpose in connection with true leases
of personal property that are otherwise permitted under the Indenture and under
which the Issuers or any Subsidiary is lessee.
"Person" means an individual, partnership, limited liability company,
corporation, trust or unincorporated organization and a government agency or a
political subdivision thereof.
"Plans" means the plans, specifications, working drawings, change orders,
correspondence and related items, which may be amended by the Company, as the
case may be, as necessary or appropriate, that collectively; (i) provide for and
detail the manner of development, construction and equipping of the Isle-Black
Hawk; (ii) call for construction which shall permit the Isle-Black Hawk to be
Operating on or prior to the Operating Deadline, subject only to Permitted
Liens; (iii) call for construction which shall cause the Isle-Black Hawk to be
Operating for a total cost consistent with its Construction Disbursement Budget
(as defined in the Cash Collateral and Disbursement Agreement) and the line
items set forth therein; (iv) provide for and detail the manner of development,
construction and equipping of, and the related budget for, the hotel which may
be built in connection with the Isle-Black Hawk pursuant to the
xvii
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Company's exercise of the Hotel Option, in accordance with the Construction
Disbursement Budget, as amended, and the line items set forth therein; (v) to
the extent such Plans are amended, in the reasonable, professional judgment of
the Independent Construction Consultant, continue to represent a logical
evolution consistent with previous Plans; and (vi) together with any amendments,
and are consistent with the description of the Isle-Black Hawk contained herein,
and are consistent with all governmental approvals are requirements, including,
without limitation, the Black Hawk Building Department, Historical Architecture
Review Commission, Gaming Authorities and the Subdivision Agreement.
"Project" means the Isle of Capri casino as described in the Offering
Circular, as the Plans may be amended pursuant to the Collateral Documents and
the Indenture, but excluding (i) any obsolete personal property or real property
improvements determined in good faith by either Trustor's Board of Directors to
be no longer useful or necessary to the operations or support of the Project and
(ii) any equipment leased from a third party in the ordinary course of business.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of August 20, 1997, among the Issuers and the other party named on the
signature page thereof, as such agreement may be amended, modified or
supplemented from time to time.
"Restricted Investment" means an Investment other than a Permitted
Investment .
"Restricted Payment" means any of the following payments or other actions:
(i) declaration or payment of any dividend or any other payment or distribution
on account of the Company's or any of its Subsidiaries' Equity Interests
(including, without limitation, any payment in connection with any merger or
consolidation involving the Company) or to the direct or indirect holders of the
Company's or any of its Subsidiaries' Equity Interests in any capacity (other
than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or dividends or distributions payable to the
Company by a Wholly Owned Subsidiary or a Substantially Owned Subsidiary); (ii)
purchase, redemption or other acquisition or retirement for value (including,
without limitation, in connection with any merger or consolidation involving the
Company) of any Equity Interests of the Company or any direct or indirect parent
of the Company or other Affiliate of the Company (other than any such Equity
Interests owned by the Company or any Wholly Owned Subsidiary of the Company);
(iii) any payment on or with respect to, or purchase, redemption, defeasance or
other acquisition or retirement for value of any Indebtedness that is pari passu
with or subordinated to the Notes (other than Notes), in each case except a
payment of interest (other than interest payable in Indebtedness incurred
pursuant to clause (x) of the second paragraph of Section 4.9 of the Indenture)
or a payment of principal on Indebtedness on or after the due date thereof in
accordance with the payment provisions thereof in each case as such Indebtedness
was permitted pursuant to Section 4.9 of the Indenture; or (iv) any Restricted
Investment.
"Semiannual Period" means the two fiscal quarter periods ending during the
January or July immediately preceding the applicable interest payment date.
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"Significant Subsidiary" means any Subsidiary that would be a significant
subsidiary as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Exchange Act, as such Regulation is in effect on the date of the
Indenture.
"Subdivision Agreement" means the Subdivision Agreement to be entered into
after the issuance of the Notes, between the Company and the city of Black Hawk,
Colorado.
"Subsidiary" means, with respect to any Person, (i) 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 that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"Subsidiary Intercompany Notes" means the intercompany notes senior to any
subordinated debt of, and pari passu with all existing senior Indebtedness of
the issuing Subsidiary, issued by Subsidiaries of the Company in favor of the
Company to evidence advances by the Company, in each case, in the form attached
as an exhibit to the Indenture.
"Substantially Owned Subsidiary" of any Person means a Subsidiary of such
Person at least 80% of the outstanding Capital Stock or other ownership interest
of which (other than directors' qualifying shares) shall at the time be owned by
one or more Wholly Owned Subsidiaries of such Person or by such Person and one
or more Wholly Owned Subsidiaries of such Person.
"Trustee" means IBJ Schroder Bank & Trust Company, as trustee under the
Indenture.
"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.
xix
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ANNEX B
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(Attached to and forming a part of the Deed of Trust to Public
Trustee, Security Agreement, Financing Statement and Assignment
of Rents and Leases, dated August 20, 1997 to the Public Trustee of
the County of Gilpin, Colorado, from
Isle of Capri Black Hawk L.L.C. and Isle of Capri Black Hawk Capital Corp.
for the benefit of IBJ Schroder Bank & Trust Company)
NOTICE PROVISION
----------------
Any notice or communication by any party 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 Trustors:
Isle of Capri Black Hawk L.L.C.
Isle of Capri Black Hawk Capital Corp.
c/o Casino America, Inc., Manager
711 Washington Loop
Biloxi, Mississippi 39530
Telecopier No.: (601) 435-5998
Attention: President
With a copy to:
Mayer, Brown & Platt
190 S. LaSalle Street, Suite 3100
Chicago, Illinois 60603
Telecopier No.: (312) 701-7711
Attention: Paul Theiss
If to the Beneficiary:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Telecopier No.: (213) 858-2952
Any party, by notice to the others, may designate additional or different
addresses for subsequent notices or communications.
<PAGE>
All notices and communications shall be deemed to have been duly given: at
the time delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; when receipt acknowledged, if telecopied; and the next Business Day
after timely delivery to the courier, if sent by overnight air courier
guaranteeing next day delivery.
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.
<PAGE>
EXHIBIT 4.6
Recording at the Request of:
and when Recorded Mail Original to:
Latham & Watkins
633 W. Fifth Street, Suite 4000
Los Angeles, California 90071
Attention: Dena Bloom, Esq.
ASSIGNMENT OF RENTS, LEASES AND LEASEHOLD INTERESTS
THIS ASSIGNMENT OF RENTS, LEASES AND LEASEHOLD INTERESTS (as the same
may be amended, supplemented or otherwise modified from time to time, this
"Assignment") is made and entered into as of August 20, 1997 by ISLE OF CAPRI
BLACK HAWK L.L.C., a Colorado limited liability company (the "Company"), whose
address is c/o Casino America Inc., 711 Washington Loop, Biloxi, Mississippi
39530 and whose federal taxation identification number is 84-1422931, and by
ISLE OF CAPRI BLACK HAWK CAPITAL CORP., a Colorado corporation ("Capital Corp."
and, together with the Company and any successor or assign thereof,
collectively, the "Assignors" and each, an "Assignor") and whose address is c/o
Casino America, Inc., 711 Washington Loop, Biloxi, Mississippi 39530, for the
benefit of IBJ SCHRODER BANK & TRUST COMPANY, a New York banking corporation,
whose address is One State Street, New York, New York 10004, in its capacity as
trustee under the Indenture referred to below ("Assignee") for its benefit and
the benefit of the Holders (as defined therein).
RECITALS
A. Assignee and Assignors are the parties to that certain Indenture
dated as of August 20, 1997 (as the same may be amended, supplemented or
otherwise modified from time to time, the "Indenture"). Unless otherwise
defined herein, capitalized terms used in this Assignment shall have the
meanings given such terms in the Indenture.
B. Assignors have, under the Indenture, issued their 13% First
Mortgage Notes Due 2004 With Contingent Interest in the original principal
amount of $75,000,000 (together with any amendments, supplements, modifications,
renewals or extensions thereof and any notes issued in replacement thereof or
exchange therefor from time to time, the "Notes"). The Notes, the Indenture,
the Collateral Documents and all other documents, agreements and instruments (in
each case, as amended,
<PAGE>
supplemented or otherwise modified from time to time) now or hereafter executed
and delivered in connection with the Indenture and transactions described
therein are collectively hereinafter referred to as the "Transaction Documents."
C. The Indenture requires that the obligations of Assignors under
the Notes, the Indenture and the other Transaction Documents be secured by liens
and security interests covering certain property of Assignors. In connection
therewith, Assignors are executing and delivering, among other things, that Deed
of Trust to Public Trustee, Security Agreement, Fixture Filing and Assignment of
Rents, Leases and Leasehold Interests, of even date herewith (the "Deed of
Trust"), from the Assignors to the Public Trustee of the County of Gilpin,
Colorado for the benefit of the Assignee encumbering the Property (as defined
below) and this Assignment.
D. Assignors, as landlord, have or will have entered into certain
leases of portions of the Property. Said leases, and any other lease or leases
or agreement for the use and occupancy of all or any portion(s) of said Property
hereafter entered into by Assignors, together with any and all guarantees
modifications, extensions and renewals thereof, are hereinafter referred to as
the "Tenants Leases".
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Assignors agree as follows:
1. Definitions. As used herein, capitalized terms shall have the
-----------
following meanings:
"Improvements" means any and all buildings, constructions, facilities
------------
and fixtures, pipelines and all other improvements now on, or hereafter located
or constructed on or in, the Land or any portion thereof.
"Land" means the real property described in Exhibit A attached hereto
---- ---------
and by this reference incorporated herein, including, without limitation, all
air rights with respect thereto.
"Property" means collectively the Land and the Improvements.
--------
2. Assignment of Leases and Rents. Each Assignor hereby absolutely
------------------------------
and unconditionally assigns and transfers to Assignee the following:
2
<PAGE>
(a) any and all rights, title and interest of such Assignor in and to
the Tenants Leases;
(b) any and all guaranties of the obligations of the tenants (the
"Tenants") under any of such Tenants Leases;
(c) the right to the use and possession of the Property and all of
the income, rents, receipts, security or similar deposits, revenues, issues,
royalties, profits, earnings, products and proceeds from any and all of the Land
or Improvements, now owned or hereafter acquired (collectively, the "Rents,
Issues and Profits") now due or that may become due or to which such Assignor
may now or hereafter (whether during any applicable period of redemption, or
otherwise) become entitled or may demand or claim, arising out of or issuing
from the Tenants Leases, or from or out of the Property or any part thereof; and
(d) the right to the use and possession of any or all of the
furniture, furnishings, fittings, attachments, appliances, machinery, equipment,
devices and appurtenances of every kind and description now or hereafter affixed
to, located in or on the Property or available for the use of the Tenants or the
operation of the Property and in or to which such Assignor has any right, title
or interest.
3. Assignors' Limited License. Provided that no Event of Default
--------------------------
exists, each Assignor shall have the right under a license granted hereby and
Assignee hereby grants to such Assignor a license to collect, but not more than
one month in advance, all of the Rents, Issues and Profits arising from or out
of the Tenants Leases or any renewals or extensions thereof, or from or out of
the Property or any part thereof, but only as trustee for the benefit of
Assignee. Each Assignor shall apply the Rents, Issues and Profits so collected
first to payment of any and all amounts due and payable under the Indenture.
Thereafter, so long as no Event of Default exists, such Assignor may use the
Rents, Issues and Profits in any manner not inconsistent with the Indenture.
The license granted hereby shall be revoked automatically upon the occurrence of
an Event of Default.
4. Limitation. The acceptance by Assignee of the assignment
----------
provided herein, together with all of the rights, powers, privileges and
authority created herein or elsewhere in this Assignment, shall not, prior to
entry upon and taking possession of the Property by Assignee, be deemed or
construed to constitute Assignee a "mortgagee in possession," nor thereafter or
at any time or in any event obligate Assignee to appear in or defend any action
or proceeding relating to the Tenants Leases, the Rents, Issues and Profits or
the Property or to take any action hereunder or to expend any money or incur any
expenses or
3
<PAGE>
perform or discharge any obligation or responsibility for any security deposits
or other deposits delivered to either Assignor by any Tenant and not assigned
and delivered to Assignee, nor shall Assignee be liable in any way for any
injury or damage to person or property sustained by any person or persons, firm
or corporation in or about the Property.
5. Performance by Assignors. Each Assignor covenants and agrees
------------------------
that it shall perform its obligations under the Tenants Leases in accordance
with their terms. Each Assignor shall not default in the performance of any
obligation of such Assignor under any Tenants Lease if, by reason of such
default, the Tenant or other party thereunder has the right to cancel such
Tenants Lease or to claim any diminution or offset against future Rents, Issues
or Profits.
6. Remedies. Upon the occurrence of any Event of Default, Assignee
--------
may, at its option (in each case, subject to and in accordance with any
applicable terms of the Indenture):
(a) in accordance with and subject to the terms of the Indenture,
declare all sums secured hereby and by the Transaction Documents to be
immediately due and payable, and the same shall thereupon become immediately due
and payable without any presentment, demand, protest or notice of any kind;
(b) terminate each Assignor's right and license to collect the Rents,
Issues and Profits and either in person or by agent, with or without bringing
any action or proceeding, or by a receiver appointed by a court, and without
regard to the adequacy of its security, enter upon and take possession of the
Property or any part thereof, and do any acts which it deems necessary or
desirable to preserve the value, marketability or rentability of the Property,
or any part thereof, and do any acts which it deems necessary or desirable to
preserve the value, marketability or rentability of the Property, or any part
thereof or interest therein, make, modify, enforce, cancel or accept the
surrender of any Tenants Lease, take actions which may affect the income
therefrom or protect the security hereof, and with or without taking possession
of the Property, sue for or otherwise collect the Rents, Issues and Profits,
including, without limitation, those past due and unpaid, and apply the same,
less costs and expenses of operation and collection, including, without
limitation, reasonable attorney's fees (including reasonable charges for in
house counsel), upon any indebtedness evidenced by the Notes or any other
Transaction Documents, all in such order as Assignee may determine. From and
after receipt of written notice Assignee to pay Rents, Issues and Profits
directly to Assignee or another party designated by Assignee, each Tenant shall
pay all such payments under its Tenants Lease in the manner instructed by
Assignee. The entering upon and taking possession
4
<PAGE>
of the Property or any portion thereof, the collection of the Rents, Issues and
Profits and the application thereof as aforesaid, or any of such acts, shall not
cure or waive any default or notice of defaulter invalidate any act done in
response to such default or pursuant to such notice, and notwithstanding the
continuance in possession of the Property or the collection, receipt and
application of the Rents, Issues and Profits, Assignee shall be entitled to
exercise every right provided for in any of the Indenture, the Notes, or the
other Transaction Documents or by law upon the occurrence of any Event of
Default, including, without limitation the right to exercise the power of sale
provided herein;
(c) notwithstanding the availability of legal remedies, obtain
specific performance mandatory or prohibitory injunctive relief, or other
equitable relief requiring Assignors to cure or refrain from repeating any
default;
(d) with or without accelerating the maturity of the Obligations, sue
from time to time for any payment due under any of the Indenture, the Notes or
the other Transaction Documents, or for money damages resulting from any
Assignor's default under any of the Indenture, the Notes or the other
Transaction Documents;
(e) exercise all other rights and remedies provided herein, in the
Indenture, the Notes, the other Transaction Documents or in any other document
or agreement now or hereafter securing all or any portion of the Obligations, or
at law or in equity, or any combination of any such rights or remedies, to the
extent permitted by law.
Upon request by Assignee, Assignors shall assemble and make available
to Assignee at the Land any of the Property which is not located on the Land or
which has been removed therefrom.
7. Remedies. If an Event of Default has occurred and is continuing,
--------
in addition to all other rights and remedies of Assignee as set forth under
Section 6 hereof, Assignee shall have the following rights and remedies:
- ---------
(a) Possession and/or Collection of Rent. Assignee, without first
------------------------------------
being required to (i) foreclose, (ii) take any actions to foreclose, (iii)
institute any legal proceedings of any kind whatsoever or (iv) exercise any
other actions or remedies hereunder or at law or in equity, shall have the
exclusive right and power (but not the obligation) (A) to enter upon and take
possession of the Property or any part thereof, (B) to rent or re-rent the same,
either in the name of Assignee or Assignors, or either of them, and/or (C) to
receive all Rents, Issues and Profits from the Property. Assignee shall apply
any
5
<PAGE>
Rents, Issues and Profits received by Assignee first, to the costs and expenses
incurred by Assignee in protecting and operating the Property, and next, to the
payment of the Obligations in such manner and in such order of priority as
Assignee shall determine consistent with the provisions of the Indenture. Any
such action by Assignee shall not operate as a waiver of the Event of Default in
question, or as an affirmation of any Tenants Leases or of the rights of any
Tenant in the event title to that part of the Property covered by the Tenants
Leases or held by the Tenant should be acquired by Assignee or other purchaser
at a foreclosure sale. The right of Assignee to receive all Rents, Issues and
Profits from the Property upon the occurrence and during the continuance of any
Event of Default shall be applicable whether or not Assignee has entered upon,
foreclosed, taken any actions to foreclose or taken possession of the Property,
whether or not Assignee has instituted any legal proceedings of any kind
whatsoever, or whether or not Assignee has otherwise attempted to exercise any
other actions or remedies hereunder or at law or in equity. If any such Rents,
Issues and Profits are paid to or received by either Assignor, such Assignor
shall hold same in trust for Assignee and immediately pay the same to Assignee
(in the form received, except for any necessary endorsement), without the
necessity of any request or demand therefor. Until receipt from Assignee of
notice of the occurrence of an Event of Default hereunder and during the
continuance thereof, all Tenants of the Tenants Leases and any successors to the
leasehold interest of such Tenants may pay Rents, Issues and Profits directly to
such Assignor, but after notice of the occurrence of any Event of Default and
during the continuance of same, such Assignor covenants to and shall hold all
Rents, Issues and Profits paid to such Assignor in trust for Assignee. Each
Assignor hereby authorizes and directs all Tenants of the Tenants Leases herein
described, and any successors to the leasehold interest of said Tenants, upon
receipt of any notice from Assignee stating that an Event of Default hereunder
has occurred, to pay to Assignee the Rents, Issues and Profits due and to become
due under said Tenants Leases. Each Assignor agrees that said Tenants shall
have the right to rely upon any such notice and request by Assignee without any
obligation or right to inquire as to whether an Event of Default actually exists
and notwithstanding any notice from or claim of such Assignor to the contrary,
and such Assignor shall have no right or claim against said Tenants for any such
Rents, Issues and Profits so paid by the Tenants to Assignee. In such event,
receipt by Assignee of Rents, Issues and Profits from such Tenants or their
successors shall be a release of such Tenants or their successors to the extent
of all amounts so received by Assignee.
(b) Management. Assignee, at its option, may take over and assume
----------
the management, operation and maintenance of the
6
<PAGE>
Property and perform all acts necessary and proper and expend such sums out of
the income of the Property as may be needed in connection therewith including
applying for appropriate approvals from the Liquor and Gaming License
Authorities, in the same manner and to the same extent as Assignors theretofore
might do, including, without limitation, the right to enter into new leases, to
cancel or surrender existing Tenants Leases, to alter or amend the terms of
existing Tenants Leases, to renew existing Tenants Leases, or to make
concessions to Tenants. Each Assignor hereby releases all claims against
Assignee arising out of such management, operation and maintenance, including,
without limitation, such claims as may arise from the negligence of Assignee,
but not the gross negligence or willful misconduct of Assignee and not any
liability of Assignee to account as hereinafter set forth.
(c) Receiver. Upon or at any time after the occurrence of any Event
--------
of Default, Assignee shall at once become entitled to the possession, use and
enjoyment of the Property and the Rents, Issues and Profits, from the date of
such occurrence and continuing during the pendency of any proceedings for sale
by the public trustee or foreclosure proceedings, and the period of redemption,
if any. Assignee shall be entitled to a receiver for the Property, and of the
Rents, Issues and Profits, after any such default, including, without
limitation, the time covered by any proceedings for sale by the public trustee
or foreclosure proceedings and the period of redemption, if any. Assignee shall
be entitled to such receiver as a matter of right, without regard to the
solvency or insolvency of Assignors, or of the then owner of the Property, and
without regard to the value thereof, and such receiver may be appointed by any
court of competent jurisdiction upon ex parte application, and without notice,
-- -----
notice being hereby expressly waived. All Rents, Issues and Profits, income and
revenue therefrom shall be applied by such receiver to the payment of the
Obligations according to the orders and directions of the court, or in the
absence of such orders or directions, in the manner set forth in Section 8
---------
below.
8. Application of Income. Assignee shall, after payment of all
---------------------
proper charges and expenses, including reasonable compensation to any managing
agent as it shall select and employ, and after the accumulation of a reserve to
meet taxes, assessments and insurance as herein required in requisite amounts,
credit the net amount of income received by it from the Property by virtue of
this absolute assignment to any amounts due and owing to it by Assignors under
the terms hereof, but the manner of the application of said net income and what
items shall be credited shall be determined pursuant to the Indenture, or
otherwise in the sole discretion of Assignee. Without impairing its rights
hereunder, Assignee may, at its option, at any time and from time to time,
release to Assignors Rents, Issues and
7
<PAGE>
Profits received by Assignee, or any portion of such Rents, Issues and Profits.
Assignee shall not be liable for its failure to collect, or its failure to
exercise diligence in the collection of Rents, Issues and Profits, but shall be
accountable only for Rents, Issues and Profits that Assignee shall actually
receive. Assignee shall not be accountable for more monies than it actually
receives from the Property nor shall it be liable for failure to collect Rents,
Issues and Profits.
9. Term. This absolute assignment shall remain in full force and
----
effect so long as the Obligations or any part thereof to Assignee remains unpaid
or unsatisfied, in whole or in part.
10. Actions of Trustee. All provisions hereof shall inure to the
------------------
benefit of and all actions authorized hereunder shall be exercisable by Trustee
or any substitute Trustee at Assignee's request.
11. PARTIES INTENT. AS BETWEEN ASSIGNEE AND ASSIGNORS, AND ANY
--------------
PERSON OR ENTITY CLAIMING THROUGH OR UNDER ASSIGNORS, OTHER THAN ANY TENANT
UNDER ANY OF THE TENANTS LEASES (OR THE SUCCESSOR OF ANY SUCH TENANT) WHO HAS
NOT RECEIVED ANY NOTICE OF AN EVENT OF A DEFAULT HEREUNDER, THE ASSIGNMENT
CONTAINED IN THIS ASSIGNMENT IS INTENDED TO BE ABSOLUTE, UNCONDITIONAL AND
PRESENTLY EFFECTIVE, AND THESE PROVISIONS ARE INTENDED SOLELY FOR THE BENEFIT OF
EACH TENANT UNDER ANY OF THE TENANTS LEASES (OR THE SUCCESSOR OF ANY SUCH
TENANT) AND SHALL NEVER INURE TO THE BENEFIT OF ASSIGNORS OR ANY PERSON CLAIMING
THROUGH OR UNDER ASSIGNORS, OTHER THAN A TENANT UNDER ANY OF THE TENANTS LEASES
(OR THE SUCCESSOR OF ANY SUCH TENANT) WHO HAS NOT RECEIVED SUCH NOTICE. IT
SHALL NEVER BE NECESSARY FOR ASSIGNEE TO INSTITUTE LEGAL PROCEEDINGS OF ANY KIND
WHATSOEVER OR TO TAKE ANY OTHER ACTIONS HEREUNDER OR AT LAW OR IN EQUITY TO
ENFORCE THE PROVISIONS OF THIS ASSIGNMENT.
12. Gaming Laws. The grant of, and terms and provisions of, this
-----------
Assignment, including, but not limited to, all rights and remedies of the
Assignee and powers of attorney and appointment, are expressly subject to all
laws, statutes, regulations and orders affecting limited gaming or the sale of
liquor (collectively, the "Gaming Laws"), in the State of Colorado, which may
include, but not be limited to, the necessity for the Assignee to obtain the
prior approval of the regulatory agencies enforcing the Gaming Laws before
taking any action hereunder and to be licensed by such regulatory agencies
before exercising certain rights and remedies hereunder.
13. Supplementary Assignment. This Assignment is intended to be
------------------------
supplementary to and not in substitution for or in derogation of any assignment
of rents contained in the
8
<PAGE>
Assignment. Failure of the Assignee to avail itself of any of the terms,
covenants or conditions of this Assignment for any period of time or for any
reason shall not constitute a waiver thereof.
14. Notices. All notices and other communications under this
-------
Assignment shall be in writing, except as otherwise provided in this Assignment.
A notice, if in writing, shall be considered as properly given if given in
accordance with the provisions of Section 5.8 of the Deed of Trust.
15. No Waiver of Remedies. By accepting payment of any amount
---------------------
secured hereby after its due date, or an amount which is less than the amount
then due, or performance of any obligation required hereunder after the date
required for such performance, Assignee does not waive its right to require
prompt payment or performance when due of all other amounts or obligations so
secured or to declare a default by reason of the failure to so pay or perform.
16. Captions. The captions or headings at the beginning of each
--------
Section hereof are for the convenience of the parties and are not to be
construed as a part of this Assignment.
17. Corrections. Assignors shall, upon request of Trustee, promptly
-----------
correct any defect, error or omission which may be discovered in the contents of
this Assignment or in the execution or acknowledgement hereof, and will execute,
acknowledge and deliver such further instruments and do such further acts as may
be necessary or as may be reasonably requested by Trustee to carry out more
effectively the purposes of this Assignment, to subject to the lien and security
interest hereby created any of Assignors' properties, rights or interest covered
or intended to be covered hereby, and to perfect and maintain such lien and
security interest.
18. Attorneys' Fees. All references to "attorneys' fees" in this
---------------
Assignment shall include, without limitation, such reasonable amounts as may
then be charged by Assignee for legal services furnished by attorneys in the
employ of Assignee (including reasonable charges for in-house counsel).
19. Amendments. This Assignment cannot be waived, changed,
----------
discharged or terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of any waiver, change, discharge or
termination is sought.
20. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO.
9
<PAGE>
21. Time of Essence. Time is of the essence of this Assignment and
---------------
of every part hereof of which time is an element.
22. Jurisdiction and Venue. At the sole option of Assignee, any
----------------------
action concerning this Assignment or any other Transaction Document may be
brought in the Colorado District Court for the County in which Assignee is
located or in the United States District Court for the District of Colorado, and
each Assignor consents to venue and personal jurisdiction with respect thereto.
23. Waiver of Jury Trial. Each Assignor hereby waives any right to
--------------------
jury trial of any claim, cross-claim or counter-claim relating to or arising out
of or in connection with this Assignment and/or any of the other Transaction
Documents.
24. Waiver of Exemptions. To the extent permitted by law, each
--------------------
Assignor hereby waives all rights to any exemption to which such Assignor would
otherwise be entitled under any present or future constitutional, statutory, or
other provision of applicable state or federal law.
25. Release. The recording of a full release of the Deed of Trust
-------
shall automatically constitute a full release of this Assignment.
[Remainder of page intentionally blank]
10
<PAGE>
IN WITNESS WHEREOF, Assignors have duly executed and delivered this
Assignment of Rents, Leases and Leasehold Interests as of the day and year first
above written.
ISLE OF CAPRI BLACK HAWK L.L.C.,
a Colorado limited liability company
By: /s/ Allan B. Solomon
-------------------------------
Name: Allan B. Solomon
Title: Secretary
By: /s/ H. Thomas Winn
------------------------------
Name: H. Thomas Winn
Title: Vice President
ISLE OF CAPRI BLACK HAWK CAPITAL CORPORATION,
a Colorado corporation
By: /s/ Allan B. Solomon
------------------------------
Name: Allan B. Solomon
Title: Secretary
<PAGE>
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On August 20, 1997, before me, Yvonne M. Gutierrez, Notary Public,
personally appeared Allan B. Solomon, [_] personally known to me OR [x] proved
to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Yvonne M. Gutierrez
[SEAL APPEARS HERE] ---------------------------------
Signature of Notary
<PAGE>
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On August 20, 1997, before me, Yvonne M. Gutierrez, Notary Public,
personally appeared Harold Thomas Winn [_] personally known to me OR [x] proved
to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Yvonne M. Gutierrez
[SEAL APPEARS HERE] ----------------------------
Signature of Notary
<PAGE>
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On August 20, 1997, before me, Yvonne M. Gutierrez, Notary Public,
personally appeared Allan B. Solomon,[_] personally known to me OR [x] proved
to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Yvonne M. Gutierrez
[SEAL APPEARS HERE] ----------------------------
Signature of Notary
<PAGE>
Exhibit A
---------
LEGAL DESCRIPTION
-----------------
A PARCEL OF LAND IN SECTION 7, TOWNSHIP 3 SOUTH, RANGE 72 WEST OF THE 6TH
PRINCIPAL MERIDIAN, CITY OF BLACK HAWK, COUNTY OF GILPIN, STATE OF COLORADO,
MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT A POINT ON THE SOUTHERLY
RIGHT-OF-WAY OF MAIN STREET AND THE NORTHWESTERLY CORNER OF LOT 5, BLOCK 51 OF
THE CITY OF BLACK HAWK, FROM WHENCE TRIANGULATION STATION NO. 7 BEARS N73
degrees 29'55"W A DISTANCE OF 6105.74 FEET AND FROM WHENCE TRIANGULATION STATION
NO. 9 BEARS N73 degrees 06'08"W A DISTANCE OF 4250.25 FEET AND FROM WHENCE THE
SOUTH QUARTER CORNER OF SAID SECTION 7 BEARS S46 degrees 15'20"W A DISTANCE OF
1622.07 FEET; THENCE, DEPARTING FROM SAID RIGHT-OF-WAY N56 degrees 05'15"E A
DISTANCE OF 21.21 FEET ALONG AMENDED RIGHT OF WAY; THENCE, CONTINUING ALONG SAID
AMENDED RIGHT-OF-WAY S78 degrees 54'45"E A DISTANCE OF 713.45 FEET TO A POINT ON
THE NORTHERLY LINE OF BLOCK 52, SAID CITY OF BLACK HAWK AND ALSO THE SOUTHERLY
RIGHT-OF-WAY OF MAIN STREET AS PER ADG ENGINEERING SURVEY CURRENT IN OCTOBER
1995, N83 degrees 38'00"E A DISTANCE OF 41.60 FEET; THENCE, DEPARTING FROM SAID
RIGHT-OF-WAY S06 degrees 22'00"E A DISTANCE OF 0.18 FEET; THENCE N83 degrees
38'00"E ALONG THE NORTHERLY LINE OF SAID BLOCK 52 A DISTANCE OF 88.31 FEET;
THENCE, CONTINUING ALONG SAID NORTHERLY LINE S82 degrees 55'00"E A DISTANCE OF
291.38 FEET; THENCE, CONTINUING ALONG SAID NORTHERLY LINE S72 degrees 00'00"E A
DISTANCE OF 264.50 FEET TO THE NORTHEASTERLY CORNER OF LOT 18, SAID BLOCK 52;
THENCE S18 degrees 00'00"W A DISTANCE OF 100.00 FEET TO THE SOUTHEASTERLY CORNER
OF SAID LOT 18; THENCE N72 degrees 00'00"W A DISTANCE OF 254.94 FEET ALONG THE
SOUTHERLY LINE OF SAID BLOCK 52; THENCE N82 degrees 55'00"W A DISTANCE OF 270.03
FEET CONTINUING ALONG SAID SOUTHERLY LINE; THENCE S83 degrees 38'00"W A DISTANCE
OF 33.06 FEET TO THE INTERSECTION OF THE SOUTHERLY LINE OF LOT 4, SAID BLOCK 52
AND LINE 4-1 OF THE STEVENS LODE; THENCE, DEPARTING FROM SAID SOUTHERLY LINE AND
ALONG LINE 4-1 OF SAID STEVENS LODE S73 degrees 45'00"W A DISTANCE OF 143.20
FEET TO CORNER NO. 3 OF THE RUNNING LODE U.S. SURVEY NO. 592; THENCE S14
degrees 25'00"E A DISTANCE OF 150.10 FEET TO CORNER NO. 4 OF SAID RUNNING LODE;
THENCE, ALONG LINE 4-1 OF SAID RUNNING LODE S73 degrees 45'00"W A DISTANCE OF
228.64 FEET; THENCE N78 degrees 52'00"W A DISTANCE OF 326.18 FEET TO SAID LINE
4-1 OF SAID STEVENS LODE; THENCE, ALONG SAID LINE 4-1 S73 degrees 45'00"W A
DISTANCE OF 400.00 FEET TO CORNER NO. 1 OF SAID STEVENS LODE AND TO INTERSECT
WITH LINE 4-1 OF THE WABASH LODE, U.S. MINERALS SURVEY NO. 42; THENCE N18
degrees 06'46"E ALONG LINE 4-1 OF SAID WABASH LODE A DISTANCE OF 328.65 FEET;
THENCE N68 degrees 28'58"W A DISTANCE OF 85.12 FEET; THENCE, N30 degrees 32'16"E
A DISTANCE OF 130.71 FEET TO A POINT ON THE SOUTHERLY LINE OF SAID BLOCK 51;
THENCE, S62 degrees 03'00"E ALONG SAID SOUTHERLY LINE A DISTANCE OF 69.21 FEET;
THENCE, S78 degrees 52'00"E A DISTANCE OF 41.23 FEET TO THE SOUTHWESTERLY CORNER
OF LOT 5, SAID BLOCK 51; THENCE, N11 degrees 08'00"E
12
<PAGE>
A DISTANCE OF 99.99 FEET TO THE POINT OF BEGINNING, CONTAINING 397,291.07 SQUARE
FEET OR 9.1205 ACRES, MORE OR LESS.
13
<PAGE>
EXHIBIT 4.7
SECURITY AGREEMENT
This SECURITY AGREEMENT, dated as of August 20, 1997 (as the same may
be amended, supplemented or otherwise modified from time to time, this
"Agreement"), is made by ISLE OF CAPRI BLACK HAWK L.L.C., a Colorado limited
liability company having an office c/o Casino America Inc., 711 Washington
Loop, Biloxi, Mississippi 39530 (the "Company"), and by ISLE OF CAPRI BLACK HAWK
CAPITAL CORP., a Colorado corporation having an office c/o Casino America Inc.,
711 Washington Loop, Biloxi, Mississippi 39530 ("Capital Corp." and, together
with the Company, collectively, the "Grantors" and each, a "Grantor") in favor
of IBJ SCHRODER BANK & TRUST COMPANY, a New York banking corporation, having an
office at One State Street, New York, New York 10004, as trustee (in such
capacity and together with any successors in such capacity, the "Trustee")
pursuant to the Indenture referred to below.
R E C I T A L S :
A. The Grantors and the Trustee are, contemporaneously with the
execution and delivery of this Agreement, entering into a certain Indenture
dated as of August 20, 1997 (as the same may be amended, supplemented or
otherwise modified from time to time, the "Indenture"), pursuant to which the
Grantors are issuing their 13% First Mortgage Notes due August 20, 2004 With
Contingent Interest (such notes, together with any notes issued in replacement
thereof or in exchange therefor, the "Securities"), in the aggregate principal
amount of $75,000,000.
B. It is a condition precedent to the purchase of the Securities
that the Grantors shall have executed and delivered this Agreement to the
Trustee for itself and the ratable benefit of the holders from time to time of
the Securities (the "Holders" and, together with the Trustee, the "Secured
Parties") to secure the payment and performance of the Obligations (as
hereinafter defined).
A G R E E M E N T :
NOW, THEREFORE, in consideration of the premises and in order to
induce the Trustee to enter into the Indenture and to induce the Holders to
purchase the Securities and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Grantors hereby
agree, for the benefit of the Trustee and for the ratable benefit of the Holders
as follows:
SECTION 1.1. Definitions. (a) Capitalized terms used herein but not
-----------
otherwise defined shall have the meanings assigned to such terms in the
Indenture. Unless the context indicates otherwise or the terms are otherwise
defined herein or in the Indenture, definitions in the UCC apply to words and
phrases in this Agreement. The term "Grantor," as used with respect to any
Person, includes, without limitation, such Person, such Person's heirs,
successors and assigns, such Person as a debtor-in-possession, and any receiver,
trustee, liquidator, conservator, custodian or similar party appointed for such
Person or all or substantially all of its assets under any law.
<PAGE>
(b) The following terms which are defined in the Uniform Commercial
Code in effect in the State of New York on the date hereof are used herein
as so defined: Accounts, Chattel Paper, Documents, Fixtures, General
Intangibles, Instruments, Inventory and Proceeds.
(c) The following terms shall have the following meanings:
"Agreement" shall mean this Security Agreement, as the same may be
---------
amended, supplemented or otherwise modified from time to time.
"Collateral" shall have the meaning set forth in Section 2 hereof.
---------- ---------
"Completion Capital Commitment" shall mean the Completion Capital
-----------------------------
Commitment by Casino America, Inc., dated as of the date hereof, as the same
may be amended, supplemented or otherwise modified from time to time.
"Contracts" shall mean (a) any and all contracts and agreements
---------
relating to gaming including, without limitation, any agreement in which a
person does business with or on the premises of an entity licensed pursuant to
applicable Gaming Laws and any resource or product used or useful in the
business of any Grantor, and (b) any and all other contracts and agreements of
any Grantor, as such may be amended, modified or otherwise supplemented from
time to time, in each case including, without limitation, (i) all rights to
receive moneys due and to become due to any Grantor thereunder or in connection
therewith, (ii) all rights to damages arising out of or for breach or default in
respect thereof and (iii) all rights to perform and exercise all remedies
thereunder.
"Copyrights" shall mean (a) all copyrights in all works, whether
----------
published or unpublished, registered or unregistered, including, without
limitation, those listed on Exhibit A, all registrations and recordings thereof,
---------
and all applications in connection therewith, including, without limitation,
registrations, recordings and applications in the United States Copyright Office
or in any other country, and (b) all renewals thereof.
"Copyright License" shall mean any and all agreements, written or oral
-----------------
providing for the grant by or to any Grantor of any right to reproduce, copy,
publish or otherwise use any Copyright, including, without limitation, the
agreements set forth on Exhibit A.
---------
"Default Rate" shall have the meaning set forth in Section 6.15
------------ ------------
hereof.
"Equipment" shall mean "equipment" as defined in the Uniform
---------
Commercial Code in effect in the State of New York on the date hereof,
including, without limitation, all machinery (including, without limitation, any
and all equipment and machinery used for or in connection with maintaining and
operating gaming facilities, lodging and restaurants), apparatus, implements,
office machinery, computers, furniture, furnaces, conveyors, tools, parts,
accessories, automobiles, trailers, tractors, trucks, forklifts, other motor
vehicles and all other equipment of any kind or nature, wherever located, and
all modifications,
2
<PAGE>
alterations, repairs, substitutions, additions and accessions thereto and all
replacements and all other parts therefor.
"General Intangibles" shall mean " general intangibles" as defined in
-------------------
the Uniform Commercial Code in effect in the State of New York on the date
hereof, including, without limitation, claims of any Grantor in respect of
litigation and claims for tax and other refunds from, inter alia, any city,
county, state, or federal government or any agency or authority or other
subdivision thereof.
"Governmental Authority" shall mean any nation or government, any
----------------------
state, municipality or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government including, without limitation, the
Colorado Division of Gaming and the Colorado Limited Gaming Control Commission.
"Investment Property" shall mean "investment property" as defined in
-------------------
the Uniform Commercial Code in effect in the State of Colorado on the date
hereof.
"Intellectual Property" shall mean Copyrights, Patents, Trademarks,
---------------------
Trade Secrets and Licenses, collectively.
"Licenses" shall mean Copyright Licenses, Patent Licenses and
--------
Trademark Licenses, collectively.
"Material Adverse Effect" shall mean a material adverse effect on (a)
-----------------------
the business, operations, property, condition (financial or otherwise) of any
Grantor and its respective Subsidiaries, taken as a whole, (b) the Collateral,
or (c) the validity or enforceability of (i) this Agreement, any of the
Securities, the Indenture, the Completion Capital Commitment or any other
Collateral Document or (ii) the rights or remedies of the Trustee (or any other
trustee) hereunder or thereunder.
"Obligations" shall have the meaning set forth in Section 3 hereof.
----------- ---------
"Patents" shall mean all patents and patent applications, and the
-------
inventions and improvements described and claimed therein, and patentable
inventions and the reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any of the foregoing, including, without limitation,
those set forth on Exhibit B.
---------
"Patent Licenses" shall mean any and all agreements, whether written
---------------
or oral, providing for the grant by or to any Grantor of any right to
manufacture, use or sell any invention covered by a Patent, including, without
limitation, those set forth on Exhibit B.
---------
"Trademarks" shall mean (a) all registered and unregistered
----------
trademarks, trade names, corporate names, company names, business names,
fictitious business names, trade styles, service marks, logos, slogans and other
source or business identifiers, and the goodwill and general intangibles
associated therewith, all registrations and recordings
3
<PAGE>
thereof, and all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, including, without limitation, those set
forth on Exhibit C, and (b) all renewals thereof.
---------
"Trademark License" shall mean any and all agreements, written or
-----------------
oral, providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, those set forth on Exhibit C.
---------
"Trade Secret" shall mean any proprietary technology, process or
------------
system which is within the possession of any Grantor, including, without
limitation, manufacturing processes or methods, all formulae, processes,
procedures, compounds, drawings, designs, blueprints, surveys, reports, manuals
and operating standards relating to or used in the operation of such Grantor's
business.
"UCC" shall mean the Uniform Commercial Code as from time to time in
---
effect in the State of New York.
"Works" shall mean any work which is or may be subject to copyright
-----
protection pursuant to Title 17 of the U.S. Code.
SECTION 1.2. Other Definitional Provisions.
-----------------------------
(a) The words "hereof," "herein," "hereto" and "hereunder" and words
of similar 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,
subsection and Exhibit references are to this Agreement, unless otherwise
specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. Grant of Security Interest. Except with respect to
--------------------------
Permitted Liens, to the fullest extent permitted by applicable law, each Grantor
hereby grants, pledges, assigns and transfers to the Trustee, for the Trustee's
individual benefit and the ratable benefit of the Holders, as security for the
prompt and complete payment and performance when due (whether at stated
maturity, upon redemption or required repurchase, by acceleration or otherwise)
of all the Obligations of the Grantors, a continuing first priority security
interest in and lien on all of the right, title and interest of such Grantor in,
to and under the following property, in each case wherever located, whether now
owned or at any time hereafter acquired by such Grantor, whether now existing or
hereafter coming into existence, or in which such Grantor now has or at any time
in the future may acquire any right, title or interest (collectively, the
"Collateral"):
(a) the Cash Collateral Accounts, the Interest Reserve Account, the
Completion Reserve Account, the Construction Disbursement Account, the
Disbursed Funds Account (in each case, as defined in the Disbursement
Agreement), any other
4
<PAGE>
related accounts and all Trust Monies, other monies, securities, certificates,
items and other property on deposit therein;
(b) all Accounts;
(c) all Chattel Paper;
(d) all Contracts;
(e) all Documents;
(f) all Equipment;
(g) all Fixtures;
(h) all General Intangibles;
(i) all Instruments;
(j) all Intellectual Property;
(k) all Inventory;
(l) all Investment Property;
(m) to the extent not otherwise included in the foregoing, all of such
Grantor's personal property, goods, furnishings, fixtures and equipment,
supplies, building and other materials of every nature whatsoever and all other
personal property, including, but not limited to, communication systems, visual
and electronic surveillance systems and transportation systems and including all
property and materials stored therein in which such Grantor has an interest and
all tools, utensils, food and beverage, liquor, uniforms, linens, housekeeping
and maintenance supplies, vehicles, fuel, advertising and promotional material,
blueprints, surveys, plans and other documents relating to the Project, all
gaming and general equipment and devices which are or are to be installed and
used in connection with the operation of the Isle of Capri casino (the
"Project"), all computer equipment, calculators, adding machines, and gaming
tables, video game and slot machines and any other electronic equipment, all
furniture, fixtures, equipment, gaming equipment, appurtenances and personal
property now or in the future contained in, used in connection with, attached
to, or otherwise useful or convenient to the use, operation, or occupancy of, or
placed on, but unattached to, any part of the Project or the land upon which the
Project will be constructed, including all removable window and floor coverings,
all furniture and furnishings, heating, lighting, plumbing, ventilating, air
conditioning, refrigerating, incinerating and elevator and escalator plants,
cooking facilities, vacuum cleaning systems, public address and communications
systems, sprinkler systems and other fire prevention and extinguishing apparatus
and materials, motors, machinery, pipes.
5
<PAGE>
appliances, equipment, fittings, fixtures and building materials, together
with all venetian blinds, shades, draperies, drapery and curtain rods,
brackets, bulbs, cleaning apparatus, mirrors, lamps, ornaments, cooling
apparatus and equipment, ranges and ovens, garbage disposals, dishwashers,
mantels, and any and all such property which is at any time installed in
affixed to or placed upon the land upon which the Project will be
constructed, all 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 specifically designed installations and
furnishings, and all other personal property, furniture, fixtures and
equipment of every nature used or located at the Project;
(n) to the extent not otherwise included in the foregoing, all of
such Grantor's accounts and accounts receivable, including, without
limitation, all rights to payment for goods sold or leased or for services
rendered which are not evidenced by an instrument or chattel paper, all
other present or future rights for money due or to become due, all of such
Grantor's chattel paper, instruments, promissory notes (including, without
limitation, all inter-company notes), markers and general intangibles for
money due or to become due of any kind, in each case whether now existing
or hereafter arising and wherever arising and whether or not earned by
performance and all royalties, earnings, income, proceeds, products, rents,
revenues, reversions, remainders, issues, profits, avails, and other
benefits directly or indirectly derived or otherwise arising from any of
the foregoing, other general intangibles, documents of title, warehouse
receipts, leases, money, tax refund claims, partnership interests,
indemnification and other similar claims and contract rights, permits and
licenses, including, without limitation, any licenses held or to be held by
such Grantor necessary to operate the Project (including, without
limitation, licenses in favor of such Grantor granted pursuant to the
Management Agreement or otherwise), franchises, variances, special permits,
rulings, validations, exemptions, filings, registrations, authorizations,
consents, approvals, waivers, orders, rights and agreements (including,
without limitation, options, option rights and contract rights)
certificates, stock, any and all books, records, customer lists, concession
agreements, supply or service contracts, documents, unearned premiums,
rebates, deposits, refunds, including, but not limited to, income tax
refunds, prepaid expenses, rebates, tax and insurance escrow and impound
accounts, if any, and all rights in, to and under all, leases and other
agreements or contracts relating to any of the foregoing or now or
hereafter obtained by such Grantor from any Governmental Authority having
or claiming jurisdiction over the Project, and all things in action, rights
represented by judgments, awards of damages, settlements and claims arising
out of tort, warranty or contract (including, without limitation, the right
to assert and otherwise be the proper party of interest to commence,
control, prosecute and/or settle such actions, whether as claims,
counterclaims or otherwise, and whether involving matters arising from
casualty, condemnation, indemnification, negligence, strict liability,
other tort, contract, warranty or in any other manner), and all securities
of any Subsidiary, whether now in existence or hereafter incorporated or
formed;
6
<PAGE>
(o) to the extent not otherwise included in the foregoing, all
computer programs of such Grantor and all intellectual property rights
therein and all other proprietary information owned by, or in which such
Grantor has an interest, such Grantor, including, but not limited to, trade
secrets;
(p) all of such Grantor's right, title and interest in and to any and
all maps, plans, preliminary plans, specifications, surveys, studies,
tests, reports, data and drawings relating to the development of the
Project including, without limitation, all marketing plans, feasibility
studies, soils tests, design contracts and all contracts and agreements of
such Grantor relating thereto including, without limitation, architectural,
structural, mechanical and engineering plans and specifications, studies,
data and drawings prepared for or relating to the development of the
Project or the construction, renovation or restoration of the Project as
finalized, amended, supplemented, or otherwise modified from time to time
by the Independent Construction Consultant, in accordance with the terms of
the Cash Collateral and Disbursement Agreement, or the extraction of
minerals, sand, gravel or other valuable substances from the land upon
which the Project will be constructed and purchase contracts or any
agreement granting such Grantor a right to acquire any land situated within
Gilpin County, Colorado;
(q) to the extent not otherwise included in the foregoing, (i) all
other rights to the payment of money, including subsidy, reserve and
deficiency payments, rents (including room rents) and other sums payable to
such Grantor under leases, rental agreements and insurance proceeds; (ii)
all books, ledgers, files, correspondence, credit files, records, invoices,
bills of lading, and other documents relating to any of the foregoing,
including, without limitation, all tapes, cards, disks, computer software,
computer runs, and other papers and documents in the possession or control
of such Grantor or any computer bureau from time to time acting for such
Grantor; (iii) all rights and rights to use or access any resource or
product used or useful in the business of such Grantor; and (iv) all
accessions and additions to, parts and appurtenances of, substitutions for
and replacements of any of the foregoing; and
(r) to the extent not otherwise included in the foregoing, all Net
Loss Proceeds, Net Proceeds, Proceeds and products of any and all of the
foregoing and all collateral security and guarantees given by any person
with respect to any of the foregoing, and in any event, including, without
limitation, any and all (i) proceeds of any insurance (including, without
limitation, all Net Insurance Proceeds), surety bonds, tax and other
refunds (including, without limitation, any city, county, state, or federal
government or any agency or authority or other subdivision thereof),
indemnity, warranty or guarantee payable to the Trustee or to such Grantor
from time to time with respect to any of the Collateral, (ii) payments (in
any form whatsoever) made or due and payable to such Grantor from time to
time in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any person acting under color of a Governmental
Authority), (iii) payments made or due and payable to such Grantor in
respect of litigation and other claims, (iv) products of the Collateral,
(v) subject to the
7
<PAGE>
provisions and limitations contained in the Indenture, whatever is now or
hereafter receivable or received by such Grantor upon the sale, exchange,
collection or other disposition of any item of Collateral, whether
voluntary or involuntary including, without limitation, the proceeds of a
permitted Asset Sale in accordance with the Indenture, (vi) to the extent
permitted by law, whatever is now or hereafter receivable or received by
such Grantor upon the sale, exchange, collection or other disposition of
any Gaming License, regardless or whether such Gaming License is Collateral
or an Excluded Asset, and (vii) other amounts from time to time paid or
payable under or in connection with any of the Collateral.
Notwithstanding the foregoing, the Collateral shall not include any of
the following assets (the "Excluded Assets"): (i) Gaming Licenses and Liquor
Licenses, (ii) any other governmental approval or permit, to the extent that,
under the terms and conditions of such approval or under applicable law, it
cannot be subjected to a Lien in favor of the Trustee without the approval of
the relevant Governmental Authority, to the extent that such approval has not
been obtained; and (iii) FF&E or the proceeds of an FF&E financing to the extent
that (A) the purchase of such FF&E was not financed with the proceeds of the
Notes and (B) Trustors are permitted to enter into an FF&E Financing for such
FF&E under the Indenture; provided that, in such event, the Trustee shall
--------
execute and deliver, at the Trustors' sole expense, any instruments necessary or
appropriate to release the lien of this Security Agreement on all such FF&E or
other personal property.
SECTION 3. Obligations. This Agreement secures with respect to each
-----------
Grantor, and the Collateral of each Grantor is collateral security for, the
payment and performance in full when due (whether at stated maturity, upon
redemption or required repurchase, by acceleration or otherwise) of all
obligations of every type and nature of the Grantors to the Trustee, any other
trustee under the Deed of Trust, or any Holder (including, without limitation,
any and all amounts which may at any time be or become due and payable and any
and all interest accruing after the maturity of the Securities and interest
accruing after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Grantors,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding and interest, to the extent permitted by law, on the unpaid
interest), whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, the Indenture, the Securities, the Completion Capital
Commitment, this Agreement, the other Collateral Documents, or any other
document made, delivered or given in connection therewith, in each case whether
on account of principal, premium, interest, fees, Liquidated Damages,
indemnities, costs, expenses or otherwise (including, without limitation, all
reasonable fees and disbursements of counsel (including, without limitation,
in-house counsel) to the Trustee or to the Holders that are required to be paid
by the Grantors pursuant to the terms of the Indenture, the Securities, the
Completion Capital Commitment, this Agreement, any other Collateral Document, or
any other document entered into by any Grantor in connection with any of the
foregoing (collectively, the "Obligations").
8
<PAGE>
SECTION 4. Special Provisions Relating to Contacts
---------------------------------------
SECTION 4.1. Grantors Remain Liable under Contracts. Anything herein
--------------------------------------
to the contrary notwithstanding, each Grantor shall remain liable under each of
the Contracts to which it is a party to observe and perform all the conditions
and obligations to be observed and performed by it thereunder, all in accordance
with the terms and provisions of each such Contract, except as otherwise
provided herein. Neither the Trustee (nor any other trustee under the Deed of
Trust) nor any Holder shall have any obligation or liability under any such
Contract by reason of or arising out of this Agreement or the receipt by the
Trustee (or any such other trustee) or any such Holder of any payment relating
to any such Contract pursuant hereto, nor shall the Trustee (or any such other
trustee) or any Holder be obligated in any manner to perform any of the
obligations of any Grantor under or pursuant to any Contract, to make any
payment, to make any inquiry as to the nature or the sufficiency of any payment
received by it or as to the sufficiency of any performance by any party under
any Contract, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
SECTION 4.2. Communication with Contracting Parties. The Trustee in
--------------------------------------
its own name or in the name of others may communicate with parties to the
Contracts to verify with them to the Trustee's satisfaction the existence,
amount and terms of any Contract.
SECTION 5. Maintenance of Perfected Security Interests: Further
----------------------------------------------------
Assurances.
- ----------
SECTION 5.1. Perfection Maintenance. Each Grantor agrees that it
----------------------
shall maintain the security interests created by this Agreement as perfected
first priority security interests, except with respect to Permitted Liens, and
shall defend such security interests against the claims and demands of all
persons whomsoever.
SECTION 5.2. Further Assurances. At Trustee's request, each Grantor
------------------
agrees that at any time and from time to time, at the sole cost and expense of
such Grantor, such Grantor shall promptly, and in any event, in no less than
five days, execute, deliver and, where applicable, file all further instruments
and documents, including, without limitation, all financing, continuation or
amendment statements under the Uniform Commercial Code in effect in any
applicable jurisdiction with respect to the security interests created hereby,
and take all further action that may be necessary or that the Trustee may
reasonably request, for the purpose of obtaining, maintaining or preserving the
full benefits of this Agreement and of the rights and powers herein granted or
for the purpose of creating, preserving, perfecting or otherwise protecting the
liens and security interests created or purported to be created hereby and the
priority thereof. Without limiting the Grantors' obligation to make such
filings, each Grantor hereby authorizes the Trustee (subject to the following
sentence) to take all action (including, without limitation, the filing of any
Uniform Commercial Code financing statements or continuation statements or
amendments thereto without the signature of the Grantors as set forth in Section
-------
15.4 hereof) which the Trustee may deem necessary or desirable to perfect or
- ----
otherwise protect the liens and security
9
<PAGE>
interests created or purported to be created hereunder and to obtain the
benefits of this Agreement. Subject to the Trustee's obligations under the
Indenture during the continuance of an Event of Default, the Trustee shall not
be responsible for perfecting or maintaining the perfection of any security
interest granted to it under this Agreement or for filing, refiling, recording
or rerecording any document, financing statement, notice or instrument in any
public office at any time or times and shall not be responsible for seeing to
the insurance on or the payment of any taxes with respect to any property
subject to this Agreement. In accordance with the Indenture, in the event of an
Asset Sale or an Event of Loss, the Net Proceeds or the Net Loss Proceeds
thereof shall be deposited into an account, if reasonably requested, in which,
at the time of such deposit, the Trustee shall have a perfected first priority
security interest and in respect of which account the Trustee shall have
received an Opinion of Counsel to the applicable Grantor, in form and substance
satisfactory to the Trustee, stating that the Trustee has a perfected first
priority security interest in such account.
SECTION 6. Representations, Warranties and Covenants. Each Grantor
-----------------------------------------
hereby represents and warrants to, and covenants and agrees with, the Trustee
(for the benefit of the Trustee and the ratable benefit of the Holders) as
follows:
SECTION 6.1. Title: No Other Liens. Each Grantor is as of the date
---------------------
hereof, and, as to Collateral acquired by it from time to time after the date
hereof, each Grantor will be, the owner of each item of Collateral of such
Grantor (or in the case of Collateral held by such Grantor as lessee under a
lease or licensee under a license, each Grantor has and will have a valid and
subsisting leasehold interest or license, as applicable, in such Collateral), in
each case free and clear from any and all Liens, claims or other right, title or
interest of any person other than Permitted Liens. No financing statement or
other public notice with respect to all or any part of the Collateral is on file
or of record in any public office, except (i) financing statements related to
Permitted Liens and (ii) financing statements which have been filed in favor of
the Secured Parties pursuant to this Agreement.
SECTION 6.2. Perfected First Priority Liens. The security interests
------------------------------
granted pursuant to this Agreement (a) constitute perfected security interests
in the Collateral in favor of the Trustee, as collateral security for the
Obligations, and (b) are prior to all other Liens on the Collateral in existence
on the date hereof, other than Permitted Liens.
SECTION 6.3. Necessary Filings. The filings, registrations and
-----------------
recordings described on Schedule B hereto constitute the only filings,
registrations and recordings necessary or appropriate to create, preserve,
protect and perfect the security interests granted by the Grantors to the
Trustee pursuant to this Agreement in respect of the Collateral. All such
filings, registrations and recordings have been accomplished as of the date
hereof.
SECTION 6.4. Other Financing Statements. The Grantors shall not
--------------------------
execute or authorize or permit to be filed in any public office or elsewhere any
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) relating to the Collateral, except financing
statements filed or to be filed (a) in respect of Permitted Liens and (b) in
favor of the Secured Parties pursuant to this Agreement.
10
<PAGE>
SECTION 6.5. Chief Executive Office; Location of Collateral and
--------------------------------------------------
Records. Each Grantor's chief executive office is located at the address set
- -------
forth for the Grantor on Schedule C. Each Grantor represents and warrants that
it has no place of business, offices where such Grantor's books of account and
records are kept, or places where the Collateral is used, stored or located, and
all Collateral is in its sole possession and control, except (i) as set forth on
Schedule C hereto, and (ii) except as set forth in Section 6.9. Each Grantor
-----------
further covenants that it will not store, use or locate any of the Collateral at
any place other than as set forth on Schedule C (or, upon 45 days' prior written
notice to the Trustee, at such other location in a jurisdiction where all action
required by Sections 5 and 6.6 (if applicable) shall have been taken).
------------------
SECTION 6.6. Changes in Locations, Name, etc. Each Grantor represents
-------------------------------
and warrants that it currently uses no business or trade names, except as set
forth on Schedule C hereto. No Grantor shall (a) change the location of its
chief executive office from that specified in Schedule C, (b) change its name,
identity or corporate structure or (c) change the location where it maintains
its books and records from the addresses set forth on Schedule C, unless (i) it
shall have given the Trustee not less than 45 days' prior written notice of its
intention to do so, clearly describing such new location, name, identity or
corporate structure and providing such other information in connection
therewith as the Trustee may reasonably request and (ii) with respect to such
new location, name, identity or corporate structure, the applicable Grantor
shall have taken all action which is necessary or appropriate or which is
reasonably requested by the Trustee to maintain the perfection and proof of the
security interest of the Trustee for the benefit of the Secured Parties in the
Collateral intended to be granted hereby and shall have delivered to the Trustee
an Officers' Certificate as to compliance with this clause (ii).
SECTION 6.7. Delivery of Instruments, Investment Property and Chattel
--------------------------------------------------------
Paper. If any amount payable under or in connection with any of the Collateral,
- -----
or any Collateral itself, shall be or become evidenced by any Instrument,
Investment Property or Chattel Paper, such Instrument, Investment Property or
Chattel Paper shall be promptly delivered to the Trustee, duly endorsed in a
manner satisfactory to the Trustee, to be held as Collateral pursuant to this
Agreement (except as otherwise specifically provided in the Account Pledge
Agreement and the Disbursement Agreement).
SECTION 6.8. Information and Inspection. Upon reasonable notice to the
--------------------------
applicable Grantor, such Grantor shall (a) allow the Trustee to inspect and copy
all records relating to the Collateral and the Obligations; and (b) furnish to
the Trustee such information as the Trustee may reasonably request from time to
time with respect to the Collateral, any distributions thereon, and any proceeds
thereof.
SECTION 6.9. Location of Equipment. All Equipment held on the date
---------------------
hereof by the Grantors is located at one of the locations shown for such Grantor
on Schedule C. All Equipment now held or subsequently acquired by any Grantor
shall be kept at one or more of the locations shown for such Grantor on Schedule
C hereto, or such new location as such Grantor may establish if (a) it shall
have given to the Trustee at least 45 days' prior written notice of its
intention to do so, clearly describing such new location and providing
11
<PAGE>
such other information in connection therewith as the Trustee may reasonably
request, and (b) with respect to such new location, such Grantor shall have
taken all action which is necessary or appropriate or which is reasonably
requested by the Trustee to maintain the perfection and priority of the security
interest of the Trustee for the benefit of the Secured Parties in the Collateral
granted or purported to be granted hereby and shall have delivered to the
Trustee an Officers' Certificate as to compliance with this clause (b). Schedule
A contains a true, complete and correct listing of all of the motor vehicles and
other Equipment of each Grantor subject to a certificate of title statute in any
jurisdiction and the jurisdiction in which such Collateral is subject to a
certificate of title statute.
SECTION 6.10 Copyrights, Patents and Trademarks.
----------------------------------
(a) (i) Exhibit A includes all Copyrights and Copyright Licenses owned
---------
by each Grantor in its own name on the date hereof; (ii) Exhibit B includes
---------
all Patents and Patent Licenses owned by each Grantor in its own name on
the date hereof; (iii) Exhibit C includes all Trademarks and Trademark
---------
Licenses owned by each Grantor in its own name on the date hereof; (iv)
each Copyright, Patent and Trademark is on the date hereof valid,
subsisting, unexpired, enforceable and has not been abandoned; (v)except as
set forth in any of Exhibit A, Exhibit B or Exhibit C, none of such
--------- --------- ---------
Copyrights, Patents and Trademarks is on the date hereof the subject of any
licensing or franchise agreement; (vi) to the best of each Grantor's
knowledge after due inquiry, no holding, decision or judgment has been
rendered by any Governmental Authority which would limit, cancel or
question the validity of any Copyright, Patent or Trademark in any respect
that could reasonably be expected have a Material Adverse Effect; and (vii)
to the best of each Grantor's knowledge after due inquiry, no action or
proceeding is pending on the date hereof (1) seeking to limit, cancel or
question the validity of any Copyright, Patent or Trademark, or (2) which,
if adversely determined, could reasonably be expected have a Material
Adverse Effect on the value of any Copyright, Patent or Trademark.
(b) Each Grantor (either itself or through licensees or sublicensees)
will (i) continue to use each material Trademark on each and every
trademark class of goods or services applicable to its current line as
reflected in its current catalogs, brochures and price lists, if any, in
order to maintain such Trademark in full force free from any claim of
abandonment for non-use, (ii) maintain as in the past the quality of
products and services offered under such Trademark, (iii) employ each
material Trademark with the appropriate notice of registration, (iv) not
adopt or use any mark which is confusingly similar or a colorable imitation
of such Trademark unless the Trustee, for the ratable benefit of the
Holders, shall obtain a perfected first priority security interest in such
mark pursuant to this Agreement, and (v) not (and not permit any licensee
or sublicensee thereof to) do any act or knowingly omit to do any act
whereby such Trademark may reasonably be expected to become invalidated.
(c) The Grantors will not do any act, or omit to do any act, whereby
any Patent may become abandoned or dedicated if such abandonment or
dedication could reasonably be expected have a Material Adverse Effect.
12
<PAGE>
(d) Each Grantor will notify the Trustee immediately if it knows, or
has reason to know, that any application or registration relating to any
material Patent or Trademark may become abandoned or dedicated, or of any
adverse determination or development (including, without limitation, the
institution of, or any such determination or development in, any proceeding
in the United States Patent and Trademark Office or any court or tribunal
in any country) regarding such Grantor's ownership of any Patent or
Trademark material to the business of such Grantor or its right to register
the same or to keep and maintain the same and of any action such Grantor is
taking in respect of such event.
(e) Whenever any Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the
registration of any Patent or Trademark with the United States Patent and
Trademark Office or any similar office or agency in any other country or
any political subdivision thereof, such Grantor shall report such filing to
the Trustee within five Business Days after the last day of the fiscal
quarter in which such filing occurs. Such Grantor shall execute and deliver
any and all agreements, instruments, documents, and papers as may be
necessary or appropriate or as the Trustee may reasonably request to
evidence Trustee's and the Holders' security interest in any Patent or
Trademark and the goodwill and general intangibles of such Grantor relating
thereto or represented thereby and shall deliver to the Trustee an
Officers' Certificate as to compliance with this subparagraph (e).
(f) Each Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States
Patent and Trademark Office, or any similar office or agency in any other
country or any political subdivision thereof, to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each
registration of the Patents and Trademarks material to the business of such
Grantor, including, without limitation, filing of applications for renewal,
affidavits of use and affidavits of incontestability and, as to Patents,
the payment of maintenance fees, except where the failure to take such
action could not have a Material Adverse Effect.
(g) In the event that any Patent or Trademark is infringed,
misappropriated or diluted by a third party, which infringement,
misappropriation or dilution could reasonably be expected to have a
Material Adverse Effect, the applicable Grantor shall upon receipt of
knowledge of such infringement, misappropriation or dilution, promptly (i)
take such actions as such Grantor shall reasonably deem appropriate under
the circumstances to protect such Patent or Trademark and (ii) if such
Patent or Trademark is of material economic value, promptly notify the
Trustee after it learns thereof and sue for infringement, misappropriation
or dilution, to seek injunctive relief where appropriate and to recover any
and all damages for such infringement, misappropriation or dilution.
(h) Each Grantor (either itself or through licensees or sublicensees)
will (i) employ the appropriate notice of copyright for each published Work
subject to copyright protection to the extent necessary to protect the
Copyright relating to such
13
<PAGE>
Work and (ii) not (and not permit any licensee or sublicensee thereof to)
do any act or knowingly omit to do any act whereby any material Copyright
may become invalidated, except where the failure to take any such action
could not reasonably be expected to have a Material Adverse Effect.
(i) No Grantor will (either itself or through licensees) do any act,
or omit to do any act, whereby any material Copyright may become injected
into the public domain, except where the failure to take any such action
could not reasonably be expected to have a Meterial Adverse Effect.
(j) Each Grantor will notify Trustee immediately if it knows, or has
reason to know, that any Copyright may become injected into the public
domain or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development
in, any proceeding in any court or tribunal in any country) regarding such
Grantor's ownership of any such Copyright or its validity and of any action
such Grantor is taking in respect of such event.
(k) Whenever any Grantor, either by itself or through any agent,
employee licensee, sublicensee or designee, shall file an application for
the registration of any Copyright with the United States Copyright Office
or any similar office in any other country or political subdivision
thereof, such Grantor shall report such filing to the Trustee within five
Business Days after the last day of the fiscal quarter in which such filing
occurs. Such Grantor shall execute and deliver any and all agreements,
instruments, documents and papers as shall be necessary or appropriate or
as the Trustee reasonably may request to evidence the Trustee's and the
Holders' security interest in such Copyright and shall deliver to the
Trustee an Officers' Certificate as to compliance with this subparagraph
(k).
(l) Each Grantor will take all reasonable and necessary steps in
accordance with its reasonable business judgment, to maintain and pursue
each application (and to obtain the relevant registration) and to maintain
to the extent permitted by law each registration of each material Copyright
owned by such Grantor including, without limitation, filing of
applications for renewal, where necessary.
(m) Each Grantor will promptly notify the Trustee of any material
infringement of any Copyright owned by it of which it becomes aware and
will take all reasonable and necessary actions to protect such Copyright,
including, where appropriate, the bringing of suit or the settling of
actual or potential suits for infringement, seeking injunctive relief and
seeking to recover any and all damages for such infringement.
SECTION 6.11. Authorization. Enforceability. Each Grantor has the
-----------------------------
requisite power, authority and legal right to grant a security interest in all
the Collateral of such Grantor pursuant to this Agreement, and this Agreement
has been duly authorized, executed and delivered by, and constitutes the legal,
valid and binding obligation of such Grantor, enforceable against such Grantor
in accordance with its terms. Each Contract to
14
<PAGE>
which any Grantor is a party is in full force and effect and constitutes a valid
and legally enforceable obligation of such Grantor, except as the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally or by general equitable principles
(whether considered in a proceeding in equity or at law).
SECTION 6.12. No Consents. Except for the filings, registrations and
-----------
recordings contemplated in Section 6.3, no consent of any person (including,
-----------
without limitation, any stockholders or creditors of any Grantor) and no
consent, authorization, approval, or other action by, and no notice to or filing
with, any Governmental Authority or regulatory body or other person is required
(a) for the grant by the Grantors of a security interest in the Collateral
pursuant to this Agreement, (b) for the perfection or maintenance of such
security interest created hereby, including the first priority nature of such
security interest, or the exercise of rights and remedies provided for herein,
(c) for the enforceability of such security interest against third parties,
including judgment lien creditors, (d) for the authorization, execution,
delivery or performance of this Agreement by the Grantors, or (e) for the
exercise by the Trustee of the remedies in respect of the Collateral pursuant to
this Agreement.
SECTION 6.13. Collateral. All information set forth herein (including,
----------
without limitation, the information set forth in the Schedules and Exhibits
annexed hereto) relating to the Collateral is accurate and complete in all
material respects.
SECTION 6.14. Ownership and Control of Collateral. Except as may
-----------------------------------
otherwise be permitted by the Indenture, each Grantor at all times will be the
sole legal and beneficial owner of the Collateral of such Grantor.
SECTION 6.15. Insurance. The Grantors shall maintain the insurance
---------
coverage required under the Indenture and otherwise comply with the requirements
of the Indenture relating to insurance including, without limitation, Sections
4.18 and 10.5 thereof.
SECTION 6.16. Representations Regarding Contracts.
-----------------------------------
(a) Each Contract to which any Grantor is a party is in full force
and effect and constitutes a valid and legally enforceable obligation of
such Grantor, except as the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights generally
or by general equitable principles (whether considered in a proceeding in
equity or at law)
(b) Except as could not reasonably be expected to have a Material
Adverse Effect, no Grantor or (to the best of such Grantor's knowledge) any
other party to any Contract to which such Grantor is a party is in default
in default in the performance or observance of any of the terms thereof and
each Grantor is not aware
15
<PAGE>
of any fact that, with notice or lapse of time, could reasonably be
expected to result in such a default.
(c) Except as could not reasonably be expected to have a Material
Adverse Effect, each Grantor has fully performed all its obligations under
each Contract to which such Grantor is a party.
(d) The right, title and interest of each Grantor in, to and under
each Contract to which such Grantor is a party are not subject to any
defense, offset, counterclaim or claim which could materially adversely
affect the value of such Contract as Collateral or otherwise have a
Material Adverse Effect, nor have any of the foregoing been asserted or
alleged against such Grantor as to any Contract to which such Grantor is a
party.
(e) No amount constituting Collateral and payable to any Grantor
under or in connection with any Contract to which such Grantor is a party
is evidenced by any Instrument, Chattel Paper or Investment Property which
has not been delivered to the Trustee.
(f) None of the parties to any Contract is a Governmental Authority,
other than contracts with the City of Black Hawk regarding the plat of
subdivision, the exchange of property and the maintenance of a sign.
SECTION 6.17. Covenants Regarding Contracts.
-----------------------------
(a) Each Grantor will perform and comply in all material respects
with all its obligations under the material Contracts to which such Grantor
is a party.
(b) Except as expressly permitted by the Indenture, each Grantor will
not amend, notify, terminate or waive any provision of any Contract to
which such Grantor is a party in any manner which could materially
adversely affect the value of such Contract as Collateral or which could
otherwise reasonably be expected to have a Material Adverse Effect;
provided, that any Grantor may replace a Contract (the "Initial Contract")
--------
so long as (1) the contract entered into to replace the Initial Contract
(the "Replacement Contract") is subject to the security interest created by
this Agreement, and (2) the Replacement Contract is on no less favorable
terms to such Grantor than the Initial Contract.
(c) Except as expressly permitted by the Indenture, no Grantor will
fail to exercise promptly and diligently each and every material right
which it may have under each material Contract to which such Grantor is a
party; provided that such Grantor may amend, modify, terminate or waive
--------
rights subject to Section 6.17(b) above.
---------------
16
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(d) Except as expressly permitted by the Indenture, no Grantor will
fail to deliver to the Trustee a copy of each material demand, notice or
document received by it relating in any way to any material Contract to
which such Grantor is a party.
(e) Except as expressly permitted in the Indenture, in any suit,
proceeding or action brought by or on behalf of the Trustee or any Holder
under any Contract to which any Grantor is a party, such Grantor will
defend, save, indemnify and keep the Trustee and such Holder harmless from
and against any and all expenses, losses, claims, liabilities and damages,
as incurred, suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction or liability whatsoever of the obligor thereunder,
arising out of a breach by such Grantor of any obligation thereunder or
arising out of any other agreement, indebtedness or liability at any time
owing to or in favor of such obligor or its successors from such Grantor.
(f) The covenants set forth at Section 6.17(a) and (c) shall
terminate on, and be of no further force or effect from and after, the date
that the Isle-Black Hawk (as defined in the Indenture) is Operating (as
defined in the Indenture).
SECTION 6.18. Further Actions and Identification of Collateral. At any
------------------------------------------------
time upon the occurrence of a Default or Event of Default or otherwise no more
than two times in any twelve-month period, each Grantor shall, at its sole cost
and expense, make, execute, endorse, acknowledge, file and/or deliver to the
Trustee from time to time such lists, descriptions and designations of the
Collateral of such Grantor, copies of warehouse receipts, receipts in the nature
of warehouse receipts, bills of lading, documents of title, vouchers, invoices
and schedules relating to the Collateral of such Grantor, as the Trustee may
reasonably request, all in reasonable detail.
SECTION 6.19. Records of Collateral: Notation on Books and Records.
----------------------------------------------------
Each Grantor shall keep full and accurate books and records relating to the
Collateral of such Grantor, and stamp or otherwise mark such books and records
in such manner as may be necessary or as the Trustee may reasonably require in
order to reflect the security interests granted by this Agreement.
SECTION 6.20. Notices. Each Grantor will advise the Trustee promptly,
-------
in reasonable detail, at the Trustee's address for notices provided for in the
Indenture of any Lien (other than security interests created hereby or Permitted
Liens) on any of the Collateral of such Grantor or any attachment or other legal
process levied against any of the Collateral of such Grantor.
SECTION 6.21. Collateral Maintenance. Each Grantor will keep and
----------------------
maintain the Collateral in good operating condition, working order and repair,
ordinary wear and tear excepted, and from time to time will make or cause to be
made all repairs, replacements and other improvements in connection therewith
that are necessary or desirable toward such end. No Grantor will misuse or abuse
the Collateral, or waste or allow it to deteriorate, except for the ordinary
wear and tear of its normal and expected use in such Grantor's business in
accordance with such Grantor's policies as then in effect (provided that
--------
17
<PAGE>
no changes are made to such Grantor's policies as in effect on the date hereof
that would be materially adverse to the interests of any of the Secured
Parties), and will comply with all laws, statutes and regulations pertaining to
the use or ownership of the Collateral of such Grantor.
SECTION 6.22. After-Acquired Intellectual Property. If any Grantor
------------------------------------
shall (i) obtain any rights to any new invention (whether or not patentable),
know-how, trade secret, design, process, procedure, formula, diagnostic test,
service mark, trademark, trademark registration, trade name, copyright or
license or (ii) become entitled to the benefit of any patent, service mark or
trademark application, trademark, trademark registration, license renewal,
copyright renewal or extension, or patent for any reissue, division,
continuation, renewal extension, or continuation-in-part of any patent or any
improvement on any patent, the provisions of this Agreement shall
automatically apply thereto and any item enumerated in clause (i) or (ii) of
this sentence shall automatically constitute Collateral and shall be subject
to the assignment, lien and security interest created hereby without further
action by any party. Each Grantor promptly shall (x) give to the Trustee written
notice of its acquisition of or entitlement to any of the rights set forth in
clauses (i) and (ii) of the immediately preceding sentence and (y) confirm the
attachment of the lien and security interest created hereby to any of such
rights by execution of an appropriate instrument delivered to the Trustee,
including an amendment to Exhibits A, B and/or C annexed hereto to include any
----------------------
such rights.
SECTION 6.23. Other Agreements. The Company has provided a copy of the
----------------
Indenture to Casino America, Inc., as Manager of the Isle-Black Hawk (in such
capacity, together with any successor or replacement manager, the "Manager") and
has caused the Manager to review the Indenture and has caused and will cause the
Isle-Black Hawk to be managed in accordance with the terms of the Indenture.
SECTION 7. Special Provisions Relating to Intellectual Property.
----------------------------------------------------
SECTION 7.1 Modifications. The Grantors and the Trustee may modify
-------------
this Agreement, without the consent of Holders, by amending Exhibits A, B and/or
--------------------
C annexed hereto to include any future Intellectual Property of the Grantors in
- -
accordance with Section 6.10 or Section 6.24 or to reflect any disposition of
------------ ------------
Intellectual Property made in compliance with the provisions of this Agreement
and the Indenture.
SECTION 7.2 Applications. Except in the ordinary course of business
------------
consistent with prudent business practice, and as may otherwise be permitted by
the Indenture, no Grantor shall abandon any registration of any Intellectual
Property or any right to file an application with respect to Intellectual
Property or any pending application, unless refused by the Patent and Trademark
Office Examiner, without the prior written consent of the Trustee.
SECTION 7.3. Restriction on Licensing Intellectual Property. No
----------------------------------------------
Grantor shall license the Intellectual Property or any portion thereof, or amend
or permit the amendment of any of the Licenses, in either case in a manner that
adversely affects the right
18
<PAGE>
to receive any material amount of payments thereunder, or, except as otherwise
permitted under the Indenture, in any manner adverse to the interests of the
Trustee in the Intellectual Property without the prior written consent of the
Trustee.
SECTION 7.4. Use of Intellectual Property Prior to Event of Default.
------------------------------------------------------
Subject to Section 7.3 but notwithstanding any other provision herein to the
-----------
contrary, so long as no Event of Default shall have occurred and be continuing,
each Grantor will be permitted to exploit, use, enjoy, protect, license,
sublicense, assign, sell, dispose of or take other actions with respect to the
Intellectual Property in the ordinary course of the business of such Grantor.
In furtherance of the foregoing, unless an Event of Default shall have occurred
and be continuing the Trustee shall, from time to time upon the request of the
Grantors, execute and deliver to the Grantors any instruments, certificates or
other documents, in the form so requested, which the Grantors shall have
certified are appropriate to allow the Grantors to take any action permitted
above (including relinquishment of the license provided as to any specific
Intellectual Property).
SECTION 8. Transfers and Other Liens. Except as permitted by the
-------------------------
Indenture, the Grantors shall not sell, convey, assign or otherwise dispose of,
or grant any option with respect to, any of the Collateral. The Grantors shall
not create or permit to exist any Lien upon or with respect to any of the
Collateral other than Permitted Liens or Liens in favor of the Secured Parties
pursuant to this Agreement.
SECTION 9. Reasonable Care. Beyond the duties set forth in Section
--------------- -------
15.3 and the exercise of reasonable care in custody thereof, the Trustee shall
- ----
have no duty as to the collection of any Collateral in its possession or control
or in the possession or control of any agent or nominee of the Trustee, or any
income thereon or as to the preservation of rights against prior parties or any
other rights pertaining thereto. The Trustee shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if such Collateral is accorded treatment substantially equivalent to
that which the Trustee, in its individual capacity, accords its own property, it
being understood that the Trustee shall not have responsibility for taking any
necessary steps to preserve rights against any person with respect to any
Collateral.
SECTION 10. Remedies Upon Event of Default.
------------------------------
SECTION 10.1. Notice to Obligors and Contract Parties. At any time
---------------------------------------
after the occurrence and during the continuance of an Event of Default, the
Trustee may, and, if requested by the Trustee, the Grantors shall, notify
parties to the Contracts and account debtors in respect of any General
Intangibles or Accounts constituting Collateral that such Collateral has been
assigned to the Trustee for the ratable benefit of the Holders and that payments
in respect thereof shall be made directly to the Trustee.
SECTION 10.2. Proceeds to be Turned Over to Trustee. If an Event of
-------------------------------------
Default shall have occurred and be continuing, all amounts and proceeds
(including instruments) received by any Grantor in respect of any Collateral
shall be held by such Grantor in trust for the Trustee and the Holders,
segregated from other funds of such
19
<PAGE>
Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to
the Trustee in the exact form received by such Grantor (duly endorsed by such
Grantor to the Trustee, if required or requested) and held by the Trustee in the
Collateral Account, which shall be maintained under the sole dominion and
control of the Trustee. All Proceeds while held by the Trustee in the
Collateral Account (or by any Grantor in trust for the Trustee and the Holders)
shall continue to be held as collateral security for all the Obligations and
shall not constitute payment thereof until applied as provided in Section 11.
----------
SECTION 10.3. Obtaining Possession of the Collateral. If an Event of
--------------------------------------
Default shall have occurred and be continuing, then and in every such case, the
Trustee may, but shall not be obligated to, in addition to any other action
permitted by law (and not limited in any manner to the remedies contained in the
Securities and the Indenture) take one or more of the following actions:
(a) personally, or by agents or attorneys, immediately take
possession of the Collateral or any part thereof, from any Grantor or any
other person who then has possession of any part thereof with or without
notice or process of law, and for that purpose may enter upon any Grantor's
premises where any of the Collateral is located and remove such Collateral
and use in connection with such removal any and all services, supplies,
aids and other facilities of any Grantor;
(b) sell, assign or otherwise liquidate, or direct any Grantor to
sell, assign or otherwise liquidate, any or all investments made in whole
or in part with the Collateral or any part thereof, and take possession of
the proceeds of any such sale, assignment or liquidation; and
(c) take possession of the Collateral or any part thereof, by
directing any Grantor in writing to deliver the same to the Trustee at any
place or places which the Trustee shall reasonably select, in which event
such Grantor shall at its own expense; (x) forthwith cause the same to be
moved to the place or places so designated by the Trustee and there
delivered to the Trustee; (y) store and keep any Collateral so delivered to
the Trustee at such place or places pending further action by the Trustee
and (z) while the Collateral shall be so stored and kept, provide such
guards and maintenance services as shall be reasonably necessary to protect
the same and to preserve and maintain them in good condition. The Grantors'
obligation to deliver the Collateral is of the essence of this Agreement.
Upon application to a court of equity having jurisdiction, the Trustee
shall, to the extent permitted by law, be entitled to a decree requiring
specific performance by any Grantor of such obligation.
SECTION 10.4. Use and Preservation of the Collateral. Upon and during
--------------------------------------
the existence of an Event of Default, the Trustee may, in its sole discretion,
use or manage the Collateral to preserve the Collateral or its value, or to pay
the Obligations which includes, without limitation, the right to take possession
of any Grantor's premises and property, to exclude any Grantor and any third
parties (whether or not claiming under such Grantor) from such premises and
property, to make repairs, replacements, alterations, additions and
20
<PAGE>
improvements to or take any acts to preserving the Collateral, and to dispose of
all or any portion of the Collateral.
SECTION 10.5. Remedies Under UCC. In addition to the rights and
------------------
remedies provided in this Agreement or otherwise available to it, the Trustee
shall have all the rights and remedies of a secured party under the UCC or under
the Uniform Commercial Code of any other relevant jurisdiction.
SECTION 10.6. Additional Remedies. Upon the occurrence and during the
-------------------
continuance of an Event of Default, the Trustee, without demand of performance
or other demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below) to or upon the Grantors or
any other person (all and each of which demands, defenses, advertisements and
notices are, to the extent permitted by law, hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of the Trustee or elsewhere upon such terms and conditions as
the Trustee may deem advisable and at such prices as it may elect, for cash or
on credit or for future delivery without assumption of any credit risk. The
Trustee or any Holder shall have the right, to the extent permitted by law, upon
any such public sale or sales or upon any such private sale or sales, to
purchase for cash the whole or any part of the Collateral so sold (but any such
purchase may not, in whole or in part, be in the form of cancellation of
indebtedness without the consent of each Holder). Each Grantor further agrees,
at the Trustee's request, to assemble the Collateral of such Grantor and make it
available to the Trustee at places which the Trustee shall reasonably select,
whether at such Grantor's premises or elsewhere. The Trustee shall apply the net
proceeds of any action taken by it pursuant to this Agreement, after deducting
all reasonable costs and expenses of every kind incurred by the Trustee in
connection therewith or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the Trustee
and the Holders hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, as provided in Section 11 hereof, and only after such
----------
application and after the payment by the Trustee of any other amount required by
any provision of law, including, without limitation, Section 9-504(1)(c) of the
UCC, need the Trustee account for the surplus, if any, to the Grantors. To the
extent permitted by law, each Grantor waives all claims, damages and demands it
may acquire against the Trustee (or any other trustee under the Deed of Trust)
or any Holder arising out of the exercise by any of them of any rights
hereunder. If any notice of proposed sale or other disposition of Collateral
shall be required by law, such notice shall, to the extent permitted by law, be
deemed reasonable and proper if given at least 10 days before such sale or other
disposition. Notwithstanding the foregoing, the Trustee shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given.
The Trustee may, without notice or publication, adjourn any public or private
sale, or cause the same to be adjourned from time to time by announcement at the
time and place fixed for sale or, with respect to a private sale, after which
such sale may take place, and any such sale may, without further notice, be made
at the time and place to which it was adjourned or, with respect to a private
sale, after which such sale may take
21
<PAGE>
place. Each purchaser at any such sale shall hold the property sold free from
any claim or right on the part of any Grantor, and each Grantor hereby waives,
to the full extent permitted by law, all rights of redemption, stay and/or
appraisal which such Grantor now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted. To the extent
permitted by law, each Grantor also hereby waives any claims against the Trustee
arising by reason of the fact that the price at which any Collateral may have
been sold at a private sale was less than the price which might have been
obtained at a public sale, even if the Trustee accepts the first offer received
and does not offer such Collateral to more than one offeree. In case any sale
of all or any part of the Collateral is made on credit or for future delivery,
the Collateral so sold may be retained by the Trustee until the sale price is
paid by the purchaser or purchasers thereof, and the Trustee shall not incur any
liability in case any such purchaser or purchasers shall fail to take up and pay
for the Collateral purchased. In case of any such failure, such Collateral may
be sold again upon like notice. The parties hereto agree that the notice
provisions, method, manner and terms of any sale, transfer or disposition of any
Collateral in compliance with the terms set forth herein or any other provision
of this Agreement are commercially reasonable.
SECTION 10.7. Certain Sales of Collateral. Each Grantor recognizes
---------------------------
that, by reason of certain prohibitions contained in law, rules, regulations or
orders of any Governmental Authority, the Trustee may be compelled, with
respect to any sale of all or any part of the Collateral, to limit purchasers to
those who meet the requirements of such Governmental Authority. Each Grantor
acknowledges that any such sales may be at prices and on terms less favorable to
the Trustee than those obtainable through a public sale without such
restrictions, and, notwithstanding such circumstances, agrees that any such
restricted sale shall be deemed to have been made in a commercially reasonable
manner.
SECTION 10.8. Certain Remedies in Respect of Intellectual Property. If
----------------------------------------------------
an Event of Default shall have occurred and shall be continuing, in addition to
the other rights and remedies provided for herein or otherwise available to it,
the Trustee may license or sublicense (whether general, special or otherwise,
and whether on an exclusive or non-exclusive basis) all or any portion of the
Intellectual Property throughout the world for such term or terms, on such
conditions and in such manner as the Trustee shall determine. Upon request by
the Trustee, the Grantors shall execute and deliver to the Trustee any powers of
attorney, in form and substance satisfactory to the Trustee, for the
implementation of any assignment, license, sublicense, grant of option, sale or
other disposition of any Intellectual Property. In the event of any sale,
assignment, or other disposition of any of the Intellectual Property, the
goodwill and general intangibles connected with and symbolized by the
Intellectual Property subject to such disposition shall be included, and the
Grantors shall supply to the Trustee or its designee, for inclusion in such
sale, assignment or other disposition, all Intellectual Property relating to
such Intellectual Property. Notwithstanding the foregoing or any other provision
hereof, the provisions of this Security Agreement, including this Section 10.8
are subject to the License Agreement, dated as of July 29, 1997, between Casino
America, Inc. and the Company, and the use and enjoyment by the Trustee of the
license rights thereunder shall be subject to the limitations contained therein.
22
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SECTION 10.9. Special Performance. In addition to any of the other
-------------------
rights and remedies hereunder, the Trustee shall have the right to institute a
proceeding seeking specific performance in connection with any of the agreements
or obligations hereunder.
SECTION 10.10. Receivership. Upon and during the continuance of a
------------
Default or an Event of Default, the Trustee may, to the fullest extent permitted
by law, have a court having jurisdiction appoint a receiver, which receiver
shall take charge and possession of and protect, preserve, replace and repair
the Collateral or any part thereof, and manage and operate the same, and receive
and collect all rents, income, receipts, royalties, revenues, issues and profits
therefrom. Except to the extent prohibited by law, each Grantor shall
irrevocably consent and shall be deemed to have hereby irrevocably consented to
the appointment thereof, and upon such appointment, such Grantor shall
immediately deliver possession of such Collateral to the receiver. Except to the
extent prohibited by law, each Grantor also irrevocably consents to the entry of
an order authorizing such receiver to invest interest upon any funds held or
received by the receiver in connection with such receivership. The Trustee shall
be entitled to such appointment as a matter of right, if it shall so elect,
without the giving of notice to any party and without regard to the adequacy of
the security of the Collateral.
SECTION 11. Application of Proceeds. All cash proceeds received by the
-----------------------
Trustee upon any sale of, collection of, or other realization upon, all or any
part of the Collateral shall be applied as follows:
First: To the payment of all reasonable out-of-pocket expenses
-----
incurred by the Trustee in connection with the sale of, collection of or
other realization upon Collateral, including reasonable attorneys' fees and
disbursements and court costs, if applicable;
Second: To the payment of the Obligations in such manner
------
consistent with applicable laws and the Indenture as the Trustee in its
discretion shall decide; and
Third: To the extent of the balance (if any) of such proceeds, to
-----
payment to the Grantors or other Person legally entitled thereto.
Non-cash proceeds of any disposition by the Trustee of Collateral
available to satisfy the Obligations shall be applied to the Obligations in such
order and in such manner consistent with applicable law and the Indenture as the
Trustee in its discretion shall decide.
SECTION 12. Expenses. The Grantors will immediately upon demand pay to
--------
the Trustee the amount of any and all reasonable expenses, including the fees
and expenses of the Trustee's counsel and the fees and expenses of any experts
and agents which the Trustee may incur in connection with (a) the collection of
the Obligations, (b) the enforcement and administration of this Agreement, (c)
the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (d) the exercise or enforcement of any
of the rights of the Trustee or any Secured Party hereunder, (e) the
23
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failure by the Grantors to perform or observe any of the provisions hereof, (f)
the preparation and filing or recording of financing statements and other
documents (including all taxes in connection therewith) in public offices
necessary or desirable to create and maintain first priority perfected security
interests in the Collateral in favor of the Trustee, (g) the payment or
discharge of any taxes, insurance premiums required or permitted under any
Collateral Document or encumbrances with respect to the Collateral, (h)
defending or prosecuting any actions or proceedings arising out of or related to
the transactions to which this Agreement relates (other than actions by any
Grantor for breach of the Indenture or any Collateral Documents determined by a
court of competent jurisdiction pursuant to a non-appealable order), or (i)
otherwise protecting, maintaining or preserving the Collateral and the
perfection and priority of the security interests granted or purported to be
granted hereunder, or the enforcing, foreclosing, retaking, holding, storing,
processing, selling or otherwise realizing upon the Collateral and the Trustee's
security interest therein, whether through judicial proceedings or otherwise.
All amounts payable by the Grantors under this Section shall be due upon demand
and shall be part of the Obligations. The Grantors' obligations under this
Section shall survive the termination of this Agreement and the discharge of the
Grantors' other obligations hereunder.
SECTION 13. Amendments in Writing: No Waiver. Cumulative Remedies:
------------------------------------------------------
Reinstatement: Additional Grantors.
- ----------------------------------
SECTION 13.1. Amendments. Subject to the provisions of Article 9 of
----------
the Indenture, none of the terms or provisions of this Agreement may be waived,
amended, supplemented or otherwise modified, except by a written instrument
executed by the Grantors (except as otherwise provided in Section 13.4) and the
------------
Trustee; provided that any provision of this Agreement imposing obligations on
--------
any Grantor may be waived by the Trustee in a written instrument executed solely
by the Trustee.
SECTION 13.2. No Waiver: Remedies Cumulative. To the maximum extent
------------------------------
permitted by law, (a) no failure on the part of the Trustee to exercise, no
course of dealing with respect to, and no delay on the part of the Trustee in
exercising, any right, power, privilege or remedy hereunder shall operate as a
waiver thereof or constitute an acquiescence to any default or Event of Default;
nor (b) shall any single or partial exercise of any such right, power, privilege
or remedy hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or remedy. A waiver by the Trustee or any
Holder of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Trustee or such Holder would
otherwise have on any future occasion. To the maximum extent permitted by law,
the remedies herein provided are cumulative and are not exclusive of any
remedies provided by law.
SECTION 13.3. Reinstatement. In the event the Trustee shall have
-------------
instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to the Trustee, then and in every such case, each Grantor, the Trustee
and each Holder shall be restored to their respective former positions and
rights hereunder with respect to the Collateral, and all rights, remedies and
24
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powers of the Trustee and the Secured Parties shall continue as if no such
proceeding had been institued.
SECTION 13.4. Additional Grantors. If either Grantor shall acquire or
-------------------
create a Sudsidiary after the date of this Agreement, then such newly acquired
or created Sudsidiary shall (i) become a party to this Security Agreement by
executing and delivering to the Trustee an Amendment to Security Agreement
(Additional Grantor) and (ii) shall enter into such documents as shall be
necessary in the Trustee's opinion to create a perfected, first priority
security interest in the capital stock and all property of such Sudsidiary
(including, without limitation, any real property and all personal property of
such Sudsidiary) and the proceeds and products thereof. Upon the execution and
delivery to the Trustee by any Person of an Amendment to Security Agreement
(Additional Grantor) in substantially the form of Annex I hereto (each, an
"Amendment to Security Agreement (Additional Grantor)"), which Amendment to
Security Agreement (Additional Grantor) need not be executed by the Grantors,
and the acceptance thereof by the Trustee, such Person shall be and become a
Grantor hereunder, and each reference in this Agreement to the "Grantor" shall
include such Person and each reference in the Indenture, the Securities and any
other Collateral Document to the "Grantor" shall include such Person.
SECTION 14. Appointment as the Trustee. The actions of the Trustee
--------------------------
hereunder are subject to the provisions of the Indenture. The Trustee shall have
the right hereunder to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking action
(including, without limitation, the release or substitution of Collateral), in
accordance with this Agreement and the Indenture. The Trustee may resign and a
successor Trustee may be appointed in the manner provided in the Indenture. Upon
the acceptance of any appointment as the Trustee by a successor Trustee, that
successor Trustee shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Trustee under this
Agreement, and the retiring Trustee shall thereupon be discharged from its
duties and obligations under this Agreement. After any retiring Trustee's
resignation, the provisions of this Agreement shall inure to its benefit as to
any actions taken or omitted to be taken by it under this Agreement while it was
the Trustee.
SECTION 15. The Trustee Appointed Attorney-in-Fact; the Trustee May
-------------------------------------------------------
Perform.
- -------
SECTION 15.1. The Trustee Appointed as Attorney-in-Fact. Each Grantor
-----------------------------------------
hereby irrevocably constitutes and appoints the Trustee and any officer or agent
thereof, with full power of substitution, as its true and lawful attorneys-in-
fact with full irrevocable power and authority in the place and stead of such
Grantor and in the name of such Grantor or in its own name, for the purpose of
carrying out the terms of this Agreement to take any and all appropriate action
and to execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, each Grantor hereby gives the Trustee and any
officer or agent of the Trustee the power and right, on behalf of such Grantor,
without notice to or assent by such Grantor, to do any or all of the following:
25
<PAGE>
(a) in the name of such Grantor or its own name, or otherwise, take
possession of and endorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due under any Contract or with
respect to any other Collateral and file any claim or take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by the
Trustee for the purpose of collecting any and all such moneys due under any
Contract or with respect to any other Collateral whenever payable;
(b) in the case of any Copyright, Patent or Trademark, execute and
deliver any and all agreements, instruments, documents and papers as the Trustee
may request to evidence the Trustee's security interest in such Copyright,
Patent or Trademark and the goodwill and general intangibles of such Grantor
relating thereto or represented thereby;
(c) pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral, effect any repairs or any insurance called for by the
terms of this Agreement and pay all or any part of the premiums therefor and the
costs thereof;
(d) execute, in connection with any sale provided for in Sections
--------
10.3, 10.4 or 10.5 or any other sale of Collateral pursuant to this Agreement,
- ---- ---- ----
any endorsements, assignments or other instruments of conveyance or transfer
with respect to the Collateral; and
(e) (i) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due thereunder
directly to the Trustee or as the Trustee shall direct; (ii) ask or demand for,
collect, receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising out of
any Collateral; (iii) sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verfications, notices and other documents in connection with any of
the Collateral; (iv) commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any thereof and to enforce any other right in respect of any
Collateral; (v) defend any suit, action or proceeding brought against such
Grantor with respect to any Collateral; (vi) settle, compromise or adjust any
such suit, action or proceeding and, in connection therewith, to give such
discharges or releases as the Trustee may deem appropriate; (vii) generally,
sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Trustee were
the absolute owner thereof for all purposes, and do, at the Trustee's option and
the Grantors' expense, at any time, or from time to time, all acts and things
which the Trustee deems necessary to protect, preserve or realize upon the
Collateral and the Trustee's and the Holders' security interests therein and to
effect the intent of this Agreement, all as fully and effectively as the
applicable Grantor might do.
26
<PAGE>
The foregoing grant of authority is a power of attorney coupled with
an interest and such appointment shall be irrevocable until this Agreement is
terminated and the security interests created hereby are released. Each Grantor
hereby ratifies all that such attorneys shall lawfully do or cause to be done by
virtue and in accordance with the terms hereof. Anything in this Section to the
contrary notwithstanding, the Trustee agrees that it will not exercise any
rights under the power of attorney provided for in this Section unless an Event
of Default shall have occurred and be continuing.
SECTION 15.2. The Trustee May Perform. If any Grantor shall fail to
-----------------------
do any act or thing that it has covenanted to do hereunder or under the
Indenture or if any representation or warranty on the part of such Grantor
contained herein or under the Indenture shall be breached, the Trustee or any
Secured Party may (but shall not be obligated to), after providing such Grantor
with at least five Business Days' notice, do the same or cause it to be done or
remedy any such breach, and may expend funds for such purpose. Any and all
amounts so expended by the Trustee or such Secured Party shall be paid by such
Grantor promptly upon demand therefor, with interest at the Default Rate during
the period from and including the date on which such funds were so expended to
the date of repayment. The Grantors' obligations under this Section shall
survive the termination of this Agreement and the discharge of the Grantors'
other obligations under this Agreement.
SECTION 15.3. Duty of the Trustee. The Trustee's sole duty with
-------------------
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the UCC, Section 9 hereof or
---------
otherwise, shall be to deal with it in the same manner as the Trustee deals with
similar property for itsown account. Neither the Trustee, any Holder nor any of
their respective officers, directors, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Grantors or any other person or to
take any other action whatsoever with regard to the Collateral or any part
thereof. The powers conferred on the Trustee and the Holders hereunder are
solely to protect the Trustee's and the Holders' interests in the Collateral and
shall not impose any duty upon the Trustee or any Holder to exercise any such
powers. The Trustee and the Holders shall be accountable only for amounts that
they actually receive as a result of the exercise of such powers, and neither
they nor any of their officers, directors, employees or agents shall be
responsible to the Grantors for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct. Except for the safe custody of
any Collateral in its possession and the accounting for moneys actually received
by it hereunder, the Trustee shall have no duty as to any Collateral, as to
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Trustee has or is deemed to have knowledge of such matters, or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any reasonable care in the custody and preservation
of any Collateral in its possession if such Collateral is accorded treatment
substantially equal to that which the Trustee accords its own property. Except
as provided in this Section, the Trustee shall not have any duty or liability to
protect or preserve any Collateral or to preserve rights pertaining thereto.
Nothing contained in this Agreement shall be construed as requiring or
obligating the Trustee or the Holders, and neither the Trustee
27
<PAGE>
nor the Holders shall be required or obligated, to (a) present or file any claim
or notice or take any action, with respect to any Collateral or in connection
therewith or (b) notify the Grantors of any decline in the value of any
Collateral.
SECTION 15.4 Execution of Financing Statements. Pursuant to Section
---------------------------------
9-402(2)(e) of the UCC, the Grantors authorize the Trustee (subject to the last
sentence of Section 5.2) to file financing statements and continuation
-----------
statements with respect to the Collateral without the signature of the Grantors
in such form and in such filing offices as the Trustee reasonably determines
appropriate to perfect, and maintain perfected, the security interests of the
Trustee under this Agreement. A carbon, photographic or other reproduction of
this Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
SECTION 15.5. Authority of the Trustee. The Grantors acknowledge that
------------------------
the rights and responsibilities of the Grantors under this Agreement with
respect to any action taken by the Trustee or the exercise or non-exercise by
the Trustee of any option, voting right, request, judgement or other right or
remedy provided for herein or resulting or arising out of this Agreement shall,
as between the Trustee and the Holders, be governed by the Indenture and by such
other agreements with respect thereto as may exist from time to time among them,
but, as between the Trustee and the Grantors, the Trustee shall be conclusively
presumed to be acting as agent for the Holders with full and valid authority so
to act or refrain from acting, and the Grantors shall be under no obligation, or
entitlement, to make any inquiry respecting such authority. The Trustee may
exercise its rights under this Agreement through an agent or other designee.
SECTION 16. Notices. All notices, requests, demands and other
-------
communication shall be given in the manner set forth in Section 13.02 of the
Indenture and shall be given or delivered at the following respective addresses
and facsimile and telephone numbers and to the attention of the following
individuals or departments: (i) if to any Grantor, at its address specified
pursuant to the Indenture , (ii) if to the Trustee, at its address specified
pursuant to the Indenture or, (iii) as to any such party, at such other address
or, facismile or telephone number or to the attention of such other individual
or department as the party to which such information pertains may hereafter
specify for the purpose in a notice to the other specifically captioned "Notice
of Change of Address".
SECTION 17. Continuing Security Interest: Assignment. This
----------------------------------------
Agreement shall create a continuing security interest in the Collateral and
shall (a) be binding upon each Grantor, its successors and assigns, and (b)
inure, together with the rights and remedies of the Trustee hereunder, to the
benefit of the Trustee (and, to the extent provided herein, any other trustee
under the Deed of Trust) and the other Secured Parties and each of their
respective successors, transferees and assigns; and no other Persons (including,
without limitation, any other creditors of any Grantor) shall have any interest
herein or any right or benefit with respect hereto. Without limiting the
generality of the foregoing clause (b), any Secured Party may assign or
otherwise transfer any security or guarantee held by it secured by this
Agreement to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Secured Party,
herein or otherwise, subject however, to the provisions of the Indenture.
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<PAGE>
SECTION 18. Release of Collateral. Reference is hereby made to
---------------------
Article 10 of the Indenture for provisions which discuss the release of the
Collateral from the Liens created by this Agreement.
SECTION 19. Termination. When all Obligations have been indefeasibly
-----------
paid in full, this Agreement shall terminate (except as to those provisions
which it is provided herein shall survive such termination) and the Trustee
shall forthwith cause to be assigned, transferred and delivered, against
receipt but without any recourse, warranty or representation whatsoever, any
remaining Collateral and money received in respect thereof, to or to the order
of the Grantors and to be released and canceled all licenses and rights referred
to in Section 7.4 hereof; provided, however, that any licenses or sublicenses
----------- -------- -------
granted by the Trustee pursuant to Section 10.8 shall continue to be in full
------------
force and effect in accordance with their terms. The Trustee shall also execute
and deliver to the Grantors upon such termination such Uniform Commercial Code
termination statements such other documentation as shall be reasonably requested
by the Grantors to effect the termination and release of the security interests
in the Collateral.
SECTION 20. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK (INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW) WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF,
EXCEPT TO THE EXTENT THAT THE PERFECTION AND ENFORCEMENT OF THE SECURITY
INTERESTS HEREUNDER ARE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.
SECTION 21. Severability of Provisions. Any provision of this
--------------------------
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 22. Interaction with Indenture.
--------------------------
(a) Incorporation by Reference. All terms, covenants, conditions,
--------------------------
provisions and requirements of the Indenture are incorporated by reference
in this Security Agreement.
(b) Conflicts. Notwithstanding any other provision of this Security
---------
Agreement, the terms and provisions of this Security Agreement shall be
subject and subordinate to the terms of the Indenture. To the extent that
the Indenture provides the Trustors with a particular cure or notice
period, or establishes any limitations or conditions on the Trustee's
actions with regard to a particular set of facts, the Trustors shall be
entitled to the same cure periods and notice periods, and the Trustee shall
be subject to the same limitations and conditions, under this Security
Agreement, as under the Indenture, in place of the cure periods, notice
periods, limitations and
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conditions provided for under this Security Agreement; provided, however,
-------- -------
that such cure periods, notice periods, limitations and conditions shall
not be cumulative as between the Indenture and 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 23. Other Security. To the extent that the Obligations are
--------------
now or hereafter secured by property other than the Collateral or by the
guarantee, endorsement or property of any other Person, then the Trustee shall
have the right in its sole discretion to pursue, relinquish, subordinate, modify
or take any other action with respect thereto, without in any way modifying or
affecting any of the Trustee's or any Holder's rights and remedies hereunder.
SECTION 24. Execution in Counterparts. This Agreement and any
-------------------------
amendments, waivers, consents or supplements hereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original,
but all such counterparts together shall constitute one and the same agreement.
SECTION 25. Headings. The Section and subsection headings used in
--------
this Agreement are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
SECTION 26. Obligations Absolute. All obligations of the Grantors
--------------------
hereunder shall be absolute and unconditional irrespective of:
(a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of any Grantor;
(b) any lack of validity or enforceability of the Indenture, the
Completion Capital Commitment, the Securities, any other Collateral
Document, or any other agreement or instrument relating thereto;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Indenture, the
Completion Capital Commitment, the Securities, and other Collateral
Document or any other agreement or instrument relating thereto (except to
the extent specified in such change, amendment or waiver);
(d) any taking, exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to any
departure from any guarantees, for all or any of the Obligations;
30
<PAGE>
(e) any exercise or non-exercise, or any waiver of any right, remedy,
power or privilege under or in respect of this Agreement, the Indenture,
the Completion Capital Commitment, the Securities, any other Collateral
Document, or any other agreement or instrument relating thereto, except as
specifically set forth in a waiver granted pursuant to the provisions of
the Indenture;
(f) any manner of application of collateral, or proceeds thereof, to
all or any of the Obligations, or any manner of sale or other disposition
of any collateral for all or any of the Obligations or any other
obligations of any Grantor under the Indenture, the Securities or any other
Collateral Document or any other assets of any Grantor or any of its
Subsidiaries;
(g) any change, restructuring or termination of the corporate
structure or existence of any Grantor or any of its Subsidiaries;
(h) any failure of the Trustee or any Secured Party to disclose to
any Grantor any information relating to the business, condition (financial
or otherwise), operations, properties or prospects of any other Grantor now
or in the future known to the Trustee or any other Secured Party (the
Grantors hereby waiving any duty on the part of the Trustee and any other
Secured Party to disclose such information); or
(i) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any
representation by the Trustee or any other Secured Party that might
otherwise constitute a defense available to, or a discharge of, any Grantor
or any guarantor or surety.
SECTION 27. Waiver of Marshaling. Each Grantor for itself and for all
--------------------
Persons hereafter claiming through or under it or who may at any time hereafter
become holders of liens junior to the liens granted under this Agreement, hereby
expressly waives and releases all rights to direct the order in which any of the
Collateral shall be sold in the event of any sale or sales pursuant hereto and
to have any of the Collateral and/or any other property now or hereafter
constituting security for any of the obligations secured hereunder marshaled
upon the exercise of any remedies under this Agreement or any other agreement
granting security for the obligations secured hereunder.
SECTION 28. Independence of Covenants. All covenants hereunder shall
-------------------------
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a default if such action is taken or condition
exists.
SECTION 29. Savings Clause. It is the intention of the parties to
--------------
conform strictly to the usury laws, whether state or federal, that are
applicable to the transaction of which this Agreement is a part. All agreements
between the Grantors and the Trustee, whether now existing or hereafter arising
and whether oral or written, are hereby expressly limited so that in no
contingency or event whatsoever shall the amount paid or agreed to be
31
<PAGE>
paid by the Grantors for the use, forbearance or detention of the money to be
loaned or advanced under the Indenture, the Securities, the Completion Capital
Commitment, this Agreement, any other Collateral Document, or any other
agreement or instrument relating thereto, or for the payment or performance of
any covenant or obligation contained herein or therein, exceed the maximum
amount permissible under applicable federal or state usury laws. If under any
circumstances whatsoever fulfillment of any such provision, at the time
performance of such provision shall be due, shall involve exceeding the limit of
validity prescribed by law, then the obligation to be fulfilled shall be reduced
to the limit of such validity. If under any circumstances the Grantors shall
have paid an amount deemed interest by applicable law, which would exceed the
highest lawful rate, such amount that would be excessive interest under
applicable usury laws shall be applied to the reduction of the principal amount
owing in respect of the Obligations and not to the payment of interest, or if
such excessive interest exceeds the unpaid balance of principal and any other
amounts due hereunder, the excess shall be refunded to the Grantors. All sums
paid or agreed to be paid for the use, forbearance or detention of the principal
under any extension of credit or advancement of funds by the Trustee or any
Holder, shall, to the extent permitted by law, and to the extent necessary to
preclude exceeding the limit of validity prescribed by law, be amortized,
prorated, allocated and spread from the date of this Agreement until payment in
full of the Obligations so that the actual rate of interest on account of such
principal amounts is uniform throughout the term hereof.
SECTION 30. Certain Waivers by the Grantors. Each Grantor waives (a)
-------------------------------
any claim that, as to any part of the Collateral, a public sale, should the
Trustee elect so to proceed, is, in and of itself, not a commercially reasonable
method of sale for such Collateral, (b) except as otherwise provided in this
Agreement, to the fullest extent not prohibited by applicable laws, notice or
judicial hearing in connection with the Trustee's disposition of any of the
Collateral including any and all prior notice and hearing for any pre-judgment
remedy or remedies and any such right that such Grantor would otherwise have
under the Constitution or any statute of the United States or of any state, and
all other requirements as to the time, place and terms of sale or other
requirements with respect to the enforcement of the Trustee's rights hereunder,
(c) all rights of redemption, appraisal or valuation, and (d) all rights and
defenses arising out of an election of remedies by any Secured Party, even
though that election of remedies, such as a nonjudicial foreclosure with respect
to security for a guaranteed obligation, has destroyed such Grantor's rights of
subrogation and reimbursement against the principal.
SECTION 31. Waiver of Jury Trial. THE TRUSTEE AND THE GRANTORS HEREBY
--------------------
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDINGS INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP
ESTABLISHED HEREUNDER.
SECTION 32. Gaming Laws. The grant of security interest and the terms
-----------
and provisions of this Agreement, including, but not limited to, all rights and
remedies of the Trustee and powers of attorney and appointment, are expressly
subject to all laws, statutes,
32
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regulations and orders affecting limited gaming or the sale of liquor
(collectively, the "Gaming Laws"), in the State of Colorado, which may include,
but not be limited to, the necessity for the Trustee to obtain the prior
approval of the regulatory agencies enforcing the Gaming Laws before taking any
action hereunder and to be licensed by such regulatory agencies before
exercising certain rights and remedies hereunder.
SECTION 33. Entire Agreement. This written agreement represents the
----------------
final agreement between the parties with respect to the subject matter hereof
and may not be contradicted by evidence of prior, contemporaneous, or subsequent
oral agreements of the parties with respect to the subject matter hereof. There
are no unwritten oral agreements among the parties with respect to the subject
matter hereof.
33
<PAGE>
IN WITNESS WHEREOF, the Grantors and the Trustee have caused this
Security Agreement to be duly executed and delivered as of the date first above
written.
ISLE OF CAPRI BLACK HAWK L.L.C.
By: /s/ Allan B. Solomon
------------------------------
Name: Allan B. Solomon
-----------------------
Title: Secretary
-----------------------
By: /s/ H. Thomas Winn
-------------------------------
Name: H. Thomas Winn
------------------------
Title: Vice President
------------------------
ISLE OF CAPRI BLACK HAWK
CAPITAL CORP.
By: /s/ Allan B. Solomon
-------------------------------
Name: Allan B. Solomon
------------------------
Title: Secretary
------------------------
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By: /s/ William T. Lynch
--------------------------------
Name: William T. Lynch
-------------------------
Title: Vice President
-------------------------
<PAGE>
EXHIBIT A
---------
TO THE SECURITY AGREEMENT
-------------------------
COPYRIGHTS, COPYRIGHT REGISTRATIONS AND
APPLICATIONS FOR COPYRIGHT REGISTRATIONS
Title Date Filed Registration No. Effective Date
- ----- ---------- ---------------- --------------
NONE
COPYRIGHT LICENSES
------------------
Title Date Filed Registration No. Effective Date
- ----- ---------- ---------------- --------------
NONE
A-1
<PAGE>
EXHIBIT B
---------
TO THE SECURITY AGREEMENT
-------------------------
PATENTS AND PATENT APPLICATIONS
-------------------------------
File Patent Country Registration No. Date
- ---- ------ ------- ---------------- ----
NONE
PATENT LICENSES
---------------
File Patent Country Registration No. Date
- ---- ------ ------- ---------------- ----
NONE
B-1
<PAGE>
EXHIBIT C
---------
TO THE SECURITY AGREEMENT
-------------------------
TRADE NAMES, TRADEMARKS, SERVICE MARKS,
TRADEMARK AND SERVICE MARK REGISTRATIONS AND
APPLICATIONS FOR TRADEMARK AND SERVICE MARK REGISTRATIONS
<TABLE>
<CAPTION>
Application (A)
Registration (R) Registration
Mark or Series No. (S) or Filing Date
- ---- ----------------- --------------
<S> <C> <C>
Farraday's 75-252,127 (A) March 5, 1997
Isle Style 75-224,559 (A) January 13, 1997
</TABLE>
TRADE NAME, TRADEMARKS AND SERVICE MARK LICENSES
Trademarks licensed to the Company:
<TABLE>
<CAPTION>
Application (A)
Registration (R) Registration
Mark or Series No. (S) or Filing Date
- ---- ----------------- --------------
<S> <C> <C>
Isle of Capri (parrot logo) 2,039,052 (R) February 18, 1997
Isle of Capri 1,789,909 (R) August 24, 1993
Isle of Capri 1,789,917 (R) August 24, 1993
Island Gold 1,925,975 (R) October 10, 1995
Calypso's 2,022,801 (R) December 17, 1996
Farraday's 75-252,127 (A) March 5, 1997
Isle Style 75-224,559 (A) January 13, 1997
</TABLE>
C-1
<PAGE>
SECURITY AGREEMENT
Schedule A
Motor Vehicles and Other Equipment subject to Certificates of Title
------------------------------------------------------------------
NONE
A-1
<PAGE>
SECURITY AGREEMENT
Schedule B
Filings
-------
1. UCC-1 Financing Statements describing the Collateral and naming the Grantor
as a debtor and the Trustee as secured party to be filed with:
(a) the Secretary of State of the State of Colorado
(b) the Secretary of State of the State of Mississippi
(c) the Secretary of State of the State of New York
(d) Chancery Clerk of Harrison County, Mississippi
2. With respect to the interests granted in Trademark Licenses, (a) a notice
filing with United States Patent and Trademark Office, and (b) UCC-1
Financing Statements describing the security interest and naming the
Grantors as debtor and the Trustee as secured party to filed with (i) the
Secretary of the State of Colorado; (ii) the Secretary of State of the
State of Mississippi, (iii) the Secretary of State of the State of New York
and (iv) Chancery Clerk of Harrison County, Mississippi
3. With respect only to motor vehicles and other equipment subject to a
certificate of title statue, filings, registrations or recordings listing
the Trustee as secured party on each applicable certificate of title.
B-1
<PAGE>
SECURITY AGREEMENT
Schedule C
Executive Office; Collateral Location; Trade Names
--------------------------------------------------
1. The chief executive office of each of the Company and Capital Corp. is
located at:
c/o Casino America Inc., 711 Washington Loop, Biloxi, Mississippi 39530.
2. All Collateral is located at Black Hawk, Colorado, except to the extent
certain Collateral is deemed by applicable laws to be located at the chief
executive office of the Company and/or Capital Corp.
3. The Company uses the following business or trade names:
(a) Isle of Capri Black Hawk L.L.C.
(b) Isle of Capri
(c) Island Gold
(d) Calypso's
(e) Farraday's
(f) Isle Style
C-1
<PAGE>
ANNEX I
FORM OF
AMENDMENT TO SECURITY AGREEMENT
(ADDITIONAL GRANTOR)
This Amendment to Security Agreement (Additional Grantor) (this
"AMENDMENT"), dated as of [____________, 19__], relates to the Security
---------
Agreement dated as of August __, 1997, as amended, modified and supplemented to
date (as so amended, supplemented or modified, the "AGREEMENT") executed by Isle
---------
of Capri Black Hawk L.L.C. (the "COMPANY") and Isle of Capri Black Hawk
-------
Capital Corp. ("CAPITAL CORP.", and together with the Company, collectively, the
------------
"GRANTORS" and each a "GRANTOR") in favor of IBJ Schroder Bank & Trust Company,
-------- -------
as trustee (the "TRUSTEE") for the benefit of the Secured Parties (as defined in
-------
the Agreement).
In compliance with Section 4.17 of the Indenture dated as of August
__, 1997 (as amended, supplemented or otherwise modified from time to time, the
"INDENTURE") between the Grantors and the Trustee, [NAME OF SUBSIDIARY] (the
---------
"ADDITIONAL GRANTOR") and the Trustee hereby agree as follows (capitalized terms
------------------
used but not otherwise defined herein shall have the meanings ascribed to them
in the Agreement):
1. AMENDMENT. The Agreement is hereby amended to add as a party,
---------
and more specifically, as a Grantor thereunder, the Additional Grantor.
2. REPRESENTATIONS AND WARRANTIES. The Additional Grantor
------------------------------
represents and warrants to the Trustee and each other Secured Party that each of
the representations and warranties of the Grantors contained in the Agreement is
hereby made by the Additional Grantor and is true and correct as to the
Additional Grantor .
3. GRANT OF SECURITY INTEREST. The Additional Grantor hereby
--------------------------
grants, pledges, assigns and transfers to the Trustee, for the Trustee's
individual benefit and the ratable benefit of the Holders, as security for the
prompt and complete payment and performance when due (whether at stated
maturity, upon redemption or require repurchase, by acceleration or otherwise)
of all the Obligations of the Additional Grantor, a continuing first priority
perfected security interest in and lien on all of the right, title and interest
of the Additional Grantor in, to and under all types and items of property of
the Additional Grantor within the definition of Collateral (as defined in the
Agreement), in each case wherever located, whether now owned or at any time
hereafter acquired by the Additional Grantor, whether now existing or hereafter
coming into existence, or in which the Additional Grantor now has or at any time
in the future may acquire any right, title or interest.
Annex I-1
<PAGE>
4. SCHEDULE SUPPLEMENTS. The Additional Grantor has attached hereto
--------------------
supplements to Schedules A through C to the Agreement, and the Additional
Grantor hereby represents and warrants that such supplements have been prepared
by the Additional Grantor in substantially the form of the Schedules to the
Agreement and are true, accurate and complete as of the date first above
written.
5. ASSUMPTION OF RIGHTS, OBLIGATIONS AND LIABILITIES. The Additional
-------------------------------------------------
Grantor assumes all of the rights, obligations and liabilities of a Grantor
under the Agreement and agrees to be bound thereby as if the Additional Grantor
were an original party to the Agreement. Without limiting the generality of the
foregoing, the Additional Grantor waives notice of the creation, advance,
increase, existence, extension, or renewal of, or of any indulgence with respect
to, the Obligations; waives presentment, demand, notice of dishonor, and
protest; waives notice of the amount of the Obligations outstanding at any time,
notice of any change in financial condition of the Grantor, notice of any
default or Event of Default, and all other notices respecting the Obligations
(except for any such notices that are required to be given to the Additional
Grantor pursuant to the other provisions of this Agreement or the provisions of
the Securities, the Indenture or any other Collateral Document); and agrees that
maturity of the Obligations and any part thereof may be accelerated, extended,
or renewed one or more times by the Holders, in its or their discretion, without
notice to the Additional Grantor.
6. EFFECTIVENESS. This Amendment shall become effective on the date
-------------
hereof upon the execution hereof by the Additional Grantor and the Trustee and
delivery hereof to the Trustee.
7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE
-------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW) WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT LAWS THEREOF,
EXCEPT TO THE EXTENT THAT THE PERFECTION AND ENFORCEMENT OF THE SECURITY
INTERESTS HEREUNDER ARE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.
Annex I-2
<PAGE>
IN WITNESS WHEREOF, the Additional Grantor and the Trustee have caused
this Amendment to Security Agreement (Additional Grantor) to be duly executed
and delivered as of the date first written above.
[ADDITIONAL GRANTOR]
By:_______________________________
Name:
Title:
Address for Notice:
__________________________________
__________________________________
Attn:_____________________________
Telephone:________________________
Telecopy:_________________________
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By:_______________________________
Name:
Title:
Annex I-3
<PAGE>
EXHIBIT 4.8
ISSUER PLEDGE AGREEMENT
This ISSUER PLEDGE AGREEMENT, dated as of August 20, 1997 (as the same
may be amended, supplemented or otherwise modified from time to time, this
"Agreement") is made by Isle of Capri Black Hawk L.L.C., a Colorado limited
liability company (the "Pledgor") in favor of IBJ Schroder Bank & Trust Company,
a New York banking corporation, having an office at One State Street, New York,
New York 10004, as trustee (in such capacity and together with any successors in
such capacity, the "Trustee") pursuant to the Indenture referred to below.
R E C I T A L S :
A. The Pledgor, Isle of Capri Black Hawk Capital Corp. ("Capital
Corp" and, together with the Pledgor, the "Issuers") and the Trustee are,
contemporaneously with the execution and delivery of this Agreement, entering
into a certain Indenture dated as of August 20, 1997 (as the same may be
amended, supplemented or otherwise modified from time to time, the "Indenture"),
pursuant to which the Issuers are issuing their 13% First Mortgage Notes due
2004 With Contingent Interest (such notes, together with any notes issued in
replacement thereof or in exchange therefor, the "Securities"), in the aggregate
principal amount of $75,000,000.
B. The Pledgor is the legal and beneficial owner of (i) all shares
described in Part I of Schedule 1 hereto and issued by the corporations named
therein (the "Pledged Shares") and (ii) the indebtedness described in Part II of
said Schedule 1 and issued by the obligors named therein (the "Pledged Debt"),
in each case to the extent attributed on such Schedule to the ownership of the
Pledgor.
C. It is a condition precedent to the purchase of the Securities
that the Pledgor shall have executed and delivered this Agreement to the Trustee
for the benefit of the Trustee and the ratable benefit of the holders from time
to time of the Securities (the "Holders," and, together with the Trustee, the
"Secured Parties") to secure the payment and performance of the Obligations (as
hereinafter defined).
A G R E E M E N T :
NOW, THEREFORE, in consideration of the premises and in order to
induce the Trustee to enter into the Indenture and to induce the Holders to
purchase the Securities and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Pledgor hereby
agrees, for the benefit of the Trustee and for the ratable benefit of the
Holders as follows:
SECTION 1. Definitions.
-----------
(a) Capitalized terms used herein but not otherwise defined shall have
the meanings assigned to such terms in the Indenture. Unless the context
indicates otherwise or the terms are otherwise defined herein or in the
Indenture, definitions in
<PAGE>
the Uniform Commercial Code as in effect in the State of New York (the
"UCC") apply to words and phrases in this Agreement. The term "Pledgor,"
as used with respect to any Person, includes, without limitation, such
Person, such Person's heirs, successors and assigns, such Person as a
debtor-in-possession, and any receiver, trustee, liquidator, conservator,
custodian or similar party appointed for such Person or all or
substantially all of its assets under any law.
(b) The words "hereof," "herein," "hereto" and "hereunder" and words
of similar 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, subsection, Schedule and Annex references are to this Agreement
unless otherwise specified.
(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. Pledge. The Pledgor hereby grants, pledges, assigns and
------
transfers to the Trustee, for the Trustee's individual benefit and the ratable
benefit of the Holders, as security for the prompt and complete payment and
performance when due (whether at stated maturity, upon redemption or required
repurchase, by acceleration or otherwise) of all the Obligations, a continuing
first priority security interest in and lien on all of the right, title and
interest of the Pledgor in, to and under the following shares, indebtedness and
other personal property, in each case wherever located, whether now owned or at
any time hereafter acquired by the Pledgor, whether now existing or hereafter
coming into existence, or in which the Pledgor now has or at any time in the
future may acquire any right, title or interest (collectively, the
"Collateral"):
(a) the Pledged Shares, all options, warrants or other rights for the
purchase of any capital stock of any issuer of Pledged Shares now owned or
hereafter acquired by or held in the name of the Pledgor, and any and all
certificates or instruments now or hereafter evidencing any of the
foregoing;
(b) the Pledged Debt and the instruments evidencing the Pledged Debt,
and all interest, 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 Debt;
(c) all additional shares of stock of any issuer of the Pledged Shares
or of any other Subsidiary of the Pledgor from time to time acquired by the
Pledgor in any manner (all of which additional shares shall, immediately
and automatically upon such acquisition, be Pledged Shares), and any and
all certificates or instruments now or hereafter evidencing any of the
foregoing;
(d) all additional indebtedness from time to time owed to the Pledgor
and the instruments evidencing such indebtedness (all of which additional
indebtedness shall, immediately and automatically upon its creation, be
Pledged Debt), and all interest, cash, instruments and other property from
time to time received, receivable
2
<PAGE>
or otherwise distributed in respect of or in exchange for any or all of
such indebtedness;
(e) all voting rights in respect of the Pledged Shares;
(f) all dividends, interest, cash, instruments, securities and other
rights and property from time to time received, receivable or otherwise
distributed in respect of, or issued in exchange for, any or all of the
foregoing; and
(g) all cash and non-cash proceeds of the foregoing;
provided, however, that the foregoing clauses (a) through (f) shall not apply to
- -------- -------
the capital stock of any Foreign Subsidiary (as defined below) to the extent
(and only to such extent) that the application of such clauses would require the
pledge hereunder of more than 65% of each class of the capital stock of any
Foreign Subsidiary. For purposes hereof, the term "Foreign Subsidiary" shall
mean any "controlled foreign corporation" within the meaning of Section 957(a)
of the Internal Revenue Code of 1986, as amended from time to time (the Code"),
as to which the Pledgor is a "United States shareholder" as defined in Section
951(b) of the Code.
SECTION 3. Obligations. This Agreement secures, and the Collateral is
-----------
collateral security for, the payment and performance in full when due (whether
at stated maturity, upon redemption or required repurchase, by acceleration or
otherwise) of all obligations of every type and nature of the Issuers to the
Trustee, any other trustee under any Deed of Trust, or any Holder (including,
without limitation, any and all amounts which may at any time be or become due
and payable and any and all interest accruing after the maturity of the
Securities and interest accruing after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding and interest, to the extent permitted by law, on the unpaid
interest), whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with, the Indenture, the Securities, the Guarantees, this Agreement,
the other Collateral Documents, or any other document made, delivered or given
in connection therewith, in each case whether on account of principal, premium,
interest, fees, Liquidated Damages, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Trustee or to the Holders that are required to be paid by the Pledgor pursuant
to the terms of the Indenture, the Securities, the Guarantees, this Agreement,
any other Collateral Document, or any other document entered into by the
Issuers, or either of them, in connection with any of the foregoing)
(collectively, the "Obligations").
SECTION 4. Maintenance of Perfected Security Interests; Further
----------------------------------------------------
Assurances; Additional Collateral.
- ---------------------------------
SECTION 4.1 Perfection Maintenance. The Pledgor agrees that it
----------------------
shall maintain the security interests created by this Agreement as perfected
first priority
3
<PAGE>
security interests and shall defend such security interests against the claims
and demands of all persons whomsoever.
SECTION 4.2 Further Assurances. The Pledgor agrees that at any
------------------
time and from time to time, at the sole cost and expense of the Pledgor, the
Pledgor shall promptly, and in any event, in no less than five days, execute,
deliver and, where applicable, file all further instruments and documents,
including, without limitation, blank stock powers and similar documents and all
financing, continuation or amendment statements under the Uniform Commercial
Code in effect in any applicable jurisdiction with respect to the security
interests created hereby, and take all further action that may be necessary or
that the Trustee may reasonably request, for the purpose of obtaining,
maintaining or preserving the full benefits of this Agreement and of the rights
and powers herein granted or for the purpose of creating, preserving, perfecting
or otherwise protecting the liens and security interests created or purported to
be created hereby and the priority thereof. Without limiting the Pledgor's
obligation to make such filings, the Pledgor hereby authorizes the Trustee
(subject to the following sentence) to take all action (including, without
limitation, the filing of any Uniform Commercial Code financing statements or
continuation statements or amendments thereto without the signature of the
Pledgor as set forth in Section 12.5 hereof) which the Trustee may deem
necessary or desirable to perfect or otherwise protect the liens and security
interests created or purported to be created hereunder and to obtain the
benefits of this Agreement. Subject to the Trustee's obligations under the
Indenture during the continuance of an Event of Default, the Trustee shall not
be responsible for perfecting or maintaining the perfection of any security
interest granted to it under this Agreement or for filing, refiling, recording
or rerecording any document, financing statement, notice or instrument in any
public office at any time or times and shall not be responsible for the payment
of any taxes with respect to any property subject to this Agreement.
SECTION 4.3 Additional Collateral. Upon acquisition by the
---------------------
Pledgor of any additional Pledged Shares or any additional Pledged Debt, the
Pledgor shall be deemed to grant hereunder, and shall cause to be granted, Liens
thereon and security interests therein to the Trustee, as security for the
Obligations. The Pledgor agrees to take, and to cause to be taken, at its own
cost and expense, such actions as the Trustee shall reasonably deem necessary or
appropriate to create, evidence and perfect such Liens and assure the first
priority of such Liens.
SECTION 5. Representations, Warranties and Covenants. The Pledgor
-----------------------------------------
hereby represents and warrants to, and covenants and agrees with, the Trustee
(for the benefit of the Trustee and the ratable benefit of the Holders) as
follows:
SECTION 5.1 Title; No Other Liens. The Pledgor is as of the date
---------------------
hereof, and, as to Collateral acquired by it from time to time after the date
hereof, the Pledgor will be, the owner of each item of Collateral free and clear
from any and all Liens, claims or other right, title or interest of any person
other than Permitted Liens. With the exception of equity interests in Capital
Corp., Schedule 1 is a complete and correct description of all equity interests
owned by the Pledgor as of the date hereof, including the number and class
thereof and the certificate number evidencing the same. The Pledged Shares
pledged hereunder are duly authorized, validly issued, fully paid, and non-
assessable
4
<PAGE>
and were not issued in violation of the rights of any Person. No unpaid capital
call or dispute exists with respect to any of the Collateral. None of the
Collateral is subject to any buy-sell, voting trust, transfer restriction,
preferential right to purchase or similar agreement or any option, warrant, put
or call or similar agreement. The delivery at any time by the Pledgor to the
Trustee of Collateral shall constitute a representation and warranty by the
Pledgor under this Agreement that, with respect to such Collateral, the Pledgor
is the sole legal and beneficial owner of such Collateral, and that the matters
set forth in this Section 5.1 are true and correct with respect to such newly-
delivered Collateral. No financing statement or other public notice with
respect to all or any part of the Collateral is on file or of record in any
public office except, (i) financing statements related to Permitted Liens and
(ii) financing statements which have been filed in favor of the Secured Parties
pursuant to this Agreement.
SECTION 5.2 Perfected First Priority Liens. The security
------------------------------
interests granted pursuant to this Agreement, upon making the filings,
registrations, and recordings and taking the actions set forth on Schedule 2,
(a) constitute perfected security interests in the Collateral in favor of the
Trustee, as collateral security for the Obligations, and (b) are prior to all
other Liens on the Collateral in existence on the date hereof.
SECTION 5.3 Necessary Filings. The filings, registrations,
-----------------
recordings and other actions described on Schedule 2 hereto constitute the only
filings, registrations and recordings or deliveries necessary or appropriate to
create, preserve, protect and perfect the security interests granted by the
Pledgor to the Trustee pursuant to this Agreement in respect of the Collateral.
SECTION 5.4 Other Financing Statements. The Pledgor shall not
--------------------------
execute or authorize or permit to be filed in any public office or elsewhere any
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) relating to the Collateral, except financing
statements filed or to be filed in respect of Permitted Liens.
SECTION 5.5 Chief Executive Office; Location of Collateral and
--------------------------------------------------
Records. The Pledgor's chief executive office is currently located at 711
- -------
Washington Loop, Biloxi, Mississippi 39530.
SECTION 5.6 Changes in Locations, Names, etc. The Pledgor
--------------------------------
represents that it currently uses no business or trade names, except as set
forth on Schedule 3 hereto. The Pledgor shall not (a) change the location of
its chief executive office from that specified in Section 5.5, (b) change its
name, identity or structure, or (c) change the location where it maintains its
books and records from that specified in Section 5.5, unless (i) it shall have
given the Trustee not less than 45 days' prior written notice of its intention
so to do, clearly describing such new location or name and providing such other
information in connection therewith as the Trustee may reasonably request and
(ii) with respect to such new location or name, the Pledgor shall have taken all
action which is necessary or appropriate or which is reasonably requested by the
Trustee to maintain the perfection and proof of the security interest of the
Trustee for the benefit of the Secured
5
<PAGE>
Parties in the Collateral granted or purported to be granted hereby and shall
have delivered to the Trustee an Officers' Certificate as to compliance with
this clause (ii).
SECTION 5.7 Delivery of Instruments and Chattel Paper. If any
-----------------------------------------
amount payable under or in connection with any of the Collateral shall be or
become evidenced by any instrument or chattel paper, such instrument or chattel
paper shall be immediately delivered to the Trustee, duly endorsed in a manner
satisfactory to the Trustee, to be held as Collateral pursuant to this
Agreement.
SECTION 5.8 Information and Inspection. The Pledgor shall (a)
--------------------------
allow the Trustee to inspect and copy all records relating to the Collateral and
the Obligations; and (b) furnish to the Trustee such information as the Trustee
may reasonably request from time to time with respect to the Collateral, any
distributions thereon, and any proceeds thereof.
SECTION 5.9 Authorization, Enforceability. The Pledgor has the
-----------------------------
requisite power, authority and legal right to grant a security interest in all
the Collateral of the Pledgor pursuant to this Agreement, and this Agreement has
been duly authorized, executed and delivered by, and constitutes the legal,
valid and binding obligation of, the Pledgor, enforceable against the Pledgor in
accordance with its terms.
SECTION 5.10 No Consents. Except for the filings, registrations
-----------
and recordings contemplated in Section 5.3, no consent of any person (including,
without limitation, any stockholders or creditors of the Pledgor) and no
consent, authorization, approval, or other action by, and no notice to or filing
with, any governmental authority or regulatory body or other person is required
(a) for the grant by the Pledgor of a security interest in the Collateral
pursuant to this Agreement, (b) for the perfection or maintenance of such
security interest created hereby, including the first priority nature of such
security interest, or the exercise of rights and remedies provided for herein,
(c) for the enforceability of such security interest against third parties,
including judgment lien creditors, (d) for the authorization, execution,
delivery or performance of this Agreement by the Pledgor, or (e) for the
exercise by the Trustee of the remedies in respect of the Collateral pursuant to
this Agreement.
SECTION 5.11 Collateral. All information set forth herein
----------
(including, without limitation, the information set forth in the Schedules
annexed hereto) relating to the Collateral is accurate and complete in all
material respects.
SECTION 5.12 Ownership and Control of Collateral. Except as may
-----------------------------------
otherwise be permitted by the Indenture, the Pledgor at all times will be the
sole legal and beneficial owner of the Collateral of the Pledgor.
SECTION 5.13 Records of Collateral; Notation on Books and
--------------------------------------------
Records. The Pledgor shall keep full and accurate books and records relating to
- -------
the Collateral and shall mark and cause each issuer of Collateral to mark
immediately all books and records of issue, registration, and transfer relating
to the Collateral as may be necessary
6
<PAGE>
or as the Trustee may reasonably require in order to reflect the security
interests granted by this Agreement.
SECTION 5.14 Certain Affirmative Covenants. The Pledgor covenants
-----------------------------
and agrees (a) promptly to deliver to the Trustee all instruments, certificates,
documents, or agreements evidencing any of the Collateral; (b) promptly to
notify the Trustee of any material change in any fact or circumstance warranted
or represented by the Pledgor in this Agreement or in any other writings
furnished by the Pledgor to the Trustee in connection with the Collateral; (c)
promptly to notify the Trustee of any claim, action or proceeding affecting the
Pledgor's title to any of the Collateral or the security interest therein
granted to the Trustee hereunder, and, at the reasonable request of the Trustee,
to appear in and defend, at the Pledgor's expense, any such action or
proceeding; and (d) promptly to pay to the Trustee the amount of all court costs
and reasonable attorneys' fees incurred by the Trustee hereunder. The Pledgor
shall, at its own cost and expense, take any and all actions necessary to defend
the creation, perfection and first priority nature of the Lien granted in favor
of the Trustee against all other Persons and all claims and demands.
SECTION 5.15 Certain Negative Covenants. The Pledgor covenants and
--------------------------
agrees that it shall not (a) create any other security interest or pledge in,
mortgage or otherwise encumber the Collateral or any part thereof, or permit the
same to be or become subject to any Lien, attachment, execution, sequestration,
other legal or equitable process, or any encumbrance of any kind or character,
or grant any option, warrant, or other rights in the Collateral in favor of any
Person other than the Trustee except for carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the ordinary course of
business which secure amounts not overdue for a period of more than 60 days or
which are being contested in good faith by appropriate proceedings; (b) except
as permitted under the Indenture, cause or permit any issuer of Pledged Shares
to authorize and issue any additional capital stock, or take any other action
that would otherwise dilute any of the Collateral; (c) except as permitted under
the Indenture, approve any amendment to the certificate or articles of
incorporation or bylaws (or other organizational or governance document) of the
Pledgor which amendment could reasonably be expected to have a Material Adverse
Effect; (d) except as permitted under the Indenture, permit the merger,
consolidation or dissolution of the Pledgor or (e) except as permitted under the
Indenture, sell, lease, lend, transfer or otherwise dispose of any Collateral in
any manner.
SECTION 5.16 Right to Distributions. So long as no Event of
----------------------
Default has occurred and is continuing, the Pledgor shall be entitled to receive
and retain any cash dividends paid in respect of the Pledged Shares pledged by
it hereunder. With respect to any Pledged Shares or other instruments,
investment property or securities constituting a part of the Collateral, the
Trustee shall have authority if an Event of Default shall have occurred and be
continuing, without notice to the Pledgor, either to have the same registered in
the Trustee's name or in the name of a nominee, and, with or without such
registration, to demand of the Pledgor, and to receive and receipt for, any and
all distributions (including any stock or similar dividend or distribution)
payable in respect thereof, whether they be ordinary or extraordinary. If the
Pledgor shall become entitled to receive or shall receive any interest in or
certificate representing (including, without limitation, any interest in or
certificate representing a distribution in connection with any reclassification,
increase, or
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reduction of capital, or issued in connection with any reorganization), or any
option or rights arising from or relating to, any of the Collateral, whether as
an addition to, in substitution of, as a conversion of, or in exchange for any
of the Collateral, or otherwise, the Pledgor agrees to accept the same as the
Trustee's agent and to hold the same in trust on behalf of and for the benefit
of the Trustee, and to deliver the same immediately to the Trustee in the exact
form received, with appropriate undated stock or similar powers, duly executed
in blank, to be held by the Trustee, subject to the terms hereof, as Collateral.
If an Event of Default shall have occurred and be continuing, the Trustee shall
be entitled to all distributions and to any sums paid upon or in respect of any
Collateral, including, without limitation, upon the liquidation, dissolution or
reorganization of the Pledgor, all of which shall be promptly paid to the
Trustee to be held by it as additional collateral security for the Obligations
and/or applied to the Obligations at the discretion of the Trustee. All
distributions paid or distributed in respect of the Collateral which are
received by the Pledgor in violation of this Agreement or the Indenture shall,
until paid or delivered to the Trustee, be held by the Pledgor in trust as
additional Collateral for the Obligations.
SECTION 5.17 Pledged Debt. The Pledged Debt that (i) has been, to
------------
the best of Pledgor's knowledge, after due inquiry, duly authorized,
authenticated or issued and delivered, is the legal, valid and binding
obligation of the issuers thereof and (ii) is not in default; provided that the
Pledged Debt that is intercompany indebtedness has been duly authorized,
authenticated or issued and delivered and is a legal, valid and binding
obligation of the issuers thereof. The Pledged Debt constitutes all of the
outstanding indebtedness owing to the Pledgor and is outstanding in the
principal amount indicated on Schedule 1.
SECTION 6. Reasonable Care. Beyond the duties set forth in
---------------
Section 12.4 and the exercise of reasonable care in custody thereof, the Trustee
shall have no duty as to the collection of any Collateral in its possession or
control or in the possession or control of any agent or nominee of the Trustee,
or any income thereon or as to the preservation of rights against prior parties
or any other rights pertaining thereto. The Trustee shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if such Collateral is accorded treatment substantially equivalent
to that which the Trustee, in its individual capacity, accords its own property,
it being understood that the Trustee shall not have responsibility for (i)
maintaining, preserving or protecting any of the Collateral, whether or not the
Trustee or any other Secured Party has or is deemed to have knowledge of any
deterioration, disrepair, neglect or otherwise, or (ii) taking any necessary
steps to preserve rights against any person with respect to any Collateral.
SECTION 7. Rights and Powers of the Trustee
--------------------------------
SECTION 7.1 Remedies upon Default. If an Event of Default shall
---------------------
occur, the Trustee may, without liability to the Pledgor and without notice or
demand: obtain from any Person information regarding the Pledgor, or any of the
Pledgor's businesses; require the Pledgor to give to the Trustee possession or
control of any of the Collateral not already in the Trustee's possession and
control; endorse as the Pledgor's agent or attorney-in-fact any instruments or
documents representing proceeds of the Collateral; unless earlier permitted
hereunder, take control of funds generated by the Collateral and any other
proceeds, and exercise all other rights which an owner of such Collateral may
exercise;
8
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at any time transfer any of the Collateral or evidence thereof into its own name
or that of its nominee; vote any Collateral and exercise any rights with respect
thereto; and demand, collect, convert, redeem, receipt for, settle, compromise,
adjust, sue for, foreclose, or realize upon the Collateral, in its own name for
the benefit of the Holders, or in the name of the Pledgor, as the Trustee may
determine. Neither the Trustee nor the Holders shall be liable for failure to
collect any distribution or other proceeds, or for any act or omission on the
part of the Trustee, its officers, agents, employees, or other representatives,
except gross negligence and willful misconduct. The foregoing rights of the
Trustee shall be in addition to, and not a limitation upon, any right of the
Trustee given by law, elsewhere in this Agreement, or otherwise.
SECTION 7.2 Right of the Trustee to Notify the Pledgor. If an
------------------------------------------
Event of Default shall have occurred and be continuing and at such other times
as the Trustee is entitled to receive distributions and other property
constituting Collateral, the Trustee may notify the Pledgor to make payments of
all distributions directly to the Trustee, and the Trustee may take control of
all proceeds of any Collateral. Until the Trustee elects to exercise such right,
if an Event of Default shall have occurred and be continuing, the Pledgor, as
agent of the Trustee, shall collect and segregate all distributions and other
amounts paid or distributed with respect to the Collateral.
SECTION 7.3 Delivery of Receipts to the Trustee. Upon the
-----------------------------------
Trustee's demand if an Event of Default shall have occurred and be continuing,
the Pledgor shall deposit, upon receipt and in the form received, with any
necessary endorsement, all payments received as proceeds of or otherwise in
connection with the Collateral, in a special bank account in a bank of the
Trustee's choice over which the Trustee alone shall have power of withdrawal.
The funds in said account shall secure the Obligations. The Trustee is
authorized as, and is hereby appointed, the Pledgor's attorney-in-fact, to make
any endorsement of the Collateral in the Pledgor's name and behalf that the
Pledgor fails to make. Pending such deposit, the Pledgor shall not commingle any
such payments with any of the Pledgor's other funds or property, but shall hold
them separate and upon an express trust for the Trustee. If an Event of Default
shall have occurred and be continuing, the Trustee may from time to time apply
the whole or any part of the funds in the special account against the
Obligations.
SECTION 7.4 Voting Rights. It is expressly understood and agreed
-------------
that the Pledgor may exercise all voting rights to the Collateral unless an
Event of Default shall exist, at which time such voting rights shall transfer to
or be exercised as directed by the Trustee, at its sole discretion; provided,
--------
however, that no voting or management rights shall be exercised, vote cast,
- -------
consent, waiver, or ratification given, or action taken by the Pledgor which
would be inconsistent with or violate any provision of this Agreement or the
Indenture.
SECTION 7.5 Realization upon Collateral. If an Event of Default
---------------------------
shall have occurred and be continuing, the Trustee, without notice or demand,
but subject to any limitations or restrictions imposed by applicable law, may
exercise any right of a secured party under the UCC or the Uniform Commercial
Code of any applicable jurisdiction, this Agreement, or otherwise and also may
(i) require the Pledgor to, and the Pledgor hereby
9
<PAGE>
agrees, to the extent such Collateral is not already in the possession of the
Trustee, that it will at its expense and upon request of the Trustee forthwith,
assemble all or part of the Collateral as directed by the Trustee and make it
available to the Trustee at a place to be designated by the Trustee which is
reasonably convenient to both parties or (ii) without notice, except as
specified below, sell the Collateral or any portion thereof in one or more
parcels at public or private sale, 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. Unless the Collateral is of a type
customarily sold on a recognized market, the Trustee shall 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 thereof is to be
made. The Pledgor agrees that ten (10) days' advance notice thereof shall
constitute reasonable notice. The Trustee shall not be obligated to make any
sale of Collateral, 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. The Trustee shall be
entitled to immediate possession of all books and records maintained by the
Pledgor with respect to the Collateral, and shall have the authority to enter
upon any premises upon which any of the same may be situated and remove the same
therefrom without liability. The Trustee shall apply the net proceeds of any
action taken by it pursuant to this Agreement, after deducting all reasonable
costs and expenses of every kind incurred by the Trustee in connection therewith
or incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Trustee and the Holders
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, as provided in Section 8 hereof, and only after such application
and after the payment by the Trustee of any other amount required by any
provision of law, including, without limitation, Section 9-504(1)(c) of the UCC,
need the Trustee account for the surplus, if any, to the Pledgor. To the extent
permitted by applicable law, the Pledgor waives all claims, damages and demands
it may acquire against the Trustee (or any other trustee under any Deed of
Trust) or any Holder arising out of the exercise by them of any rights
hereunder.
SECTION 7.6 Securities and Other Laws; Contractual Restrictions;
----------------------------------------------------
Registration.
- ------------
(a) Because of the Securities Act of 1933, as amended (the
"Securities Act"), and other laws, including without limitation state "blue
sky" laws, or contractual restrictions or agreements imposed by other
Persons, there may be legal restrictions or limitations affecting the
Trustee in any attempts to dispose of the Collateral and the enforcement of
its rights hereunder. For these reasons, the Trustee is hereby authorized
by the Pledgor, but not obligated, if an Event of Default shall have
occurred and be continuing, to sell or otherwise dispose of any of the
Collateral at private sale, subject to an investment letter, or in any
other manner which will not require the Collateral, or any part thereof, to
be registered in accordance with the Securities Act, or the rules and
regulations promulgated thereunder, or any other law. The Trustee is also
hereby authorized by the Pledgor, but not obligated, to take such actions,
give such notices, obtain such consents, and do such other things as the
Trustee may deem required or appropriate under the Securities Act or other
securities
10
<PAGE>
laws or other laws or contractual restrictions or agreements in the event
of a sale or disposition of any Collateral. The Pledgor clearly
understands that the Trustee may in its discretion approach a restricted
number of potential purchasers and that a sale under such circumstances may
yield a lower price for the Collateral than would otherwise be obtainable
if the Collateral were registered and sold in the open market. No sale so
made in good faith by the Trustee shall be deemed to be not "commercially
reasonable" because so made. The Pledgor agrees that in the event the
Trustee shall, if an Event of Default shall have occurred and be
continuing, sell the Collateral or any portion thereof at any private sale
or sales, the Trustee shall have the right to rely upon the advice and
opinion of appraisers and other Persons, which appraisers and other Persons
are acceptable to the Trustee, as to the best price reasonably obtainable
upon such a private sale thereof. In the absence of fraud, such reliance
shall be conclusive evidence that the Trustee handled such matter in a
commercially reasonable manner under applicable law.
(b) If the Trustee shall determine to exercise its right to sell
any or all of the Collateral following an Event of Default, and if in the
opinion of counsel for the Trustee it is necessary, or if in the opinion of
the Trustee it is advisable, to have the Collateral or that portion thereof
to be sold, registered under the provisions of the Securities Act, the
Pledgor will, to the fullest extent it has the capability to do so, execute
and deliver at the Pledgor's expense, all such instruments and documents,
and to do or cause to be done all such other acts and things, as may be
necessary or, in the opinion of the Trustee, advisable to register the
Collateral or that portion thereof to be sold, under the provisions of the
Securities Act and to cause the registration statement relating thereto to
become effective and to remain effective for such period as the Trustee may
deem appropriate to facilitate the sale or other disposition of such
Collateral from the date of the first public offering of the Collateral or
that portion thereof to be sold, and to make all amendments thereto and/or
to the related prospectus which, in the opinion of the Trustee, are
necessary or advisable, all in conformity with the requirements of the
Securities Act. The Pledgor shall use its best efforts to comply with the
provisions of the securities or "blue sky" laws of any jurisdiction which
the Trustee shall designate and to make available to its security holders,
as soon as practicable, an earnings statement which will satisfy the
provisions of the Securities Act and applicable "blue sky" laws.
SECTION 7.7 Convertible Securities. If an Event of Default shall
----------------------
have occurred and be continuing, the Trustee may present for conversion any
Collateral which is convertible into any other instrument, security or cash. The
Trustee shall not have any duty, however, to present for conversion any of the
Collateral, unless it shall have received from the Pledgor detailed written
instructions to that effect at a time reasonably far in advance of the final
conversion date to make such conversion possible and such conversion does not
violate any provisions of the Indenture.
SECTION 7.8 Issuer Liabilities. By taking a security interest in
------------------
the Collateral pursuant to this Agreement, neither the Trustee nor any Holder
assumes, accepts or becomes liable with respect to any debts, liabilities or
obligations of or owed to the issuer of any Collateral.
11
<PAGE>
SECTION 8. Application of Proceeds. All cash proceeds received by the
-----------------------
Trustee upon any sale of, collection of, or other realization upon, all or any
part of the Collateral shall be applied as follows:
First: To the payment of all reasonable out-of-pocket
-----
expenses incurred by the Trustee in connection with the sale of, collection
of or other realization upon Collateral, including reasonable attorneys'
fees and disbursements and court costs, if applicable;
Second: To the payment of the Obligations in such order set
------
forth in the Indenture; and
Third: To the extent of the balance (if any) of such
-----
proceeds, to payment to the Pledgor or other Person legally entitled
thereto.
Non-cash proceeds of any disposition by the Trustee of Collateral
available to satisfy the Obligations shall be applied to the Obligations in such
order and in such manner consistent with applicable law as the Trustee in its
discretion shall decide.
SECTION 9. Expenses. The Pledgor will immediately upon demand pay to
--------
the Trustee the amount of any and all reasonable expenses, including the fees
and expenses of the Trustee's counsel and the fees and expenses of any experts
and agents which the Trustee may incur in connection with (a) the collection of
the Obligations, (b) the enforcement and administration of this Agreement, (c)
the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (d) the exercise or enforcement of any
of the rights of the Trustee or any Secured Party hereunder, (e) the failure by
the Pledgor to perform or observe any of the provisions hereof, (f) the
preparation and filing or recording of financing statements and other documents
(including all taxes in connection therewith) in public offices necessary or
desirable, in the Trustee's sole discretion, to maintain a first priority
perfected security interest in the Collateral in favor of the Trustee, (g) the
payment or discharge of any taxes, insurance premiums required under any
Collateral Document or encumbrances with respect to the Collateral, (h)
defending or prosecuting any actions or proceedings arising out of or related to
the transactions to which this Agreement relates, or (i) otherwise protecting,
maintaining or preserving the Collateral and the perfection and priority of the
security interests granted or purported to be granted hereunder, or the
enforcing, foreclosing, retaking, holding, storing, processing, selling or
otherwise realizing upon the Collateral and the Trustee's security interest
therein, whether through judicial proceedings or otherwise. All amounts payable
by the Pledgor under this Section 9 shall be due upon demand and shall be part
of the Obligations. The Pledgor's obligations under this Section 9 shall
survive the termination of this Agreement and the discharge of the Pledgor's
other obligations hereunder.
SECTION 10. Amendments in Writing; No Waiver, Cumulative Remedies;
------------------------------------------------------
Reinstatement.
- -------------
SECTION 10.1 Amendments. Subject to the provisions of Article 9
----------
of the Indenture, none of the terms or provisions of this Agreement may be
waived, amended,
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<PAGE>
supplemented or otherwise modified, except by a written instrument executed by
the Pledgor (except as otherwise provided in Section 10.4) and the Trustee;
provided, however, that any provision of this Agreement imposing obligations on
- -------- -------
the Pledgor may be waived by the Trustee in a written instrument executed solely
by the Trustee.
SECTION 10.2 No Waiver; Remedies Cumulative. To the maximum
------------------------------
extent permitted by law, no failure on the part of the Trustee to exercise, no
course of dealing with respect to, and no delay on the part of the Trustee in
exercising, any right, power, privilege or remedy hereunder shall operate as a
waiver thereof or constitute an acquiescence to any default or Event of Default;
nor shall any single or partial exercise of any such right, power, privilege or
remedy hereunder preclude any other or future exercise thereof or the exercise
of any other right, power or remedy. A waiver by the Trustee or any Holder of
any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which the Trustee or such Holder would otherwise have
on any future occasion. To the maximum extent permitted by law, the remedies
herein provided are cumulative and are not exclusive of any remedies provided by
law.
SECTION 10.3 Reinstatement. In the event the Trustee shall have
-------------
instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to the Trustee, then and in every such case, the Pledgor, the Trustee
and each Holder shall be restored to their respective former positions and
rights hereunder with respect to the Collateral, and all rights, remedies and
powers of the Trustee and the Secured Parties shall continue as if no such
proceeding had been instituted.
SECTION 10.4 Additional Pledgors. Upon the execution and delivery
-------------------
to the Trustee by any Person of an Amendment to Issuer Pledge Agreement
(Additional Pledgor) in substantially the form of Annex I hereto (each, an
"Amendment to Issuer Pledge Agreement (Additional Pledgor)"), which Amendment to
Issuer Pledge Agreement (Additional Pledgor) need not be executed by any other
Pledgor, and the acceptance thereof by the Trustee, such Person shall be and
become a Pledgor hereunder, and each reference in this Agreement to the
"Pledgor" shall include such Person and each reference in the Indenture, the
Securities and any other Collateral Document to the "Pledgor" shall include such
Person.
SECTION 11. Appointment as the Trustee. The actions of the Trustee
--------------------------
hereunder are subject to the provisions of the Indenture. The Trustee shall
have the right hereunder to make demands, to give notices, to exercise or
refrain from exercising any rights, and to take or refrain from taking action
(including, without limitation, the release or substitution of Collateral), in
accordance with this Agreement and the Indenture. The Trustee may resign and a
successor Trustee may be appointed in the manner provided in the Indenture.
Upon the acceptance of any appointment as the Trustee by a successor Trustee,
that successor Trustee shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Trustee under this
Agreement, and the retiring Trustee shall thereupon be discharged from its
duties and obligations under this Agreement. After any retiring Trustee's
resignation, the provisions of this Agreement shall inure to its
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<PAGE>
benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was the Trustee.
SECTION 12. The Trustee Appointed Attorney-in-Fact; Proxy; the
--------------------------------------------------
Trustee May Perform; Duty of the Trustee.
- ----------------------------------------
SECTION 12.1 The Trustee Appointed Attorney-in-Fact. The Pledgor
--------------------------------------
hereby irrevocably constitutes and appoints the Trustee and any officer or agent
thereof, with full power of substitution, as its true and lawful attorneys-in-
fact with full irrevocable power and authority in the place and stead of the
Pledgor and in the name of the Pledgor or in its own name, for the purpose of
carrying out the terms of this Agreement to take any and all appropriate action
and to execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, the Pledgor hereby gives the Trustee and any
officer or agent of the Trustee the power and right, on behalf of the Pledgor,
without notice to or assent by the Pledgor, to do any or all of the following:
(a) in the name of the Pledgor or its own name, or otherwise, take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys with respect to
any Collateral and file any claim or take any other action or proceeding in
any court of law or equity or otherwise deemed appropriate by the Trustee
for the purpose of collecting any and all such moneys due with respect to
any Collateral whenever payable;
(b) pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral;
(c) execute, in connection with any sale provided for in Section 7 or
any other sale of Collateral pursuant to this Agreement, any endorsements,
assignments or other instruments of conveyance or transfer with respect to
the Collateral; and
(d) (i) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Trustee or as the Trustee shall direct; (ii) ask
or demand for, collect, receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (iii) commence and prosecute
any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect all or any of the Collateral and to
enforce any other right in respect of any Collateral; (iv) defend any suit,
action or proceeding brought against the Pledgor with respect to any
Collateral; (v) settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, to give such discharges or
releases as the Trustee may deem appropriate; (vi) generally, sell,
transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Trustee
were the absolute owner thereof for all purposes, and do, at the Trustee's
option and the Pledgor's expense, at any time, or from time to time, all
acts and things which the Trustee deems necessary to protect, preserve or
realize upon the Collateral and the Trustee's
14
<PAGE>
and the Holders' security interests therein and to effect the intent of
this Agreement, all as fully and effectively as the Pledgor might do.
The foregoing grant of authority is a power of attorney coupled with
an interest and such appointment shall be irrevocable until this Agreement is
terminated and the security interests created hereby are released. The Pledgor
hereby ratifies all that such attorneys shall lawfully do or cause to be done by
virtue and in accordance with the terms hereof. Anything in this Section to the
contrary notwithstanding, the Trustee agrees that it will not exercise any
rights under the power of attorney provided for in this Section unless an Event
of Default shall have occurred and be continuing.
SECTION 12.2 Proxy. The Pledgor hereby irrevocably grants to the
-----
Trustee the Pledgor's proxy (exercisable if an Event of Default shall have
occurred and be continuing) to vote any Collateral. The proxy granted, and each
stock power and similar power now or hereafter granted (including any evidenced
by a separate writing), are coupled with an interest and shall be irrevocable
until this Agreement is terminated and the security interests created hereby are
released.
SECTION 12.3 The Trustee May Perform. If the Pledgor shall fail
-----------------------
to do any act or thing that it has covenanted to do hereunder or under the
Indenture or if any warranty on the part of the Pledgor contained herein or
under the Indenture shall be breached, the Trustee or any Secured Party may (but
shall not be obligated to), after providing the Pledgor with at least five
Business Days' notice, do the same or cause it to be done or remedy any such
breach, and may expend funds for such purpose. Any and all amounts so expended
by the Trustee or such Secured Party shall be paid by the Pledgor promptly upon
demand therefor, with interest at the Default Rate during the period from and
including the date on which such funds were so expended to the date of
repayment. The Pledgor's obligations under this Section 12.3 shall survive the
termination of this Agreement and the discharge of the Pledgor's other
obligations under this Agreement.
SECTION 12.4 Duty of the Trustee. The Trustee's sole duty with
-------------------
respect to the custody, safekeeping and physical preservation of the Collateral
in its possession, under Section 9-207 of the UCC, Section 6 hereof or
otherwise, shall be to deal with it in the same manner as the Trustee deals with
similar property for its own account. Neither the Trustee, any Holder nor any
of their respective officers, directors, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Pledgor or any other person or to take
any other action whatsoever with regard to the Collateral or any part thereof.
The powers conferred on the Trustee and the Holders hereunder are solely to
protect the Trustee's and the Holders' interests in the Collateral and shall not
impose any duty upon the Trustee or any Holder to exercise any such powers. The
Trustee and the Holders shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any of
their officers, directors, employees or agents shall be responsible to the
Pledgor for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct. Except for the safe custody of any Collateral
in its possession and the accounting for moneys actually received by it
hereunder, the Trustee shall have no duty as to
15
<PAGE>
any Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Trustee has or is deemed to have knowledge of
such matters, or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to reasonable care in the
custody and preservation of any Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which the Trustee accords its
own property. Except as provided in this Section 12.4, the Trustee shall not
have any duty or liability to protect or preserve any Collateral or to preserve
rights pertaining thereto. Nothing contained in this Agreement shall be
construed as requiring or obligating the Trustee or the Holders, and neither the
Trustee nor the Holders shall be required or obligated, to (a) present or file
any claim or notice or take any action, with respect to any Collateral or in
connection therewith or (b) notify the Pledgor of any decline in the value of
any Collateral.
SECTION 12.5 Execution of Financing Statements. Pursuant to
---------------------------------
Section 9-402(2)(e) of the UCC, the Pledgor authorizes the Trustee (subject to
the last sentence of Section 4.2) to file financing statements and continuation
statements with respect to the Collateral without the signature of the Pledgor
in such form and in such filing offices as the Trustee determines appropriate to
perfect the security interests of the Trustee under this Agreement. A carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.
SECTION 12.6 Authority of the Trustee. The Pledgor acknowledges
------------------------
that the rights and responsibilities of the Pledgor under this Agreement with
respect to any action taken by the Trustee or the exercise or non-exercise by
the Trustee of any option, voting right, request, judgment or other right or
remedy provided for herein or resulting or arising out of this Agreement shall,
as between the Trustee and the Holders, be governed by the Indenture and by such
other agreements with respect thereto as may exist from time to time among them,
but, as between the Trustee and the Pledgor, the Trustee shall be conclusively
presumed to be acting as agent for the Holders with full and valid authority so
to act or refrain from acting, and the Pledgor shall be under no obligation, or
entitlement, to make any inquiry respecting such authority. The Trustee may
exercise its rights under this Agreement through an agent or other designee.
SECTION 13. Notices. All notices, requests, demands and other
-------
communication shall be given in the manner set forth in Section 11.2 of the
Indenture and shall be given or delivered to any party at its address specified
pursuant to the Indenture or at such other address or, facsimile or telephone
number or to the attention of such other individual or department as the party
to which such information pertains may hereafter specify for the purpose in a
notice to the other specifically captioned "Notice of Change of Address."
SECTION 14. Continuing Security Interest; Assignment. This Agreement
----------------------------------------
shall create a continuing security interest in the Collateral and shall (a) be
binding upon the Pledgor, its successors and assigns, and (b) inure, together
with the rights and remedies of the Trustee hereunder, to the benefit of the
Trustee (and, to the extent provided herein, any other trustee under a Deed of
Trust) and the other Secured Parties and each of their respective successors,
transferees and assigns; and no other Persons (including, without
16
<PAGE>
limitation, any other creditors of the Pledgor) shall have any interest herein
or any right or benefit with respect hereto. Without limiting the generality of
the foregoing clause (b), any Secured Party may assign or otherwise transfer any
Security or Guarantee held by it secured by this Agreement to any other person,
and such other person shall thereupon become vested with all the benefits in
respect thereof granted to such Secured Party, herein or otherwise, subject
however, to the provisions of the Indenture.
SECTION 15. Release of Collateral. Reference is hereby made to
---------------------
Article 10 of the Indenture for provisions which discuss the release of the
Collateral from the Liens created by this Agreement.
SECTION 16. Termination. When all Obligations have been paid in
-----------
full, this Agreement shall terminate (except as to those provisions which it is
provided herein shall survive such termination) and the Trustee shall forthwith
cause to be assigned, transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining Collateral and
money received in respect thereof, to or on the order of the Pledgor. The
Trustee shall also execute and deliver to the Pledgor upon such termination such
Uniform Commercial Code termination statements and such other documentation as
shall be reasonably requested by the Pledgor to effect the termination and
release of the security interests in the Collateral.
SECTION 17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
SECTION 18. Severability of Provisions. Any provision of this
--------------------------
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 19. Other Security. To the extent that the Obligations are
--------------
now or hereafter secured by property other than the Collateral or by the
guarantee, endorsement or property of any other person, then the Trustee shall
have the right in its sole discretion to pursue, relinquish, subordinate, modify
or take any other action with respect thereto, without in any way modifying or
affecting any of the Trustee's or any Holder's rights and remedies hereunder.
SECTION 20. Execution in Counterparts. This Agreement and any
-------------------------
amendments, waivers, consents or supplements hereto may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original,
but all such counterparts together shall constitute one and the same agreement.
17
<PAGE>
SECTION 21. Headings. The Section and subsection headings used in
--------
this Agreement are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
SECTION 22. Obligations Absolute. All obligations of the Pledgor
--------------------
hereunder shall be absolute and unconditional irrespective of:
(a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of either Issuer;
(b) any lack of validity or enforceability of the Indenture, the
Guarantees, the Securities, any other Collateral Document, or any other
agreement or instrument relating thereto;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Indenture, the
Guarantees, the Securities, any other Collateral Document or any other
agreement or instrument relating thereto (except to the extent specified in
such change, amendment or waiver);
(d) any taking, exchange, release or non-perfection of any other
collateral, or any release or amendment or waiver of or consent to any
departure from any guarantee, for all or any of the Obligations;
(e) any exercise or non-exercise, or any waiver of any right, remedy,
power or privilege under or in respect of this Agreement, the Indenture,
the Guarantees, the Securities, any other Collateral Document, or any other
agreement or instrument relating thereto, except as specifically set forth
in a waiver granted pursuant to the provisions of the Indenture;
(f) any manner of application of collateral, or proceeds thereof, to
all or any of the Obligations, or any manner of sale or other disposition
of any collateral for all or any of the Obligations or any other
obligations of the Issuers, or either of them, under the Indenture, the
Securities or any other Collateral Document or any other assets of either
Issuer or any of their respective Subsidiaries;
(g) any change, restructuring or termination of the corporate
structure or existence of either Issuer or any of their respective
Subsidiaries;
(h) any failure of the Trustee or any Secured Party to disclose to
either Issuer any information relating to the financial condition,
operations, properties or prospects of the other Issuer now or in the
future known to the Trustee or any other Secured Party (the Pledgor hereby
waiving any duty on the part of the Trustee and any other Secured Party to
disclose such information); or
(i) any other circumstance (including, without limitation, any statute
of limitations) or any existence of or reliance on any representation by
the Trustee or
18
<PAGE>
any other Secured Party that might otherwise constitute a defense available
to, or a discharge of, either Issuer, or any guarantor or surety.
SECTION 23. Waiver of Marshaling. The Pledgor for itself and for all
--------------------
persons hereafter claiming through or under it or who may at any time hereafter
become holders of liens junior to the liens granted under this Agreement, hereby
expressly waives and releases all rights to direct the order in which any of the
Collateral shall be sold in the event of any sale or sales pursuant hereto and
to have any of the Collateral and/or any other property now or hereafter
constituting security for any of the obligations secured hereunder marshaled
upon the exercise of any remedies under this Agreement or any other agreement
granting security for the obligations secured hereunder.
SECTION 24. Independence of Covenants. All covenants hereunder shall
-------------------------
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a default if such action is taken or condition
exists.
SECTION 25. Savings Clause. It is the intention of the parties to
--------------
conform strictly to the usury laws, whether state or federal, that are
applicable to the transaction of which this Agreement is a part. All agreements
between the Issuers, or either of them, and the Trustee, whether now existing or
hereafter arising and whether oral or written, are hereby expressly limited so
that in no contingency or event whatsoever shall the amount paid or agreed to be
paid by the Issuers for the use, forbearance or detention of the money to be
loaned or advanced under the Indenture, the Securities, the Guarantees, this
Agreement, any other Collateral Document, or any other agreement or instrument
relating thereto, or for the payment or performance of any covenant or
obligation contained herein or therein, exceed the maximum amount permissible
under applicable federal or state usury laws. If under any circumstances
whatsoever fulfillment of any such provision, at the time performance of such
provision shall be due, shall involve exceeding the limit of validity prescribed
by law, then the obligation to be fulfilled shall be reduced to the limit of
such validity. If under any circumstances the Issuers, or either of them, shall
have paid an amount deemed interest by applicable law, which would exceed the
highest lawful rate, such amount that would be excessive interest under
applicable usury laws shall be applied to the reduction of the principal amount
owing in respect of the Obligations and not to the payment of interest, or if
such excessive interest exceeds the unpaid balance of principal and any other
amounts due hereunder, the excess shall be refunded to the Issuers. All sums
paid or agreed to be paid for the use, forbearance or detention of the principal
under any extension of credit or advancement of funds by the Trustee or any
Holder, shall, to the extent permitted by applicable law, and to the extent
necessary to preclude exceeding the limit of validity prescribed by law, be
amortized, prorated, allocated and spread from the date of this Agreement until
payment in full of the Obligations so that the actual rate of interest on
account of such principal amounts is uniform throughout the term hereof.
SECTION 26. Certain Waivers by the Pledgor. The Pledgor waives (a)
------------------------------
any claim that, as to any part of the Collateral, a public sale, should the
Trustee elect so to proceed, is, in and of itself, not a commercially reasonable
method of sale for such
19
<PAGE>
Collateral, (b) except as otherwise provided in this Agreement, to the fullest
extent not prohibited by applicable laws, notice or judicial hearing in
connection with the Trustee's disposition of any of the Collateral including any
and all prior notice and hearing for any pre-judgment remedy or remedies and any
such right that the Pledgor would otherwise have under the Constitution or any
statute of the United States or of any state, and all other requirements as to
the time, place and terms of sale or other requirements with respect to the
enforcement of the Trustee's rights hereunder, (c) all rights of redemption,
appraisal or valuation, and (d) all rights and defenses arising out of an
election of remedies by any Secured Party, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for a
guaranteed obligation, has destroyed the Pledgor's rights of subrogation and
reimbursement against the principal.
SECTION 27. WAIVER OF JURY TRIAL. THE TRUSTEE AND THE PLEDGOR HEREBY
--------------------
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDINGS INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP
ESTABLISHED HEREUNDER.
SECTION 28. Entire Agreement. This written agreement represents the
----------------
final agreement between the parties with respect to the subject matter hereof
and may not be contradicted by evidence of prior, contemporaneous, or subsequent
oral agreements of the parties with respect to the subject matter hereof. There
are no unwritten oral agreements among the parties with respect to the subject
matter hereof.
SECTION 29. Gaming Laws. The terms and provisions of this Agreement,
-----------
including, but not limited to, all rights and remedies of the Trustee and powers
of attorney and appointment, are expressly subject to all laws, statutes,
regulations and orders affecting limited gaming or the sale of liquor
(collectively, the "Gaming Laws"), in the State of Colorado, which may include,
but not be limited to, the necessity for the Trustee to obtain the prior
approval of the regulatory agencies enforcing the Gaming Laws before taking any
action hereunder and to be licensed by such regulatory agencies before
exercising certain rights and remedies hereunder.
20
<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Trustee have caused this
Issuer Pledge Agreement to be executed and delivered by their duly authorized
officers as of the date first above written.
ISLE OF CAPRI BLACK HAWK L.L.C.
By: /s/ Allan B. Solomon
---------------------------------
Name: Allan B. Solomon
----------------------------
Title: Secretary
---------------------------
By: /s/ H. Thomas Winn
----------------------------------
Name: H. Thomas Winn
----------------------------
Title: Vice President
---------------------------
IBJ SCHRODER BANK & TRUST
COMPANY, as Trustee
By: /s/ William T. Lynch
---------------------------------
Name: William T. Lynch
----------------------------
Title: Vice President
---------------------------
Acknowledged as to Section 25
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
By: /s/ Allan B. Solomon
-------------------------------------
Name: Allan B. Solomon
-------------------------------
Title: Secretary
-------------------------------
<PAGE>
SCHEDULE 1
PART I - PLEDGED SHARES
-----------------------
<TABLE>
<CAPTION>
Number and Class of Certificate Percentage
Pledgor Issuer Shares Number(s) Interest
- --------------- ------------- -------------------- -------------- -----------
<S> <C> <C> <C> <C>
Isle of Capri Isle of Capri 100 shares of Common 1 100%
Black Hawk Black Hawk Stock, No Par Value
L.L.C. Capital
Corp.
</TABLE>
PART II - PLEDGED DEBT
----------------------
NONE
A-1
<PAGE>
SCHEDULE 2
FILINGS AND REGISTRATIONS
1. UCC-1 Financing Statement describing the Collateral and naming the Pledgor
as debtor and the Trustee as secured party to be filed with the Secretary
of State of the State of Mississippi.
2. UCC-1 Financing Statement describing the Collateral and naming the Pledgor
as debtor and the Trustee as secured party to be filed with the Chancery
Court of the County of Harrison, in the State of Mississippi.
3. UCC-1 Financing Statement describing the Collateral and naming the Pledgor
as debtor and the Trustee as secured party to be filed with the Secretary
of State of the State of Colorado.
4. UCC-1 Financing Statement describing the Collateral and naming the Pledgor
as debtor and the Trustee as secured party to be filed with the Secretary
of State of the State of New York.
A-2
<PAGE>
SCHEDULE 3
BUSINESS OR TRADE NAMES
Pledgor uses the following business or trade names:
(a) Isle of Capri Black Hawk L.L.C.
(b) Isle of Capri
(c) Island Gold
(d) Calypso's
(e) Farraday's
(e) Isle Style
A-3
<PAGE>
ANNEX I
FORM OF
AMENDMENT TO ISSUER PLEDGE AGREEMENT
(ADDITIONAL PLEDGOR)
This Amendment to Issuer Pledge Agreement (Additional Pledgor) (this
"AMENDMENT"), dated as of [________ ___, 19__], relates to the Issuer Pledge
- ----------
Agreement dated as of August __, 1997, as amended, modified and supplemented to
date (as so amended, supplemented or modified, the "AGREEMENT") executed by Isle
---------
of Capri Black Hawk L.L.C., the "PLEDGOR") in favor of IBJ Schroder Bank & Trust
-------
Company, as trustee (the "TRUSTEE") for the benefit of the Secured Parties (as
-------
defined in the Agreement).
In compliance with Section 4.17 of the Indenture dated as of August
__, 1997 (as amended, supplemented or otherwise modified from time to time, the
"INDENTURE") among the Pledgor, Isle of Capri Black Hawk Capital Corp. and the
---------
Trustee, [NAME OF SUBSIDIARY] the ("ADDITIONAL PLEDGOR") and the Trustee hereby
------------------
agree as follows (capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to them in the Agreement):
(a) AMENDMENT. The Agreement is hereby amended to add as a party, and
---------
more specifically, as a Pledgor thereunder, the Additional Pledgor.
(b) REPRESENTATIONS AND WARRANTIES. The Additional Pledgor represents
------------------------------
and warrants to the Trustee and each other Secured Party that each of the
representations and warranties of a Pledgor contained in the Agreement is hereby
made by the Additional Pledgor and is true and correct as to the Additional
Pledgor. All capital stock owned or otherwise held by the Additional Pledgor in
each Subsidiary, if any, of the Additional Pledgor is set forth on the
supplement to Schedule 1 to the Issuer Pledge Agreement attached hereto.
(c) GRANT OF SECURITY INTEREST. The Additional Pledgor hereby grants,
--------------------------
pledges, assigns and transfers to the Trustee, for the Trustee's individual
benefit and the ratable benefit of the Holders, as security for the prompt and
complete payment and performance when due (whether at stated maturity, upon
redemption or required repurchase, by acceleration or otherwise) of all the
Obligations, a continuing first priority security interest in and lien on all of
the right, title and interest of the Additional Pledgor, to and under all types
and items of property of the Additional Pledgor within the definition of
Collateral (as defined in the Agreement), in each case wherever located, whether
now owned or at any time hereafter acquired by the Additional Pledgor, whether
now existing or hereafter coming into existence, or in which the Additional
Pledgor now has or at any time in the future may acquire any right, title or
interest.
(d) SCHEDULE SUPPLEMENTS. The Additional Pledgor has attached hereto
--------------------
supplements to Schedules 1 through 3 to the Agreement, and the Additional
Pledgor hereby certifies that such supplements have been prepared by the
Additional Pledgor in substantially the form of the Schedules to the Agreement
and are accurate and complete as of the date first above written.
A-4
<PAGE>
(e) ASSUMPTION OF RIGHTS, OBLIGATIONS AND LIABILITIES. The Additional
-------------------------------------------------
Pledgor assumes all of the rights, obligations and liabilities of a Pledgor
under the Agreement and agrees to be bound thereby as if the Additional Pledgor
were an original party to the Agreement. Without limiting the generality of the
foregoing, the Additional Pledgor hereby waives notice of the creation, advance,
increase, existence, extension, or renewal of, or of any indulgence with respect
to, the Obligations; waives presentment, demand, notice of dishonor, and
protest; waives notice of the amount of the Obligations outstanding at any time,
notice of any change in financial condition of the Pledgor or any other
Guarantors, notice of any default or Event of Default, and all other notices
respecting the Obligations (except for any such notices that are required to be
given to such Additional Pledgor pursuant to the other provisions of this
Agreement or the provisions of the Securities, the Indenture or any other
Collateral Document); and agrees that maturity of the Obligations and any part
thereof may be accelerated, extended, or renewed one or more times by the
Holders, in its or their discretion, without notice to such Additional Pledgor.
(f) EFFECTIVENESS. This Amendment shall become effective on the date
-------------
hereof upon the execution hereof by the Additional Pledgor and the Trustee and
delivery hereof to the Trustee.
(g) GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE
-------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.
[ADDITIONAL PLEDGOR]
By: ____________________________
Name:
Title:
Address for Notice:
_________________________________
_________________________________
Attn:____________________________
Telephone:_______________________
Telecopy:________________________
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By:______________________________
Name:
Title:
A-5
<PAGE>
EXHIBIT 4.9
COLLATERAL ASSIGNMENT
---------------------
THIS COLLATERAL ASSIGNMENT (as amended, supplemented or otherwise modified
from time to time, this "ASSIGNMENT") is made as of August 20, 1997, by and
between ISLE OF CAPRI BLACK HAWK L.L.C., a Colorado limited liability company
(the "COMPANY"), ISLE OF CAPRI BLACK HAWK CAPITAL CORP., a Colorado corporation
("CAPITAL CORP", and, together with the Company, the "ISSUERS"), in favor of IBJ
SCHRODER BANK AND TRUST COMPANY, a New York banking corporation, as trustee (the
"TRUSTEE") for the benefit of itself and the holders of the Notes (as defined
below).
RECITALS
--------
A. NOTES. Pursuant to that certain Indenture dated as of August 20, 1997
-----
(as amended, supplemented or otherwise modified from time to time, the
"INDENTURE"), by and between the Issuers and the Trustee, the Issuers shall
issue $75,000,000 principal amount of 13% First Mortgage Notes due 2004 With
Contingent Interest (the "Original Notes," and together with any New Notes
issued in exchange therefor, the "NOTES"). Capitalized terms used herein
without definition shall have the meanings assigned to such terms in the
Indenture.
B. PURPOSE. In order to induce the holders of the Notes to enter into
-------
the transactions contemplated by the Indenture, the parties have entered into
this Assignment to evidence each Issuer's collateral assignment for security of
certain contracts and documents related to the design, construction and
operation of the Capri-Black Hawk.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing premises and in order to
induce the holders of the Notes to purchase the Notes, the Issuers agree as
follows:
1. ASSIGNMENT. As security for the due and punctual payment and
----------
performance of all indebtedness and obligations of the Issuers, now or hereafter
due under the Indenture, the Notes or any Collateral Documents, whether or not
arising after the commencement of a proceeding under Bankruptcy Law (including
post-petition interest) and whether or not recovery of any such obligation or
liability may be barred by a statute of limitations or prescriptive period or
such obligation or liability may otherwise be unenforceable (collectively, the
"OBLIGATIONS"), each Issuer hereby assigns and transfers to the Trustee and
hereby grants to the Trustee a security interest in all of such Issuer's right,
title and interest, to the extent assignable and transferable, whether now
existing or hereafter arising and whether now owned or hereafter acquired, where
ever located, in and to (a) all contracts, including, without limitation,
construction contracts and architectural design, engineering and development
contracts and agreements, subcontracts, service agreements, supply agreements
and other such contracts and agreements between the Issuers, or either of them,
and other persons, and all amendments, modifications, additions and changes
thereto, related to the Isle-Black Hawk, (b) all plans, specifications,
engineering reports, soil and environmental reports, site plans, surveys,
working
<PAGE>
drawings, shop drawings, other reports, drawings and plans and other such
documents, and all amendments, modifications, supplements, general conditions,
addenda, additions and changes thereto, related to the Isle-Black Hawk, (c) the
Management Agreement and the License Agreement, dated as of July 29, 1997,
between Casino America, Inc. and the Company, (d) all other contracts,
agreements, documents and instruments now existing or hereafter arising related
to the Isle-Black Hawk, including, without limitation, any and all construction,
architectural and engineering contracts, plans and specifications, drawings, and
surveys, bonds, permits, licenses and other governmental approvals and all other
Plans (collectively, the "CONTRACTS AND DOCUMENTS"), and (e) all proceeds of the
foregoing, including (i) whatever is now or hereafter receivable or received
upon the sale, exchange, collection or other disposition of any of the Contracts
and Documents, whether voluntary or involuntary, (ii) any such items which are
now or hereafter acquired with any proceeds of Contracts and Documents, and
(iii) any insurance or payments under any indemnity, warranty or guaranty now or
hereafter payable by reason of loss or damage or otherwise with respect to any
Contracts and Documents or any proceeds thereof. Notwithstanding the foregoing,
the Contracts and Documents shall not include any license, permit or other
approval of or by any Governmental Authority to the extent that, under the terms
and conditions of such approval or under applicable law, it cannot be subjected
to a Lien in favor of the Trustee without the approval of the relevant
Governmental Authority, to the extent that such approval has not been obtained
(collectively, the "EXCLUDED ASSETS"); provided, further, that (i) any such
-------- -------
Excluded Asset now or hereafter acquired by either Issuer shall automatically
become part of the Contracts and Documents when and to the extent it may
subsequently be made subject to such a lien and/or such approval has been
obtained and (ii) proceeds of any Excluded Assets shall nevertheless be subject
to the assignment hereunder. The Contracts and Documents include, without
limitation, those certain contracts and agreements described in Exhibit "A"
-----------
attached hereto.
2. RIGHTS OF THE ISSUERS. This Assignment is an absolute assignment for
---------------------
security purposes only. Accordingly, notwithstanding anything to the contrary
set forth herein, each Issuer is hereby granted a license and shall retain all
rights with respect to the Contracts and Documents, including without
limitation, the right to enforce all rights of such Issuer thereunder, except
during a period when an "Event of Default" (as such term is defined in the
Indenture) has occurred and is continuing.
3. REPRESENTATIONS AND WARRANTIES OF THE ISSUERS. As of the date hereof,
---------------------------------------------
each Issuer represents and warrants to the Trustee (a) that it has not assigned
or granted a security interest in any of the Contracts and Documents or the
proceeds thereof to anyone other than the Trustee, and (b) that it is not in
material default and that no event has occurred that with notice or lapse of
time or both would constitute a default by such Issuer, or to its knowledge any
other party, under any of the material Contracts and Documents; provided that it
--------
is expressly agreed that each of the Contracts and Documents described in
Exhibit "A" is material.
- -----------
4. COVENANTS OF THE ISSUERS. Each Issuer covenants and agrees in favor
------------------------
of the Trustee (a) that it will not further assign, encumber or suffer the
assignment or encumbrance of any of the Contracts and Documents or the proceeds
thereof without the prior written consent of the Trustee pursuant to or as
expressly permitted under the Indenture, (b) that it will comply with Section
6.17 of the Security Agreement dated as of the date hereof, by the Issuers in
favor
2
<PAGE>
of Trustee that it will not modify, amend, supplement or in any way join in the
release or discharge of any obligations or rights of such Issuer under any of
the Contracts and Documents to which it is a party in any material way that is
adverse to the holders of the Notes, in the case of Contracts and Documents the
amendment of which are governed by the Cash Collateral and Disbursement Agent
(i) such change complies with the terms of the Cash Collateral and Disbursement
Agreement, and (ii) the Independent Construction Consultant under the Cash
Collateral and Disbursement Agreement consents to such change in writing to the
extent provided for in Cash Collateral and Disbursement Agreement, and (c)
except as otherwise expressly provided in the Indenture, that it will not
perform any work pursuant to any change order or directive, unless the same is
issued and executed in accordance with the terms and conditions of the
applicable Contract or Document and the Cash Collateral and Disbursement
Agreement.
5. LIMITATION OF TRUSTEE'S OBLIGATIONS. Nothing in this Assignment shall
-----------------------------------
constitute an assumption of any obligation by the Trustee under the Contracts
and Documents. The Issuers shall continue to be liable for all obligations
thereunder and hereby agrees to perform all such obligations, to comply with all
terms and conditions of the Contracts and Documents, and to take such steps as
may be necessary or appropriate to secure performance by all other parties
thereto. The Issuers shall defend, indemnify and hold the Trustee harmless from
and against all losses, costs, liabilities and expenses, including attorneys'
fees, arising from or related to any failure by the Issuers to perform any
obligation of the Issuers under any of the Contracts and Documents, such
indemnity and hold harmless agreement to survive the payment and performance of
the Obligations.
6. CURE BY TRUSTEE. At any time upon and during the continuation of an
---------------
Event of Default, the Trustee shall have the right, but shall have no
obligation, to take all actions that the Trustee may determine to be necessary
or appropriate to cure any default under any of the Contracts and Documents and
to protect the rights of the Issuers or the Trustee thereunder, and may do so in
the Trustee's name, in the name of the Issuers or otherwise. If any such action
taken by the Trustee shall prove to be inadequate or invalid in whole or in
part, the Trustee shall not incur any liability on account thereof, and each
Issuer hereby agrees to defend, indemnify and hold the Trustee harmless from and
against all losses, costs, liabilities and expenses, including reasonable
attorneys' fees, which the Trustee may incur or to which it may become subject
in exercising any of its rights under this Assignment, except for those arising
from the gross negligence or willful misconduct of the Trustee, such indemnity
and hold harmless agreement to survive the payment and performance of the
Obligations.
7. RIGHTS AND REMEDIES. Upon the occurrence of an Event of Default under
-------------------
the Indenture, irrespective of whether a notice of default has been given with
respect to such or Event of Default (unless required by the Indenture), and with
or without bringing any action or proceeding, the Trustee may, at its option,
succeed to and proceed to enforce all of the rights, interests and remedies of
the Issuers under the Contracts and Documents, amend, modify, cancel, terminate
or replace the same, reassign the Issuers' right, title and interest therein to
any other person, and exercise any and all other rights of the Issuers under the
Contracts and Documents, either in person or through an agent, receiver or
keeper, without further notice to or consent by the Issuers, and without regard
to the adequacy of security for the Obligations or
3
<PAGE>
the availability of any other remedies. The exercise of any of the foregoing
rights or remedies shall not cure or waive any Default under the Indenture or
any other Collateral Document, or waive, modify or affect any notice of default
thereunder, or invalidate any act done pursuant to any such notice. In addition
to the rights and remedies of the Trustee as set forth in this Assignment, the
Trustee shall be entitled to the benefit of all other rights and remedies set
forth in the Indenture and the other Collateral Document, at law or in equity.
8. ADDITIONAL INSTRUMENTS. With respect to both existing and future
----------------------
Contracts and Documents, the Issuers hereby agree to execute and deliver such
additional assignments and other documents as the Trustee may reasonably request
in order to implement the provisions of this Assignment.
9. MISCELLANEOUS; GOVERNING LAW. This Assignment shall inure to the
----------------------------
benefit of and be binding upon the parties hereto and their respective heirs,
legal representatives, successors and assigns. In any action or proceeding
arising from or related to this Assignment, the prevailing party shall be
entitled to recover its reasonable costs and attorneys' fees. The reference to
"attorneys' fees" in this Assignment shall include, without limitation, such
reasonable amounts as may then be charged by the Trustee for legal services
furnished by attorneys in the employ of the Trustee, at rates not exceeding such
reasonable rates that would be charged by outside attorneys for comparable
services. This Assignment shall be governed by the laws of the State of New
York, except to the extent that perfection and enforcement of the security
interests and assignment hereunder are governed by the laws of another
jurisdiction.
10. GAMING LAWS AND REGULATIONS. Each Issuer acknowledges that, to the
---------------------------
extent required under applicable law, the consummation of the transactions
contemplated hereby and the exercise of remedies hereunder may be subject to the
Colorado Limited Gaming Act and the regulations promulgated pursuant to each
such law, all as amended from time to time. The parties hereto further
acknowledge that the Gaming License held by the Issuers is not part of the
collateral of this Assignment and that, under the above described legislation
and rules promulgated thereunder, the Trustee may be precluded from or otherwise
limited in taking possession of or in selling the collateral of this Assignment
under the Defaults and Remedies provisions of this Assignment. The parties
hereto also acknowledge that due to various legal restrictions, including,
without limitation, licensing of operators of gaming facilities and prior
approval of the sale or disposition of assets of a licensed gaming operation,
the sale of collateral may be denied by Gaming Authorities or delayed pending
approval of Gaming Authorities.
11. SEVERABILITY. If any provision or obligation of this Assignment
------------
should be found to be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions and
obligations or any other agreement executed in connection herewith, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby and shall nonetheless remain in full force and
effect to the maximum extent permitted by law.
12. CONFLICTS WITH INDENTURE. Notwithstanding any other provision of this
------------------------
Assignment, the terms and provisions of this Assignment shall be subject and
subordinate to the terms of the Indenture. To the extent that the Indenture
provides the Issuers with a particular
4
<PAGE>
cure or notice period, or establishes any limitations or conditions on Trustee's
actions with regard to a particular set of facts, the Issuers shall be entitled
to the same cure periods and notice periods, and Trustee shall be subject to the
same limitations and conditions in place of the cure periods, notice periods,
limitations and conditions provided for under the Indenture; provided, however,
-------- -------
that such cure periods, notice periods, limitations and conditions shall not be
cumulative as between the Indenture and this Assignment. In the event of any
conflict or provisions of this Assignment 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.
Capitalized terms used herein and not otherwise defined shall have the same
meaning as in the Indenture.
5
<PAGE>
IN WITNESS WHEREOF, the Issuers have executed this Collateral Assignment as
of the date first above written.
ISSUERS:
-------
ISLE OF CAPRI BLACK HAWK L.L.C., a Colorado
limited liability company
By: /s/ Allan B. Solomon
-------------------------------------
Name: Allan B. Solomon
-----------------------------------
Title: Secretary
----------------------------------
By: /s/ H. Thomas Winn
-------------------------------------
Name: H. Thomas Winn
-----------------------------------
Title: Vice President
----------------------------------
ISLE OF CAPRI BLACK HAWK CAPITAL CORP., a Colorado
corporation
By: /s/ Allan B. Solomon
-------------------------------------
Name: Allan B. Solomon
-----------------------------------
Title: Secretary
----------------------------------
ACKNOWLEDGED AND AGREED
- -----------------------
IBJ SCHRODER BANK AND TRUST COMPANY,
a New York banking corporation
By: /s/ William T. Lynch
------------------------------------
Name: William T. Lynch
----------------------------------
Title: Vice President
---------------------------------
<PAGE>
COLLATERAL ASSIGNMENT
EXHIBIT "A"
CONTRACTS AND DOCUMENTS
-----------------------
1. License Agreement dated July 29, 1997 between Casino America, Inc. and the
Company.
2. Subdivision Agreement to be entered into between the City of Black Hawk and
the Company.
3. Design/Build Agreement dated July 22, 1997 between Haselden Construction,
Inc. and the Company.
4. Amended and Restated Management Agreement between Casino America, Inc. and
the Company.
A-1
<PAGE>
EXHIBIT 4.10
PLEDGE AND ASSIGNMENT
---------------------
THIS PLEDGE AND ASSIGNMENT (as amended, supplemented or otherwise
modified from time to time, the "AGREEMENT") is made and entered into as of
---------
August 20, 1997, by ISLE OF CAPRI BLACK HAWK L.L.C., a Colorado limited
liability company (the "COMPANY"), whose address is 711 Washington Loop,
-------
Biloxi, Mississippi 39350 (fax no.: (601) 435-5998) and ISLE OF CAPRI BLACK
HAWK CAPITAL CORP., a Colorado corporation ("CAPITAL CORP" and, together with
------------
the Company, each a "PLEDGOR" and collectively the "PLEDGORS"), whose address is
------- --------
711 Washington Loop, Biloxi, Mississippi 39350 (fax no.: (601) 435-5998), in
favor of IBJ SCHRODER BANK & TRUST COMPANY, a New York banking corporation, as
trustee (the "SECURED PARTY") pursuant to the Indenture referred to below, whose
-------------
address is One State Street, New York, New York 10004 (fax no.: (212) 858-2952).
WITNESSETH
----------
WHEREAS, the Pledgors and the Secured Party have entered into that
certain Indenture dated as of the date hereof (as amended, supplemented or
otherwise modified from time to time, the "INDENTURE"), pursuant to which the
---------
Pledgors are issuing their 13% First Mortgage Notes due 2004 With Contingent
Interest (such notes, together with any notes issued in replacement thereof or
in exchange therefor, the "NOTES"), in the aggregate principal amount of
-----
$75,000,000;
WHEREAS, the Pledgors and the Secured Party have entered into that
certain Cash Collateral and Disbursement Agreement dated as of August 20, 1997
(as amended, supplemented or otherwise modified from time to time, the
"DISBURSEMENT AGREEMENT"), with IBJ Schroder Bank & Trust Company, as
- -----------------------
disbursement agent (in such capacity and together with any successors in such
capacity, the "AGENT") and the independent construction consultant named
-----
therein, providing for (i) the Pledgors to deposit certain of the proceeds of
the issuance of the Notes into certain accounts to be held by the Agent in trust
for the benefit of the Pledgors and pledged to the Secured Party for the benefit
of itself and the ratable benefit of the holders from time to time of the Notes
(the "HOLDERS") and (ii) the terms and conditions for the disbursement of funds
-------
held in such accounts. When capitalized and used herein, terms defined in the
Disbursement Agreement and not otherwise defined herein shall have the meanings
ascribed to them in the Disbursement Agreement;
WHEREAS, the Pledgors are the owners of the securities (the "PLEDGED
-------
SECURITIES") and accounts (the "PLEDGED ACCOUNTS") each listed on Schedule 1
- ---------- ---------------- ----------
attached hereto;
WHEREAS, each such Pledged Security falls within the definition of
Investment Grade Securities or Government Securities utilized in the
Disbursement Agreement, and each such Pledged Account constitutes a brokerage or
deposit account maintained at a bank or broker acceptable to the Secured Party;
and
<PAGE>
WHEREAS, it is a condition precedent to the purchase of the Notes that
the Pledgors shall have executed and delivered this Agreement to the Secured
Party for itself and the ratable benefit of the Holders to secure the payment
and performance of the Obligations (as hereinafter defined).
AGREEMENT
---------
NOW, THEREFORE, in consideration of the premises and in order to
induce the Secured Party to enter into the Indenture and to induce the Holders
to purchase the Notes, the Pledgors hereby agree with the Secured Party for its
benefit and the ratable benefit of the Holders as follows:
1. Pledge. Each Pledgor hereby pledges and assigns to the Secured
------
Party for its benefit and the ratable benefit of the Holders, and grants to the
Secured Party for its benefit and the ratable benefit of the Holders, a security
interest in the following collateral (the "PLEDGED COLLATERAL"):
------------------
(a) all of such Pledgor's right, title and interest in and to the
Pledged Accounts and the Pledged Securities, together with all additions to,
replacements of or substitutions for such Pledged Accounts and Pledged
Securities and other assets, and all income, interest, and dividends (stock or
otherwise) thereon;
(b) all cash, instruments and other rights, property or proceeds
or products from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Accounts or the Pledged
Securities;
(c) all deeds of trust and other security (including, without
limitation, rights under guarantees or against third parties) for any
indebtedness owed under the Pledged Securities;
(d) all other claims of any kind or nature (including, without
limitation, any claims of such Pledgor against any person or entity liable upon
or for the payment of any of the foregoing), and any instruments, certificates,
chattel paper or other writings evidencing such claims, whether in contract or
tort and whether arising by operation of law, consensual agreement or otherwise,
at any time acquired by such Pledgor as owner of any Pledged Account or Pledged
Security; and
(e) to the extent not included in any of the foregoing, all
proceeds and products of the foregoing.
2. Security for Obligations. The security interest in the Pledged
------------------------
Collateral granted pursuant to this Agreement secures and shall hereafter secure
the payment and performance in full when due (whether at stated maturity, upon
redemption or required repurchase, by acceleration or otherwise) of all
obligations of every type and nature of the
2
<PAGE>
Pledgors to the Secured Party, any other trustee under the Deed of Trust, or any
Holder (including, without limitation, any and all amounts which may at any time
be or become due and payable and any and all interest accruing after the
maturity of the Notes and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Pledgors, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding and interest, to the extent
permitted by law, on the unpaid interest), whether direct or indirect, absolute
or contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, the Indenture, the Notes,
the Completion Capital Commitment, this Agreement, the other Collateral
Documents, or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, premium, interest,
fees, Liquidated Damages, indemnities, costs, expenses or otherwise (including,
without limitation, all fees and disbursements of counsel (including, without
limitation, in-house counsel) to the Secured Party or to the Holders that are
required to be paid by the Pledgors pursuant to the terms of the Indenture, the
Notes, the Completion Capital Commitment, this Agreement, any other Collateral
Document, or any other document entered into by the Pledgors, or either of them,
in connection with any of the foregoing (collectively, the "OBLIGATIONS"). All
-----------
payments and performance by the Pledgors with respect to any Obligations shall
be in accordance with the terms under which said indebtedness, obligations and
liabilities were or are hereafter incurred or created.
3. Perfection of Security Interest. Each Pledgor shall take all
-------------------------------
steps necessary or appropriate in order to evidence, perfect and protect the
security interest herein granted to the Secured Party as a first priority
security interest in the Pledged Collateral. Such steps shall include, without
limitation, the following:
(a) Certificated Securities. With respect to any Pledged
-----------------------
Collateral consisting of certificated securities, any of the following:
(i) Each Pledgor shall deliver, or cause to be delivered,
all certificates or instruments representing or evidencing the Pledged
Collateral to and to be held by or on behalf of the Secured Party pursuant
hereto in suitable form for transfer by delivery, or endorsed to the Secured
Party or accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Secured Party.
(ii) With respect to any such Pledged Collateral credited
to or on deposit in a Pledged Account, each Pledgor shall execute and deliver a
Notice of Security Interest substantially in the form of Exhibit A attached
---------
hereto to IBJ Schroder Bank & Trust Company or such other bank or broker
maintaining the Pledged Account and shall cause the Secured Party to have
received a Confirmation from said bank or broker substantially in the form
attached hereto as Exhibit B.
---------
(b) Federal Book-Entry Securities. With respect to any Pledged
-----------------------------
Collateral consisting of "Federal Book-Entry Securities" (as hereinafter
defined), the Pledgor: (i) shall execute and deliver a Notice of Security
Interest substantially in the form attached hereto as Exhibit A to a financial
---------
institution which is acceptable to the Secured Party in its sole
3
<PAGE>
discretion and is capable of maintaining a book-entry account with a Federal
"Reserve Bank" or a "Federal Reserve Bank" (as such terms are defined in the
Code of Federal Regulations (the "C.F.R.") Title 12, Sections 615.5450(i),
------
912.1(e), 950.4(b) and 1511.1, Title 18 Section 1314.2(k), Title 24, Section
81.91 and 12 U.S.C. (S) 4502, Title 31, Sections 306.115(a) and 354.1(g); and
(ii) shall cause the Secured Party to have received a Confirmation from said
financial institution substantially in the form attached hereto as Exhibit B.
---------
For purposes of this Agreement, a "FEDERAL BOOK-ENTRY SECURITY" means any of the
---------------------------
following: a Book-entry Security (i.e. a Book-entry Farm Credit Security) as
----
such term is defined in 12 C.F.R. (S) 615.5450(b), a Book-entry Financial
Assistance Corporation Security as referenced in 12 C.F.R. (S) 615.5560(c), a
Book-entry Federal Home Loan Bank Security as such term is defined in 12 C.F.R.
(S) 912.1(b), a Book-entry Financing Corporation Obligation as defined in 12
C.F.R. (S) 950.4(b), a Book-entry Funding Corporation Security as such term is
defined in 12 C.F.R. (S) 1511.1, a Book-entry TVA Power Security as such term is
defined in 18 C.F.R. (S) 1314.2(b), a Book-entry GSE Security as such term is
defined in 24 C.F.R. (S) 81.2, an Eligible Book-entry Sallie Mae Security as
such term is defined in 31 C.F.R. (S) 354.1(e), or a Book-entry Security (i.e. a
----
Book-entry Treasury Security) as such term is defined in 31 C.F.R. (S) 357.2.
(c) Non Revised Article 8 Federal Book-Entry Securities. With
---------------------------------------------------
respect to any Pledged Collateral consisting of "Non Revised Article 8 Federal
Book-Entry Securities" (as hereinafter defined), the Pledgor: (i) shall execute
and deliver a Notice of Security Interest substantially in the form attached
hereto as Exhibit A to a financial institution which is acceptable to the
---------
Secured Party in its sole discretion and is capable of maintaining a book-entry
account with a Federal "Reserve Bank" (as such term is defined in 7 C.F.R. (S)
1901.503(b)(1) and 39 C.F.R. (S) 761.1); and (ii) shall cause the Secured Party
to have received a Confirmation from said financial institution substantially in
the form attached hereto as Exhibit B. For purposes of this Agreement, a "NON
--------- ---
REVISED ARTICLE 8 FEDERAL BOOK-ENTRY TREASURY SECURITY" means a Book-entry FmHA
- ------------------------------------------------------
as such term is defined in 7 C.F.R. 1901.503(b)(4) or a Book-entry Postal
Service security as such term is defined in 39 C.F.R. (S) 761.1(d).
(d) Other Non-Federal Uncertificated Securities. With respect to
-------------------------------------------
any Pledged Collateral consisting of any uncertificated securities (other than
securities issued by the federal government or any agency or instrumentality
thereof for which a federal statute or regulation provides a method of
perfection of a security interest which is different from the Uniform Commercial
Code then in effect in the State of New York (the "CODE")), the Pledgor shall
----
execute and deliver a Notice of Security Interest substantially in the form
attached hereto as Exhibit A to a bank or broker which is acceptable to the
---------
Secured Party in its sole discretion pertaining to said Pledged Collateral and
shall cause the Secured Party to have received a Confirmation from said bank or
broker substantially in the form attached hereto as Exhibit B.
---------
(e) Other Federal Securities (and Alternative Perfection Methods
------------------------------------------------------------
for Any Securities). With respect to any Pledged Collateral consisting of an
- ------------------
uncertificated security issued by the federal government or an agency or
instrumentality thereof for which a federal statute or regulation provides a
method of perfection of a security interest which is different from the Code,
other than Federal Book-Entry Securities referred to in Section 3(b) above and
- ----- ----
4
<PAGE>
Non-Revised Article 8 Federal Book-Entry Treasury Securities referred to in
Section 3(c) above, each Pledgor shall take all steps necessary or appropriate
under the Code or any applicable federal statute or regulation in order to
effect perfection of the security interest in favor of the Secured Party in the
Pledged Collateral as a first priority security interest. Further, as an
alternative to the steps for perfection of a first priority security interest
set forth in Section 3(a) through 3(d) above with respect to the Pledged
Collateral referenced therein, the Pledgors with the prior written consent of
the Secured Party may take such other steps as are appropriate and acceptable to
the Secured Party in order to perfect such a security interest in favor of the
Secured Party. For purposes of determining the steps to be taken under this
Section 3(e), the Pledgors shall provide to the Secured Party, and the Secured
Party may rely on, an opinion of counsel to the Pledgors (the expense of which
shall be paid by the Pledgors) specifying (i) that the counsel is familiar with
the laws applicable to the perfection of security interests in said Pledged
Collateral and (ii) the steps required to perfect and maintain a first priority
security interest in favor of the Secured Party in said Pledged Collateral.
(f) Pledged Accounts. The Secured Party acknowledges that with
----------------
respect to Pledged Securities credited to or on deposit in Pledged Accounts, the
Pledgors may list multiple securities in the Notices and Confirmations required
pursuant to Sections 3(a) through 3(d) hereof, so long as each such Pledged
Security credited to or deposited into a Pledged Account is referenced on at
least one Notice and one Confirmation.
(g) UCC-1. In addition, each Pledgor shall take any additional
-----
steps required by the Secured Party in order to evidence, perfect, or protect
the security interest in favor of the Secured Party in the Pledged Collateral
and any proceeds thereof, including, without limitation, executing financing
statements (which financing statements shall list, for such Pledgor, all of the
names referenced for such Pledgor in Schedule 2 as the "debtor" thereunder) in
----------
favor of, and in form and substance satisfactory to, the Secured Party covering
the Pledged Collateral, filing said financing statement with the office of the
Secretary of State of the States of Mississippi and Colorado (and, if such
Pledgor's chief executive office is not located in Mississippi, as indicated on
Schedule 2 hereto, in the appropriate location for filing financing statements
- ----------
in the state in which such Pledgor's chief executive office is located, as well
as with the Office of the Secretary of State of the State of Colorado) and such
other governmental offices as the Secured Party may identify. The Secured Party
shall have the right, at any time in its discretion and without notice to the
Pledgors after the occurrence of an Event of Default, to transfer to or to
register in the name of the Secured Party or any of its nominees any or all of
the Pledged Collateral.
(h) Disbursed Funds Account. The Company acknowledges that the
-----------------------
Disbursed Funds Account maintained in the name of the Company at IBJ Schroder
Bank & Trust Company (in such capacity, the "Bank") is under the sole dominion
and control of the Bank which holds such account and all amounts on deposit in
such account as agent for Secured Party for purposes of perfecting the security
interest of the Secured Party in such account and all amounts on deposit
therein. By signing the acknowledgement on the signature page hereof, the Bank
acknowledges that it is holding the Disbursed Funds Account and such amounts on
deposit therein as agent for the Secured Party for purposes of perfecting such
security interest. The
5
<PAGE>
Secured Party directs the Bank to release funds from the Disbursed Funds Account
to honor drafts drawn on such account by the Company until such time as the
Secured Party notifies the Bank in writing that a Default or Event of Default
has occurred under the Indenture or the Disbursement Agreement.
4. Representations and Warranties. The Pledgors represents and
------------------------------
warrants as follows:
(a) The Pledged Securities have been duly authorized,
authenticated or issued and delivered, and are the legal, valid and binding
obligations of the obligor thereunder.
(b) The Pledgors are the legal and beneficial owners of the
Pledged Collateral existing on the date hereof and will be the legal and
beneficial owners of the Pledged Collateral existing after the date hereof, free
and clear of any lien except for the security interest created by this
Agreement.
(c) As of the date hereof, Schedule 1 truly, completely and
----------
accurately describes the Pledged Accounts and the Pledged Securities. Such
Pledged Accounts and Pledged Securities represent all of the "Accounts",
"Investment Grade Securities", "Government Securities" and "Proceeds" referred
to or described in the Disbursement Agreement.
(d) The consummation of the steps listed in Section 3 hereof and
pertaining to the Pledged Collateral creates a valid and perfected first
priority security interest in the Pledged Collateral, securing the performance
of the Obligations.
(e) The security interests created by this Agreement (i)
constitute perfected security interests in the Pledged Collateral in favor of
the Secured Party, as collateral security for the Obligations, and (ii) are
prior to all other Liens on the Pledged Collateral in existence on the date
hereof.
(f) No consent of any other party (including, without limitation,
any stockholder, member or creditor of such Pledgor) and no governmental
approval is required either (i) for the pledge by the Pledgors of the Pledged
Collateral pursuant to this Agreement or for the execution, delivery and
performance of this Agreement by the Pledgors or (ii) for the exercise by the
Secured Party of the remedies in respect of the Pledged Collateral pursuant to
this Agreement.
(g) Schedule 2, attached hereto and incorporated herein, states,
----------
without exception: (i) the location of each Pledgor's chief executive office;
(ii) such Pledgor's mailing address; and (iii) all the names under which such
Pledgor has conducted business.
(h) The Pledgors have agreed in writing with IBJ Schroder Bank &
Trust Company and each other bank or broker with whom the Pledged Accounts are
maintained that all monies deposited therein or credited thereto shall not be
commingled with the other assets of such bank or broker, but shall be kept
intact as a special deposit for a specific purpose.
6
<PAGE>
The monies deposited in or credited to the Pledged Accounts constitute special
deposits and not general deposits, so as to create a bailor-bailee (and not a
creditor-debtor) relationship between the Pledgors and each such bank or broker.
5. Covenants. The Pledgors hereby covenant as follows:
---------
(a) The Pledgors shall immediately update Schedule 1 to reflect
----------
changes from time to time in the Pledged Accounts and the Pledged Securities
listed on Schedule 1 on the date hereof and shall promptly provide a copy of
----------
each such updated Schedule 1 to the Secured Party.
----------
(b) At all times after execution and delivery of this Agreement,
the security interests created by this Agreement in the Pledged Collateral
including, without limitation, the proceeds of any Pledged Securities and any
replacement securities purchased, in whole or in part, with such proceeds, will
constitute valid perfected first priority security interests therein.
(c) All Pledged Collateral shall at all times be credited to or
held in a Pledged Account except as otherwise provided in the Disbursement
Agreement.
6. Further Assurances. Each Pledgor shall at any time and from time
------------------
to time, at the expense of such Pledgor, promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Secured Party may reasonably request, in
order to perfect and protect any security interest granted or purported to be
granted hereby or to enable the Secured Party to exercise and enforce its rights
and remedies hereunder with respect to any Pledged Collateral and to carry out
the provisions and purposes hereof.
7. Subsequent Changes Affecting Collateral; Transfers and Other
------------------------------------------------------------
Liens; Additional Indebtedness.
- ------------------------------
(a) Each Pledgor represents and warrants to the Secured Party
that such Pledgor has made its own arrangements for keeping informed of changes
or potential changes affecting the Pledged Collateral, and such Pledgor agrees
that the Secured Party shall have no responsibility or liability for informing
such Pledgor of any such changes or potential changes or for taking any action
or omitting to take any action with respect thereto.
(b) Each Pledgor agrees that it will not, (i) except as permitted
by the Indenture, sell or otherwise dispose of, or grant any option with respect
to, any of the Pledged Collateral, (ii) create or permit to exist any lien upon
or with respect to any of the Pledged Collateral except pursuant to this
Agreement or (iii) enter into any other contractual obligations which may
restrict or inhibit the Secured Party's rights or ability to sell or otherwise
dispose of the Pledged Collateral or any part thereof after the occurrence of an
Event of Default (as defined below).
7
<PAGE>
(c) Each Pledgor agrees that it will (i) cause the obligors or
issuers of the Pledged Collateral not to issue any other debt or other
securities in substitution for the Pledged Collateral except to such Pledgor
(or, in the event that such Pledged Collateral is credited to or deposited into
a Pledged Account, to such Pledged Account; provided that IBJ Schroder Bank &
Trust Company or such other bank or broker maintaining such Pledged Account
promptly provides to the Secured Party an additional confirmation in accordance
with this Agreement covering said debt or other securities), and (ii) deliver
hereunder to the Secured Party, immediately upon its acquisition (directly or
indirectly) thereof, any and all writings evidencing any additional Pledged
Collateral. The Pledgors hereby authorize the Secured Party to modify this
Agreement by unilaterally amending Schedule 1 to include such additional debt or
----------
other securities.
(d) Each Pledgor agrees that the Secured Party shall have the
right at any time after the occurrence of an Event of Default in its discretion
and without notice to the Pledgors or either of them to instruct the issuers or
obligors under any Pledged Collateral to make any or all payments and
distributions under said Pledged Collateral directly to the Secured Party;
provided, however, that if at the time of the Secured Party's receipt of any
- -------- -------
such payment, the Company is entitled to receive any portion of said payment in
accordance with Section 13 of this Agreement, then the Secured Party promptly
upon request from the Company shall deliver said portion of the payment thereto.
(e) If received by either Pledgor, such payments and
distributions shall be received in trust for the benefit of the Secured Party,
shall be segregated from other property or funds of such Pledgor and shall
forthwith be delivered to the Secured Party in the same form as so received
(with any necessary or requested endorsement).
8. Secured Party Appointed Attorney-in-Fact. Each Pledgor hereby
----------------------------------------
irrevocably appoints the Secured Party such Pledgor's attorney-in-fact, which
appointment is coupled with an interest, with full authority in the place and
stead of such Pledgor and in the name of such Pledgor or otherwise, from time to
time in the Secured Party's discretion, to take any action and to execute any
instrument which the Secured Party may deem necessary or advisable to accomplish
the purposes of this Agreement, including, without limitation:
(a) to perform any of such Pledgor's obligations under this
Agreement in such Pledgor's name or otherwise;
(b) after the occurrence of an Event of Default to receive,
indorse and collect all interest, cash, securities, instruments and other
property received or otherwise distributed in respect of the Pledged Collateral
or any part thereof;
(c) after the occurrence of an Event of Default to give notice of
such Pledgor's right to payment, to enforce that right and to make extension
agreements with respect to it;
8
<PAGE>
(d) after the occurrence of an Event of Default to release
persons liable on rights to payment, to compromise disputes with those persons,
and to surrender Pledged Collateral, all as the Secured Party determines in its
sole discretion when acting in good faith based on information known to it when
it acts;
(e) to prepare and file financing statements, continuation
statements, statements of assignment, termination statements, and the like, as
necessary to perfect, protect, preserve, or release the Secured Party's interest
in the Pledged Collateral;
(f) to endorse such Pledgor's name on instruments, securities,
documents, or other forms of payment or security that come into the Secured
Party's possession;
(g) to take cash in payment of obligations; and
(h) to verify information concerning rights to payment by inquiry
in its own name or in a fictitious name.
9. Secured Party May Perform. If either Pledgor fails to perform
-------------------------
any agreement contained herein, the Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of the Secured Party incurred
in connection therewith shall be payable by the applicable Pledgor.
10. Secured Party's Duties; Reasonable Care. The powers conferred on
---------------------------------------
the Secured Party hereunder are solely to protect its interest in the Pledged
Collateral and shall not impose any duty on it to exercise any such powers.
Except for the safe custody of any Pledged Collateral in its possession and the
accounting for monies actually received by it hereunder, the Secured Party shall
have no duty as to any Pledged Collateral. The Secured Party shall have the
right to designate a nominee to serve as the Secured Party's agent for the
purposes of this Agreement. If the Secured Party chooses to designate a
nominee, said nominee shall hold the Pledged Collateral solely for the Secured
Party. Said nominee shall not be an agent of the Pledgors and shall have no
duty whatsoever to the Pledgors, and the Pledgors shall have no right to
instruct said nominee. The Secured Party may evidence designation of the
nominee in a manner deemed appropriate by the Secured Party. The Pledgors agree
to take such steps as the Secured Party reasonably may request in connection
with such designation. The Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment that is not
materially less protective than that which the Secured Party accords its own
property, it being expressly agreed that the Secured Party shall have no
responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Pledged Collateral, whether or not the Secured Party has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps to preserve rights
against any parties with respect to any Pledged Collateral, but the Secured
Party may do so at its option and all expenses incurred in connection therewith
shall be payable by and for the sole account of the Pledgors.
11. Default and Remedies.
--------------------
9
<PAGE>
(a) The occurrence of an "event of default" under the Indenture
or the Disbursement Agreement shall constitute an "EVENT OF DEFAULT" hereunder.
----------------
(b) Upon the occurrence of an Event of Default, the Secured Party
may exercise in respect of the Pledged Collateral, in addition to other rights
and remedies provided for herein or otherwise available to it, all the rights
and remedies of a secured party under the Code, and the Secured Party may also,
without notice except as specified below, (i) perform any of the obligations of
either Pledgor under this Agreement for such Pledgor's account (any money
expended or obligations incurred in doing so, including reasonable attorney's
fees and disbursements and interest at the then applicable rate of interest on
the Notes plus one percent will be charged to the Pledgors and added to the
obligation secured by this Agreement); (ii) take immediate possession of the
Pledged Collateral; and (iii) sell the Pledged Collateral or any part thereof in
one or more parcels at one or more public or private sales, at any exchange,
broker's board or at any of the Secured Party's offices or elsewhere, for cash,
on credit or for future delivery, and upon such other terms as the Secured Party
may deem commercially reasonable. The Pledgors acknowledge and agree that any
such private sale may result in prices and other terms less favorable to the
seller than if such sale were a public sale. Each Pledgor agrees that, to the
extent notice of sale shall be required by law, at least seven days' notice to
such Pledgor 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
Secured Party, in its discretion, if permitted by law, may bid (which bid may
be, in whole or in part, in the form of cancellation of indebtedness) for and
purchase for its account the whole or any part of the Pledged Collateral at any
public sale or sale on any securities exchange or other recognized market.
Notwithstanding the foregoing, the Secured Party shall not be obligated to make
any sale of Pledged Collateral regardless of notice of sale having been given.
The Secured Party 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.
(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 Pledgors agree that
upon the occurrence or existence of any Event of Default, the Secured Party may,
from time to time, attempt to sell all or any part of the Pledged Collateral by
means of a private placement, restricting the prospective purchasers to those
who will represent and agree that they are purchasing for investment only and
not for distribution. In so doing, the Secured Party may solicit offers to buy
the Pledged Collateral, or any part of it, for cash, from a limited number of
investors who might be interested in purchasing the Pledged Collateral. The
Pledgors acknowledge and agree that any such private sale may result in prices
and terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agree that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Secured Party
shall be under no obligation to delay a sale of any of the Pledged Collateral
for the period of time necessary to permit the Issuer to register such
securities for public sale under the Securities Act of 1993, as amended, or
under applicable state securities laws, even if the issuers of the Pledged
Securities agree to do so.
10
<PAGE>
(d) Each Pledgor further agrees to use its best efforts to do or
cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Pledged Collateral pursuant to this Section
11 valid and binding and in compliance with any and all other applicable
requirements of law. The Pledgors further agree that a breach of any of the
covenants contained in this Section 11 will cause irreparable injury to the
Secured Party and the Holders, that the Secured Party and the Holders have no
adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 11 shall be specifically
enforceable against each Pledgor, and the Pledgors hereby waive and agree not to
assert any defenses against an action for specific performance of such covenants
except for a defense that no Event of Default has occurred.
(d) Any cash held by the Secured Party as Pledged Collateral and
all cash proceeds received by the Secured Party in respect of any sale of,
collection from, or other realization upon all or any part of the Pledged
Collateral may, in the discretion of the Secured Party, be held by the Secured
Party as collateral for, and/or then or at any time thereafter applied (after
payment of any amounts payable to the Secured Party pursuant to the Indenture)
in whole or in part by the Secured Party against all or any part of the
Obligations in such order as the Secured Party shall elect. Any surplus of such
cash or cash proceeds remaining after payment in full of all the Obligations
shall be paid over to the Pledgors or to whomsoever may be lawfully entitled to
receive such surplus or as a court of competent jurisdiction may direct;
otherwise, the Secured Party shall hold such surplus as further security for the
Obligations.
12. Remedies Cumulative. Each right, power and remedy of the Secured
-------------------
Party provided in this Agreement or now or hereafter existing at law or in
equity or by statute or otherwise shall be cumulative and concurrent and shall
be in addition to every other right, power or remedy provided for in this
Agreement or now or hereafter existing at law or in equity or by statute or
otherwise. The exercise or partial exercise by the Secured Party of any one or
more of such rights, powers or remedies shall not preclude the simultaneous or
later exercise by the Secured Party of all such other rights, powers or
remedies, and no failure or delay on the part of the Secured Party to exercise
any such right, power or remedy shall operate as a waiver thereof.
13. Interest on Pledged Securities; Release; Termination.
----------------------------------------------------
(a) Subject to Section 13(b) below, during the term of this
Agreement:
(i) the Secured Party shall comply in a reasonably prompt manner
with any written instructions received from the Pledgors to sell or dispose of
any Pledged Securities;
(ii) Pledged Securities, cash, instruments, property or proceeds
or products of any of the foregoing held in the Pledged Accounts may not be
disbursed from the Pledged Accounts except to the Company pursuant to the terms
of the Disbursement Agreement; and
11
<PAGE>
(iii) The Pledgors shall instruct and authorize IBJ Schroder Bank
& Trust Company and each other bank or broker maintaining a Pledged Account to
act upon instructions from the Secured Party with respect to the Pledged
Collateral, and not to act upon any instructions from either Pledgor with
respect thereto. The Pledgors agree that the failure of the Secured Party to
deliver copies of such instructions or authorizations to the Pledgors shall not
affect the rights of the Secured Party hereunder.
(b) Notwithstanding the provisions of Section 13(a) above, the
Pledgors shall not have the right, except with the prior written consent of the
Secured Party, to receive any interest or any other earnings paid on any Pledged
Collateral, or to sell or dispose of any Pledged Securities or receive any sale
proceeds therefrom, or to make investment decisions with respect to the Pledged
Collateral, or to close any of the Pledged Accounts:
(i) if at the time of such payment, sale, or disposition,
there exists an Event of Default or circumstances have occurred or exist which
with the giving of notice or the passage of time or both would constitute an
Event of Default; or
(ii) if such sale or disposition is prohibited by any terms
or conditions of the Indenture or any other Collateral Document.
(c) This Agreement shall create a continuing security interest
in the Pledged Collateral and shall remain in full force and effect until the
payment in full of all of the Obligations. At the time of such termination, the
Secured Party, at the request and expense of the Pledgors and subject to the
provisions of Section 18 below, will execute and deliver to the Pledgors a
proper instrument or instruments acknowledging the satisfaction and termination
of this Agreement, and will duly assign, transfer and deliver to the Pledgors
such of the Pledged Collateral as has not yet theretofore been sold or otherwise
applied or released pursuant to this Agreement, together with any monies at the
time held by the Secured Party hereunder. Such assignment and delivery shall be
without warranty by or recourse to the Secured Party, except as to the absence
of any prior assignments by the Secured Party of its interest in the Pledged
Collateral.
14. Amendments, Waivers and Consents. This Agreement or any
--------------------------------
provision hereof may be changed, waived, or terminated only by an instrument in
writing signed by the party against whom enforcement of such change, waiver or
termination is sought.
15. Notice. Any notice, approval, consent or other communication
------
shall be in the form and manner set forth in Section 11.2 of the Indenture and
to the addresses set forth in the preamble to this Agreement. Any party may
change its address for notices in the manner set forth in Section 11.2 of the
Indenture.
16. Transfer of Security. This Agreement (i) shall be binding upon
--------------------
each Pledgor, its successors and assigns, and (ii) shall inure, together with
the rights and remedies of the Secured Party hereunder, to the benefit of the
Secured Party and its successors, transferees and assigns.
12
<PAGE>
17. Waiver. To the fullest extent it may lawfully so agree, each
------
Pledgor agrees that it will not at any time insist upon, claim, plead, or take
any benefit or advantage of any appraisement, valuation, stay, extension,
moratorium, redemption or similar law now or hereafter in force in order to
prevent, delay, or hinder the enforcement hereof or the absolute sale of any
part of the Pledged Collateral; each Pledgor for itself and all who claim
through it, so far as it or they now or hereafter lawfully may do so, hereby
waives the benefit of all such laws, and all right to have the Pledged
Collateral marshalled upon any foreclosure hereof, and agrees that any court
having jurisdiction to foreclose this Agreement may order the sale of the
Pledged Collateral as an entirety. Without limiting the generality of the
foregoing, each Pledgor hereby: (i) authorizes the Secured Party, in its sole
discretion and without notice to or demand upon such Pledgor and without
otherwise affecting the Obligations of such Pledgor hereunder from time to time
to take and hold other collateral (in addition to the Pledged Collateral) for
payment of any Obligations, or any part thereof, and to exchange, enforce or
release such other collateral or any part thereof and to accept and hold any
endorsement or guarantee of payment of the Obligations, or any part thereof and
to release or substitute any endorser or guarantor or any other person granting
security for or in any other way obligated upon any Obligations or any part
thereof, and to exchange, enforce or release such other collateral or any part
thereof and to accept and hold any endorsement or guarantee of payment of the
Obligations or any part thereof and to release or substitute any endorser or
guarantor or any other person granting for or in any way obligated upon any
obligations or any part thereof, and (ii) waives and releases any and all right
to require the Secured Party to collect any of the Obligations from any specific
item or items of the Pledged Collateral or from any other party liable as
guarantor or in any other manner in respect of any of the Obligations or from
any collateral for any of the Obligations.
18. Reinstatement. This Agreement shall continue to be effective
-------------
or be reinstated, as the case may be, if at any time any amount received by the
Secured Party in respect of the Obligations is rescinded or must otherwise be
restored or returned by the Secured Party or any bank upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of either Pledgor, upon
the appointment of any intervenor or conservator of, or trustee or similar
official for, either Pledgor or any substantial part of its assets, or
otherwise, all as though such payments had not been made.
19. Attorneys' Fees. In any action or proceeding brought to enforce
---------------
any provision of this Agreement, or to seek damages for a breach of any
provision hereof, or where any provision hereof is validly asserted as a
defense, the successful party shall be entitled to recover reasonable attorneys'
fees in addition to any other available remedy.
20. Fees and Expenses. Each Pledgor agrees to pay upon demand to the
-----------------
Secured Party the amount of any and all costs and expenses including, without
limitation, the actual fees and expenses of the Secured Party's counsel
(including special and local counsel and allocated costs of internal counsel)
and of any experts and agents, that the Secured Party may incur in connection
with (i) the administration of this Agreement, including, without limitation,
the preparation of this Agreement and any amendment hereof or other modification
hereto, (ii) the perfection or maintenance of the Secured Party's first priority
security interest in,
13
<PAGE>
custody, preservation or sale of, collection from, or other realization upon,
any of the Pledged Collateral, (iii) the exercise or enforcement of any of the
rights of the Secured Party hereunder, or (iv) the failure by either Pledgor to
perform or observe any of the provisions hereof; all such amounts shall be
included in the indebtedness secured hereunder.
21. No Third Party Beneficiaries. This Agreement shall be binding
----------------------------
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, and no other person shall have any right,
benefit or obligation under this Agreement as a third party beneficiary or
otherwise.
22. Severability. The provisions of this Agreement are severable,
------------
and if any clause or provision shall be held invalid or unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction and
shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
23. Interpretation. Time is of the essence of each provision of this
--------------
Agreement of which time is an element. All terms not defined herein shall have
the meaning set forth in the Code, except where the context otherwise requires.
24. Interaction with the Indenture.
------------------------------
(a) All terms, covenants, conditions, provisions and requirements
of the Indenture are incorporated by reference in this Agreement.
(b) Notwithstanding any other provision of this Agreement, the
terms and provisions of this Agreement shall be subject and subordinate to the
terms of the Indenture. To the extent that the Indenture provides the Pledgors
with a particular cure or notice period, or establishes any limitations or
conditions on the Secured Party's actions with regard to a particular set of
facts, the Pledgors shall be entitled to the same cure periods and notice
periods, and the Secured Party shall be subject to the same limitations and
conditions, under this Agreement, as under the Indenture, in place of the cure
periods, notice periods, limitations and conditions provided for under this
Agreement; provided, however, that such cure periods, notice periods,
-------- -------
limitations and conditions shall not be cumulative as between the Indenture and
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.
25. Statute of Limitations. Each Pledgor hereby waives the right to
----------------------
plead any statute of limitations as a defense to any indebtedness or obligation
hereunder or secured hereby to the full extent permitted by law.
26. Indemnity; Survival of Provisions. Each Pledgor shall indemnify,
---------------------------------
protect, defend (with counsel approved by the Secured Party) and hold the
Secured Party harmless from
14
<PAGE>
and against any expenses (including attorneys' fees), damages, obligations,
claims, actions, and other liabilities or costs arising out of a breach by such
Pledgor of any of its representations, warranties or covenants hereunder. All
representations, warranties and covenants of the Pledgors contained herein shall
survive the execution and delivery of this Agreement, and shall terminate only
upon the full and final payment and performance by the Pledgors of their
indebtedness and Obligations secured hereby.
27. Headings Descriptive. The headings in this Agreement are for
--------------------
purposes of reference only and shall not limit or otherwise affect the meaning
or construction or any provision of this Agreement.
28. Entire Agreement. This Agreement, together with any other
----------------
agreement executed in connection herewith, is intended by the parties as a final
expression of their agreement and is intended as a complete and exclusive
statement of the terms and conditions thereof. Acceptance of or acquiescence in
a course of performance rendered under this Agreement shall not be relevant to
determine the meaning of this Agreement even though the accepting or acquiescing
party had knowledge of the nature of the performance and opportunity for
objection.
29. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which shall
together constitute one and the same agreement.
30. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
----------------------------------------------------------------
WAIVER OF DAMAGES.
- -----------------
(i) THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING,
WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW)
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT LAWS THEREOF.
(ii) EXCEPT AS PROVIDED IN THE NEXT PARAGRAPH, THE PLEDGORS AND THE
SECURED PARTY AGREE THAT ALL DISPUTES BETWEEN THEM ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH THIS AGREEMENT, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY,
OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE OR FEDERAL COURTS LOCATED IN NEW
YORK, NEW YORK BUT THE PLEDGORS AND THE SECURED PARTY ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW
YORK CITY. EACH PLEDGOR WAIVES AND AGREES TO FOREGO ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS.
15
<PAGE>
(iii) EACH PLEDGOR AGREES THAT THE SECURED PARTY SHALL HAVE THE
RIGHT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST
SUCH PLEDGOR OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN
GOOD FAITH TO ENABLE THE SECURED PARTY TO REALIZE ON SUCH PROPERTY, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE SECURED PARTY.
EACH PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY
PROCEEDING BROUGHT BY THE SECURED PARTY TO REALIZE ON SUCH PROPERTY, OR TO
ENFORCE A JUDGEMENT OR OTHER COURT ORDER IN FAVOR OF THE SECURED PARTY. EACH
PLEDGOR WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN
WHICH THE SECURED PARTY HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS.
(iv) THE PLEDGORS AND THE SECURED PARTY EACH WAIVE 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.
INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL
WITHOUT A JURY.
(v) EACH PLEDGOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN
ANY JURISDICTION IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO SUCH PLEDGOR AT ITS ADDRESS SET FORTH IN THE PREAMBLE TO
THIS AGREEMENT OR AT SUCH OTHER ADDRESS OF WHICH THE SECURED PARTY SHALL HAVE
BEEN NOTIFIED IN ACCORDANCE WITH THIS AGREEMENT, SUCH SERVICE TO BECOME
EFFECTIVE 4 DAYS AFTER SUCH MAILING.
(vi) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE SECURED PARTY TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST EITHER PLEDGOR IN ANY OTHER
JURISDICTION.
(vii) EACH PLEDGOR (I) AGREES THAT THE SECURED PARTY SHALL NOT HAVE
ANY LIABILITY TO SUCH PLEDGOR (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE)
FOR LOSSES SUFFERED BY SUCH PLEDGOR IN CONNECTION WITH, ARISING OUT OF, OR IN
ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP
ESTABLISHED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN
CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A JUDGMENT OF A COURT THAT IS
BINDING ON THE SECURED PARTY (WHICH JUDGMENT SHALL BE FINAL AND NOT
16
<PAGE>
SUBJECT TO REVIEW ON APPEAL), THAT SUCH LOSSES WERE THE RESULT OF ACTS OR
OMISSIONS ON THE PART OF THE SECURED PARTY CONSTITUTING GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT AND (II) WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY
CLAIM AGAINST THE SECURED PARTY (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE), EXCEPT A CLAIM BASED UPON GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
WHETHER OR NOT SUCH DAMAGES ARE RELATED TO A CLAIM THAT IS SUBJECT TO THE WAIVER
EFFECTED ABOVE AND WHETHER OR NOT SUCH WAIVER IS EFFECTIVE, THE SECURED PARTY
SHALL HAVE NO LIABILITY WITH RESPECT TO, AND SUCH PLEDGOR HEREBY WAIVES,
RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR, ANY SPECIAL, INDIRECT,
CONSEQUENTIAL DAMAGES IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED
TO THE TRANSACTIONS CONTEMPLATED OR THE RELATIONSHIP ESTABLISHED BY THIS
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
UNLESS IT IS DETERMINED BY A JUDGMENT OF A COURT THAT IS BINDING ON THE SECURED
PARTY (WHICH JUDGMENT SHALL BE FINAL AND NOT SUBJECT TO REVIEW ON APPEAL), THAT
SUCH DAMAGES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART OF THE SECURED
PARTY CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(viii) EACH PLEDGOR WAIVES ALL RIGHTS OF NOTICE AND HEARING OF ANY
KIND PRIOR TO THE EXERCISE BY THE SECURED PARTY OF ITS RIGHTS FROM AND AFTER THE
OCCURRENCE OF AN EVENT OF DEFAULT TO REPOSSESS THE COLLATERAL WITH JUDICIAL
PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL OR OTHER SECURITY FOR
THE OBLIGATIONS. EACH PLEDGOR WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED
OF THE SECURED PARTY IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO
OBTAIN POSSESSION OF, REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR OTHER SECURITY
FOR THE OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF THE SECURED PARTY OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER, PRELIMINARY OR PERMANENT INJUNCTION THIS AGREEMENT OR ANY
OTHER AGREEMENT OR DOCUMENT BETWEEN SUCH PLEDGOR AND THE SECURED PARTY.
17
<PAGE>
IN WITNESS WHEREOF, the Pledgors have caused this Pledge and
Assignment to be duly executed and delivered as of the date first above written.
ISLE OF CAPRI BLACK HAWK L.L.C.
By: /s/ Allan B. Solomon
-----------------------------
Name: Allan B. Solomon
------------------------
Title: Secretary
-----------------------
By: /s/ H. Thomas Winn
-----------------------------
Name: H. Thomas Winn
------------------------
Title: Vice President
-----------------------
ISLE OF CAPRI BLACK HAWK
CAPITAL CORP.
By: /s/ Allan B. Solomon
-----------------------------
Name: Allan B. Solomon
------------------------
Title: Secretary
-----------------------
<PAGE>
By acceptance hereof as of this 20th day of August, 1997, the Secured Party
also agrees to be bound by the provisions hereof.
IBJ SCHRODER BANK & TRUST
COMPANY, as Trustee
By: /s/ William T. Lynch
--------------------------
Name: William T. Lynch
Title: Vice President
ACKNOWLEDGMENT OF BANK
By acceptance hereof as of this 20th day of August, 1997, the Bank agrees
to be bound by the provisions of Section 3(h) hereof.
IBJ SCHRODER BANK & TRUST
COMPANY, as Agent
By: /s/ William T. Lynch
--------------------------
Name: William T. Lynch
Title: Vice President
<PAGE>
SCHEDULE 1 TO PLEDGE AND ASSIGNMENT
-----------------------------------
PLEDGED SECURITIES
------------------
Bank: IBJ Schroder B&T/Trust/Attn: Tom McCutcheon
Address: One State Street, New York, New York 10004
ABA: 026007825
Account: Construction Disbursement Account (ISLACAPCONDIS)
Vendor: IBJ Schroder Bank & Trust Company
AMOUNT: $52,216,983.75
Subject: Deposit funds into Construction Disbursement Account
Bank: IBJ Schroder B&T/Trust/Attn: Tom McCutcheon
Address: One State Street, New York, New York 10004
ABA: 026007825
Account: Completion Reserve Account (ISLACAPCOMRES)
Vendor: IBJ Schroder Bank & Trust Company
AMOUNT: $5,000,000.00
Subject: Deposit funds into Completion Reserve Account
Bank: IBJ Schroder B&T/Trust/Attn: Tom McCutcheon
Address: One State Street, New York, New York 10004
ABA: 026007825
Account: Interest Reserve Account (ISLCAPINTRES)
Vendor: IBJ Schroder Bank & Trust
Company AMOUNT: $14,129,651.94
Subject: Deposit funds into Interest Reserve Account
<PAGE>
SCHEDULE 2 TO PLEDGE AND ASSIGNMENT
<TABLE>
Isle of Capri Black Hawk L.L.C.
-------------------------------
<S> <C>
1. Pledgor's Chief Executive Office: 711 Washington Loop
--------------------------
Biloxi, Mississippi 39350
--------------------------
2. Pledgor's Mailing Address: 711 Washington Loop
---------------------------
Biloxi, Mississippi 39350
---------------------------
3. Names under which Pledgor 1. Isle of Capri Black Hawk L.L.C
------------------------------
has conducted business 2. ______________________
3. ______________________
Isle of Capri Black Hawk Capital Corp.
--------------------------------------
1. Pledgor's Chief Executive Office: 711 Washington Loop
---------------------------
Biloxi, Mississippi 39350
---------------------------
2. Pledgor's Mailing Address: 711 Washington Loop
---------------------------
Biloxi, Mississippi 39350
---------------------------
3. Names under which Pledgor 1. Isle of Capri Black Hawk Capital Corp.
-------------------------------------
has conducted business 2. ____________________________
3. ____________________________
</TABLE>
<PAGE>
EXHIBIT A TO PLEDGE AND ASSIGNMENT
----------------------------------
NOTICE OF SECURITY INTEREST IN SECURITIES ACCOUNTS
--------------------------------------------------
AND INVESTMENTS
---------------
______________, 199____
[INSERT NAME AND ADDRESS OF FINANCIAL INTERMEDIARY, AS APPLICABLE]
Attention:
Re: Pledge and Assignment of Securities by Isle of Capri Black Hawk
L.L.C., a Colorado limited liability company (the "COMPANY"), whose
-------
address is 711 Washington Loop, Biloxi, Mississippi 39350 (fax no.:
(601) 435-5998) and Isle of Capri Black Hawk Capital Corp., a Colorado
corporation ("CAPITAL CORP," and, together with the Company, each a
------------
"DEBTOR" and collectively the "DEBTORS"), whose address is 711
------ -------
Washington Loop, Biloxi, Mississippi 39350 (fax no.: (601) 435-5998)
in favor of IBJ Schroder Bank & Trust Company, a New York banking
corporation, as trustee (the "SECURED PARTY") pursuant to a Pledge and
-------------
Assignment dated as of August 20, 1997 (as amended, modified or
otherwise supplemented from time to time, the "SECURITY AGREEMENT")
------------------
whose address is One State Street, New York, New York 10004 (fax no.:
(212) 858-2952),
Gentlemen and Ladies:
You are hereby notified that the above referenced Debtors have granted
to the Secured Party a first priority security interest in and to all of the
right, title and interest of the Debtors in and to each of the accounts listed
on Exhibit A attached hereto (the "ACCOUNTS") and all investments, securities,
--------- --------
cash, money and other property credited thereto or deposited therein (the
"INVESTMENTS") including, but not limited to, the securities identified on
-----------
Exhibit A as presently credited thereto or deposited therein (the "SECURITIES").
- --------- ----------
More specifically, each Debtor hereby represents, confirms, agrees and
irrevocably instructs you as follows:
1. Purpose. This letter constitutes notice to you of said security
-------
interest pursuant to Sections 8-313 and 9-305 of the Uniform Commercial Code as
adopted in the State of New York, the "UCC"). This letter further provides you
---
with irrevocable instructions concerning the Accounts, the Investments and the
Securities. Any Investments constituting "certificated securities" under the
terms of the UCC shall be referred to herein as "CERTIFICATED SECURITIES", and
-----------------------
any Investments constituting "uncertificated securities" under the terms of the
UCC shall be referred to herein as "UNCERTIFICATED SECURITIES".
-------------------------
A-1
<PAGE>
2. Representations and Warranties of Debtors. Each Debtor hereby
-----------------------------------------
represents and warrants to you that:
(a) The Company's place of business (or its chief executive office,
if the Company has more than one place of business) is located in ___________,
____________ (the "COMPANY STATE") of the United States of America, which
-------------
Company State has: adopted the UCC in a format that permits the perfection of a
first priority security interest in Certificated Securities (other than
Certificated Securities of the type referenced in Section 3(c), 3(d) or 3(e) of
the Confirmation (as hereinafter defined) by, among other things, you taking the
steps described in Section 3 (the "PERFECTION SECTION") of the form of
------------------
confirmation ("CONFIRMATION") attached hereto as Exhibit B, and returning said
------------
Confirmation (with a copy of this notice attached thereto) to the Secured Party;
(b) Capital Corp's place of business (or its chief executive office,
if Capital Corp has more than one place of business) is located in ___________,
____________ (the "CAPITAL CORP STATE") of the United States of America, which
------------------
Capital Corp State has adopted the UCC in a format that permits the perfection
of a first priority security interest in Certificated Securities (other than
Certificated Securities of the type referenced in Section 3(c), 3(d) or 3(e) of
the Confirmation by, among other things, you taking the steps described in the
Perfection Section of the Confirmation, and returning said Confirmation (with a
copy of this notice attached thereto) to the Secured Party;
(c) The Company State [has] [has not] {delete as applicable} adopted
Uniform Commercial Code, Revised Article 8, Investment Securities (with
Conforming and Miscellaneous Amendments to Articles 1, 3, 4, 5, 9 and 10) 1994
Official Text ("REVISED ARTICLE 8");
-----------------
(d) The Capital Corp State [has] [has not] {delete as applicable}
adopted Revised Article 8;
(e) If there are any Uncertificated Securities (other than
Uncertificated Securities of the type referenced in Section 3(c), 3(d) or 3(e)
of the Confirmation) within the Investments, each of the issuers thereof is
organized under the laws of a state within the United States of America, which
state has adopted the UCC in a format that permits the perfection of a first
priority security interest in Uncertificated Securities by, among other things,
you taking the steps described in Section 3 of the Perfection Section of the
Confirmation, and returning said Confirmation (with a copy of this notice
attached thereto) to the Secured Party;
(f) Such Debtor has not granted any security interest, right or claim
in the Accounts, the Investments or the Securities to any person or entity other
than the Secured Party; and
(g) Such Debtor has executed UCC-1 financing statement(s) in favor of
the Secured Party describing the Accounts and the Investments (including the
Securities) as the collateral encumbered thereby, and such Debtor has filed the
same in the appropriate filing
A-2
<PAGE>
location(s) for UCC financing statements within the Company State or the Capital
Corp State, as the case may be.
3. Perfection. With respect to each of the Investments, you shall
----------
by ___________, 19__ {insert date acceptable to the Secured Party} take the
actions described in the Perfection Section and return a duly executed
Confirmation (with a copy of this notice attached thereto) to the Secured Party
confirming that such steps have been completed. Further, if any additional
Investments from time to time may be credited to or deposited into the Accounts,
you shall promptly take the steps described in the Perfection Section and return
a duly executed Confirmation (with a copy of this notice attached thereto) to
Secured Party confirming that, with respect to such additional Investments, such
steps have been completed. Except as set forth in Section 4 below of this
notice or as otherwise agreed in writing by the Secured Party, you shall not
take any actions which would cause the matters confirmed in the Confirmation no
longer to be true and correct in all respects.
4. Handling of Proceeds. You shall hold all interest, earnings,
--------------------
dividends, distributions, substitutions and other proceeds of, on or with
respect to the Investments ("PROCEEDS") for the benefit of the Secured Party,
--------
subject to the security interest in the Secured Party's favor, and you shall
invest the same only in other Investments for which you have returned a duly
executed Confirmation in accordance with Section 3 above. Further, except as
otherwise ordered by a court of competent jurisdiction, you shall:
(a) accept and comply with such instructions with respect to the
Accounts and the Investments as you may receive from time to time from the
Secured Party including, without limitation, such instructions as the Secured
Party may provide concerning (i) the payment or reinvestment of any Proceeds,
(ii) the redemption, transfer, sale, distribution or any other disposition or
transaction concerning the Investments or any Proceeds, or (iii) the enforcement
of its security interest in the Investments; and
(b) cease to accept or comply with any instructions with respect to
the Accounts or the Investments from either Debtor or any other person or entity
(other than the Secured Party) or permit either Debtor or any other person or
entity (other than the Secured Party) to in any way exercise control over the
Accounts or the Investments; and
(c) not close any of the Pledged Accounts without giving 30 days'
prior written notice to the Secured Party and the Disbursement Agent (as defined
below).
5. Statements. You shall send all notices, statements (including,
----------
without limitation, the regular monthly statements covering the deposits to and
withdrawals from the Accounts, and all debit and credit advises) and all other
communications concerning the Accounts and the Securities to (i) the Secured
Party at the address set forth above for the Secured Party marked to the
attention of _______________, and (ii) IBJ Schroder Bank & Trust Company, as
disbursement agent (in such capacity, the "DISBURSEMENT AGENT") under that
------------------
certain Cash Collateral and Disbursement Agreement, dated as of August __, 1997,
among the Debtors, the Disbursement Agent and the independent construction
consultant named therein,
A-3
<PAGE>
at One State Street, New York, New York 10004, Attention: _____________. The
Secured Party or the Disbursement Agent party may change its address for notices
by written instruction to you.
6. Exculpation. Each Debtor agrees that you shall not be liable to
-----------
the Debtor for complying in good faith with the instructions contained herein or
failing to comply with any contrary or inconsistent instructions that may
subsequently be issued by such Debtor. Each Debtor further agrees to hold you
harmless and indemnify you against any claim or loss arising out of any actions
or omissions taken by any person in reliance on or compliance with the
instructions and authorizations contained herein.
7. Joint and Several Obligations. Notwithstanding any other
-----------------------------
provision to the contrary herein, the representations, warranties, covenants and
other obligations of the Pledgors hereunder shall be deemed joint and several.
8. Miscellaneous. The rights and obligations of the Debtors, the
-------------
Secured Party and you with respect to the transactions contemplated hereby shall
be governed by New York law. If you receive notice of any adverse claim of any
person or entity other than the Secured Party in the Accounts or the
Investments, you shall promptly provide written notice thereof to the Secured
Party and the Disbursement Agent. Confirmations and notices to be sent to the
Secured Party and the Disbursement Agent hereunder shall be sent to the
addresses set forth above for the Secured Party and the Disbursement Agent or to
such alternative addresses as the Secured Party and the Disbursement Agent may
elect in a writing delivered to you. The Secured Party and the Disbursement
Agent may rely upon the representations, confirmations, agreements and
instructions set forth herein, and said representations, confirmations,
agreements and instructions may not be amended or terminated except with the
prior written consent of the Secured Party [and the Disbursement Agent]. In the
event of a dispute hereunder or under the Confirmation, the prevailing party
shall be entitled to an award of its attorneys' fees and other costs.
[Remainder of page deliberately left blank]
A-4
<PAGE>
Very truly yours,
ISLE OF CAPRI BLACK HAWK L.L.C.
By:_________________________________
Name:____________________________
Title:___________________________
By:_________________________________
Name:____________________________
Title:___________________________
GUARANTEES OF SIGNATURES
Authorized Signature
By:_________________________ Address:____________________________
Title:______________________ ____________________________
Dated:______________________ Dated:______________________________
Authorized Signature
By:_________________________ Address:____________________________
Title:______________________ ____________________________
Dated:______________________ Dated:______________________________
Authorized Signature
By:_________________________ Address:____________________________
Title:______________________ ____________________________
Dated:______________________ Dated:______________________________
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
A-5
<PAGE>
By:_________________________________
Name:____________________________
Title:___________________________
GUARANTEE OF SIGNATURE
Authorized Signature
By:_______________________ Address:____________________________
Title:____________________ ____________________________
Dated:____________________ Dated:______________________________
A-6
<PAGE>
EXHIBIT A TO NOTICE OF SECURITY INTEREST
----------------------------------------
ACCOUNTS AND INVESTMENTS
------------------------
{List Accounts (including account name, account number and any other information
necessary to sufficiently identify each such Pledged Account) and, on an Account
by Account basis, the respective Investments credited thereto or deposited
therein}
{Accounts: Interest Reserve Account, the Completion Reserve Account, the
Construction Disbursement Account, and the Disbursed Funds Account}
A-7
<PAGE>
EXHIBIT B TO PLEDGE AND ASSIGNMENT
----------------------------------
FORM OF CONFIRMATION
--------------------
The undersigned hereby represents, confirms and agrees as follows for
the benefit of IBJ Schroder Bank & Trust Company, a New York banking
corporation, as trustee ("SECURED PARTY"):
-------------
1. Notice of Security Interest. This Confirmation is delivered
---------------------------
pursuant to that certain Notice of Security Interest in Securities Accounts and
Investments executed by Isle of Capri Black Hawk L.L.C., a Colorado limited
liability company (the "COMPANY") and Isle of Capri Black Hawk Capital Corp., a
-------
Colorado corporation ("CAPITAL CORP" and, together with the Company, each a
------------
"DEBTOR" and collectively the "DEBTORS") and directed to the undersigned, a copy
- ------- -------
of which is attached (the "NOTICE OF SECURITY INTEREST").
---------------------------
2. Confirmation of Accounts and Investments. {check appropriate box
----------------------------------------
[_] This Confirmation constitutes the first Confirmation provided by the
undersigned pursuant to the Notice of the Security Interest. The
undersigned confirms that: (a) each of the Accounts described in Exhibit A
---------
is identified on the books of the undersigned as being held in the name of
IBJ Schroder Bank & Trust Company, a New York banking corporation, as
trustee, as secured party under that certain Pledge and Assignment executed
by the Debtors in favor of the Secured Party dated as of August 20, 1997;
(b) each of the Investments listed on Exhibit A to the Notice of Security
---------
Interest also is listed on Exhibit 1 attached hereto: (c) Exhibit 1
--------- ---------
attached hereto accurately describes all of the respective Investments
presently credited to or deposited into the Accounts listed thereon; and
(d) except for the interests of the Debtors as owners thereof and the
security interest of the Secured Party therein, the undersigned is not
aware of and does not have notice of any other interest or adverse claim in
said Accounts or Investments.
[_] This Confirmation constitutes the second or subsequent Confirmation
provided by the undersigned pursuant to the Notice of Security Interest.
The undersigned confirms that: (a) each of the Accounts described in
Exhibit 1 attached hereto is identified on the books of the undersigned as
---------
being held in the name of IBJ Schroder Bank & Trust Company, a New York
banking corporation, as trustee, as secured party under that certain Pledge
and Assignment executed by the Debtors in favor of Secured Party dated as
of August 20, 1997; (b) Exhibit 1 attached hereto accurately describes all
---------
of the respective Investments presently credited to or deposited into the
Accounts listed thereon; and (c) except for the interests of the Debtors as
owners thereof and the security interest of the Secured Party therein, the
undersigned is not aware of and does not have notice of any other interest
or adverse claim in said Accounts or Investments.
3. Perfection. The undersigned confirms the following with respect
----------
to the Investments referenced in Section 2 of this Confirmation:
B-1
<PAGE>
(a) With respect to each such Investment constituting a
Certificated Security (other than a Certificated Security issued by the federal
government or any agency or instrumentality thereof for which a federal statute
or regulation provides a method of perfection of a security interest which is
different from the UCC), the undersigned qualifies under and has taken the
actions described in Section 3(a)(i), (ii) or (iii) below, as indicated on
Exhibit 1 attached hereto:
- ---------
(i) The undersigned is a "financial intermediary" (as such term is
used in Article 8 of the UCC), and the undersigned has acquired actual
possession of the Certificated Security specially indorsed to or issued in
the name of the Secured Party [Perfection pursuant to UCC (S)(S) 8-
302(1)(c) and 8-313(1)(c)]; or
(ii) The undersigned is a "financial intermediary" (as such term is
used in Article 8 of the UCC), but is not a "clearing corporation" (as such
term is used in Article 8 of the UCC), the Certificated Security is in the
undersigned's possession and the undersigned has by book-entry or otherwise
identified the Certificated Security as belonging to, or subject to, a
limited interest in favor of the Secured Party [Perfection pursuant to UCC
(S)(S) 8-302(1)(c) and 8-313(1)(d)(i)]; or
(iii) The undersigned is a "clearing corporation" (as such term is
used in Article 8 of the UCC) and:
(A) the undersigned or a "custodian" (as such term is used in
Article 8 of the UCC) or a nominee of either subject to the control of the
undersigned has custody of the Certificated Security;
(B) the Certificated Security is in bearer form or indorsed in
blank by an appropriate person in favor of, or is registered in favor of,
the undersigned or such custodian or nominee; and
(C) immediately prior to the undersigned's receipt of the
Notice of Security Interest (or, if later, immediately upon the
undersigned's acquisition of custody of the Certificated Security in the
manner described in clauses (A) and (B) above), the Certificated Security
was shown in the books of the undersigned as being owned by the Debtors,
free and clear of any other interests or adverse claims, and the
undersigned since has made appropriate entries in its books (1) to decrease
the amount (as measured in amount of obligation or number of shares or
other rights of the Certificated Security listed on Exhibit 1 as encumbered
---------
in favor of the Secured Party) of the Certificated Security identified in
the books of the undersigned as being held by the Debtors free and clear of
the security interest in favor of the Secured Party, and (2) to increase
the amount (as measured in amount of obligation or number of shares or
other rights of the Certificated Security listed on Exhibit 1 as encumbered
---------
in favor of the Secured Party) of the Certificated Security identified in
the books of the undersigned as being held in the appropriate Account
referenced in Section 2 hereof as containing such amount of Certificated
Security. [Perfection pursuant to UCC (S)(S) 8-302(1)(c), 8-313(1)(g) and
8-320(1)(a) and (b).]
B-2
<PAGE>
(b) With respect to any such Investment constituting Uncertificated
Securities (other than Uncertificated Securities issued by the federal
government or any agency or instrumentality thereof for which a federal statute
or regulation provides a method of perfection of a security interest which is
different from the UCC), the undersigned qualifies as a "clearing corporation"
(as such term is used in Article 8 of the UCC) and the undersigned has taken the
following actions, as indicated on Exhibit 1 hereto:
---------
(i) the Uncertificated Security has been issued by an issuer
organized under the laws of a state within the United States of America
whose laws permit a pledge of the Uncertificated Securities to be perfected
by registration of the pledge on the books of the issuer or its transfer
agent;
(ii) the Uncertificated Security has been registered on the books of
the issuer or its transfer agent in the name of the undersigned (or in the
name of another "clearing corporation" or "custodian" (as such terms are
used in the Article 8 of the UCC), or a nominee of either of them, but in
each such case only if the entity is acting under and subject to the
undersigned's control), and in connection therewith the undersigned has
received a written initial transaction statement (of the type contemplated
by, and complying with the requirements of, Section 8-408 of the UCC) from,
and signed by or on behalf of, said issuer or transfer agent confirming:
(A) the description of the issue of which the Uncertificated Security is a
part; (B) the number of shares or units pledged; (C) the name, address, and
taxpayer identification number, if any, of the Debtors and the Secured
Party, (D) that, immediately after registration of said pledge, there were
no liens, restrictions or adverse claims (as to which the issuer or
transfer agent issuing the statement had a duty to disclose under Section
8-403 of the UCC or otherwise) with respect to the Uncertificated Security;
and (E) the date that the pledge was registered; and
(iii) immediately prior to the undersigned's receipt of the Notice of
Security Interest (or, if later, immediately upon the registration of the
Uncertificated Security in the manner described in clauses (i) and (ii)
above), the Uncertificated Security was shown in the books of the
undersigned as being owned by the Debtors, free and clear of any other
interests or adverse claims, and the undersigned since has made appropriate
entries in its books (A) to decrease the amount (as measured in amount of
obligation or number of shares or other rights of the Uncertificated
Security listed on Exhibit 1 as encumbered in favor of the Secured Party)
---------
of the Uncertificated Security identified in the books of the undersigned
as being held by the Debtors free and clear of the security interest in
favor of the Secured Party, and (B) to increase the amount (as measured in
amount of obligation or number of shares or other rights of the
Uncertificated Security listed on Exhibit 1 as encumbered in favor of the
---------
Secured Party) of the Certificated Security identified in the books of the
undersigned as being held in the appropriate Account referenced in Section
2 hereof as containing such amount of Certificated Security. [Perfection
pursuant to UCC (S)(S) 8-302(1)(b) and (c), 8-313(1)(g), 8-320(1)(c), 8-408
and 9-103(b).]
B-3
<PAGE>
(c) Federal Book-Entry Securities. With respect to any Pledged
-----------------------------
Collateral consisting of "Federal Book-Entry Securities" (as hereinafter
defined), the undersigned qualifies and has taken all actions described in
Section 3(c)(i), (ii) or (iii) below, as indicated on Exhibit 1 attached hereto:
---------
(i) the undersigned has become the "entitlement holder" (as such
term is used in Article 8 of the applicable Uniform Commercial Code)
[Perfection pursuant to 12 C.F.R. (S)(S) 615.5453 and 615.5454(c)(2), (S)
615.5560(c) and (S)(S) 912.3 and 912.4(c)(2), (S) 950.4(b) and (S)(S)
1511.3 and 1511.4(c)(2), 18 C.F.R. (S)(S) 1314.4 and 1314.5(d), 24 C.F.R.
(S)(S) 81.92 and 81.93(c)(2), 31 C.F.R. (S)(S) 354.4(c)(2) and 354.3, and
(S)(S) 357.11 and 357.12(c)(2) and applicable Uniform Commercial Code 8-
106(d)(1)]; or
(ii) the undersigned is a "securities intermediary" and has agreed
in writing that it will comply with "entitlement orders" (as such terms are
used in Article 8 of the applicable Uniform Commercial Code) given by the
Secured Party without further consent of the Debtors [Perfection pursuant
to 12 C.F.R. (S)(S) 615.5453 and 615.5454(c)(2), (S) 615.5560(c) and (S)(S)
912.3 and 912.4(c)(2), (S) 950.4(b) and (S)(S) 1511.3 and 1511.4(c)(2), 18
C.F.R. (S)(S) 1314.4 and 1314.5(d), 24 C.F.R. (S)(S) 81.92 and 81.93(c)(2),
31 C.F.R. (S)(S) 354.4(c)(2) and 354.3, and (S)(S) 357.11 and 357.12(c)(2)
and applicable Uniform Commercial Code 8-106(d)(1)]; or
(iii) pursuant to a specific requirement of federal law or an
agreement with a Federal "Reserve Bank" or a "Federal Reserve Bank" (as
such terms are defined in 12 C.F.R. (S)(S) 615.5450(i), 912.1(e), 940.4(b)
and 1511.1, 18 C.F.R. (S) 1314.2(k), 24 C.F.R. (S) 81.91, 31 C.F.R. (S)(S)
354.1(g) and 306.115(a)) or a "Federal Reserve Bank Operating Circular,"
(as such term is defined in 12 C.F.R. (S)(S) 615.5450(j), 912.1(f),
940.4(b) and 1511.1, 18 C.F.R. (S) 1314(l), 24 C.F.R. 81.2, 31 C.F.R.
(S)(S) 354.1(h) and 357.2) a Federal Reserve Bank has marked its books to
record the security interest in such Book-Entry Treasury Securities in
favor of the Secured Party [Perfection pursuant to 12 C.F.R. (S)(S)
615.5454(c)(1), 912.4(c)(1), 950.4(b) and 1511.4(c)(1), 18 C.F.R. (S)
1314.5(c), 24 C.F.R. (S) 81.93(c)(1), 31 C.F.R. (S)(S) 354.4(c)(1) and
357.12(c)(1)]
For the purposes of this Section 3(c) only, references to the "applicable
Uniform Commercial Code" shall mean, (i) in the case of the Company, the Company
State (as defined in the Notice of Security Interest) if such state has adopted
Revised Article 8 (as defined in the Notice of Security Interest) and otherwise
Revised Article 8, and (ii) in the case of Capital Corp, the Capital Corp State
(as defined in the Notice of Security Interest) if such state has adopted
Revised Article 8 and otherwise Revised Article 8 [Pursuant to 12 C.F.R. (S)(S)
615.5453(c) and (d), (S) 615.5560(c), (S)(S) 912.3(c) and (d), (S) 950.4 and
(S)(S)1511.3(c) and (d), 18 C.F.R. (S) 1314.4(d), 24 C.F.R. (S)(S) 81.92(c) and
(d), 31 C.F.R. (S)(S) 354.3(c) and (d) and (S)(S) 357.11(c) and (d)].
For purposes of this Agreement, a "FEDERAL BOOK-ENTRY SECURITY" means any of the
---------------------------
following: a Book-entry Security (i.e. a Book-entry Farm Credit Security) as
----
such term is defined in 12 C.F.R. (S) 615.5450(b), a Book-entry Financial
Assistance Corporation Security as referenced in 12 C.F.R. (S) 615.5560(c), a
Book-entry Federal Home Loan Bank Security as such term is defined in 12 C.F.R.
(S) 912.1(b), a Book-entry Financing Corporation Obligation as defined in 12
C.F.R. (S) 950.4(b), a Book-entry Funding Corporation Security as such term is
defined in 12
B-4
<PAGE>
C.F.R. (S) 1511.1, a Book-entry TVA Power Security as such term is defined in 18
C.F.R. (S) 1314.2(b), a Book-entry GSE Security as such term is defined in 24
C.F.R. (S) 81.2, a Book-entry Security (i.e. a Book-entry Treasury Security) as
----
such term is defined in 31 C.F.R. (S) 357.2 or an Eligible Book-entry Sallie Mae
Security as such term is defined in 31 C.F.R. (S) 354.1(e).
(d) With respect to any such Investment constituting a Non Revised
Article 8 Federal Book-Entry Security, the undersigned qualifies under and has
taken the actions described in Section 3(d)(i) or (ii) below, as indicated on
Exhibit 1 attached hereto:
- ---------
(i) The undersigned qualifies as a financial institution capable of
maintaining a book-entry account with a Reserve Bank (as such term is
defined in the Code of Federal Regulations (the "C.F.R.") Title 7, Section
------
1901.503(b)(1) and Title 39, Section 761.1(a) located within New York, the
Non Revised Article 8 Federal Book-Entry Security has been transferred to
the undersigned and is identified as within the book-entry account which
the undersigned maintains at said Reserve Bank. [Perfection pursuant to
UCC (S) 8-321(5), [1 C.F.R. (S) 462.4(a)], 7 C.F.R. (S) 1901.506(c)(1) and
39 C.F.R. (S) 761.4(a)]
(ii) The undersigned does not qualify as a financial institution
capable of maintaining a book-entry account with a Reserve Bank (as such
term is defined in 7 C.F.R. (S) 1901.503(b)(1) and 39 C.F.R. (S) 761.1(a)),
but (A) the Security has been transferred to a financial institution
located within New York capable of maintaining a book-entry account with a
Reserve Bank located within New York, (B) is identified as within the book-
entry account which said financial institution maintains at said Reserve
Bank, (C) the undersigned has received confirmation reasonably satisfactory
to the undersigned that such Non Revised Article 8 Federal Book-Entry
Security has been registered in the records of said financial institution
in the name of the undersigned, and (D) the undersigned either:
(1) qualifies as a "financial intermediary" (as such term is
used in Article 8 of the UCC), but is not a "clearing corporation" (as such
term is used in Article 8 of the UCC) [Perfection pursuant to UCC (S) 8-
321(5), 7 C.F.R. (S) 1901.506(c)(2) and 39 C.F.R. (S) 761.4(b), and UCC
(S)(S) 8-302(1)(c) and 8-313(1)(d)(i)]; or
(2) qualifies as a "clearing corporation" (as such term is
used in Article 8 of the UCC) and immediately prior to the undersigned's
receipt of the Notice of Security Interest (or, if later, immediately upon
the undersigned's causing such Non Revised Article 8 Federal Book-Entry
Security to be registered in the records of said financial institution
referenced in section 3(c)(ii) above in the name of the undersigned), such
Non Revised Article 8 Federal Book-Entry Security was shown in the books of
the undersigned as being owned by the Debtors, free and clear of any other
interests or adverse claims, and the undersigned since has made appropriate
entries in its books (a) to decrease the amount (as measured in amount of
obligation or number of shares or other rights of the Non Revised Article 8
Federal Book-Entry Security listed on Exhibit 1 as encumbered in favor of
---------
the Secured Party) of the Non Revised Article 8 Federal
B-5
<PAGE>
Book-Entry Security identified in the books of the undersigned as being
held by the Debtors free and clear of the security interest in favor of the
Secured Party, and (b) to increase the amount (as measured in amount of
obligation or number of shares or other rights of the Non Revised Article 8
Federal Book-Entry Security listed on Exhibit 1 as encumbered in favor of
---------
the Secured Party) of the Non Revised Article 8 Federal Book-Entry Security
identified in the books of the undersigned as being held in the appropriate
Account referenced in Section 2 hereof as containing such amount of Non
Revised Article 8 Federal Book-Entry Security. [Perfection pursuant to UCC
(S) 8-321(5), 7 C.F.R. (S) 1901.506(c)(2), 39 C.F.R. (S) 761.4(b), and UCC
(S)(S) 8-302(1)(c), 8-313(1)(g) and 8-320(1)(a)]
For purposes of this Agreement, a "NON REVISED ARTICLE 8 FEDERAL BOOK-ENTRY
----------------------------------------
SECURITY" means a Book-entry FmHA as such term is defined in 7 C.F.R.
- --------
1901.503(b)(4) or a Book-entry Postal Service security as such term is defined
in 39 C.F.R. (S) 761.1(d).
(e) With respect to any such Investment constituting a Certificated
or Uncertificated Security issued by the federal government or any agency or
instrumentality thereof for which a federal statute or regulation provides a
method for perfection of the security interest different from those specified in
the UCC (other than a Federal Book-Entry Security of the types described in
Section 3(c) above and a Non Revised Article 8 Book-Entry Federal Security of
the type described in Section 3(d) above), the undersigned has obtained an
opinion of counsel describing the steps to be taken in order to provide the
Secured Party with a first priority security interest therein, a copy of which
is attached hereto, and the undersigned has taken all such steps, as indicated
on Exhibit 1 attached hereto. [Perfection pursuant to UCC (S) 8-321(5) and other
---------
applicable requirements]
4. Instructions. The undersigned shall comply with the instructions
------------
set forth in the Notice of Security Interest. In particular: (a) the
undersigned agrees to take such further actions as the Secured Party reasonably
may request from time to time in order to assure the continued perfection and
priority of the Secured Party's first priority security interest in the
Securities; (b) the undersigned agrees to take such steps as the Secured Party
may request with respect to enforcement of the security interests granted to the
Secured Party; and (c) the undersigned agrees that the Secured Party may replace
the undersigned at any time by notification in writing of such replacement, and
the undersigned shall take such steps as the Secured Party may request to
dispose of or transfer the Securities.
5. Waiver. The undersigned waives and releases any and all liens,
------
claims, encumbrances and rights of setoff which it may have in the Accounts and
the Investments, including all rights of offset, deduction and liens (whether
statutory or otherwise) afforded by law, agreement or otherwise against the
Accounts and/or the Investments.
6. Miscellaneous. The rights and obligations of the Debtors, the
-------------
Secured Party and the undersigned shall be governed by New York law. The
Secured Party may rely upon the representations, confirmations, and agreements
set forth herein, and said representations, confirmations and agreements may not
be amended or terminated except with the written consent of the Secured Party.
In the event of a dispute hereunder or under the
B-6
<PAGE>
Notice of Security Interest, the prevailing party shall be entitled to an award
of its attorneys' fees and other costs.
Date:_______________, 199__ _____________________________________________
By:__________________________________________
Name:________________________________________
Title:_______________________________________
B-7
<PAGE>
EXHIBIT 1 TO CONFIRMATION
-------------------------
ACCOUNTS AND INVESTMENTS
------------------------
{List Investments, by Account}
<TABLE>
<CAPTION>
===================================================================================================================
Account Security or Cash Certificated or Uncertificated Qualification/Actions for perfection, by
{check appropriate box} reference to Section in Confirmation
{check appropriate box}
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
[_]Certificated [_]3(a)(i) [_]3(a)(ii) [_]3(a)(iii) [_]3(b)
[_]Uncertificated [_]3(c)(i) [_]3(c)(ii) [_]3(d)(i)
[_]3(d)(ii) [_]3(d)(ii) [_]3(e)
- -------------------------------------------------------------------------------------------------------------------
[_]Certificated [_]3(a)(i) [_]3(a)(ii) [_]3(a)(iii) [_]3(b)
[_]Uncertificated [_]3(c)(i) [_]3(c)(ii) [_]3(d)(i)
[_]3(d)(ii) [_]3(d)(ii) [_]3(e)
- --------------------------------- ---------------------------------------------------------------------------------
[_]Certificated [_]3(a)(i) [_]3(a)(ii) [_]3(a)(iii) [_]3(b)
[_]Uncertificated [_]3(c)(i) [_]3(c)(ii) [_]3(d)(i)
[_]3(d)(ii) [_]3(d)(ii) [_]3(e)
- -------------------------------------------------------------------------------------------------------------------
[_]Certificated [_]3(a)(i) [_]3(a)(ii) [_]3(a)(iii) [_]3(b)
[_]Uncertificated [_]3(c)(i) [_]3(c)(ii) [_]3(d)(i)
[_]3(d)(ii) [_]3(d)(ii) [_]3(e)
- --------------------------------- ---------------------------------------------------------------------------------
[_]Certificated [_]3(a)(i) [_]3(a)(ii) [_]3(a)(iii) [_]3(b)
[_]Uncertificated [_]3(c)(i) [_]3(c)(ii) [_]3(d)(i)
[_]3(d)(ii) [_]3(d)(ii) [_]3(e)
- --------------------------------- ---------------------------------------------------------------------------------
[_]Certificated [_]3(a)(i) [_]3(a)(ii) [_]3(a)(iii) [_]3(b)
[_]Uncertificated [_]3(c)(i) [_]3(c)(ii) [_]3(d)(i)
[_]3(d)(ii) [_]3(d)(ii) [_]3(e)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
[_]Certificated [_]3(a)(i) [_]3(a)(ii) [_]3(a)(iii) [_]3(b)
[_]Uncertificated [_]3(c)(i) [_]3(c)(ii) [_]3(d)(i)
[_]3(d)(ii) [_]3(d)(ii) [_]3(e)
------------------------------------------------------------------------------------------------------------------
[_]Certificated [_]3(a)(i) [_]3(a)(ii) [_]3(a)(iii) [_]3(b)
[_]Uncertificated [_]3(c)(i) [_]3(c)(ii) [_]3(d)(i)
[_]3(d)(ii) [_]3(d)(ii) [_]3(e)
[_]Certificated [_]3(a)(i) [_]3(a)(ii) [_]3(a)(iii) [_]3(b)
[_]Uncertificated [_]3(c)(i) [_]3(c)(ii) [_]3(d)(i)
[_]3(d)(ii) [_]3(d)(ii) 3(e)
==================================================================================================================
</TABLE>
2
<PAGE>
EXHIBIT 4.11
CONSENT TO ASSIGNMENT OF
CONSTRUCTION AGREEMENT
----------------------
THIS CONSENT TO ASSIGNMENT OF CONSTRUCTION AGREEMENT (as amended,
supplemented or otherwise modified from time to time, this "CONSENT") is made as
of August 20, 1997, by HASELDEN CONSTRUCTION, INC. a Colorado corporation (the
"CONTRACTING PARTY"), whose address is 2134 S. Valentia Street, Denver Colorado
80231 for the benefit of IBJ SCHRODER BANK AND TRUST COMPANY, a New York banking
association, as trustee (the "TRUSTEE") for the benefit of itself and the
holders of the Notes (as defined below), whose address is One State Street, New
York, New York 10004.
RECITALS
--------
A. NOTES. Pursuant to that certain Indenture dated as of August 20, 1997
-----
(as amended, supplemented or otherwise modified from time to time, the
"INDENTURE"), by and between Isle of Capri Black Hawk L.L.C., a Colorado limited
liability company (the "COMPANY"), Isle of Capri Black Hawk Capital Corp., a
Colorado corporation ("CAPITAL CORP" and, together with the Company, the
"Issuers"), as co-issuers, and Trustee, the Issuers shall issue $75,000,000
principal amount of its 13% First Mortgage Notes due 2004 With Contingent
Interest (the "Original Notes," and together with any New Notes issued in
exchange therefor, the "NOTES"), to finance the design, construction and
operation of the Isle Black Hawk. All defined terms used herein and not
otherwise defined, shall have the meanings set forth in the Indenture.
B. PURPOSE. Contracting Party and the Company are parties to that
-------
certain Design-Build Agreement dated July 22, 1997 (as amended, supplemented or
otherwise modified from time to time, the "CONTRACT"), relating to the
construction or operation of Isle of Capri-Black Hawk. In order to induce the
holders of the Notes to enter into the transactions contemplated by the
Indenture, the Company has executed a Collateral Assignment collaterally
assigning all of the Company's right, title and interest in and to, among other
things, the Contract (as amended, supplemented or otherwise modified from time
to time, the "COLLATERAL ASSIGNMENT"), dated of even date with the Indenture, in
favor of Trustee, in order to secure the obligations of the Company under, among
other documents, the Notes, the Indenture and the Collateral Documents
(collectively, the "OBLIGATIONS"), and Contracting Party consents to such
assignment.
CONSENT
-------
NOW THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, Contracting Party agrees as follows:
1. CONSENT TO ASSIGNMENT. Pursuant to the Contract, Contracting
---------------------
Party has performed or supplied, or agreed to perform or supply, certain
services, materials or documents
<PAGE>
in connection with Isle-Black Hawk. Contracting Party hereby consents to the
assignment of the Contract by the Company to Trustee as provided in the
Collateral Assignment and this Consent.
2. COMPANY'S DEFAULT UNDER CONTRACT. If the Company defaults under
--------------------------------
the Contract, before exercising any remedy, Contracting Party shall deliver to
Trustee at its address set forth above, with a copy to the Independent
Construction Consultant, at 1670 Broadway, Suite 3200, Denver, Colorado 80202
(or such other address provided thereby in writing to the Company), by
registered or certified mail, postage prepaid, return receipt requested, written
notice of such default, specifying the nature of the default and the steps
necessary to cure the same, and clearly marked as a notice of default pursuant
to Paragraph 2 of this Agreement. If the Company fails to cure the default
within the time permitted under the Contract, then Trustee shall have an
additional thirty (30) days after the expiration of the time permitted under the
Contract (but in no event less than an additional thirty (30) days after the
receipt by Trustee of said notice from Contracting Party) within which Trustee
shall have the right, but not the obligation, to cure such default; provided,
however, that, with respect to payment defaults only, Trustee shall have thirty
(30) days from receipt of notice of such default within which Trustee shall have
the right, but not the obligation, to cure such default. Contracting Party's
delivery of such a notice of default to Trustee and the failure to cure the same
within the said additional period shall be conditions precedent to the exercise
of any right or remedy of Contracting Party arising by reason of such default,
except that Contracting Party shall not be required to continue performance
under the Contract for the said additional period, unless and until Trustee
agrees to and shall pay Contracting Party for that portion of the work, labor
and materials rendered during the said period; provided that if Trustee elects
to continue performance under the Contract for the said additional period,
Trustee shall have all the rights and obligation of the Company under the
Contract.
3. CERTIFICATE OF DEFAULT STATUS. Upon the written request of
-----------------------------
Trustee at any time and from time to time, Contracting Party shall furnish to
Trustee, within five (5) days of receipt of such request, a certificate stating
whether, as of such request receipt date, the Company is in default on the
Contract, and if so, the nature of the default and the steps necessary to cure
the same. Such certificate shall not constitute a written notice of default
pursuant to Paragraph 2 hereof unless clearly marked as such.
4. COMPANY'S DEFAULT UNDER OBLIGATIONS. If Trustee gives written
-----------------------------------
notice to Contracting Party that the Company has defaulted under the Obligations
and requests that Contracting Party continue its performance under the Contract,
Contracting Party shall thereafter perform for Trustee under the Contract in
accordance with its terms, so long as Contracting Party shall be paid pursuant
to the Contract for all work, labor and materials rendered or supplied
thereunder, including payment of any sums due to Contracting Party for work
performed or materials supplied up to and including the date of the Company's
default and the Trustee otherwise performs the obligations of the Company under
the Contract.
5. PERFORMANCE FOR TRUSTEE. If Trustee (a) cures any default by the
-----------------------
Company pursuant to Paragraph 2 above, (b) gives written notice to Contracting
Party that the Company has defaulted under the Obligations pursuant to Paragraph
4 above, (c) becomes the owner of Isle-Black Hawk, (d) undertakes to complete
the construction of Isle-Black Hawk
2
<PAGE>
pursuant to its rights under the Collateral Documents, or (e) following a
Default or an Event of Default under the Indenture or the Cash Collateral and
Disbursement Agreement, otherwise requires the performance of Contracting
Party's obligations under the Contract or the use of any plans, specifications,
engineering reports, soil and environmental reports, site plans, surveys,
working drawings, shop drawings, other reports, drawings and plans and other
such documents, and any amendments, modifications, supplements, general
conditions, addenda, additions and changes thereto, previously prepared or
provided by Contracting Party pursuant to the Contract (collectively, "PLANS"),
then in any such event, so long as Contracting Party has received and continues
to receive the compensation required under the Contract related thereto, Trustee
shall have the right to obtain performance from Contracting Party of all of its
obligations under the Contract, and to use all Plans, and the ideas, designs and
concepts contained therein, in connection with the completion of Isle-Black
Hawk, without the payment of any additional fees or charges to Contracting
Party; provided that if the Trustee elects to obtain performance from
Contracting Party of all such obligations, Trustee shall perform the obligations
of the Company under the Contract.
6. AMENDMENTS AND CHANGE ORDERS. Contracting Party agrees that it
----------------------------
will not modify, amend, supplement or in any way join in the release or
discharge of Contracting Party's obligations under the Contract, without the
prior written consent of the Independent Construction Consultant (which consent
shall be granted in accordance with the Cash Collateral and Disbursement
Agreement), if such modification, amendment or supplement (i) results in a cost
increase in excess of Twenty-Five Thousand Dollars ($25,000), (ii) results in a
material lessening of the scope or quality of the work constituting the design
or construction of the Isle-Black Hawk, the value of which is in excess of
Twenty-Five Thousand Dollars ($25,000), or (iii) results in the likely addition
of no less than one week of construction.
7. LIST OF SUBCONTRACTING PARTIES. Upon the written request of
------------------------------
Trustee at any time and from time to time, Contracting Party shall furnish to
Trustee a current list of all persons with whom Contracting Party has entered
into subcontracts or other agreements related to the rendering of work, labor or
materials under the Contract, together with a statement as to the status of each
such subcontract or agreement, and the respective amounts, if any, owed by
Contracting Party related thereto.
8. REPRESENTATIONS AND WARRANTIES. Contracting Party represents and
------------------------------
warrants to Trustee that (a) it is duly licensed to conduct its business in the
jurisdiction contemplated by the Contract, and will at all times maintain its
license in full force and effect throughout the term thereof, (b) the Contract
has not been amended, modified or supplemented, (c) the Contract constitutes a
valid and binding obligation of Contracting Party and is enforceable in
accordance with its terms, (d) there have been no prior assignments of the
Contract, and (e) all covenants, conditions and agreements of the Company and
Contracting Party contained in the Contract have been performed as required
therein, except for those that are not due to be performed until after the date
hereof.
9. APPLICATION OF FUNDS. Nothing herein imposes or shall be
--------------------
construed to impose upon Trustee any duty to direct the application of any
proceeds of the Notes, and
3
<PAGE>
Contracting Party acknowledges that Trustee is not obligated to Contracting
Party or any of its subcontracting parties, materialmen, suppliers or laborers.
10. ACKNOWLEDGMENT OF ACCOMMODATION. Contracting Party is executing
-------------------------------
this consent as an accommodation to the purchasers of the Notes to purchase the
Notes.
11. GAMING LAWS AND REGULATIONS. Contracting Party acknowledges
---------------------------
that, to the extent required under applicable law, the consummation of the
transactions contemplated hereby and the exercise of remedies hereunder may be
subject to the Colorado Limited Game Act, and the regulations promulgated
pursuant to each such law, all as amended from time to time.
12. IRREVOCABILITY. The provisions hereof shall be irrevocable and
--------------
remain in full force and effect until the Company has fully paid and performed
all of the Obligations.
13. NOTICES. Except for notices sent pursuant to Paragraph 2 above,
-------
any notices to Trustee hereunder shall be sent to its address set forth above,
by U.S. Mail, postage prepaid.
14. GOVERNING LAW. This Consent shall be governed by the laws of the
-------------
State of New York.
4
<PAGE>
IN WITNESS WHEREOF, Contracting Party has executed this Consent to
Assignment of Construction Agreement as of the date first above written.
CONTRACTING PARTY:
-----------------
HASELDEN CONSTRUCTION, INC.,
By: /s/ Ed Haselden
--------------------------
Name: ED HASELDEN
-----------------------
Title: PRESIDENT
-----------------------
<PAGE>
EXHIBIT 4.12
CONSENT TO ASSIGNMENT OF
MANAGEMENT AGREEMENT
--------------------
THIS CONSENT TO ASSIGNMENT OF MANAGEMENT AGREEMENT (as amended,
supplemented or otherwise modified from time to time, this "CONSENT") is made as
of August 20, 1997, by CASINO AMERICA, INC., a Delaware corporation (the
"CONTRACTING PARTY"), whose address is 711 Washington Loop, Biloxi, Mississippi
39530, for the benefit of IBJ SCHRODER BANK AND TRUST COMPANY, a New York
banking corporation, as trustee (the "TRUSTEE") for the benefit of itself and
the holders of the Notes (as defined below), whose address is One State Street,
New York, New York 10004.
RECITALS
--------
A. NOTES. Pursuant to that certain Indenture dated as of August 20, 1997
-----
(as amended, supplemented or otherwise modified from time to time, the
"INDENTURE"), by and between Isle of Capri Black Hawk, L.L.C., a Colorado
limited liability company (the "COMPANY"), Isle of Capri Black Hawk Capital
Corp., a Colorado corporation ("CAPITAL CORP" and, together with the Company,
the "Issuers"), as co-issuers, and Trustee, the Issuers shall issue $75,000,000
principal amount of its 13% First Mortgage Notes due 2004 With Contingent
Interest (the "Original Notes," and together with any New Notes issued in
exchange therefor, the "NOTES"), to finance the design, construction and
operation of the Isle Black Hawk. All defined terms used herein and not
otherwise defined, shall have the meanings set forth in the Indenture.
B. PURPOSE. Contracting Party and the Company are parties to that
-------
certain Amended and Restated Management Agreement dated as of July 29, 1997 (as
further amended, supplemented or otherwise modified from time to time, the
"CONTRACT"), relating to the management and operation of the Isle-Black Hawk.
In order to induce the holders of the Notes to enter into the transactions
contemplated by the Indenture, the Company has executed a Collateral Assignment
collaterally assigning all of the Company's right, title and interest in and to,
among other things, the Contract (the "COLLATERAL ASSIGNMENT"), dated of even
date with the Indenture, in favor of Trustee, in order to secure the obligations
of the Company under, among other documents, the Notes, the Indenture and the
Collateral Documents (collectively, the "OBLIGATIONS"), and Contracting Party
consents to such assignment.
CONSENT
-------
NOW THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, Contracting Party agrees as follows:
1. CONSENT TO ASSIGNMENT. Pursuant to the Contract, Contracting
---------------------
Party has performed or supplied, or agreed to perform or supply, certain
services in connection with Isle-
<PAGE>
Black Hawk. Contracting Party hereby consents to the assignment of the Contract
by the Company to Trustee as provided in the Collateral Assignment and this
Consent.
2. COMPANY'S DEFAULT UNDER CONTRACT. If the Company defaults under
--------------------------------
the Contract, before exercising any remedy, Contracting Party shall deliver to
Trustee at its address set forth above, by registered or certified mail, postage
prepaid, return receipt requested, written notice of such default, specifying
the nature of the default and the steps necessary to cure the same, and clearly
marked as a notice of default pursuant to Paragraph 2 of this Agreement. If the
Company fails to cure the default within the time permitted under the Contract,
then Trustee shall have an additional thirty (30) days after the expiration of
the time permitted under the Contract (but in no event less than an additional
thirty (30) days after the receipt by Trustee of said notice from Contracting
Party) within which Trustee shall have the right, but not the obligation, to
cure such default. Contracting Party's delivery of such a notice of default to
Trustee and the failure to cure the same within the said additional period shall
be conditions precedent to the exercise of any right or remedy of Contracting
Party arising by reason of such default, except that Contracting Party shall not
be required to continue performance under the Contract for the said additional
period, unless and until Trustee agrees to pay Contracting Party for that
portion of the work, labor and supplies rendered during the said period (subject
to the Subordination Agreement (defined below)).
3. CERTIFICATE OF DEFAULT STATUS. Upon the written request of
-----------------------------
Trustee at any time and from time to time, Contracting Party shall furnish to
Trustee, within five days of receipt of such request, a certificate stating
whether, as of such request receipt date, the Company is in default on the
Contract, and if so, the nature of the default and the steps necessary to cure
the same. Such certificate shall not constitute a written notice of default
pursuant to Paragraph 2 hereof unless clearly marked as such.
4. COMPANY'S DEFAULT UNDER OBLIGATIONS. If Trustee gives written
-----------------------------------
notice to Contracting Party that the Company has defaulted under the Obligations
and requests that Contracting Party continue its performance under the Contract,
Contracting Party shall thereafter perform for Trustee under the Contract in
accordance with its terms, so long as Contracting Party shall be paid pursuant
to the Contract for all work, labor and supplies rendered or supplied
thereunder, including payment of any sums due to Contracting Party for work
performed or supplies supplied up to and including the date of the Company's
default (subject to the Subordination Agreement).
5. PERFORMANCE FOR TRUSTEE. If Trustee (a) cures any default by the
-----------------------
Company pursuant to Paragraph 2 above, (b) gives written notice to Contracting
Party that the Company has defaulted under the Collateral Documents pursuant to
Paragraph 4 above, (c) becomes the owner of Isle-Black Hawk, (d) undertakes to
complete the construction of Isle-Black Hawk pursuant to its rights under the
Collateral Documents, or (e) following an Event of Default under the Indenture,
otherwise requires the performance of Contracting Party's obligations under the
Contract or the use of any plans and specifications, drawings, surveys or other
materials or documents previously prepared or provided by Contracting Party
pursuant to the Contract, then in any such event, so long as Contracting Party
has received and continues to receive the compensation required under the
Contract related thereto (subject to the
2
<PAGE>
Subordination Agreement), Trustee shall have the right to obtain performance
from Contracting Party of all of its obligations under the Contract, and to use
all such plans and specifications, drawings, surveys and other materials and
documents, and the ideas, designs and concepts contained therein, in connection
with the completion of Isle-Black Hawk, without the payment of any additional
fees or charges to Contracting Party.
6. AMENDMENTS. Contracting Party agrees that it will not modify,
----------
amend, supplement or in any way join in the release or discharge, except
pursuant to the terms of the Contract, of Contracting Party's obligations under
the Contract, unless such change is commercially reasonable to the Company and
is expressly permitted by the Indenture. Contracting Party will not perform any
work pursuant to any such amendment, unless the same is issued and executed in
accordance with the terms and conditions of the Contract.
7. MATERIAL COMMUNICATIONS. Contracting Party agrees that during
-----------------------
the term of the Contract, it shall promptly furnish to Trustee copies of all
material agreements, permits, correspondence, records, proceedings, notices, and
all other material communications and documents relating to the Contract at any
time in the possession of Contracting Party or otherwise furnished to the
Company.
8. OTHER DOCUMENTS. In addition, the parties acknowledge that this
---------------
Consent is subject to the terms of that certain Manager Subordination Agreement,
dated as of the date hereof (as amended, supplemented or otherwise modified from
time to time, the "SUBORDINATION AGREEMENT") between the parties hereto.
9. REPRESENTATIONS AND WARRANTIES. Contracting Party represents and
------------------------------
warrants to Trustee that (a) it is duly licensed to conduct its business in the
jurisdiction contemplated by the Contract, and will at all times maintain its
licenses in full force and effect throughout the term thereof, (b) the Contract
has not been amended, modified or supplemented, (c) the Contract constitutes a
valid and binding obligation of Contracting Party and is enforceable in
accordance with its terms, (d) there have been no prior assignments of the
Contract, and (e) all covenants, conditions and agreements of the Contracting
Party contained in the Contract have been performed as required therein, except
for those that are not due to be performed until after the date hereof.
10. APPLICATION OF FUNDS. Nothing herein imposes or shall be
--------------------
construed to impose upon Trustee any duty to direct the application of any
proceeds of the Notes, and Contracting Party acknowledges that Trustee is not
obligated to Contracting Party or any of its subcontracting parties,
materialmen, suppliers or laborers.
11. ACKNOWLEDGMENT. Contracting Party acknowledges that it is a
--------------
condition precedent to the purchase of the Notes by the purchasers thereof that
the Contracting Party shall have executed and delivered this consent.
12. GAMING LAWS AND REGULATIONS. Contracting Party acknowledges
---------------------------
that, to the extent required under applicable law, the consummation of the
transactions contemplated
3
<PAGE>
hereby and the exercise of remedies hereunder may be subject to Colorado Limited
Gaming Act and the regulations promulgated pursuant to each such law, all as
amended from time to time.
13. IRREVOCABILITY. The provisions hereof shall be irrevocable and
--------------
remain in full force and effect until the Company has fully paid and performed
all of the Obligations.
14. NOTICES. Except for notices sent pursuant to Paragraph 2 above,
-------
any notices to Trustee hereunder shall be sent to its address set forth above,
by U.S. Mail, postage prepaid.
15. GOVERNING LAW. This Consent shall be governed by the laws of the
-------------
State of New York.
4
<PAGE>
IN WITNESS WHEREOF, Contracting Party has executed this Consent to
Assignment of Management Agreement as of the date first above written.
CONTRACTING PARTY:
-----------------
CASINO AMERICA, INC., a Delaware corporation
By: /s/ Allan B. Solomon
------------------------------
Name: Allan B. Solomon
----------------------------
Title: Secretary
---------------------------
<PAGE>
EXHIBIT 4.13
CONSENT TO ASSIGNMENT OF
LICENSE AGREEMENT
-----------------
THIS CONSENT TO ASSIGNMENT OF LICENSE AGREEMENT (as amended,
supplemented or otherwise modified from time to time, this "CONSENT") is made as
of August 20, 1997, by CASINO AMERICA, INC., a Delaware corporation (the
"CONTRACTING PARTY"), whose address is 711 Washington Loop, Biloxi, Mississippi
39350, for the benefit of IBJ SCHRODER BANK AND TRUST COMPANY, a New York
banking corporation, as trustee (the "TRUSTEE") for the benefit of itself and
the holders of the Notes (as defined below), whose address is One State Street,
New York, New York 10004.
RECITALS
--------
A. NOTES. Pursuant to that certain Indenture dated as of the date hereof
-----
(as amended, supplemented or otherwise modified from time to time, the
"INDENTURE"), among Isle of Capri Black Hawk L.L.C., a Colorado limited
liability company (the "COMPANY"), Isle of Capri Black Hawk Capital Corp., a
Colorado corporation ("CAPITAL CORP" and, together with the Company, the
"ISSUERS"), as co-issuers, and the Trustee, the Issuers shall issue $75,000,000
principal amount of its 13% First Mortgage Notes due 2004 With Contingent
Interest (the "ORIGINAL NOTES," and together with any other notes issued in
exchange therefor, the "NOTES"), to finance the design, construction and
operation of the Isle Black Hawk. All defined terms used herein and not
otherwise defined, shall have the meanings set forth in the Indenture.
B. PURPOSE. The Contracting Party and the Company are parties to that
-------
certain License Agreement dated as of July 29, 1997 (as further amended,
supplemented or otherwise modified from time to time, the "CONTRACT"), relating
to the licensing of certain trademarks in the operation of the Isle-Black Hawk.
In order to induce the holders of the Notes to enter into the transactions
contemplated by the Indenture, the Company has executed a Collateral Assignment
collaterally assigning all of the Company's right, title and interest in and to,
among other things, the Contract (the "COLLATERAL ASSIGNMENT"), dated of even
date with the Indenture, in favor of the Trustee, in order to secure the
obligations of the Company under, among other documents, the Notes, the
Indenture and the Collateral Documents (collectively, the "OBLIGATIONS"), and
the Contracting Party consents to such assignment.
CONSENT
-------
NOW THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, the Contracting Party agrees as follows:
1. CONSENT TO ASSIGNMENT. Pursuant to the Contract, the Contracting
---------------------
Party has agreed to license certain Marks (as defined in the Contract) in
connection with Isle-Black Hawk. The Contracting Party hereby consents to the
assignment of the Contract by the Company to the Trustee as provided in the
Collateral Assignment and this Consent.
<PAGE>
2. THE COMPANY'S DEFAULT UNDER CONTRACT. If the Company defaults
------------------------------------
under the Contract, before exercising any remedy, the Contracting Party shall
deliver to the Trustee at its address set forth above, by registered or
certified mail, postage prepaid, return receipt requested, written notice of
such default, specifying the nature of the default and the steps necessary to
cure the same, and clearly marked as a notice of default pursuant to Paragraph 2
of this Agreement. If the Company fails to cure the default within the time
permitted under the Contract, then the Trustee shall have an additional thirty
(30) days after the expiration of the time permitted under the Contract (but in
no event less than an additional thirty (30) days after the receipt by the
Trustee of said notice from the Contracting Party) within which the Trustee
shall have the right, but not the obligation, to cure such default, except where
permitting such additional 30 day cure period could reasonably be expected to
result in diminuation in value of the Marks. The Contracting Party's delivery
of such a notice of default to the Trustee and the failure to cure the same
within the said additional period shall be conditions precedent to the exercise
of any right or remedy of the Contracting Party arising by reason of such
default, except that Contracting Party shall not be required to continue
performance under the Contract for the said additional period, unless and until
Trustee agrees to pay Contracting Party for that portion of the work, labor and
supplies rendered during the said period.
3. CERTIFICATE OF DEFAULT STATUS. Upon the written request of the
-----------------------------
Trustee at any time and from time to time, the Contracting Party shall furnish
to the Trustee, within five (5) days of receipt of such request, a certificate
stating whether, as of such request receipt date, the Company is in default on
the Contract, and if so, the nature of the default and the steps necessary to
cure the same. Such certificate shall not constitute a written notice of
default pursuant to Paragraph 2 hereof, unless clearly marked as such.
-----------
4. THE COMPANY'S DEFAULT UNDER OBLIGATIONS. If the Trustee gives
---------------------------------------
written notice to the Contracting Party that the Company has defaulted under the
Obligations and requests that the Contracting Party continue its performance
under the Contract, the Contracting Party shall thereafter perform for the
Trustee under the Contract in accordance with its terms, so long as the
Contracting Party shall be paid pursuant to the Contract for all work, labor and
supplies or rights rendered, granted or supplied thereunder, including payment
of any sums due to the Contracting Party for work performed or rights or
supplies supplied up to and including the date of the Company's default.
5. PERFORMANCE FOR THE TRUSTEE. If the Trustee (a) cures any
---------------------------
default by the Company pursuant to Paragraph 2 above, (b) gives written notice
to the Contracting Party that the Company has defaulted under the Collateral
Documents pursuant to Paragraph 4 above, (c) becomes the owner of Isle-Black
Hawk, (d) undertakes to complete the construction of Isle-Black Hawk pursuant to
its rights under the Collateral Documents, or (e) following an Event of Default
under the Indenture, otherwise requires the performance of the Contracting
Party's obligations under the Contract, then in any such event, so long as the
Contracting Party has received and continues to receive the compensation
required under the Contract related thereto, the Trustee shall have the right to
obtain performance from the Contracting Party of all of its obligations under
the Contract, without the payment of any additional fees or charges to the
Contracting Party. Notwithstanding the foregoing or anything else in this
consent, the parties
2
<PAGE>
acknowledges and agree that the provisions in this Consent are subject to
Section 10 of the Contract.
6. AMENDMENTS. The Contracting Party agrees that it will not
----------
modify, amend, supplement, except pursuant to the terms of the Contract, of the
Contracting Party's obligations under the Contract, unless such change is
commercially reasonable to the Company and is expressly permitted by the
Indenture. The Contracting Party will not perform any work pursuant to any such
amendment, unless the same is issued and executed in accordance with the terms
and conditions of the Contract.
7. MATERIAL COMMUNICATIONS. The Contracting Party agrees that
-----------------------
during the term of the Contract, it shall promptly furnish to the Trustee copies
of all material agreements, permits, correspondence, records, proceedings,
notices, and all other material communications and documents relating to the
Contract at any time in the possession of the Contracting Party or otherwise
furnished to the Company.
8. REPRESENTATIONS AND WARRANTIES. The Contracting Party represents
------------------------------
and warrants to the Trustee that (a) it is duly licensed to conduct its business
in the jurisdiction contemplated by the Contract, and will at all times maintain
its licenses in full force and effect throughout the term thereof, (b) the
Contract has not been amended, modified or supplemented, (c) the Contract
constitutes a valid and binding obligation of the Contracting Party and is
enforceable in accordance with its terms, (d) there have been no prior
assignments of the Contract, (e) it has all right, title and interest in and to
the Marks and the right to license such Marks, and (f) all covenants, conditions
and agreements of the Contracting Party contained in the Contract have been
performed as required therein, except for those that are not due to be performed
until after the date hereof.
9. APPLICATION OF FUNDS. Nothing herein imposes or shall be
--------------------
construed to impose upon the Trustee any duty to direct the application of any
proceeds of the Notes, and the Contracting Party acknowledges that the Trustee
is not obligated to the Contracting Party or any of its subcontracting parties,
materialmen, suppliers or laborers.
10. ACKNOWLEDGMENT. The Contracting Party acknowledges that it is a
--------------
condition precedent to the purchase of the Notes by the purchasers thereof that
the Contracting Party shall have executed and delivered this consent.
11. GAMING LAWS AND REGULATIONS. The Contracting Party acknowledges
---------------------------
that, to the extent required under applicable law, the consummation of the
transactions contemplated hereby and the exercise of remedies hereunder may be
subject to Colorado Limited Gaming Act and the regulations promulgated pursuant
to each such law, all as amended from time to time.
12. IRREVOCABILITY. The provisions hereof shall be irrevocable and
--------------
remain in full force and effect until the Company has fully paid and performed
all of the Obligations.
3
<PAGE>
13. NOTICES. Except for notices sent pursuant to Paragraph 2 above,
-------
any notices to the Trustee hereunder shall be sent to its address set forth
above, by U.S. Mail, postage prepaid.
14. GOVERNING LAW. This Consent shall be governed by the laws of the
-------------
State of New York.
4
<PAGE>
IN WITNESS WHEREOF, The Contracting Party has executed this Consent
to Assignment of License Agreement as of the date first above written.
CONTRACTING PARTY:
-----------------
CASINO AMERICA, INC., a Delaware corporation
By: /s/Allan B. Solomon
------------------------------------
Name: Allan B. Solomon
----------------------------------
Title: Secretary
---------------------------------
<PAGE>
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On August 19, 1997, before me, Yvonne M. Gutierrez, Notary Public,
personally appeared Allan B. Solomon, [_] personally known to me OR [X] proved
to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Yvonne M. Gutierrez
---------------------------------
Signature of Notary
[NOTARY PUBLIC SEAL APPEARS HERE]
<PAGE>
Exhibit 4.14
MANAGER SUBORDINATION AGREEMENT
-------------------------------
This MANAGER SUBORDINATION AGREEMENT (as amended, supplemented or
otherwise modified from time to time, this "Agreement") is made as of August 20,
1997, by and among IBJ SCHRODER BANK AND TRUST COMPANY, a New York banking
corporation, as trustee (the "Trustee"), for the benefit of itself and the
holders of the Notes (as defined below), CASINO AMERICA, INC., a Delaware
corporation (the "Manager"), and ISLE OF CAPRI BLACK HAWK L.L.C., a Colorado
limited liability company (the "Company").
Recitals
--------
A. The Company and Isle of Capri Black Hawk Capital Corp. ("Capital
Corp" and, together with the Company, the "Issuers") shall issue $75,000,000
principal amount of their 13% First Mortgage Notes due 2004 with Contingent
Interest (the "Original Notes," and together with any New Notes issued in
exchange therefor, the "Notes") pursuant to that certain Indenture dated as of
August 20, 1997 (as amended, supplemented or otherwise modified from time to
time the "Indenture"), by and between the Issuers and the Trustee. All defined
terms used herein and not otherwise defined, shall have the meanings set forth
in the Indenture.
B. The Manager and the Company are parties to that certain Amended and
Restated Management Agreement dated as of July 29, 1997 (as amended,
supplemented or otherwise modified from time to time the "Management
Agreement"), pursuant to which the Company shall pay the Manager a management
fee in consideration of the Manager's services relating to the management and
operation of the Isle-Black Hawk.
C. As a condition to the purchase of the Notes, the parties have agreed
to enter into this Agreement.
Agreement
---------
NOW, THEREFORE, in consideration of the above recitals and the
provisions set forth herein, the Trustee, the Manager and the Company agree as
follows:
1. Subordination to Senior Debt. Notwithstanding any other
----------------------------
provision of the Management Agreement, all payment obligations of the Company,
to the Manager arising under Section 9.1 of the Management Agreement, now
-----------
existing or hereafter arising (other than reimbursement of expenses permitted
thereunder) (collectively, the "Subordinated Obligations") are and shall be
subordinate and junior in right of payment, to the extent and in the manner
hereinafter set forth, to the prior indefeasible payment in full of all Senior
Debt.
"Senior Debt" means (a) all indebtedness, liabilities and obligations
of every kind or nature, absolute or contingent, now existing or hereafter
arising, of the Company, its
<PAGE>
successors and assigns, under the Indenture, the Notes or any Collateral
Documents, to the Trustee or any holder of Notes and their successors and
assigns and any Person who extends credit to the Company for the purpose of
refunding any such indebtedness, liabilities or obligations, including, without
limitation, the principal of, and interest on (including any interest accruing
after the commencement of any bankruptcy, insolvency or similar proceeding with
respect to the Company and any interest which would have accrued but for the
commencement of any such proceeding whether or not allowed as a claim in that
proceeding), and all premiums, fees, charges, expenses and indemnities arising
under or in connection with the Indenture, the Notes or any Collateral
Documents; and (b) any modifications, amendments, refundings, renewals or
extensions of any indebtedness or obligation described in clause (a) above.
Except as and to the extent provided hereinafter, the Manager will not ask,
demand, sue for, take or receive from the Company, by set-off or in any other
manner, direct or indirect payment (whether in cash or property), of the whole
or any part of the Subordinated Obligations, or any transfer of any property in
payment of or as security therefor, so long as there exists a Default or an
Event of Default under the Indenture.
2. Distribution in Liquidation and Bankruptcy. In the event of any
------------------------------------------
distribution, division or application, partial or complete, voluntary or
involuntary, by operation of law or otherwise, of all or any part of the assets
of the Company or the proceeds thereof (including any assets now or hereafter
securing any Subordinated Obligations), to creditors of the Company or upon any
indebtedness of the Company, by reason of the liquidation, dissolution or other
winding up, partial or complete, of the Company, or any receivership, insolvency
or bankruptcy proceeding, or assignment for the benefit of creditors or
marshalling of assets, or any proceeding by or against the Company for any
relief under any bankruptcy or insolvency law or laws relating to the relief of
debtors, readjustment of indebtedness, arrangements, reorganizations,
compositions or extensions, or sale of all or substantially all of the assets of
Borrower, then and in any such event:
(a) The holders of Senior Debt shall be entitled to receive payment
in full in cash of all Senior Debt before the Manager shall be entitled to
receive any payment or other distributions on, or with respect to, the
Subordinated Obligations;
(b) Any payment or distribution of any kind or character, whether in
cash, securities or other property, which but for these provisions would be
payable or deliverable upon or with respect to the Subordinated Obligations
shall instead be paid or delivered directly to the Trustee for the benefit
of the holders of the Senior Debt for application on the Senior Debt,
whether then due or not due, until the Senior Debt shall have first been
fully and indefeasibly paid in cash;
(c) The Manager hereby irrevocably authorizes and empowers the
Trustee, and appoints the Trustee as attorney-in-fact, to demand, sue for,
collect and receive every such payment or distribution and give acquittance
therefor, and to file and vote claims (in bankruptcy proceedings or
otherwise) and take such other actions, in the Trustee's own name or
otherwise, as the Trustee may deem necessary or
2
<PAGE>
advisable for the enforcement of these provisions. The Manager shall duly
and promptly take such action as may be reasonably requested by the Trustee
to assist in its collection of the Subordinated Obligations for the account
of any holder of the Senior Debt, and to file appropriate proofs of claim
with respect to the Subordinated Obligations and to vote the same, and to
execute and deliver to the Trustee on demand such powers of attorney,
proofs of claim, assignments of claim or other instruments as may be
reasonably requested by the Trustee to enable the Trustee or any other
holder of the Senior Debt to enforce any and all claims upon or with
respect to the Subordinated Obligations and to collect and receive any and
all payments or distributions which may be payable or deliverable at any
time upon or with respect to the Subordinated Obligations. In addition, the
Manager shall take no action (whether oral, written or otherwise) in
contravention of any action of the Trustee duly taken and permitted
hereunder;
(d) Should any direct or indirect payment be made to the
Manager upon or with respect to the Subordinated Obligations prior to the
payment in full of the Senior Debt in accordance with these provisions, the
Manager will forthwith deliver the same to the Trustee in precisely the
form received (except for the endorsement or assignment of the Manager
where necessary) for application on the Senior Debt, whether then due or
not due. Until so delivered, the payment or distribution shall be held in
trust by the Manager as property of the holders of the Senior Debt. In the
event of the failure of the Manager to make any such endorsement or
assignment, the Trustee, or any of its officers or employees, are hereby
irrevocably authorized to make the same; and
(e) Each of the parties hereby agrees that it shall be bound
by the terms and provisions hereof, notwithstanding the confirmation of a
plan of reorganization of the Company under Section 1129(b) of the
Bankruptcy Code.
3. Permitted Payments. Subject to the provisions of Paragraphs 2
------------------
and 4 of this Agreement, the Company may pay to and the Manager may accept
payment of amounts due under the Management Agreement, a copy of which is
attached hereto as Exhibit A. Except as otherwise expressly provided in the
Indenture, the Company and the Manager shall not change, alter, amend, waive or
otherwise modify the Management Agreement, without the Trustee's prior written
consent.
4. Default on Senior Debt. In the event that any Default or Event
----------------------
of Default shall occur and be continuing with respect to Senior Debt, or if any
payment of Subordinated Obligations would create a Default or Event of Default,
unless and until all Senior Debt shall have been indefeasibly paid in full in
cash, the right of the Manager to receive any payments or other distributions
with respect to Subordinated Obligations shall be suspended during the
continuance of such Default or Event of Default. If, notwithstanding the
foregoing, the Manager shall receive any payment or distribution of any kind
with respect to Subordinated Obligations(whether from any collateral securing
such obligations or otherwise), such payment or distribution shall be received
in trust for, and shall be delivered to the Trustee promptly in precisely the
form received (except for the endorsement or
3
<PAGE>
assignment of the Manager where necessary) for application on the Senior Debt,
whether then due or not due. Until so delivered, the payment or distribution
shall be held in trust by the Manager as property of the holders of Senior Debt.
5. No Acceleration or Exercise of Remedies. So long as any Senior Debt
---------------------------------------
remains unpaid, the Manager will not (a) cause any portion of the Subordinated
Obligations to become due prior to the due date for such Subordinated
Obligations as set forth in the Management Agreement; (b) accept any payment,
prepayment or defeasance of any portion of the Subordinated Obligations prior to
the due date for such Subordinated Obligations as set forth in the Management
Agreement; (c) modify or alter in any way the provisions of the Management
Agreement if the effect of such is to accelerate the payments of Subordinated
Obligations due thereon; or (d) exercise any remedies with respect to the
Subordinated Obligations or any collateral at any time securing payment or
performance thereof unless and until, in each such case, all of the Senior Debt
shall have indefeasibly paid in full in cash, or the Trustee shall have
otherwise consented in writing.
6. Bankruptcy. Until the Senior Debt shall have been indefeasibly paid in
----------
full in cash, the Manager will not, without the prior consent of the Trustee,
commence, or join with any other person in commencing, any proceeding against
any Person with respect to the Subordinated Obligations under any bankruptcy,
reorganization, readjustment of debt, dissolution, receivership, liquidation or
insolvency law or statute now or hereafter in effect in any jurisdiction.
7. Continuing Subordination. The subordination effected by these
------------------------
provisions is a continuing subordination and may not be modified or terminated
by the Manager or any other holder of any Subordinated Obligations until all of
the Senior Debt shall have been indefeasibly paid in full in cash. At any time
and from time to time, without consent of or notice to the Manager or any other
holder of Subordinated Obligations, and without impairing or affecting the
obligations of any of them hereunder:
(a) The time for the Company's performance of, or compliance with, any
of its agreements contained in the Indenture, the Notes or the Collateral
Documents, or any other agreement, instrument or document relating to the
Senior Debt, may be modified or extended or such performance or compliance
may be waived;
(b) The Trustee may exercise or refrain from exercising any rights
under the Indenture, the Notes or the Collateral Documents, or any other
agreement, instrument or document relating to the Senior Debt;
(c) The Indenture, the Notes or the Collateral Documents, or any other
agreement, instrument or document relating to the Senior Debt, may be
revised, amended or otherwise modified for the purpose of adding or
changing any provisions thereof (including, but not limited to, an increase
in the interest charges), or changing in any manner the rights of the
Trustee or the Company;
4
<PAGE>
(d) Payment of the Senior Debt or any portion thereof may be extended
or refunded or any notes evidencing such Senior Debt may be renewed in
whole or in part;
(e) The maturity of the Senior Debt may be accelerated, and any
collateral security therefor or any other rights of the Trustee may be
exchanged, sold, surrendered, released or otherwise dealt with, in
accordance with the terms of any present or future agreement with the
Company and any other agreement of subordination (and the debt covered
thereby) may be surrendered, released or discharged, or the terms thereof
modified or otherwise dealt with in any manner;
(f) Any person liable in any manner for payment of the Senior Debt
may be released by holders of Senior Debt; and
(g) Notwithstanding the occurrence of any of the foregoing, these
subordination provisions shall remain in full force and effect with respect
to the Senior Debt, as the same shall have been extended, renewed, modified
or refunded.
8. Waivers. The Manager hereby waives, and agrees not to assert (a) any
-------
right, now or hereafter existing, to require the Trustee to proceed against or
exhaust any collateral at any time securing the Senior Debt, or to marshal any
assets in favor of the Manager or any other holder of any Subordinated
Obligations; (b) any notice of the incurrence of Senior Debt, it being
understood advances may be made under the Indenture, or any other agreement,
document or instrument now or hereafter relating to the Senior Debt, without
notice to or authorization of the Manager in reliance upon these subordination
provisions.
In the event this Agreement may cause the Manager to be deemed a surety,
the following provisions apply; provided, however, that nothing contained herein
-------- -------
shall be deemed to be a guarantee by the Obligor of any obligations for the
payment of principal and interest of the Issuers under the Notes. The Manager
hereby waives and relinquishes all rights and remedies accorded by applicable
law to sureties or guarantors and agrees not to assert or take advantage of any
such rights or remedies, including, without limitation, (a) any right to require
the Trustee or any of the Holders (each a "Benefitted Party") to proceed against
the Company or any other Person or to proceed against or exhaust any security
held by a Benefitted Party at any time or to pursue any other remedy in the
power of a Benefitted Party before proceeding against the Manager with respect
to the Subordinated Obligations or other Person, (b) the defense of the statute
of limitations in any action with respect to the Subordinated Obligations
hereunder or in any action for the collection or performance of the Senior
Obligations, (c) any defense that may arise by reason of the incapacity, lack of
authority, death or disability of any Person or the failure of a Benefitted
Party to file or enforce a claim against the estate (in administration,
bankruptcy or any other proceeding) of any Person, (d) appraisal, valuation,
stay, extension, marshaling of assets, redemption, exemption, demand,
presentment, protest and notice of any kind, including, without limitation,
notice of the existence, creation or incurring of any new or additional
indebtedness or obligation or of any action or non-action of the part of a
Benefitted Party,
5
<PAGE>
the Company, any endorser, guarantor or creditor of the Company or on the part
of any Person under this or any other instrument or document in connection with
any Obligation or evidence of Indebtedness held by a Benefitted Party as
collateral or in connection with the Note Obligations, (e) any defense based
upon an election of remedies by a Benefitted Party, including, without
limitation, an election to proceed by non-judicial rather than judicial
foreclosure, which destroys or otherwise impairs the subrogation rights of the
Manger, the right of the Manger to proceed against the Company or any other
Person for reimbursement, or both, (f) any defense based upon any statute or
rule of law which provides that the obligation of a surety must be neither
larger in amount nor in other respects more burdensome than that of the
principal, (g) any duty on the part of a Benefitted Party to disclose to the
Manager any facts a Benefitted Party may now or hereafter know about the Company
or any other Person, regardless of whether a Benefitted Party has reason to
believe that any such facts materially increase the risk beyond that which the
Manager intends to assume, or has reason to believe that such facts are unknown
to the Manger, or has a reasonable opportunity to communicate such facts to the
Manager, because the Manager acknowledges that the Manager is fully responsible
for being and keeping informed of the financial condition of the Company or any
other Person and of all circumstances bearing on the risk of non-payment of any
Senior Obligations, (h) any defense arising because of the election of a
Benefitted Party, in any proceeding instituted under the Federal Bankruptcy
Code, of the application of Section 1111(b)(2) of the Federal Bankruptcy Code,
(i) any defense based upon any borrowing or grant of a security interest under
Section 364 of the Federal Bankruptcy Code, (j) any claim or other rights which
it may now or hereafter acquire against the Company or any other Person that
arises from the existence of performance obligations under the Indenture, the
Notes or any Collateral Document, including, without limitation, any right of
subrogation, reimbursement. No failure or delay on the Trustee's part in
exercising any power, right or privilege under this Agreement shall impair or
waive any such power, right or privilege. The Manager acknowledges and agrees
that any nonrecourse or exculpation provided for in the Indenture, the Notes or
any Collateral Document, or any othr provisionof this Indenture, the Notes or
any Colateral Document, limiting the Benefitted Parties' recourse to specific
collateral, or limiting the Benefitted Parties' right to enforce a deficiency
judgment against the Company, shall have absolutely no application to the
Manager's or the Company's liability under the Indenture, the Notes or any
Collateral Documents.
9. Lien Subordination. Any lien, security interest, encumbrance, charge
------------------
or claim of the Manager on any assets or property of the Company or any proceeds
or revenues therefrom which the Manager may have at any time as security for any
Subordinated Obligations shall be, and hereby is, subordinated to all liens,
security interests, or encumbrances now or hereafter granted to the Trustee by
the Company or by law, notwithstanding the date or order of attachment or
perfection of any such lien, security interest, encumbrance or claim or charge
or the provision of any applicable law. Until all holders of Senior Debt have
received payment in full in cash of the Senior Debt, the Manager agrees that the
Manager will not assert or seek to enforce against the Company the Subordinated
Obligations or any interest of the Manager in any collateral for any portion of
the Subordinated Obligations and that the Trustee may dispose of any or all of
the collateral for the Senior Debt free of any and all liens, including, but not
limited to, liens created in favor of the Manager, through judicial or
non-judicial proceedings,
6
<PAGE>
in accordance with applicable law including taking title, after five (5) days
written notice to the Manager. The Manager hereby acknowledges that such notice
if given five (5) days prior to such disposition of any or all of the collateral
for the Senior Debt is sufficient and commercially reasonable. The Manager
hereby agrees that any such sale or other disposition of so much of the
collateral for the Senior Debt as is necessary to satisfy in full in cash all of
the Senior Debt shall be free and clear of any security interest granted to the
Manager; provided that the entire proceeds (after deducting reasonable expenses
--------
of sale) are applied in reduction of the Senior Debt. Upon the Trustee's
request, the Manager shall execute and deliver any releases or other documents
and agreements that the Trustee in its reasonable discretion deems necessary to
dispose of the collateral for the Senior Debt free of the Manager's interest in
the same. The Manager retains all of its rights as a junior secured creditor
with respect to the surplus, if any, arising from any such disposition of the
collateral for the Senior Debt.
10. Subrogation. The Manager hereby waives all rights of subrogation
-----------
to the rights of the holders of Senior Debt to receive payments or
distributions, and any rights of subrogation to any collateral for the Senior
Debt, until the Senior Debt shall have been indefeasibly paid in full in cash.
Upon such payment in full, the Manager shall be subrogated to all rights of the
holders of Senior Debt.
11. Subordination Not Impaired by the Company. No right of any
-----------------------------------------
holder of Senior Debt to enforce the subordination of the Subordinated
Obligations shall be impaired by any act or failure to act by the Company or by
its failure to comply with these provisions.
12. No Third Party Beneficiaries. This Agreement is not intended to
----------------------------
give or confer any rights to any person other than the holders of the Senior
Debt. No other party, including the Company, is intended to be a third party
beneficiary of this Agreement.
13. Legend on Note. If any portion of the Subordinated Obligations
--------------
is evidenced by a promissory note, stock certificate or other instrument, the
Manager agrees to promptly add a legend thereto stating that the rights of any
holder thereof are subject to this Agreement.
14. Representations and Warranties. The Manager hereby represents
------------------------------
and warrants that (a) the execution and delivery of this Agreement and the
performance by the Manager of its obligations hereunder have received all
necessary approvals and do not and will not contravene or conflict with any
provision of law or of any indenture, instrument or other agreement to which the
Manager is a party or by which it or its property may be bound or affected or
result in or require the creation or imposition of any mortgage, lien, pledge,
security interest, charge or other encumbrance in, upon or of any of its
properties or assets under any such indenture, instrument or other agreement,
(b) the Manager has full power, authority and legal right to make and perform
this Agreement, (c) the Manager has not assigned or transferred any indebtedness
owing by the Company or any of the collateral for the Subordinated Obligations
and that the Manager will not assign or transfer same, (d) this Agreement is the
legal, valid and binding obligation of the Manager, enforceable against the
Manager in accordance with its terms, and (e) the Subordinated Obligations are
not subject to any other subordination agreement.
7
<PAGE>
15. No Waiver. No failure on the part of the Trustee to exercise, no
---------
delay in exercising, and no course of dealing with respect to, any right or
remedy hereunder will operate as a waiver thereof; nor will any single or
partial exercise of any right or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right or remedy. This Agreement
may not be amended or modified except by written agreement of the Trustee, the
Manager, and the Company, and no consent or waiver hereunder shall be valid
unless in writing and signed by the Trustee.
16. Successors and Assigns. This Agreement, and the terms, covenants and
----------------------
conditions hereof, shall be binding upon and inure to the benefit of the parties
hereto, and their respective successors and assigns.
17. GOVERNING LAW. THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH
-------------
AND GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO
CHOICE OF LAW PRINCIPLES.
18. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19. Severability. The invalidity, illegality or unenforceability in any
------------
jurisdiction of any provision in or obligation under this Agreement shall not
affect or impair the validity, legality or enforceability of the remaining
provisions or obligations under this Agreement or of such provision or
obligation in any other jurisdiction.
8
<PAGE>
IN WITNESS WHEREOF, this Subordination Agreement has been duly
executed as of the day and year first above written.
IBJ SCHRODER BANK AND TRUST
COMPANY, a New York banking corporation
By: /s/ William T. Lynch
--------------------------------------
Name: William T. Lynch
Title: Vice President
CASINO AMERICA, INC., a Delaware
corporation
By: /s/ Allan B. Solomon
--------------------------------------
Name: Allan B. Solomon
Title: Secretary
ISLE OF CAPRI BLACK HAWK L.L.C., a
Colorado limited liability company
By: /s/ Allan B. Solomon
--------------------------------------
Name: Allan B. Solomon
Title: Secretary
By: /s/ H. Thomas Winn
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Name: H. Thomas Winn
Title: Vice President
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SUBORDINATION AGREEMENT
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Exhibit A
Management Agreement
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See attached.
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EXHIBIT A
AMENDED AND RESTATED MANAGEMENT AGREEMENT
This, AMENDED AND RESTATED MANAGEMENT AGREEMENT (the "Management
Agreement"), dated as of this 29th day of July, 1997, is by and between CASINO
AMERICA, INC., a Delaware corporation ("Manager"), and ISLE OF CAPRI BLACK HAWK,
LLC, a Colorado limited liability company ("Owner") and is effective as of the
Closing Date, as defined in the Amended and Restated Operating Agreement of the
Owner of even date.
RECITALS:
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A. Owner proposed to acquire, construct, develop and equip a Casino
Facility including a casino, restaurant and a hotel in Black Hawk, Colorado.
B. Owner desires to have Manager manage the business operations of its
Casino Facility and Manager desires to manage Owner's Casino Facility, all upon
the terms and conditions of this Agreement.
C. Owner and Manager executes a Management Agreement, dated as of April
25, 1997, and wish by this Agreement to amend and restate the Management
Agreement dated as of April 25, 1997.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, Owner and Manager agree as follows:
1. DEFINITIONS AND REFERENCES.
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1.1 Definitions. As used herein, the following terms shall have the
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respective meanings indicated below:
(a) Annual Plan - The Annual Plan to be prepared by Manager and approved
by Owner in accordance with the provisions of Section 6.2 hereof.
(b) Casino Facility - The Casino Facility to be owned by Owner and
operated in Black Hawk, Colorado by Manager. The Casino Facility may have
gaming, hotel rooms, parking, food and beverage, gift shop and entertainment
together with other related activities.
(c) Commencement Date - The date upon which Owner fist opens the Casino
Facility to the public for business, which date shall be confirmed in writing by
Owner and Manager.
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(d) Compensation - The direct salaries and wages paid to, or
accrued for the benefit of, any executive or other employee, including, without
limitation, employer's contributions under F.I.C.A., unemployment compensation
or other employment taxes, pension fund contributions, Worker's Compensation,
group life, accident, health and other insurance premiums, profit sharing, and
retirement plans, disability and other similar benefits.
(e) Operating Agreement - That certain Amended and Restated
Operating Agreement of Owner dated as of even date herewith by and between
Casino America of Colorado, Inc. and Blackhawk Gold, Ltd.
2. SCOPE OF AGREEMENT, RESPONSIBILITIES.
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2.1 Authority of Owner. Owner shall determine the general policy
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with respect to the management of its Casino Facility and shall have all other
decision making powers customarily afforded to an owner of a casino/hotel
facility, as well as any additional powers reserved to Owner hereunder.
2.2 Authority of Manager. Subject to the foregoing general
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authority of Owner, and subject to the terms of this Management Agreement,
Manager shall have the authority to exclusively supervise and direct the
management and operation of the day-to-day activities of the Casino Facility for
the account of Owner. Manager shall have the authority and responsibility (i)
to determine operating policy, standards of operation, quality of service, the
maintenance and physical appearance of the Casino Facility and any other matters
affecting operations and maintenance; (ii) to supervise and direct all phases of
advertising, sales and business promotion for the Casino Facility; and (iii) to
carry out all programs contemplated by the Annual Plan. Owner agrees that it
will cooperate with Manager in every reasonable and proper way to permit and
assist Manager to carry out its duties hereunder and comply with any conditions
or restrictions, if any, placed upon Manager by any gaming authority.
2.3 Duties and Obligations of Manager. Manager shall take all
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actions which may, in its sole discretion, be reasonably necessary or
appropriate in connection with the authority granted to it in accordance with
the provisions of this Management Agreement. Manager shall devote to its
responsibilities such time as may be reasonably necessary for the proper
performance of all duties hereunder. The standard of performance by Manager in
managing the Casino Facility shall be measured by commercial standards of
reasonableness in the industry consistent with food business practices and
policies. An organizational chart detailing the supervisory and management
positions and all other employees of the Manager will be provided by Manager to
Owner.
2.4 Consultation with Owner. Notwithstanding the foregoing,
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Manager shall at all times keep Owner reasonably apprised and aware of all
operating policies. Manager agrees to
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consult with Owner as frequently as Owner shall reasonably request to review
operating policies and other matters referred to herein. Owner shall, at all
times, have the right to enter the Casino Facility for the purpose of
inspecting same and reviewing the operations. Owner agrees that it and its
representatives will, at no time, act in a manner which is inconsistent with the
authority granted to Manager.
3. LICENSING. Other than as set forth in the Operating Agreement, Owner and
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Manager shall apply for and maintain at Owner's expense any and all licenses and
approvals required in order to implement the provisions of this Management
Agreement. The performance of any services pursuant to this Management
Agreement that require any such licenses and approvals is contingent upon the
receipt of all such licenses and approvals.
4. TERM. The term of this Management Agreement shall continue until December
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31, 2096, unless sooner terminated as hereinafter set forth.
5. PRE-COMMENCEMENT DATE RESPONSIBILITIES.
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5.1 Owner's Responsibilities. Owner, without cost or expense to
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Manager, shall design, acquire, construct and equip the Casino Facility. All
expenses and fees incident thereto shall be paid by Owner.
5.2 Manager's Responsibilities. From the date of this Management
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Agreement to the Commencement Date, Manager shall be available to consult with
Owner in designing, acquiring, constructing, and equipping all assets to be used
by Owner in the operation of the Casino Facility. Manager shall, at Owner's
expense and the Owner's approval, also be responsible for the development and
implementation of all pre-opening activities.
6. OPERATION OF THE BUSINESS.
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6.1 Permits. Manager and Owner shall timely apply for, obtain and
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maintain all licenses and permits required to operate the business (other then
gaming authority permits, licenses, and approvals required to be obtained by
parties other than owner or Manager), at Owner's expense.
6.2 Annual Plan.
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6.2.1 Preparation. With such cooperation and assistance of Owner as
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Manager may request, Manager shall prepare for Owner's review and approval not
less than thirty (30) days in advance of each fiscal year, an Annual Plan for
approval by Owner, which shall include:
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(a) a forecast comprised of estimated income and expenses by month
for the coming fiscal year;
(b) an estimated cash flow projection by month, and an estimate as to
the amount of funds needed for working capital requirements;
(c) a budget covering estimated expenditures for capital
improvements;
(d) an annual marketing plan; and
(e) an organizational chart of Owner, as of the date of the Annual
Plan, listing all employees, names, positions and compensation
(including key employees whether employees of Owner or charged to
Owner).
Manager shall not be deemed to have made any guarantee or warranty in connection
with the results of operations or performance set forth in the Annual Plan since
the parties acknowledge that the Annual Plan is intended to set forth objectives
and goals based upon Manager's best judgement of the facts and circumstances
known by Manager at the time of preparation.
6.2.2 Owner's Review and Approval. The Annual Plan will be subject to
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the approval of Owner, which approval will not be unreasonably withheld or
delayed. Owner shall approve or disapprove the Annual Plan within twenty (20)
days after submission to Owner. If Owner fails to provide written notice to
Manager of any specific objections to a proposed Annual Plan within such twenty
(20)-day period, such Annual Plan shall be deemed to have been approved by Owner
as submitted. In the event Owner disapproves or raises any objections to the
proposed Annual Plan or any revisions thereto, Owner and Manager agree to
cooperate with each other in good faith to resolve the dispute. Owner agrees,
consistent with the Annual Plan, to provide the funds necessary to operate the
Casino Facility.
6.2.3 Compliance. Manager shall use all reasonable efforts to comply
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with the Annual Plan and shall not deviate in any substantial respect therefrom.
In the event Manager encounters circumstances which require unexpected
expenditures not foreseen at the time of preparation of the Annual Plan and
which Manager deems reasonably necessary, Manager may without Owner's approval,
make or cause to be made on account of Owner, any expenditures, provided,
however, that no such expenditures shall be made in violation of the applicable
provisions of the Operating Agreement. Manager, without Owner's approval, on a
monthly basis with full reporting to Owner, shall be entitled to increase the
total expenses budgeted within the Annual Plan by a percentage approved by Owner
to cover any expenditures that were underestimated at the time the Annual Plan
was prepared and that are reasonably necessary in Manager's sole discretion, to
carry out the provisions of this Agreement. Owner and Manager agree to cooperate
with each other in good faith in resolving disputes. Policy
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changes not anticipated in the Annual Plan shall be submitted to Owner for
approval, which approval shall not be unreasonably delayed or withheld.
6.2.4 Specific Matters. The description of specific matters
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hereinafter stated are in every respect subject to the prior approval of Owner
as part of its approval of the Annual Plan.
6.3 Personnel.
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6.3.1 General. Manager, for the account of Owner, shall hire,
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supervise, direct, discharge and determine terms of employment of all personnel
working for the Casino Facility. An organizational chart detailing the specific
type of personnel and functions shall be provided to Owner by Manager. The
determination of Compensation for all employees shall be part of the Annual Plan
approved by Owner.
6.3.2 Key Employees. The key employees may include, but are not
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limited to, the general manager, director of gaming, director of food, beverage
and entertainment, director of marketing and director of finance and may, at the
option of Manager and with prior approval of Owner, be employees of Manager.
Owner shall reimburse Manager for the Compensation of such employees working for
the Casino Facility or primarily on behalf of Owner in connection with the
Casino Facility.
6.3.3 Personnel Expenses and Compensation. Subject to the above, it
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is expressly understood and agreed that all other personnel of Owner are in the
sole employ of Owner.
6.3.4 Professional and Other Specialists. Manager shall have the
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right to retain legal counsel and such other professionals, consultants and
specialists as Manager deems necessary or appropriate in connection with the
operation of the Casino Facility. The selection of all professional firms shall
be subject to Owner's prior approval.
6.4 Sales, Marketing and Advertising. Manager shall advertise and
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promote the Casino Facility for Owner's account and shall institute and
supervise a sales and marketing program. Manager, in its sole discretion, may
cause participation in sales and promotional campaigns and activities involving
complimentary passage, food and beverages to travel agents, tourist officials
and airline representatives.
6.5 Other Services Provided by Manager. Other services, such as data
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processing, reservation system, internal audit, etc. may be provided by Manager
to Owner at an additional cost on a commercially reasonable basis, or may be
contracted for separately.
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6.6 Maintenance and Repair. Owner shall be responsible for maintaining the
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property utilized in the business in good repair and condition. To implement
Owner's responsibility, Manager shall, on behalf of Owner, and at Owner's
expense, make or cause to be made, all repairs, replacements, corrections and
maintenance items as shall be required in the normal and ordinary course of
operation of the business.
6.7 Capital Expenditures. Owner recognizes the necessity of capital
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improvements and shall expend such amount for capital improvements as shall be
required in the normal and ordinary course of operation of the business
in conformity with the amounts approved as part of the Annual Plan.
6.8 Reimbursement. In addition to the Compensation provided for in Section
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9 of this Management Agreement, Manager shall be entitled to be reimbursed for
the actual reasonable travel and entertainment expenses of all officers and
employees of Manager incurred in performing its duties hereunder in connection
with any phase of the operation of the Casino Facility. In addition, if
employees of Manager on a specific assignment for the benefit of the Casino
Facility are in a position that would otherwise be filled by an employee of
Owner, then Manager shall be entitled to be reimbursed by Owner for the
Compensation payable to such employees while working for the Casino Facility.
However, Manager shall not be entitled to reimbursement for (i) any cost,
expense, liability or obligation deemed a contribution to the capital of Owner
under Section 3.1(b) of the Members Agreement of even date among Manager, Nevada
Gold & Casinos, Inc., Casino America of Colorado, Inc. and Blackhawk Gold, Ltd.
or (ii) the compensation of any other employee unless otherwise provided in this
Management Agreement. Manager shall be entitled to all reimbursements authorized
under this Section 6.8, or under any other provision of this Agreement, provided
that (i) no such reimbursement shall exceed the actual costs incurred by Manager
or, if such costs are not determinable, the fair market value of items for which
reimbursement is sought and (ii) all such reimbursements shall be made in a
manner which is consistent with the provision of the Annual Plan or as otherwise
agreed with Owner.
7. FISCAL MATTERS.
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7.1 Accounting Matters and Fiscal Periods.
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7.1.1 Books and Records. Manager shall maintain, or cause to be
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maintained, at Owner's expense, full and complete books of account and such
other records as are necessary to reflect the operating results of the Casino
Facility. Manager shall also prepare and file for Owner, at Owner's expense, all
informational and/or tax returns which may be required by any governmental
authority.
7.1.2 Reports to Owner. Manager, at Owner's expense, shall deliver or
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cause to be delivered to Owner, monthly financial statements, which shall
include a statement of
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cash flows, and monthly comparison of operational income and expenses versus the
Annual Plan.
7.1.3 Owner's Rights to Audit. Owner and the individual members of
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the limited liability company reserve the right upon reasonable prior notice,
to perform any and all additional audit procedures relating to the business
where accounting books and records are kept.
7.2 Bank Account. All bank accounts for the Casino Facility shall be in
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the name of Manager, as agent for Owner. Owner and Manager shall agree on the
procedures for withdrawals and deposits of funds. Manager shall have the right
to designate individuals to disburse funds from the business bank accounts to
pay all costs and expenses of managing, operating and maintaining the business
and its properties, including authorized capital expenditures and management
fees due to Manager. Owner agrees that at all times during the term of this
Management Agreement, a bank balance as approved in the Annual Plan shall be
maintained in an amount necessary to provide sufficient working capital to
assure the uninterrupted and efficient operation of the business. Excess funds
shall be disbursed to Owner.
8. TITLE, OTHER MATTERS.
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8.1 Covenant of Title. Owner shall enable Manager to peaceably and
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quietly operate the business in accordance with the terms of this Management
Agreement.
8.2 Proprietary Information. All specifically identifiable information
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developed by Manager for Owner shall be the property of both Manager and Owner.
All existing information of Manager previously developed by Manager at
Manager's expense, including, without limitation, all customer lists, gaming
and marketing strategies and other similar information, shall be the property of
Manager and not Owner and neither Owner nor any of its affiliates or successors
may use such proprietary information without the consent of Manager, which
consent shall not be unreasonably withheld. The parties agree that Proprietary
Information does not include information which is clearly available in the
public domain.
8.3 Outside Activities of Parties. This Management Agreement shall be
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limited to the purposes set forth herein and nothing in this Management
Agreement, whether by implication or otherwise, shall be construed to extend the
relationship of the parties beyond such purposes. Each party acknowledges that
the other party and their respective affiliates are or may hereafter become
interested, directly or indirectly, by ownership, contract, agency or otherwise,
in business opportunities which are not within the purpose of this Management
Agreement and which may compete with or otherwise affect all or some aspects of
the Casino
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Facility. However, both parties agree that they will not compete in any gaming
activities in Gilpin County, Colorado during the Term except as permitted under
the Operating Agreement.
9. COMPENSATION OF MANAGER.
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9.1 In consideration for the services to be performed by Manager after
the Commencement Date, Manager shall be entitled to an annual management fee
equal to two percent (2%) of Revenues (as defined below), plus ten percent (10%)
of Operating Income (as defined below), but such fee shall not, in the
aggregate, exceed four percent (4%) of Revenues.
(a) Revenues means all revenues, less sales tax on such revenues,
determined on an annual basis received from the following sources: (i) gross
gaming receipts from the Casino Facility, less 50% of applicable gaming and
admission taxes from the operation of gaming in the Casino Facility; (ii) hotel
operations; (iii) food and beverage operations; (iv) all parking fees; (v) all
revenues generated from gift shops and arcades; (vi) other revenues, fees and
income, which are attributable to the operation of the Casino Facility. Revenues
derived from non-operating activities, such as the sale of capital assets are
excluded from the definition of Revenues.
(b) Operating Income means the income of the Casino Facility before
any management fee paid to Manager, distributions to Members of Owner, interest,
depreciation, amortization and write-off or start-up and pre-opening type
expenses and income taxes.
(c) The fee shall become due and payable ten (10) days after the end
of each month based upon the Revenues and Operating Income for the previous
month. Payment of such compensation may be paid to Manager by withholding
Revenues it has received for Owner's account; provided, however, that the fee
shall be accrued as a liability and not paid to the extent that Owner has not
generated sufficient cash flow to pay such fee. For these purposes, cash flow
shall be determined before capital expenditures and distributions to Members of
Owner.
10. INSURANCE.
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10.1 Coverage. Owner, for the benefit of both Owner and Manager, shall
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maintain adequate insurance during the term of this Agreement. The type and
amount of coverage shall be approved by Owner.
10.2 Policies and Endorsements.
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10.2.1 Policies. All insurance coverage provided for hereunder shall
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be effected by policies issued by insurance companies with sound and adequate
financial
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responsibility, or by self-insurance programs of either Manager or Owner. Either
party shall be entitled to object to an insurance company. Owner shall deliver
to the Manager duplicate copies of the insurance policies or certificates of
insurance with respect to all of the policies of insurance so procured,
including existing, additional and renewal policies, and in the case of
insurance about to expire, shall deliver duplicate copies of the insurance
policies or insurance certificates with respect to the renewal policies to the
other party not less than thirty (30) days prior to the respective dates of
expiration.
10.2.2 Endorsement. All insurance shall, to the extent obtainable,
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have attached thereto:
(a) an endorsement that such policy shall not be canceled or
materially changed without at least thirty (30) days' prior written notice to
Owner and Manger; and
(b) an endorsement to the effect that no act or omission of Owner
or Manager shall affect the obligation of the insurer to pay the full amount of
any loss sustained.
(c) Owner and its members shall be named as additional insureds on
all policies.
10.2.3 Named Insureds. All policies of insurance shall be carried in
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the name of Owner and Manager. All liability policies shall name Owner and
Manger, and their respective members, managers, directors, officers, agents and
employees, as additional insureds.
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11. Indemnification.
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11.1 Indemnification. Manager agrees to indemnify and hold Owner free and
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harmless from any loss, liability, claim, demand, legal proceeding or cost
(including attorneys' fees, costs, expenses and other charges) which is not
covered by insurance proceeds and which Owner may sustain, incur or assume as a
result of any allegation, claim, civil or criminal action, proceeding, charge or
prosecution (collectively "Claims") which may be alleged, made, instituted or
maintained against Manager or Owner, jointly or severally, to the extent arising
out of or based upon (a) Claims by the employees of the Manager (including
without limitation injury or compensation Claims); (b) the performance or non-
performance of the Management Agreement by Manager, its agents or employees; or
(c) the acts or failure to act of Manager, its employees or agents in a manner
consistent with the standards set forth in Section 2.3 above. Notwithstanding
the foregoing, Manager shall not be liable to indemnify and hold Owner harmless
to the extent of any such loss, liability or cost which (i) results from the
negligence of Owner, its agents (other than Manager) or employees or (ii)
consists of consequential or punitive damages (including any such damages
asserted by a third party). Nothing contained in this Section 11 or this
Agreement shall constitute a guaranty or commitment by the Manager of the
operating results or business prospects of the Casino Facility.
11.2 Related Matters.
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11.2.1 Legal Fees, Etc., Procedures. Manager shall reimburse Owner for
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any legal fees and costs, including attorney's fees and other litigation
expenses, incurred by Owner in respect to which indemnity is granted hereunder.
If Claims are asserted or threatened, or if any action or suit is commenced or
threatened with respect thereto, for which indemnity may be sought against
Manager hereunder, Owner shall notify Manager in writing within thirty (30) days
after Owner shall have had actual knowledge of the threat, assertion or
commencement of the Claims, which notice shall specify in reasonable detail the
matter for which indemnity may be sought. Manager shall have the right, upon
notice to Owner given within thirty (30) days of its receipt of Owner's notice,
to take primary responsibility for the prosecution, defense or settlement of
such matter and payment of expenses in connection therewith. Owner shall
provide, without cost to Manager, all relevant records and information
reasonably required by Manager for such prosecution, defense or settlement and
shall cooperate with Manager to the fullest extent possible. Owner, at Owner's
sole cost and expense, shall have the right to employ its own counsel in any
such matter with respect to which Manager has elected to take primary
responsibility for prosecution, defense or settlement.
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11.2.2 Indemnified Parties. The indemnities contained in this
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Section 11 shall run to the benefit of both Owner and its affiliates, and its
directors, officers, shareholders and employees.
11.2.3 Survival. The provisions of this Section 11 shall survive any
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cancellation, termination or expiration of this Management Agreement and shall
remain in full force and effect until such time as the applicable statute of
limitation shall cut off all claims which are subject to the provisions of this
Section 11.
12. DAMAGE TO AND DESTRUCTION OF THE BUSINESS.
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12.1 Restoration. Provided that there are sufficient insurance proceeds,
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in the event fire or other casualty shall damage or destroy the property used in
the Casino Facility, Owner shall be required to repair, restore or replace the
same to the extent as may be limited by insurance proceeds. If there are not
sufficient insurance proceeds and Owner no longer desires to operate the Casino
Facility, Manager shall have the option, exercisable within ninety (90) days of
such casualty, to obtain the license to operate the Casino Facility subject to
appropriate regulatory approval. Owner shall use its best efforts to assist
Manager in obtaining the license. In the event fire or other casualty shall
damage or destroy the Casino Facility, Owner shall have the choice of repairing,
restoring or replacing the same to the extent as may be limited by insurance
proceeds. If Owner determines that it is not in its best interest to restore the
Casino Facility, the Management Agreement will terminate.
13. DEFAULT AND TERMINATION.
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13.1 Events of Default. It shall be an event of default hereunder (an
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"Event of Default") if Manager or Owner (the "Defaulting Party") as hereinafter
defined fails to keep, perform or observe any material covenant, obligation or
agreement required to be kept, performed or observed by such party under the
terms of this Management Agreement, followed by written notice of such breach,
default or non-compliance from the other party (the "Non-Defaulting Party" as
hereinafter defined) to the Defaulting Party and the Defaulting Party fails to
remedy or correct such breach, default or non-compliance within thirty (30) days
after receipt of such notice. If the breach, default or non-compliance is other
than payment of money and is of a nature such that it cannot reasonably be cured
within such thirty (30) day period, the period for curing the default shall be
extended so long as the Defaulting Party commences immediately and expediently
as possible to cure the breach, default or non-compliance within such thirty
(30) day period.
13.2 Termination.
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13.2.1 General. If an Event of Default occurs and has not been
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cured, this Management Agreement shall terminate at the election of the
Non-Defaulting Party. Notice of
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termination pursuant to this Section 13 may be given by the Non-Defaulting Party
to the Defaulting Party at any time prior to the curing of such Event of
Default, and such termination shall be effective as of the date specified in
such notice of termination, which date shall be not less than sixty (60) nor
more than one hundred twenty (120) days after the date of such notice.
Notwithstanding the foregoing, if the Event of Default pertains to the payments
of money, Manager may cease the discharge of its responsibilities hereunder
effective upon the expiration of the thirty (30)-day notice referenced in
Section 13.1 hereof. Manager shall receive all funds due to it at the time of
Termination.
13.2.2 Termination. In addition to the foregoing, this Management
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Agreement shall terminate upon any of the following events:
(a) The mutual agreement of the parties; or
(b) The inability of either party to receive or maintain the
licenses to perform their obligations hereunder; or
(c) Manager shall
(i) apply for or consent to the appointment of, or
taking possession by, a receiver, custodian,
trustee, liquidator or other similar official of
all of its assets;
(ii) make a general assignment for the benefit of
creditors;
(iii) be adjudicated as bankrupt or insolvent or have
an order for relief entered with respect thereto;
or
(iv) file a voluntary petition, commence a voluntary
case under the federal bankruptcy laws as now or
hereafter constituted or file a petition or an
answer seeking reorganization or any arrangement
with creditors or take advantage of any
bankruptcy, reorganization, insolvency,
readjustment of debts, dissolution or liquidation
law or statute.
13.2.3 Waiver. The waiver of any one Event of Default shall not be
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construed as the waiver of any other Event of Default.
13.3 Remedies Cumulative. Except as herein provided to the contrary, the
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termination of this Management Agreement by the Non-Defaulting Party upon an
Event of Default shall be without damages, injunctions, specific performance or
other legal or equitable
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remedies by reason of any breach, default or non-compliance by the Defaulting
Party with such Defaulting Party's covenants, obligations and agreements
hereunder. Except as to any disputes for which injunctive relief would be an
appropriate remedy, in the event a dispute of any kind arises in connection with
this Agreement (including any dispute concerning its construction, performance
or breach), the parties to the dispute will attempt to resolve the dispute as
set forth in Section 13.4 before proceeding to arbitration as provided in
Section 13.5. All documents, discovery and other information related to any
such dispute, and the attempts to resolve or arbitrate such dispute, will be
kept confidential to the fullest extent possible.
13.4 Negotiation. If a dispute arises, any party to the dispute will give
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notice to each other party. If Owner is not a party to the dispute, notice will
be given to Owner. After notice has been given, the parties in good faith will
attempt to negotiate a resolution of the dispute.
13.5 Arbitration. If within 30 days after the notice provided in Section
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13.4, a dispute is not resolved through negotiation or mediation, the dispute
will be arbitrated. The parties to the dispute agree to be bound by the
selection of an arbitrator, and to settle the dispute exclusively by binding
arbitration in accordance with the following provisions:
(a) All parties to the dispute will collectively select one
arbitrator. If they fail to do so within 45 days after the notice provided in
Section 13.4, one or more parties will request the American Arbitration
Association to submit a panel of five arbitrators who are qualified to resolve
the matters in dispute from which the choice will be made. The party requesting
the arbitration will strike first, followed by alternative striking until one
name remains. A similar procedure will be followed if there are more than two
parties. The parties may be agreement reject one entire list, and request a
second list. If selection by the above method is not completed within 90 days
after the notice provided in Section 13.4, or if there are more than four
parties, then an arbitrator will be selected by the American Arbitration
Association. The arbitrator so selected will then arbitrate the dispute in
Denver, Colorado, and issue an award.
(b) To the extent consistent with the provisions of this Article,
the arbitration will be conducted under the Commercial Arbitration Rules of the
American Arbitration Association and in accordance with Colorado law. The
arbitrator's decision will be made pursuant to the relevant substantive law of
the State of Colorado. The award of the arbitrator will be final, binding and
non-appealable. Judgment on the award may be entered in any court, state or
federal, having jurisdiction.
(c) The fees and expenses of the arbitrator, and the other direct
costs of the arbitration, will be shared by the parties to the dispute in equal
proportions. Each party to the dispute will bear its other respective costs and
expenses. If one or more Members are
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included in the arbitration because of their membership or former membership in
Owner, such group will collectively be treated as one party to the dispute
(through Owner as a party).
140 NOTICES.
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14.1 Notices. Every notice, demand, consent, approval or other document or
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instrument required or permitted to be served upon any of the parties hereto
shall be in writing and shall be deemed to have been duly served on the day of
mailing, and shall be sent by registered or certified United States Mail,
postage prepaid, return receipt requested, addressed to the respective parties
at the addresses stated below:
If to Manager: John M. Gallaway, President
or his designee Manager
711 Washington Loop
Biloxi, MS 39530
With copies thereof to the following:
Allan B. Solomon, Esq.
2200 Corporate Blvd. NW
Suite 310
Boca Raton, FL 33434
If to Owner: Isle of Capri Black Hawk L.L.C.
711 Washington Loop
Biloxi, MS 39530
Attention: John M. Gallaway
With copies thereof to the following:
H. Thomas Winn, President, or his designee,
Nevada Gold and Casinos, Inc.
3040 Post Oak Boulevard, Suite 675
Houston, TX 77056
or to such other address as either Manager or Owner may have specified in a
notice duly given as required herein to the other.
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<PAGE>
150 RELATIONSHIP, AUTHORITY AND FURTHER ACTIONS.
-------------------------------------------
15.1 Relationship. Manager and Owner shall not be construed as joint
------------
venturers or partners of each other by reason of this Management Agreement and
neither shall have the power to bind or obligate the other except as
specifically authorized and set forth in this Management Agreement.
Nevertheless, Manager is granted such authority and powers as may be reasonably
necessary for it to carry out the provisions of this Management Agreement. This
Management Agreement, either alone or in conjunction with any other documents,
shall not be deemed to constitute or create a lease of all or any portion of
the Casino Facility.
15.2 Contractual Authority. Subject to the limitations thereon set forth
---------------------
in this Management Agreement, and in conformity with the Annual Plan, Manager is
authorized to make, enter into and perform in the name of, for the account of,
on behalf of and at the expense of Owner any contracts and agreements
(including, but not limited to bank accounts) which are reasonably necessary and
appropriate to carry out and place in effect the terms and conditions of this
Management Agreement. Copies of all executed contracts shall be immediately
conformed and furnished to Owner.
15.3 Further Actions. Owner and Manager agree to execute all contracts,
---------------
agreements and documents and to take all actions necessary to comply with the
provisions of this Management Agreement and the intent thereof.
160 APPLICABLE LAW. This Management Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of Colorado. If any of the
terms and provisions hereof shall be held invalid or unenforceable for any
reason, such validity or unenforceability shall in no event affect any of the
other terms or provisions hereof, all such other terms and provisions to be held
valid and enforceable to the fullest extent permitted by law; provided, however,
that in the event any material part of Owner's obligations under this Management
Agreement shall be declared invalid or unenforceable, Manager shall have the
option to terminate this Management Agreement.
170 MISCELLANEOUS.
-------------
17.1 Successors and Assigns. Manager shall not assign the whole or any
----------------------
portion of this Management Agreement or any payments due Manager hereunder,
without the unanimous consent of the Members of Owner, which consent will not
be unreasonably withheld, except that Manager may make such assignment, without
Owner's or the Members' consent, to a Permitted Transferee as defined in the
Operating Agreement. Owner shall not assign the whole or any portion of this
Agreement, except to an affiliate of Owner, without Manager's consent, except as
collateral for any financing obtained in connection with the development and/or
operations of the Casino Facility. If the Agreement is assigned to an affiliate
of Owner, Manager shall continue to be responsible under this Agreement.
-15-
<PAGE>
17.2 Force Majeure. If at any time it becomes necessary in Manager's
-------------
or Owner's reasonable opinion to cease operation of all or part of the Casino
Facility to protect the Casino Facility or the health, safety or welfare of
guests or employees of the Casino Facility for reasons of force majeure, such
as, but not limited to, weather, acts of war, insurrection, civil strife and
commotion, labor unrest, contagious illness, catastrophic events, or acts of
God, then in such event Manager or Owner may close and cease operations of all
or part of the Casino Facility, reopening and commencing operation when Manager
and Owner determine in good faith that such may be done without jeopardy to the
Casino Facility, its guests and employees. Neither party shall be liable for
failure to perform any obligation hereunder (other than to pay money) when
prevented by any force majeure cause not reasonably within the control of such
party, such as strike, lockout, breakdown, accident, order or regulation of or
by any governmental authority, failure of supply or inability, by the exercise
of reasonable diligence, to obtain supplies, parts or employees necessary to
perform such obligation to which such force majeure applies shall be extended
for a period of time equivalent to the delay from such cause.
17.3 Authorization. Owner and Manager represent to the other that it
-------------
has full power and authority to execute this Management Agreement and to be
bound by and perform the terms hereof. On request, each party shall furnish the
other evidence of such authority.
17.4 Interest. Any amount payable to a party hereunder which shall not
--------
be paid when due, shall accrue interest at the prime rate as published from time
to time in the Wall Street Journal.
17.5 Entire Agreement; Amendments. This Management Agreement sets
----------------------------
forth the entire and only agreement or understanding between Owner and Manager
relating to the subject matter hereof and superseded and cancels all previous
agreements, negotiations, commitments and representations in respect hereof
among them. Owner has not relied on any projection of earnings or statements as
to the possibility of future success or other similar matters which may have
been prepared by Manager or Owner, or any of their respective affiliates, and
understands that no guaranty is made or implied by Manager or its affiliates as
to the cost or the future financial success of the operations being managed
hereunder. This Management Agreement may not be amended in any respect except
by an instrument in writing signed by Owner and Manager.
17.6 Survival of Covenants. Any covenant, term or provision of this
---------------------
Management Agreement which, in order to be effective, must survive the
termination of this Management Agreement, shall survive any such termination.
17.7 No Waiver. No waiver by either party of a breach by the other
---------
party of any of the terms, covenants or conditions of this Management Agreement,
shall be construed or held
-16-
<PAGE>
to be a waiver of any succeeding or preceding of the same or any other term,
covenant or condition herein contained. No waiver of any default of either party
hereunder shall be implied from any omission by the other party to take any
action on account of such default if such default persists or is repeated, and
no express waiver shall affect default other than as specified in said waiver.
17.8 Compliance. In performing its obligations under this Management
----------
Agreement, Manager shall comply with all present and future laws, ordinances and
all rules and regulations, requirements and orders of all governmental
authorities and shall obtain all licenses and permits required to perform such
obligations and shall file all returns and reports lawfully required of Manager
in connection with its duties hereunder, including, but not limited to, income
tax witholding returns, Federal Insurance Contributions Act returns and reports,
Federal Unemployment Tax Act and worker's compensation returns and reports,
sales and use tax returns (and shall timely pay all contributions, taxes, costs
and other amounts due thereunder). All of the foregoing returns and reports
shall maintained as a part of the books and records of Manager.
17.9 Headings. The headings hereunder are used for convenience only and
--------
shall not affect the construction or interpretation of any provision hereof.
17.10 Counterparts. For the convenience of the parties hereto, this
------------
Management Agreement may be executed in several original counterparts, each of
which shall be deemed an original for all purposes an all such counterparts
shall constitute but one and the same agreement.
17.11 Commercial Reasonableness. Anything contained in this Management
-------------------------
Agreement to the contrary notwithstanding, all contracts and agreements entered
into by Manager hereunder, including any contracts on account of Owner, shall be
commercially reasonable.
-17-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Management Agreement as of the date and year first above written.
CASINO AMERICA, INC., ISLE OF CAPRI BLACK HAWK,
a Delaware corporation L.L.C., a Colorado limited liability
company
By: /s/ Allan B. Solomon By: Casino America of Colorado, Inc.,
-------------------------- Member
Its:
-------------------------
By: /s/ Allan B. Solomon
------------------------------
Title: Exec. V.P.
----------------------------
Blackhawk Gold, Ltd., Member
By: /s/ H. Thomas Winn
------------------------------
Title: President
----------------------------
-18-
<PAGE>
EXHIBIT 4.15
ENVIRONMENTAL INDEMNITY
-----------------------
This Environmental Indemnity (as amended, modified or otherwise
supplemented from time to time, this "Indemnity") is made and entered into as of
---------
August 20, 1997, by and between Isle of Capri Black Hawk L.L.C., a Colorado
limited liability company (the "Indemnitor") and IBJ Schroder Bank & Trust
----------
Company, as trustee (in such capacity, together with its successors in such
capacity, the "Trustee") under the Indenture referred to below for the holders
-------
(the "Holders") of the 13% First Mortgage Notes due 2004 With Contingent
-------
Interest (the "Notes") co-issued by the Indemnitor and Isle of Capri Black Hawk
-----
Capital Corp. ("Capital Corp." and, together with the Indemnitor, the
------------
"Issuers").
-------
RECITALS
--------
A. The Indemnitor is the present owner or lessee of the real property
included in the Collateral (together with all other property at any time owned,
leased or managed by the Indemnitor and (i) subject to a Lien in favor of the
Trustee or (ii) on which any equipment subject to a Lien in favor of the Trustee
is located (the "Trust Property")).
--------------
B. Issuers and the Trustee are, contemporaneously with the execution
and delivery of this Indemnity, entering into a certain Indenture, dated as of
August 20, 1997, between the Issuers and the Trustee (as the same may be
supplemented, amended, restated and/or otherwise modified from time to time, the
"Indenture") pursuant to which the Issuers are issuing the Notes.
---------
C. The Holders have required, as a condition precedent to entering into
the Indenture, that the Indemnitor shall have executed and delivered this
Indemnity for the benefit of the Trustee and the ratable benefit of the Holders.
NOW, THEREFORE, the parties hereto agree as follows:
1. Recitals. The Recitals are incorporated herein by this reference.
--------
2. Definitions. Capitalized terms used herein but not otherwise defined
-----------
shall have the meanings assigned to such terms in the Indenture. For purposes
of this Indemnity, the following terms have the meanings set forth below.
"Adjacent Property" means any property so situated as to pose a
-----------------
material risk that a Hazardous Material could spread onto the Trust Property.
"Contamination" means the release of any Hazardous Material.
-------------
"Environmental Laws" collectively means and includes any and all
------------------
present and, other than with respect to Section 3, future local, state and
federal law relating to the environment and environmental conditions, including,
without limitation, the Colorado Air Quality Control Act, Colo. Rev. Stat.
(S)(S) 25-7-101 et seq., the Colorado Water Quality Control Act, Colo. Rev.
Stat. (S)(S) 25-8-101 et seq., the Hazardous Waste Statute, Colo. Rev. Stat.
(S)(S) 25-15-101 et seq., the Hazardous Waste Sites Cleanup Statute, Colo. Rev.
Stat. (S)(S) 25-16-101
<PAGE>
et seq., the Petroleum Storage Tank Statute, Colo. Rev. Stat. (S)(S) 8-20.5-101
et seq., the Radiation Control Act, Colo. Rev. Stat. (S)(S) 25-11-101 et seq.,
the Colorado Hazardous Substance Incidents Statute, Colo. Rev. Stat. (S)(S) 29-
22-101 et seq., the Colorado Hazardous Substances Act of 1973, Colo. Rev. Stat.
(S)(S) 25-5-501 et seq., the Resource Conservation and Recovery Act of 1976
("RCRA"), 42 U.S.C. (S) 6901 et seq., the Comprehensive Environmental Response,
----
Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. (S)(S) 9601-9657,
------
as amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"),
----
the Hazardous Materials Transportation Act, 49 U.S.C. (S) 6901, et seq., the
Federal Water Pollution Control Act, 33 U.S.C. (S)(S) 1251 et seq., the Clean
Air Act, 42 U.S.C. (S)(S) 741 et seq., the Clean Water Act, 33 U.S.C. (S) 7401
et seq., the Toxic Substances Control Act, 15 U.S.C. (S)(S) 2601-2629, the Safe
Drinking Water Act, 42 U.S.C. (S)(S) 300f-300j, or any other similar federal,
state or local law of similar effect, each as amended, and any and all
regulations, orders, and decrees now or hereafter promulgated thereunder or any
and all common law requirements, rules and bases of liability regulating,
relating to or imposing liability or standards of conduct concerning pollution
or protection of human health or the environment, as now or may at any time
hereafter be in effect.
"Hazardous Materials" means (i) those substances deemed hazardous,
-------------------
toxic, contaminating or polluting under any Environmental Law or by any
governmental agency pursuant to any Environmental Law, including, without
limitation, asbestos, petroleum products or by-products (including, without
limitation, crude oil or any fraction thereof), the group of organic compounds
known as polychlorinated biphenyls, radon gas, urea formaldehyde, radioactive
materials, toxic, infectious, reactive, corrosive, ignitable or flammable
chemicals and chemicals known to cause cancer or reproductive toxicity; and
(ii) any items included in the definition of hazardous or toxic waste, materials
or substances under any Environmental Law.
"Material Adverse Effect" means any event, matter, condition or
-----------------------
circumstance which (i) has or would reasonably be expected to have a material
adverse effect on the business, properties, results of operations, or financial
condition of the Indemnitor and its Subsidiaries taken as a whole; or (ii) would
materially impair the ability of the Indemnitor, or any other Person to perform
or observe its obligations under or in respect of the Indenture, this Indemnity,
any Collateral Document, or any other document entered into by the Indemnitor in
connection with foregoing, in whole or part, or (iii) affects the legality,
validity, binding effect or enforceability of any of the Indenture, any
Collateral Document, or any other document entered into by the Indemnitor in
connection with the foregoing, in whole or part, or the perfection or priority
of, or the ability to exercise remedies with respect to, a Lien granted to the
Trustee.
3. Representations and Warranties. Except as would not constitute a
------------------------------
Material Adverse Effect and except as otherwise set forth on Schedule 3, (1) no
Hazardous Material has been installed, used, generated, manufactured, treated,
handled, refined, produced, processed, stored or disposed of in, on or under the
Trust Property, including, without limitation, the surface and subsurface waters
of the Trust Property, except in amounts normal in the ordinary course of
business of the Indemnitor as permitted under Section 4.13 of the Indenture;
(2) no activity has been undertaken on the Trust Property which would cause
(i) the Trust Property to become a hazardous waste treatment, storage or
disposal facility within the meaning of, or otherwise violate, any Environmental
Law, (ii) a release or threatened release of Hazardous Materials from
-2-
<PAGE>
the Trust Property within the meaning of, or otherwise violate, any
Environmental Law, or (iii) the discharge or emission of Hazardous Materials
which would require a permit under any Environmental Law that has not been
obtained and is in full force and effect; (3) no conditions with respect to the
Trust Property cause a violation or support a claim under any Environmental Law;
(4) no underground storage tanks or underground deposits of Hazardous Materials
are located on the Trust Property or have been located on the Trust Property and
subsequently removed or filled; (5) the Indemnitor has not received any notice
at any time that it is or was claimed to be in violation of or in non-compliance
with the conditions of any Environmental Law; and (6) there is not now pending
or threatened any action, judgment, claim, consent decree, judicial or
administrative orders or agreements, or governmental liens with respect to the
Indemnitor or any of its properties relating to any Environmental Law.
4. Covenants. The Indemnitor covenants: (i) that no Hazardous Materials
---------
shall be installed, used, generated, manufactured, treated, handled, refined,
produced, processed, stored or disposed of in, on or under the Trust Property,
except in amounts normal in the ordinary course of business of the Indemnitor as
permitted under Section 4.13 of the Indenture and in compliance with all
applicable rules, regulations and laws; (ii) that no activity shall be
undertaken on the Trust Property which would cause (A) the Trust Property to
become a hazardous waste treatment, storage or disposal facility, as such terms
are defined and classified under any Environmental Law, (B) a release or
threatened release of Hazardous Materials from the Trust Property in violation
of any Environmental Law, or (C) the discharge of Hazardous Materials into any
watercourse, body of surface or subsurface water or wetland, or the discharge
into the atmosphere of any Hazardous Materials that would require a permit under
any Environmental Law and for which no such permit has been issued; (iii) that
no activity shall be undertaken or permitted to be undertaken by the Indemnitor
on the Trust Property which would result in a violation under any Environmental
Law; and (iv) promptly following completion of any actions imposed upon the
Indemnitor under any Environmental Law, the Indemnitor shall obtain and deliver
to the Trustee, either (i) an environmental report in form and substance
acceptable to the Trustee from an environmental consultant acceptable to the
Trustee, stating that all required action has been taken, and that upon
completion of such action, the Trust Property is, to the knowledge of such
professional, then in compliance with applicable Environmental Laws, or (ii) a
statement from the governmental agency that required such action to the effect
that all required action has been taken to its satisfaction.
5. Indemnities. The Indemnitor hereby agrees to unconditionally
-----------
indemnify, defend, and hold the Trustee and the Holders harmless against:
(1) any loss, liability, damage, expense or claim incurred in connection with,
arising out of, resulting from or incident to the application of any
Environmental Law to the Trust Property; (2) any breach of any representation or
warranty or the inaccuracy of any representation made by the Indemnitor in or
pursuant to this Indemnity; (3) any breach of any covenant or agreement made by
the Indemnitor in or pursuant to this Indemnity; (4) any liability or obligation
arising out of CERCLA, any equivalent state statute or any other Environmental
Law; and (5) any other loss, liability, damage, expense or claim which may be
incurred by or asserted against the Trustee or the Holders directly or
indirectly resulting from the presence of Hazardous Material on the Trust
Property.
-3-
<PAGE>
6. Duration of Indemnity. The duration of this Indemnity hereunder shall
---------------------
be perpetual and shall survive repayment of the Notes and/or the foreclosure of
the Deed of Trust. Notwithstanding the foregoing, this Indemnity shall not be
construed to impose liability on the Indemnitor for Hazardous Materials placed,
released or disposed of on the Trust Property through no fault of the Indemnitor
or its agents, employees or contractors (i) after the date of foreclosure or
sale, the acceptance by the Trustee of a deed in lieu of foreclosure,
(ii) during any period during which a receiver appointed upon the request or
petition of the Trustee is in possession of the Trust Property or the Trustee
operates the Trust Property as a mortgagee in possession.
7. Notices from the Indemnitor. The Indemnitor shall, promptly after
---------------------------
obtaining knowledge thereof, advise the Trustee in writing of (i) any
governmental or regulatory actions instituted or threatened in writing under any
Environmental Law affecting the Trust Property or this Indemnity, including,
without limitation, any notice of inspection, abatement or noncompliance,
(ii) all claims made or threatened in writing by any third party against the
Indemnitor or the Trust Property relating to any Hazardous Material or a
violation of an Environmental Law with respect to the Trust Property and
(iii) the Indemnitor's discovery of any occurrence or condition on the Trust
Property or any Adjacent Property that could subject the Indemnitor or the Trust
Property to a claim under any Environmental Law or to any restrictions on
ownership, occupancy, transferability or use of the Trust Property under any
Environmental Law. The Indemnitor shall deliver to the Trustee such
documentation or records as the Trustee may reasonably request and that are
susceptible of being obtained by the Indemnitor relating to the Trust Property
in relation to any Environmental Law without undue cost or expense and without
the necessity for initiating legal proceedings to obtain the same.
8. Notice of Claims Against Indemnities. The Trustee agrees that it
------------------------------------
shall provide the Indemnitor with written notice of any claim or demand that the
Trustee has determined could give rise to a right of indemnification under this
Indemnity provided that the failure to give any such notice shall not limit
--------
Indemnitor's obligations hereunder. Such notice shall be given a reasonable
time after the Trustee becomes aware of the relevant facts and shall specify, to
the best of the Trustee's knowledge, the facts giving rise to the alleged claim,
and the amount, to the extent determinable, of liability for which indemnity is
asserted. The Indemnitor agrees that in any action, suit or proceeding brought
against the Trustee or any Holder of a Note, the Trustee or such Holder, as the
case may be, may be represented by counsel chosen by the Trustee or such Holder,
as the case may be, without affecting or otherwise impairing this Indemnity and,
to the extent fees and disbursements to such counsel are reasonably incurred in
protecting the Trustee's or such Holder's interests, to pay such fees and
disbursements. The Trustee agrees that, as to any action, suit or proceeding
for which the Indemnitor has acknowledged in writing and undertaken its
obligation to indemnify, defend and hold the Holders harmless with respect
thereto, the Trustee will not settle or otherwise compromise any such action,
suit or proceeding without the prior written consent of the Indemnitor, which
consent shall not be unreasonably withheld. If, as to any such action, suit or
proceeding for which the Indemnitor has acknowledged in writing and undertaken
their obligation to indemnify, defend and hold the Holders harmless with respect
thereto, without obtaining the prior written consent in writing of the
Indemnitor, the Trustee compromises or otherwise settles such action, suit or
proceeding, any such compromise or
-4-
<PAGE>
settlement without the consent of the Indemnitor shall not be binding upon the
Indemnitor. The Indemnitor agrees that it will not settle or compromise such
action, suit or proceeding without the Trustee's prior written consent, which
consent shall not be unreasonably withheld.
9. Payment of the Trustee's Expenses. If after notice of claim under
---------------------------------
Section 8 the Trustee retains counsel for advice or other representation in any
litigation, contest, dispute, suit or proceeding (whether instituted by the
Trustee, the Indemnitor, or any other party, including any governmental agency
charged with enforcement of any Environmental Law) in any way relating to this
Indemnity, or to enforce this Indemnity, then all of the reasonable attorneys'
fees arising from such services and all related expenses and court costs shall
be payable by the Indemnitor within 30 days after demand.
10. Assignment of Environmental Rights. (a) The Indemnitor
----------------------------------
unconditionally assigns, transfers, and sets over to the Trustee all of the
Indemnitor's claims and rights to the payment of damages that may arise from (A)
any Contamination on the Trust Property caused by the spread of such
Contamination from any Adjacent Property and/or (B) the violation of any
Environmental Law on any Adjacent Property (collectively, the "Assigned
--------
Environmental Rights"). If an Event of Default has occurred and is continuing,
- --------------------
the Trustee shall have the right to elect either of the following options (which
election the Trustee may change from time to time):
(b) The Trustee may proceed against the owner of such Adjacent
Property (or the receiver, trustee, custodian, or other party) in the name of
the Indemnitor or in the Trustee's name as agent for the Indemnitor, at the sole
expense of the Indemnitor. The Indemnitor agrees to cooperate with the Trustee
in such action, execute any and all documents required in furtherance of such
action and reimburse the Trustee for all costs and expenses associated with such
action; or
(c) At the Trustee's option, the Indemnitor may proceed on the
Indemnitor's and the Trustee's behalf in which event the Trustee may participate
in any such proceedings, and at the Trustee's election, take over such
proceedings from the Indemnitor's, and the Indemnitor's from time to time shall
deliver to the Trustee all instruments that the Trustee requests or may require
to permit such participation.
(d) This assignment constitutes a present, irrevocable, and
unconditional assignment of the foregoing claims, rights, and remedies, and
shall continue in effect until the Obligations have been satisfied in full.
During the occurrence and continuance of an Event of Default, any amounts that
the Trustee receives as damages arising out of any Contamination of the Trust
Property or the violation of any Environmental Law shall be applied first to the
Trustee's costs and expenses (including, without limitation, reasonable
attorneys' fees including reasonable charges for in-house counsel) incurred in
connection with the exercise of the Assigned Environmental Rights; second, to
remediation of such contamination to levels that are reasonably acceptable to
all applicable regulators or agencies having jurisdiction over the Trust
Property; third to the Obligations to the extent outstanding; and finally, the
remaining amounts, if any, to the person or persons legally entitled thereto.
-5-
<PAGE>
11. Environmental Inspections. The Trustee may enter the Trust Property
-------------------------
at any time to ascertain its environmental condition and in so doing may sample
building materials, take soil samples and/or test borings, and otherwise inspect
the Trust Property. The Trustee shall conduct such inspection in a reasonable
manner so as to not unduly disrupt the operation of the Indemnitor and its
contractors.
12. Obligations Absolute; Waivers. The obligations of the Indemnitor
-----------------------------
hereunder shall remain in full force without regard to, and shall not be
impaired by the following, any of which may be taken in such manner, upon such
terms and at such times as the Trustee, in accordance with the terms of the
Indenture, this Indemnity, any Collateral Document, or any other document
entered into by the Indemnitor in connection with the foregoing, deems
advisable, without the consent of, or notice to, the Indemnitor (except to the
extent that it may be entitled to consent or notice, in its capacity as an
Issuer), nor shall any of the following give the Indemnitor any recourse or
right of action against the Trustee or any holder of a Note: (i) any express or
implied amendment, modification, renewal, addition, supplement, extension or
acceleration of or to the Notes or the Indenture, this Indemnity, any Collateral
Document, or any other document entered into by the Indemnitor in connection
with the foregoing (including, without limitation, this Indemnity); (ii) any
exercise or non-exercise by the Trustee of any right or privilege under the
Indenture, this Indemnity, any Collateral Document, or any other document
entered into by the Indemnitor in connection with the foregoing; (iii) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to the Indemnitor, or any
affiliate of the Indemnitor, or any action taken with respect to this Indemnity
by any trustee or receiver, or by any court, in any such proceeding, whether or
not the Indemnitor shall have had notice or knowledge of any of the foregoing;
(iv) any release, waiver or discharge of the Indemnitor or any endorser or other
guarantor from liability under any of the Indenture, this Indemnity, any
Collateral Document, or any other document entered into by the Indemnitor in
connection with the foregoing or the Indemnitor's grant to the Trustee of a
security interest, lien or encumbrance in any of the Indemnitor's property;
(v) any subordination, compromise, settlement, release (by operation of law or
otherwise), discharge, compound, collection, or liquidation of the Indenture,
this Indemnity, any Collateral Document, or any other document entered into by
the Indemnitor in connection with the foregoing or any collateral described in
the Indenture, this Indemnity, any Collateral Document, or any other document
entered into by the Indemnitor in connection with the foregoing or otherwise, or
any substitution with respect thereto; (vi) any assignment or other transfer of
the Indenture, this Indemnity, any other Collateral Document, or any other
document entered into by the Indemnitor in connection with the foregoing, in
whole or in part; (vii) any acceptance of partial performance of any of the
obligations of the Indemnitor under the Indenture, this Indemnity, any other
Collateral Document, or any other document entered into by the Indemnitor in
connection with the foregoing; (viii) any consent to the transfer of any
collateral described in the Indenture, this Indemnity, any Collateral Document,
or any other document entered into by the Indemnitor in connection with the
foregoing or otherwise; and (ix) any bid or purchase at any sale of the
collateral described in the Indenture, this Indemnity, any Collateral Document,
or any other document entered into by the Indemnitor in connection with the
foregoing.
-6-
<PAGE>
The Indemnitor unconditionally waives any defense to the enforcement of
this Indemnity, including, without limitation: (1) all presentments, demands,
demands for performance, notices of nonperformance, protests, notices of
protest, dishonor, nonpayment, partial payment or default, notices of acceptance
of this Indemnity and all other notices and formalities to which the Indemnitor
may be entitled; (2) any right to require the Trustee to proceed against the
Indemnitor in its capacity as an Issuer, or any guarantor or to proceed against
or exhaust any collateral described in the Indenture, this Indemnity, any
Collateral Document, or any other document entered into by the Indemnitor in
connection with the foregoing or to pursue any other remedy whatsoever; (3) the
defense of any statute of limitations affecting the liability of the Indemnitor
hereunder, the liability of the Indemnitor or any guarantor under the Indenture,
this Indemnity, any Collateral Document, or any other document entered into by
the Indemnitor in connection with the foregoing, or the enforcement hereof, to
the extent permitted by law; (4) any defense arising by reason of any invalidity
or unenforceability of the Indenture, this Indemnity, any Collateral Document,
or any other document entered into by the Indemnitor in connection with the
foregoing or any disability of the Indemnitor or any guarantor or of the manner
in which the Trustee has exercised its remedies under the Indenture, this
Indemnity, any Collateral Document, or any other document entered into by the
Indemnitor in connection with the foregoing; (5) any defense based upon any
election of remedies by the Trustee, including, without limitation, any election
to proceed by judicial or nonjudicial foreclosure of any security, whether real
property or personal property security, or by deed in lieu thereof, and whether
or not every aspect of any foreclosure sale is commercially reasonable, or any
election of remedies (including, but not limited to, remedies relating to real
property or personal property security) that destroys or otherwise impairs the
subrogation rights of the Indemnitor or the rights of the Indemnitor to proceed
against any other indemnitor or any other guarantor for reimbursement, or both;
(6) any duty of the Trustee to advise the Indemnitor of any information known to
the Trustee regarding the financial condition of the Indemnitor or any guarantor
or of any other circumstance affecting the Indemnitor's or any guarantor's
ability to perform its obligations to the Trustee, it being agreed that the
Indemnitor assumes the responsibility for being and keeping informed regarding
such condition or any such circumstances; (7) any right of subrogation and any
rights to enforce any remedy that the Trustee now has or may hereafter have
against the Indemnitor or any guarantor and any benefit of, and any right to
participate in, any security now or hereafter held by the Holders, until all
obligations under the Indenture, this Indemnity, any Collateral Document, or any
other document entered into by the Indemnitor in connection with the foregoing
have been fully paid and performed; and (8) to the extent permitted by law, any
right to assert against the Trustee or any holder of a Note any legal or
equitable defense, counterclaim, set-off or crossclaim that it may now or at any
time or times hereafter have against any other indemnitor.
13. No Waiver. The Indemnitor's obligations hereunder shall in no way be
---------
impaired, reduced or released by reason of the Trustee's omission or delay to
exercise any right described herein or in connection with any notice (except for
notices required of the Trustee pursuant to this Indemnity), demand, warning or
claim regarding violations of any Environmental Laws governing the Trust
Property.
14. Recourse. The Indemnitor agrees that the indemnities hereunder are
--------
separate, independent of and in addition to the Indemnitor's undertakings under
the Indenture, any
-7-
<PAGE>
Collateral Document, or any other document entered into by the Indemnitor in
connection with the foregoing. The Indemnitor agrees that a separate action may
be brought to enforce the provisions of this Indemnity, which shall in no way be
deemed to be an action on the Notes, whether or not the Trustee would be
entitled to a deficiency judgment following a judicial foreclosure or sale under
any Deed of Trust.
The Indemnitor waives any right to require that any action be brought by
the Trustee or any holder of a Note against the Indemnitor or any other Person,
or that any other remedy under the Indenture, this Indemnity, any other
Collateral Document, or any other document entered into by the Indemnitor in
connection with the foregoing be exercised. The Trustee may, at its option,
proceed against the Indemnitor in the first instance to collect monies when due
or to obtain performance under this Indemnity, without first proceeding against
the Indemnitor or any other indemnitor or any other Person and without first
resorting to any other indemnity, the Indenture, this Indemnity, any Collateral
Document, or any other document entered into by the Indemnitor in connection
with the foregoing or any other remedy under the Indenture, this Indemnity, any
Collateral Document, or any other document entered into by the Indemnitor in
connection with the foregoing.
15. Successors and Assigns. Subject to the provisions of Section 6, this
----------------------
Indemnity shall be continuing, irrevocable and binding on the Indemnitor and its
successors and assigns, and this Indemnity shall be binding upon and shall inure
to the benefit of the Trustee and each holder of a Note and their respective
successors and assigns. The death or dissolution of the Indemnitor shall not
affect this Indemnity or any of the Indemnitor's obligations hereunder. It is
agreed by the Indemnitor that its liabilities hereunder are not contingent on
the signature of any other indemnitor under any other indemnity.
16. Notices. All notices, demands and other communications under this
-------
Indemnity shall be given in accordance with Section 11.2 of the Indenture.
17. Entire Agreement. This Indemnity constitutes the entire agreement
----------------
among the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter contained in this Indemnity.
18. Amendment and Waiver. This Indemnity may not be amended except by a
--------------------
writing signed by all the parties, nor shall observance of any term of this may
be waived except with the written consent of the Trustee.
19. Governing Law. This Indemnity shall be governed and construed as to
-------------
interpretation, enforcement, validity, construction, effect and in all other
respects by the laws, statutes and decisions of the State of Colorado without
regard to the principles of conflict of laws thereof.
20. Counterparts. This Indemnity may be executed in any number of
------------
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same agreement.
-8-
<PAGE>
21. Severability. All provisions contained in this Indemnity are
------------
severable and the invalidity or unenforceability of any provision shall not
affect or impair the validity or enforceability of the remaining provisions of
this Indemnity.
22. Headings. The descriptive headings of the Sections of this Indemnity
--------
are inserted for convenience only and do not constitute a part of this
Indemnity.
-9-
<PAGE>
IN WITNESS WHEREOF, this Environmental Indemnity has been executed as
of the date first above written.
TRUSTEE: IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ William T. Lynch
----------------------------
Name: William T. Lynch
Title: Vice President
INDEMNITOR: ISLE OF CAPRI BLACK HAWK L.L.C.
By: /s/ Allan B. Solomon
----------------------------
Name: Allan B. Solomon
Title: Secretary
-10-
<PAGE>
SCHEDULE 3
----------
1. Administrative Order on Consent for Removal Action filed before Region VIII
of the EPA recorded June 20, 1995.
2. Clear Creek/Central City Superfund Site Five-year Review Report prepared by
Region VIII of the EPA, dated March, 1994.
3. Final Design for Clay County Mine and Mill and the National Tunnel Sites
Reclamation, Black Hawk, Colorado, prepared by Golder Associates, Inc., dated
February 1995.
4. Final Report of National Tunnel Project, Black Hawk, Colorado, dated July 4,
1994.
5. Quality Assurance Monitoring Report from Golder Associates, Inc., dated July
1996.
6. Phase I Environmental Audit from L.F. Brown & Associates Inc., dated
September 5, 1995.
7. Performance of Remedial Response Activities at Uncontrolled Hazardous Waste
Sites (REM II), Draft Remedial Investigation, dated June 8, 1987.
8. Report of a Phase I Environmental Site Assessment from Stewart Environmental
Consultants, Inc., dated June 1997.
9. Site Information Document Control System Printout for Clear Creek/Central
City from Region VIII of the EPA
10. Letter from Stewart Environmental to Edward Reese dated June 12, 1997.
11. Correspondence with Environmental Protection Agency, and reports and
remedial plans, regarding National Tunnel Discharge, Wetland Mitigation Site.
-11-
<PAGE>
EXHIBIT 4.16
ASSIGNMENT OF TRADEMARK
-----------------------
WHEREAS, Isle of Capri Black Hawk L.L.C., a Colorado limited liability
company (the "Company") and Isle of Capri Black Hawk Capital Corp., a Colorado
corporation ("Capital Corp" and, together with Capital Corp., collectively, the
"Grantors" and each, a "Grantor") and IBJ Schroder Bank & Trust Company, a New
York banking corporation, having an office at One State Street, New York, New
York 10004 (the "Trustee") are entering into that certain Indenture dated as of
August 20, 1997 (as the same may be amended, supplemented or otherwise modified
from time to time, the "Indenture"), pursuant to which the Grantors are issuing
their 13% First Mortgage Notes due 2004 With Contingent Interest (such Notes,
together with any Notes issued in replacement thereof or in exchange therefor,
the "Securities"), in the aggregate principal amount of $75,000,000;
WHEREAS, pursuant to the terms of the Security Agreement dated as of
August 20, 1997 (as said Agreement may be amended, supplemented or otherwise
modified from time to time, the "Security Agreement"; capitalized terms used and
not otherwise defined have the meanings assigned to such terms in the Security
Agreement), between Grantors and the Trustee (in such capacity, "Grantee"), each
Grantor has assigned and granted to Grantee for Grantee's benefit and the
ratable benefit of the holders from time to time of the Securities (the
"Holders") a security interest in substantially all the assets of such Grantor
including all right, title and interest of such Grantor in, to and under all now
owned and hereafter acquired Trademarks, Trademark registrations, Trademark
applications and Trademark Licenses (subject to the limitations contained in the
Security Agreement), together with the goodwill of the business symbolized by
such Grantor's Trademarks, and all proceeds thereof, to secure the payment of
the Obligations; and
WHEREAS, each Grantor owns the Trademarks, Trademark registrations and
Trademark applications, and is a party to the Trademark Licenses, listed for
such Grantor on Schedule 1 annexed hereto;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor does hereby grant and
assign to Grantee a continuing security interest in all of such Grantor's right,
title and interest in, to and under the following (all of the following items or
types of property being herein collectively referred to as the "Trademark
Collateral"), whether presently existing or hereafter created or acquired:
(1) (a) all registered and unregistered trademarks, trade names,
corporate names, company names, business names, fictitious
business names, trade styles, service marks, logos, slogans and
other source or business identifiers, and the goodwill and
general intangibles associated therewith, all registrations and
recordings thereof, and all applications in connection therewith,
whether in the United States Patent and Trademark Office or in
any similar office or agency of the United
<PAGE>
States, any State thereof or any other country or any political
subdivision thereof, or otherwise, including, without limitation,
those set forth on Schedule 1, and (b) all renewals thereof;
----------
(2) any and all agreements, written or oral, providing for the grant
by or to such Grantor of any right to use any Trademark,
including, without limitation, those set forth on Schedule 1; and
----------
(3) all products and proceeds of the foregoing, including, without
limitation, any claim by such Grantor against third parties for
past, present or future (a) infringement or dilution of any
Trademark or trademark registration including, without
limitation, the Trademarks and trademark registrations referred
to in Schedule 1 annexed hereto, the trademark registrations
----------
issued with respect to the trademark applications referred to in
Schedule 1 and the Trademarks licensed under any Trademark
----------
License (subject to the terms of such Trademark License), or (b)
injury to the goodwill associated with any Trademark, Trademark
registration or Trademark licensed under any Trademark License.
This assignment and grant of security interest is granted in
conjunction with the security interests granted to Grantee pursuant to the
Security Agreement. Each Grantor hereby acknowledges and affirms that the
rights and remedies of Grantee with respect to the assignment and security
interest in the Trademark Collateral made and granted hereby are more fully set
forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.
<PAGE>
IN WITNESS WHEREOF, each Grantor has caused this Assignment of
Trademark to be duly executed as of the 20th day of August, 1997.
ISLE OF CAPRI BLACK HAWK L.L.C.
By: /s/ Allan B. Solomon
----------------------------------------
Name: Allan B. Solomon
--------------------------------------
Title: Secretary
-------------------------------------
By: /s/ H. Thomas Winn
----------------------------------------
Name: H. Thomas Winn
--------------------------------------
Title: Vice President
-------------------------------------
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
By: /s/ Allan B. Solomon
----------------------------------------
Name: Allan B. Solomon
--------------------------------------
Title: Secretary
-------------------------------------
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ William T. Lynch
----------------------------------------
Name: William T. Lynch
--------------------------------------
Title: Vice President
-------------------------------------
<PAGE>
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On August 19, before me, Yvonne M. Gutierrez, Notary Public,
personally appeared Allan B. Solomon [_] personally known to me OR [X] proved to
me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Yvonne M. Gutierrez
------------------------------
Signature of Notary
(SEAL APPEARS HERE)
<PAGE>
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On August 19, before me, Yvonne M. Gutierrez, Notary Public,
personally appeared Harold Thomas Winn, [_] personally known to me OR [X] proved
to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Yvonne M. Gutierrez
------------------------------
Signature of Notary
(SEAL APPEARS HERE)
<PAGE>
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On August 19, before me, Yvonne M. Gutierrez, Notary Public,
personally appeared William T. Lynch, [_] personally known to me OR [X] proved
to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Yvonne M. Gutierrez
------------------------------
Signature of Notary
(SEAL APPEARS HERE)
<PAGE>
ASSIGNMENT OF TRADEMARK
Schedule 1
TRADEMARKS
----------
NONE
TRADEMARK REGISTRATIONS
-----------------------
Under the License Agreement dated July 29, 1997, the Company is a licensee
of the marks listed below for use at the Isle-Black Hawk.
<TABLE>
<CAPTION>
MARK REG. NO. DATE
<S> <C> <C>
Isle of Capri (parrot logo) 2,039,052 (R) February 18, 1997
Isle of Capri 1,789,909 (R) August 24, 1993
Isle of Capri 1,789,917 (R) August 23, 1993
Island Gold 1,925,975 (R) October 10, 1995
Calypso's 2,022,801 (R) December 17, 1996
</TABLE>
TRADEMARK APPLICATIONS
----------------------
Under the License Agreement dated July 29, 1997, the Company is a licensee
of the marks listed below for use at the Isle-Black Hawk.
<TABLE>
<CAPTION>
MARK APPLICATION NO. DATE
<S> <C> <C>
Farraday's 75-252,127 March 5, 1997
Isle Style 75-224,559 January 13, 1997
</TABLE>
TRADEMARK LICENSES
------------------
<TABLE>
<CAPTION>
Name of Agreement Parties Date of Agreement
- ------------------ ------- -----------------
<S> <C> <C>
License Agreement Isle of Capri Black Hawk L.L.C. July 29, 1997
Casino America, Inc.
</TABLE>
Schedule 1-1
<PAGE>
EXHIBIT 4.17
ASSIGNMENT OF COPYRIGHT
-----------------------
WHEREAS, Isle of Capri Black Hawk L.L.C., a Colorado limited liability
company (the "Company") and Isle of Capri Black Hawk Capotal Corp., a Colorado
corporation ("Capital Corp" and, together with Capital Corp., collectively, the
"Grantors" and each, a "Grantor") and IBJ Schroder Bank & Trust Company, and New
York banking corporation, having an office at One State Street, New York, New
York 10004 (the "Trustee") are entering into that certain Indenture dated as of
August 20, 1997 (as the same may be amended, supplemented or otherwise modified
from time to time, the "Indenture"), pursuant to which the Grantors are issuing
their 13% First Mortgage Notes due 2004 with Contingent Interest (such Notes,
together with any Notes issued in replacement thereof or in exchange therefor,
the "Securities"), in the aggregate principal amount of $75,000,000;
WHEREAS, pursuant to the terms of the Security Agreement dated as of August
20, 1997 (as said Agreement may be amended, supplemented or otherwise modified
from time to time, the "Security Agreement"; capitalized terms used and not
otherwise defined have the meanings assigned to such terms in the Security
Agreement), between Grantors and the Trustee (in such capacity, "Grantee"), each
Grantor has assigned and granted to Grantee for Grantee's benefit and the
ratable benefit of the holders from time to time of the Securities (the
"Holders") a security interest in substantially all the assets of such Grantor
including all right, title and interest of such Grantor in, to and under all now
owned and hereafter acquired Trademarks, Trademark registrations, Trademark
applications and Trademark Licenses, together with the goodwill of the business
symbolized by such Grantor's Trademarks, and all proceeds thereof, to secure the
payment of the Obligations; and
WHEREAS, each Grantor, owns the Copyrights, Copyright registrations and
Copyright applications, and is a party to the Copyright Licenses, listed for
such Grantor on Schedule 1 annexed hereto.
----------
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor does hereby grant and
assign to Grantee a continuing security interest in all of such Grantor's right,
title and interest in, to and under the following (all of the following items or
types of property being herein collectively referred to as the "Copyright
Collateral"), whether presently existing or hereafter created or acquired:
(1) all copyrights in all works, whether published or unpublished,
registered or unregistered, all registrations and recordings thereof,
and all applications in connection therewith, including, without
limitation, registrations, recordings and applications in the United
States Copyright Office or in any other country, including in each
case, without limitation, those listed on Schedule 1, and (b) all
----------
renewals thereof;
<PAGE>
(2) any and all agreements, written or oral, providing for the
grant by or to such Grantor of any right to reproduce, copy
publish or otherwise use any right to reproduce, copy,
publish or otherwise use any Copyright, including, without
limitation, the agreements set forth on Schedule 1; and
----------
(3) all products and proceeds of the foregoing, including,
without limitation, any claim by such Grantor against third
parties for past, present or future (a) infringement or
dilution of any Copyright or copyright registration
including, without limitations, the Copyright and copyright
registrations referred to in Schedule 1 annexed hereto, the
----------
Copyright registrations issued with respect to the
Copyrights applications referred in Schedule 1 and the
Copyrights licensed under the Copyright License, or (b)
injury to the goodwill associated with any Copyright,
copyright registration or Copyright licensed under any
Copyright License.
This assignment and grant of security interest is granted in
conjunction with the security interests granted to Grantee pursuant to the
Security Agreement. Each Grantor hereby acknowledges and affirms that the rights
and remedies of Grantee with respect to the assignment and security interest in
the Copyright Collateral made and granted hereby are more fully set forth in the
Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.
<PAGE>
IN WITNESS WHEREOF, Grantors have caused this Assignment of Copyright to be
duly executed as of the 20th day of August, 1997.
ISLE OF CAPRI BLACK HAWK L.L.C.
By: /s/ Allan B. Solomon
------------------------------------
Name: Allan B. Solomon
----------------------------------
Title: Secretary
---------------------------------
By: /s/ H. Thomas Winn
------------------------------------
Name: H. Thomas Winn
----------------------------------
Title: Vice President
---------------------------------
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
By: /s/ Allan B. Solomon
------------------------------------
Name: Allan B. Solomon
----------------------------------
Title: Secretary
---------------------------------
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ William T. Lynch
------------------------------------
Title: William T. Lynch
---------------------------------
<PAGE>
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On August 19, 1997, before me, Yvonne M. Gutierrez, Notary Public,
personally appeared Allan B. Solomon, [_] personally known to me OR [X] proved
to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Yvonne M. Gutierrez
---------------------------------
Signature of Notary
[NOTARY PUBLIC SEAL
APPEARS HERE]
<PAGE>
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On August 19, 1997, before me, Yvonne M. Gutierrez, Notary Public,
personally appeared Harold Thomas Winn, [_] personally known to me OR [X] proved
to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Yvonne M. Gutierrez
---------------------------------
Signature of Notary
[NOTARY PUBLIC SEAL
APPEARS HERE]
<PAGE>
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On August 19, 1997, before me, Yvonne M. Gutierrez, Notary Public,
personally appeared William T. Lynch, [_] personally known to me OR [X] proved
to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person, or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Yvonne M. Gutierrez
---------------------------------
Signature of Notary
[NOTARY PUBLIC SEAL
APPEARS HERE]
<PAGE>
ASSIGNMENT OF COPYRIGHT
Schedule 1
COPYRIGHTS
----------
None
COPYRIGHT REGISTRATIONS
-----------------------
MARK REG. NO. DATE FIRST USE GOODS
---- -------- ---- --------- -----
None
COPYRIGHT APPLICATIONS
----------------------
None
COPYRIGHT LICENSES
------------------
Name of Agreement Parties Date of Agreement
- ----------------- ------- -----------------
None
Schedule 1-1
<PAGE>
EXHIBIT 4.18
ASSIGNMENT OF PATENT
--------------------
WHEREAS, Isle of Capri Black Hawk L.L.C., a Colorado limited liability
company (the "Company") and Isle of Capri Black Hawk Capital Corp., a Colorado
corporation ("Capital Corp" and, together with Capital Corp., collectively, the
"Grantors" and each, a "Grantor") and IBJ Schroder Bank & Trust Company, a New
York banking corporation, having an office at One State Street, New York, New
York 10004 (the "Trustee") are entering into that certain Indenture dated as of
August 20, 1997 (as the same may be amended, supplemented or otherwise modified
from time to time, the "Indenture"), pursuant to which the Grantors are issuing
their 13% First Mortgage Notes due 2004 With Contingent Interest (such Notes,
together with any Notes issued in replacement thereof or in exchange therefor,
the "Securities"), in the aggregate principal amount of $75,000,000;
WHEREAS, pursuant to the terms of the Security Agreement dated as of
August 20, 1997 (as said Agreement may be amended, supplemented or otherwise
modified from time to time, the "Security Agreement"; capitalized terms used and
not otherwise defined have the meanings assigned to such terms in the Security
Agreement), between Grantors and the Trustee (in such capacity, "Grantee"), each
Grantor has assigned and granted to Grantee for Grantee's benefit and the
ratable benefit of the holders from time to time of the Securities (the
"Holders") a security interest in substantially all the assets of such Grantor
including all right, title and interest of such Grantor in, to and under all now
owned and hereafter acquired Trademarks, Trademark registrations, Trademark
applications and Trademark Licenses, together with the goodwill of the business
symbolized by such Grantor's Trademarks, and all proceeds thereof, to secure the
payment of the Obligations; and
WHEREAS, each Grantor owns the Patents and Patent Applications and is
a party to the Patent Licenses, listed on Schedule 1 annexed hereto;
----------
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor does hereby grant and
assign to Grantee a continuing security interest in all of such Grantor's right,
title and interest in, to and under the following (all of the following items or
types of property being herein collectively referred to as the "Patent
Collateral"), whether presently existing or hereafter created or acquired:
(1) all patents and patent applications, and the inventions and
improvements described and claimed therein, and patentable
inventions and the reissues, divisions, continuations, renewals,
extensions and continuations-in-part of any of the foregoing,
including, without limitation, those set forth on Schedule 1;
----------
(2) any and all agreements, whether written or oral, providing for
the grant by or to such Grantor of any right to manufacture, use
or sell any
<PAGE>
invention, including, without limitation, those set forth on
Schedule 1; and
----------
(3) all products and proceeds of the foregoing, including, without
limitation, any claim by such Grantor against third parties for
past, present or future infringement of any Patent, including,
without limitation, any Patent referred to in Schedule 1 annexed
----------
hereto, any Patent issued pursuant to a patent application
referred to in Schedule 1 and any Patent licensed under any
----------
Patent License listed on Schedule 1 annexed hereto.
----------
This assignment and grant of security interest is granted in
conjunction with the security interests granted to Grantee pursuant to the
Security Agreement. Each Grantor hereby acknowledges and affirms that the
rights and remedies of Grantee with respect to the assignment and security
interest in the Patent Collateral made and granted hereby are more fully set
forth in the Security Agreement, the terms and provision of which are
incorporated by reference herein as if fully set forth herein.
2
<PAGE>
IN WITNESS WHEREOF, Grantors have caused this Assignment of Patent to
be duly executed as of the 20th day of August, 1997.
ISLE OF CAPRI BLACK HAWK L.L.C.
By: /s/ Allan B.Solomon
-------------------------------------
Name: Allan B.Solomon
-----------------------------------
Title: Secretary
----------------------------------
By: /s/ H. Thomas Winn
-------------------------------------
Name: H. Thomas Winn
-----------------------------------
Title: Vice President
----------------------------------
ISLE OF CAPRI BLACK HAWK CAPITAL CORP.
By: /s/ Allan B. Solomon
-------------------------------------
Name: Allan B. Solomon
-----------------------------------
Title: Secretary
----------------------------------
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ William T. Lynch
-------------------------------------
Name: William T. Lynch
-----------------------------------
Title: Vice President
----------------------------------
<PAGE>
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On August 19, before me, Yvonne M. Gutierrez, Notary Public,
personally appeared Allan B. Solomon [_] personally known to me OR [X] proved to
me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he they executed
the same in his authorized capacity, and that by his signature on the instrument
the person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Yvonne M. Gutierrez
-----------------------------
Signature of Notary
(SEAL APPEARS HERE)
<PAGE>
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On August 19, before me, Yvonne M. Gutierrez, Notary Public,
personally appeared William T. Lynch [_] personally known to me OR [X] proved to
me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he they executed
the same in his authorized capacity, and that by his signature on the instrument
the person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Yvonne M. Gutierrez
-----------------------------
Signature of Notary
(SEAL APPEARS HERE)
<PAGE>
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
On August 19, before me, Yvonne M. Gutierrez, Notary Public,
personally appeared Harold Thomas Winn [_] personally known to me OR [X] proved
to me on the basis of satisfactory evidence to be the person whose name is
subscribed to the within instrument and acknowledged to me that he executed the
same in his authorized capacity, and that by his signature on the instrument the
person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Yvonne M. Gutierrez
-----------------------------
Signature of Notary
(SEAL APPEARS HERE)
<PAGE>
ASSIGNMENT OF PATENT
Schedule 1
PATENTS
-------
U.S. Patent No. Date Issued Related Foreign Patents
- --------------- ----------- -----------------------
NONE
PATENT APPLICATIONS
-------------------
NONE
PATENT LICENSES
---------------
Name of Agreement Parties Date of Agreement
- ----------------- ------- -----------------
NONE
<PAGE>
EXHIBIT 4.19
COMPLETION CAPITAL COMMITMENT
COMPLETION CAPITAL COMMITMENT (the "Commitment") dated as of August 20,
1997, by Casino America, Inc., a Delaware corporation (the "Obligor"), in favor
of IBJ Schroder Bank & Trust Company, as trustee (the "Trustee"), for the
benefit of itself and the holders (the "Holders") of the Notes (as defined
below).
RECITALS
A. First Mortgage Notes. Pursuant to an Indenture (as amended,
--------------------
supplemented or otherwise modified from time to time, the "Indenture") dated as
of August 20, 1997, among Isle of Capri Black Hawk L.L.C., a Colorado limited
liability company (the "Company"), Isle of Capri Black Hawk Capital Corp., a
Colorado corporation ("Capital Corp." and, together with the Company, the
"Issuers"), and the Trustee, the Issuers have issued $75,000,000 in aggregate
principal amount of 13% First Mortgage Notes due 2004 With Contingent Interest
(the "Notes").
B. Proceeds of the Notes. The Company will use the proceeds of the Notes
---------------------
for the development, construction, equipping and operation of the Isle-Black
Hawk (as defined in the Indenture) upon certain real property located in Black
Hawk, Colorado (the "Property") and for certain other purposes described in the
Indenture.
C. Obligor's Benefit. The Obligor's wholly owned subsidiary, Casino
-----------------
America of Colorado, Inc., is a member of the Company and, as a result, the
Obligor will significantly benefit from the construction and operation of the
Isle-Black Hawk. The Obligor is making the commitments herein for the benefit
of Casino America of Colorado, Inc.
D. Purpose. As a material inducement to the purchasers of the Notes, the
-------
Obligor has agreed that it will commit, subject to the limitations set forth
herein, for the benefit of the Company, the Trustee and the Holders, to provide
certain additional funds to the Company upon the terms, conditions and
limitations provided herein, if such additional funds are necessary to complete
construction and commence operations of the Isle-Black Hawk as provided herein.
E. Definitions. Capitalized terms not otherwise defined herein shall
-----------
have the meanings ascribed to such terms in the Indenture.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Obligor hereby agrees as
follows:
1. FUNDING AMOUNTS. Upon the occurrence of each Contribution Event (as
---------------
defined below), the Obligor shall pay, without demand, the Funding Amounts (as
defined below) into the Construction Disbursement Account. The Funding Amounts
shall be equal to the amount in immediately available cash determined by the
Trustee, based upon the Construction Disbursement Budget, to be reasonably
necessary to cause a Contribution Event to no longer
<PAGE>
exist; provided, however, that in no event shall the aggregate amount of the
Funding Amounts paid pursuant hereto exceed $5,000,000; provided, further, that
for purposes of Section 2(iv) below, the Funding Amounts shall be equal to the
difference between $5,000,000 and the Funding Amounts, if any, previously paid
under Sections 2(i), 2(ii), 2(iii), 2(v) or 2(vi) below; and provided, further,
that for purposes of Section 2(v) and 2(vi) below, the Funding Amounts shall be
equal to the difference between $5,000,000 and the Funding Amounts, if any,
previously paid under Sections 2(i), 2(ii), 2(iii), and 2(iv) below. Such
proceeds shall be used for the development, construction, equipping and
operations of the Isle-Black Hawk pursuant to the terms of the Indenture, the
Cash Collateral and Disbursement Agreement and other Collateral Documents.
2. CONTRIBUTION EVENT. A "Contribution Event" means (i) there are
------------------
insufficient Available Funds (as defined in the Cash Collateral and Disbursement
Agreement) to complete the development, construction and equipping of the Isle-
Black Hawk so that the Isle-Black Hawk is Operating on or before April 1, 1999,
subject only to Permitted Liens; (ii) the Company, or any of its representatives
or agents, has provided the Trustee with a written notice that it is unlikely
that there shall be sufficient Available Funds to complete the development,
construction and equipping of the Isle-Black Hawk so that the Isle-Black Hawk is
Operating on or before April 1, 1999, subject only to Permitted Liens; (iii) (a)
the Independent Construction Consultant, or any of its representatives or
agents, has provided the Trustee and the Company with a written notice that it
is unlikely that there will be sufficient Available Funds (without giving effect
to the amount of Additional Revenues (as defined in the Cash Collateral and
Disbursement Agreement)), to complete the development, construction and
equipping of the Isle-Black Hawk, so that the Isle-Black Hawk is Operating on or
before April 1, 1999, subject only to Permitted Liens and (b) within ten days of
the Company receiving notice thereof, the Company has not provided evidence
satisfactory to the Trustee that there shall be sufficient Additional Revenues,
together with the other Available Funds, to complete the development,
construction and equipping of the Isle-Black Hawk so that the Isle-Black Hawk is
Operating on or before April 1, 1999, subject only to Permitted Liens; (iv) the
Isle-Black Hawk is not Operating on or before April 1, 1999; (v) the
commencement of any voluntary bankruptcy case by the Company, or (vi) the
commencement of any involuntary bankruptcy case against the Company (a) if such
involuntary case is not dismissed in its entirety by a final, non-appealable
court order within 60 days after the date of the involuntary petition or (b) if
the Company consents to the entry of an order for relief commencing a bankruptcy
case prior to the conclusion of such 60-day period.
3. ALTERATION OF OBLIGATIONS. In such manner, upon such terms and at
-------------------------
such times as the Trustee deems best, and without notice to the Obligor, the
Trustee, subject to the terms of the Indenture, the Notes and the Collateral
Documents, may alter, compromise, accelerate, extend or change the time or
manner for the development, construction, equipping or operation of the Isle-
Black Hawk (collectively the "Construction Obligations") or payment or
performance with respect to the Indenture, the Notes or the Collateral Documents
(the "Payment Obligations"); release either of the Issuers from any or all of
the Construction Obligations or the Payment Obligations by acceptance of a deed
in lieu of foreclosure or otherwise, as to all or any portion of the
Construction Obligations or the
2
<PAGE>
Payment Obligations; release, substitute or add any one or more guarantors or
endorsers of the Funding Amounts, the Construction Obligations or the Payment
Obligations; accept additional or substitute security for the Funding Amounts,
the Construction Obligations or the Payment Obligations, or release or
subordinate any security for the Funding Amounts, the Construction Obligations,
or the Payment Obligations. No exercise or non-exercise of any right hereby
given to the Trustee, no dealing by the Trustee hereunder or any other document
with the Obligor or any other guarantors or any other Person, and no change,
impairment or release of all or any portion of the Construction Obligations or
the Payment Obligations or suspension of any right or remedy of the Trustee
against any person, including, without limitation, either of the Issuers or any
other such guarantor, endorser or other person, shall in any way affect any of
the obligations of the Obligor hereunder or any security furnished by the
Obligor or give the Obligor any recourse against the Trustee. If the Trustee has
exculpated or hereafter exculpates either of the Issuers from personal liability
in whole or in part, or has agreed or hereafter agrees to look solely to the
Property encumbered by the Collateral Documents or any other property for the
satisfaction of the Issuers' obligations under the Indenture, the Notes or the
Collateral Documents, such exculpation and agreement shall not affect the
obligations of the Obligor hereunder. The Obligor further acknowledges that any
such exculpation or agreement that has been given or that is hereafter given to
either of the Issuers has been given or is given in reliance upon the covenants
of the Obligor contained herein.
4. WAIVER. The Obligor hereby waives and relinquishes all rights and
------
remedies accorded by applicable law to sureties or guarantors and agrees not to
assert or take advantage of any such rights or remedies, including, without
limitation, (a) any right to require the Trustee or the Holders (each a
"Benefitted Party") to proceed against either of the Issuers or any other person
or entity or to proceed against or exhaust any security held by a Benefitted
Party at any time or to pursue any other remedy in the power of a Benefitted
Party before proceeding against the Obligor, (b) the defense of the statute of
limitations in any action hereunder or in any action for the collection or
performance of the Funding Amounts, the Construction Obligations or the Payment
Obligations, (c) any defense that may arise by reason of the incapacity, lack of
authority, death or disability of any other person or the failure of a
Benefitted Party to file or enforce a claim against the estate (in
administration, bankruptcy or any other proceeding) of any other person, (d)
appraisal, valuation, stay, extension, marshaling of assets, redemption,
exemption, demand, presentment, protest and notice of any kind, including,
without limitation, notice of the existence, creation or incurring of any new or
additional indebtedness or obligation or of any action or non-action on the part
of a Benefitted Party, either of the Issuers, any endorser or creditor of either
of the Issuers or the Obligor or on the part of any other person under this or
any other instrument in connection with any obligation or evidence of
indebtedness held by a Benefitted Party as collateral or in connection with the
Funding Amounts, the Construction Obligations or the Payment Obligations, (e)
any defense based upon an election of remedies by a Benefitted Party, including,
without limitation, an election to proceed by non-judicial rather than judicial
foreclosure, which destroys or otherwise impairs the subrogation rights of the
Obligor, the right of the Obligor to proceed against either of the Issuers or
any other person for reimbursement, or both, (f) any defense based upon any
statute or rule of law which provides that the obligation of a surety must be
neither larger in amount nor in other respects more burdensome than that of the
principal, (g) any duty on the part of a Benefitted Party to disclose to the
Obligor any facts a Benefitted Party may now or hereafter know about either of
the Issuers or any other person, regardless of whether a Benefitted Party has
reason to believe that any such
3
<PAGE>
facts materially increase the risk beyond that which the Obligor intends to
assume, or has reason to believe that such facts are unknown to the Obligor, or
has a reasonable opportunity to communicate such facts to the Obligor, since the
Obligor acknowledges that the Obligor is fully responsible for being and keeping
informed of the financial condition of either of the Issuers or any other person
and of all circumstances bearing on the risk of non-payment of any Funding
Amounts, (h) any defense arising because of the election of a Benefitted Party,
in any proceeding instituted under the Federal Bankruptcy Code, of the
application of Section 1111(b)(2) of the Federal Bankruptcy Code, (i) any
defense based upon any borrowing or grant of a security interest under Section
364 of the Federal Bankruptcy Code, (j) any claim or other rights which it may
now or hereafter acquire against either of the Issuers or any other person that
arises from the existence of performance of the Obligor's obligations under this
Commitment or any Collateral Document, including, without limitation, any right
of subrogation, reimbursement, exoneration, contribution, indemnification, any
right to participate in any claim or remedy by a Benefitted Party against either
of the Issuers or any collateral which a Benefitted Party now has or hereafter
acquires, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, by any payment made hereunder or otherwise,
including, without limitation, the right to take or receive from either of the
Issuers or any other person or entity, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim or other rights, (k) any rights which it may acquire by way of
contribution under this Commitment or any Collateral Document, by any payment
made hereunder or otherwise, including, without limitation, the right to take or
receive from any other person, directly or indirectly, in cash or other property
or by set-off or in any other manner, payment or security on account of such
contribution rights, and (l) any defense based on one-action laws and any other
anti-deficiency protections granted to guarantors by applicable law. Any
proceeds of a foreclosure or similar sale may be applied first to any
obligations of the Issuers that do not also constitute Funding Amounts, Payment
Obligations or Construction Obligations. Obligor acknowledges and agrees that
any nonrecourse or exculpation provided for in any Collateral Document, or any
other provision of a Collateral Document limiting the Benefitted Parties'
recourse to specific collateral or limiting the Benefitted Parties' right to
enforce a deficiency judgment against the Issuers, shall have absolutely no
application to Obligor's liability under this Commitment. To the extent that the
Trustee collects or receives any sums or payments from the Issuers, the Trustee
shall have the right, but not the obligation, to apply such amounts first to
that portion of the Issuers' indebtedness and obligations, if any, to the
Trustee that is not covered by this Commitment, regardless of the manner in
which any such payments and/or amounts are characterized by the person making
payment.
5. EQUITY CONTRIBUTION. The Obligor may contribute, at its option, the
-------------------
Funding Amounts to the Company through the contribution of such amounts to
Casino America of Colorado, Inc. solely for the purchase by Casino America of
Colorado, Inc. of additional Ownership Interests (as defined in that certain
Amended and Restated Operating Agreement dated July 29, 1997) in the Company.
4
<PAGE>
6. BANKRUPTCY.
----------
6.1 So long as any of the Funding Amounts is owed hereunder, the
Obligor shall not, without the prior written consent of the Trustee, commence,
or join with any other person in commencing, any bankruptcy, reorganization, or
insolvency proceeding against the Company. The obligations of the Obligor under
this Commitment shall not be altered, limited or affected by or as a result of
any action taken by the Company in any proceeding, voluntary or involuntary,
involving the bankruptcy, reorganization, insolvency, receivership, liquidation
or arrangement of the Company, or by any defense which the Company may have by
reason of any order, decrees or decision of any court or administrative body
resulting from any such proceeding.
6.2 The Obligor shall file, in any bankruptcy or other proceeding in
which the filing of claims is required or permitted by law, all claims which the
Obligor may have against the Company relating to any indebtedness of the Company
to the Obligor, and hereby assigns to the Trustee all rights of the Obligor
thereunder. The Obligor shall timely notify the Trustee of any deadlines for
filing such claim. If the Obligor does not file any such claim, the Trustee, as
attorney-in-fact for the Obligor, is hereby authorized to do so in the name of
the Obligor or, in the Trustee's discretion, to assign the claim to a nominee
and to cause proofs of claim to be filed in the name of the Trustee's nominee.
The foregoing power of attorney is coupled with an interest and cannot be
revoked. The Trustee or its nominee shall have the sole right to vote to accept
or reject any plan proposed in any such proceeding and to take any other action
which a party filing a claim is entitled to take. The Obligor shall timely
notify the Trustee of any deadlines for casting such a vote. In all such cases,
whether in administration, bankruptcy or otherwise, the person authorized to pay
such a claim shall pay the same to the Trustee, and, to the full extent
necessary for that purpose, the Obligor hereby assigns to the Trustee all of the
Obligor's rights to all such payments or distributions to which the Obligor
would otherwise be entitled; provided, however, that the Obligor's obligations
hereunder shall not be satisfied except to the extent that the Trustee receives
cash by reason of any such payment or distribution. If the Trustee receives
anything hereunder other than cash, the same shall be held as collateral for
amounts due under this Commitment.
7. INTEREST, COSTS AND FEES.
------------------------
7.1 If the Obligor fails to pay all or any portion of the Funding
Amounts in accordance with the provisions hereof, the amount of such Funding
Amounts and all other sums payable by the Obligor to the Trustee hereunder shall
bear interest from the date of demand at the highest rate applicable to the
principal balance of the Notes (without regard to any contingent interest), or,
if the Notes have been fully repaid, at the highest rate that would be
applicable if the Notes had not been fully repaid (without regard to any
contingent interest).
7.2 If the Trustee incurs any costs or expenses (including reasonable
attorneys' fees) in enforcing, construing or defending any provision hereof, the
Obligor shall pay to the Trustee upon demand the amount of all such reasonable
fees, costs and other expenses incurred by the Trustee in connection therewith,
together with interest thereon from the date of
5
<PAGE>
demand at the highest rate applicable to the principal balance of the Notes, or,
if the Notes have been fully repaid, at the highest rate that would be
applicable if the Notes had not been fully repaid. The reference to "attorneys'
fees" in this Section 7.2 and in all other places in this Commitment shall
-----------
include, without limitation, such amounts as may then be charged by Trustee for
legal services furnished by attorneys in the employ of the Trustee, at rates not
exceeding such reasonable rates that would be charged by outside attorneys for
comparable services. Such fees, costs and expenses shall include, without
limitation, those incurred in connection with any bankruptcy, reorganization,
insolvency, receivership, liquidation, arrangement or other similar proceedings
of the Obligor which in any way affect the exercise by the Trustee of its rights
and remedies hereunder.
8. CUMULATIVE RIGHTS. All rights, powers and remedies of the Trustee
-----------------
hereunder and under any other agreement now or at any time hereafter in force
between the Trustee and the Obligor shall be cumulative and not alternative, and
such rights, powers and remedies shall be in addition to all rights, powers and
remedies given to the Trustee and the Holders by law. This Commitment is in
addition to and independent of the commitment of any other guarantor of any of
the Funding Amounts or other indebtedness of the Company.
9. INDEPENDENT OBLIGATIONS. The obligations of the Obligor hereunder are
-----------------------
independent of the obligations of the Issuers, and, in the event of any default
hereunder, a separate action or actions may be brought and prosecuted against
the Obligor, whether or not either of the Issuers are joined therein or a
separate action or actions are brought against either of the Issuers. The
Trustee's rights hereunder shall not be exhausted by its exercise of any of its
rights or remedies or by any such action or by any number of successive actions,
unless and until all of the Funding Amounts and any fees, costs and expenses, to
be paid herein, as provided herein have been paid and fully performed.
10. APPLICATION OF PAYMENTS OR RECOVERIES. With or without notice to the
-------------------------------------
Obligor, the Trustee, in the Trustee's sole discretion, at any time and from
time to time, and in such manner and upon such terms as the Trustee deems fit,
may apply any or all payments or recoveries from the Company or from any
guarantor, endorser or person under any other instrument or realized from any
security, in such manner and order of priority as the Trustee may determine, to
any obligations of the Company, whether or not such indebtedness is otherwise
secured or is due at the time of such application.
11. FINANCIAL STATEMENTS. The Obligor hereby represents and warrants that
--------------------
the most recent financial statements of each of the Issuers set forth in the
Offering Circular and of the Obligor set forth in its most recent Annual Report
on Form 10-K are true and correct in all material respects, and fairly present
the financial condition of each of the Issuers and the Obligor as of the
respective dates thereof and for the periods covered thereby, and that no
material adverse change has occurred in the financial condition of either of the
Issuers or the Obligor since the respective dates thereof. The Obligor hereby
agrees to deliver to the Trustee annual financial statements of the Obligor
required to be maintained by the Securities Act of 1934, as amended, within 120
days after the end of each fiscal year of the Obligor until payment and
performance in full of the Funding Amounts guaranteed hereby.
6
<PAGE>
12. NOTICES. Whenever the Obligor or the Trustee shall desire to give or
-------
serve any notice, demand, request or other communication with respect to this
Commitment, each such notice shall be in writing and shall be effective only if
the same is delivered by hand-delivery, first-class mail (registered or
certified, return receipt requested), telex, telecopier or air courier
guaranteeing overnight delivery, addressed as follows:
To the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York, 10004
Attention: Michael Diaz
To the Obligor:
Casino America, Inc.
711 Washington Loop
Biloxi, Mississippi 39530
Attention: Chief Financial Officer
Any such notice delivered personally shall be deemed to have been received upon
delivery. Any such notice sent by telegram shall be presumed to have been
received by the addressee one business day after its acceptance for sending by
an authorized carrier thereof. Any such notice sent by mail shall be presumed
to have been received by the addressee three business days after posting in the
United States mail. The Obligor or the Trustee may change its address by giving
the other a written notice of the new address as herein provided.
13. SUCCESSORS AND ASSIGNS. This Commitment shall inure to the benefit of
----------------------
the Trustee, its successors and assigns, and shall bind the successors and
assigns of the Obligor. This Commitment may be assigned by the Trustee with
respect to all or any portion of the Funding Amounts hereby guaranteed, and when
so assigned, the Obligor shall be liable to the assignees under this Commitment
without in any manner affecting the liability of the Obligor hereunder with
respect to any of the Funding Amounts retained by the Trustee.
14. INDENTURE. The Obligor shall at all times prior to the fulfillment of
---------
all of its obligations pursuant to this Commitment, retain no less than
$5,000,000 in available funds for Restricted Payments, as defined in and
pursuant to section 1012 of the indenture dated as of August 1, 1996, among the
Obligor, the subsidiary guarantors identified therein and Fleet National Bank,
as trustee, relating to the issuance of $315,000,000 principal amount of 12 1/2%
Senior Secured Notes due 2003 of the Obligor for so long as such indenture
remains in effect, or any successor indenture thereto, if applicable.
7
<PAGE>
15. TERMINATION. This Agreement shall expire upon the later of (i) the
-----------
final disbursement of amounts in the Cash Collateral Accounts in accordance with
the Cash Collateral and Disbursement Agreement and (ii) April 1, 1999.
16. NO GUARANTEE. Nothing contained in this Commitment shall be deemed to
------------
be a guarantee by the Obligor of any obligations for the payment of principal
and interest of the Issuers under the Notes.
17. MISCELLANEOUS PROVISIONS.
------------------------
17.1 This Commitment shall be governed by and construed in accordance
with the laws of the State of New York. The Obligor hereby consents to the
jurisdiction of the courts of the State of New York and consents to service of
process by any means authorized by New York law in any action brought under or
arising from this Commitment.
17.2 The Obligor shall defend, indemnify and hold each Benefitted
Party harmless from all claims, demands, causes of action, liabilities, losses,
costs, and expenses (including costs of suit and reasonable attorneys' fees)
arising from or in connection with any act or failure to act by the Obligor in
connection with this Commitment.
17.3 The Obligor agrees to comply with the terms of the Indenture,
the Cash Collateral and Disbursement Agreement and any other Collateral
Document, to the extent applicable thereto.
17.4 Except as provided in any other written agreement now or at any
time hereafter in force between the Obligor and the Trustee, this Commitment
shall constitute the entire agreement of the Obligor with the Trustee with
respect to the subject matter hereof, and no representation, understanding,
promise or condition concerning the subject matter hereof shall be binding upon
the Trustee unless expressed herein.
17.5 Should any term, covenant, condition or provision of this
Commitment be determined to be illegal or unenforceable, all other terms,
covenants, conditions and provisions hereof shall nevertheless remain in full
force and effect.
17.6 Time is of the essence to this Commitment and each of its
provisions.
17.7 When the context and construction so require, all words used in
the singular herein shall be deemed to include the plural, the masculine shall
include the feminine and neuter, and vice versa.
17.8 The word "person" as used herein shall include any individual,
company, firm, association, partnership, joint venture, corporation, trust or
other legal entity of any kind whatsoever.
8
<PAGE>
17.9 No provision of this Commitment or right granted to the Trustee
hereunder can be waived in whole or in part, nor can the Obligor be released
from its obligations hereunder, except by a writing duly executed by an
authorized officer of the Trustee.
17.10 The Trustee need not inquire into the power of the Issuers or
the authority of their respective partners, officers or agents acting or
purporting to act on their behalf.
17.11 The headings of this Commitment are inserted for convenience
only and shall have no effect upon the construction or interpretation hereof.
[signature page follows]
9
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Completion
Capital Commitment as of the date first above written.
OBLIGOR:
CASINO AMERICA, INC., a Delaware corporation
By: /s/ Allan B. Solomon
-----------------------------
Name: Allan B. Solomon
Title: Secretary
10
<PAGE>
EXHIBIT 10.1
AMENDED AND RESTATED OPERATING AGREEMENT
OF
ISLE OF CAPRI BLACKHAWK L.L.C.
This AMENDED AND RESTATED OPERATING AGREEMENT is made as of this 29th day
of July, 1997 by Casino America of Colorado, Inc. ("Casino America of Colorado")
and Blackhawk Gold, Ltd. ("Blackhawk Gold") and those other persons, if any, who
from time to time become parties to or are otherwise bound by this Agreement as
provided herein.
The parties hereto are parties to and Operating Agreement dated April 25,
1997. The parties wish to amend and restate the Operating Agreement, pursuant to
this Amended and Restated Operating Agreement, which supersedes and replaces the
Operating Agreement, effective as of the Closing Date. The parties therefore
agree as follows:
ARTICLE 1: ORGANIZATION AND DEFINITIONS
1.1 Company Name. The business of the Company will be conducted under the name
------------
"Isle of Capri Blackhawk L.L.C." or any other name determined by the Company in
accordance with governing law.
1.2 Initial Ownership. Upon execution of this Amended and Restated Operating
-----------------
Agreement, the Ownership Interest of the Company is as set forth below:
<TABLE>
<CAPTION>
Member Ownership Interest Initial Contribution
------ ------------------ --------------------
<S> <C> <C>
Blackhawk Gold, Ltd. 45% $7,500,000
Casino America of Colorado, Inc. 55% $9,200,000
</TABLE>
The Ownership Interest shall be adjusted from time to time in accordance
with the provisions of this Agreement. The Ownership Interests of the Members
shall at all times be maintained on Appendix I hereto, which shall be amended
chronologically from time to time as necessary. Effective as of the Closing,
Blackhawk Gold has sold to Casino America of Colorado a portion of it's
Ownership Interest representing 4.2% of the total Ownership Interests in the
Company so that, as of the Closing Date, the respective percentage Ownership
Interests are as follows: Blackhawk Gold - 40.8% and Casino America of
Colorado - 59.2%.
1.3 Colorado Office and Agent. The initial registered office of the Company in
-------------------------
Colorado is located at 1675 Broadway, Suite 1200, Denver, Colorado 80202, and
its initial registered agent at such address is CT Corporation. The Company may
subsequently change its registered office or registered agent in Colorado in
accordance with the Act. The Company's principal place of business
<PAGE>
is 711 Washington Loop, Biloxi, Mississippi 39530.
1.4 Term. The Company began on the date its Articles of Organization were filed
----
with the Colorado Secretary of State and continues until December 31, 2096, or
such earlier date as a Dissolution may occur.
1.5 Foreign Qualification. After formation of the Company under the Act, the
---------------------
Company will apply for any required certificate of authority to do business in
any other state or jurisdiction where it conducts business, as appropriate.
1.6 Definitions. Terms used with initial capital letters will have the meanings
-----------
specified in Exhibit "A", applicable to both singular and plural forms, for all
purposes of this Agreement.
ARTICLE 2: PURPOSES AND POWERS
2.1 Principal Purpose. The business and principal purpose of the Company is to
-----------------
investigate, seek, acquire and engage in casino gaming in the Black Hawk/Central
City, Colorado area, and to engage in all activities related thereto, including,
without limitation, the operation of restaurants, gift shops and/or a hotel.
2.2 Powers. The Company has all of the powers granted to a limited liability
------
company under the Act, as well as all powers necessary or convenient to achieve
its purposes and to further its business.
ARTICLE 3: CAPITAL CONTRIBUTIONS
3.1 Initial Capital of the Company. The Members have made an initial Capital
------------------------------
Contribution to the Company and have received the Initial Ownership Interests
set forth in Section 1.2 above.
3.2 No Additional Capital Contributions. Except as agreed by the Members in the
-----------------------------------
Members Agreement, no Member shall be required to make an additional Capital
Contribution to the Company.
3.3 No Withdrawal. Except as specifically provided in this Agreement, no Member
-------------
will be entitled to withdraw all or any part of such Member's capital from the
Company or, when such withdrawal of capital is permitted, to demand a
distribution of property other than cash.
3.4 No Interest on Capital. No Member will be entitled to receive interest on
----------------------
such Member's Capital Contribution or Capital Account.
3.5 Loans by Members. The Company may borrow money from any Member or Affiliate
----------------
for Company purposes on such terms as the Company and such Member or Affiliate
may agree. Any such advance or loan will be treated as indebtedness of the
Company and will not be treated as a
<PAGE>
Capital Contribution by a Member.
3.6 Capital Accounts. A Capital Account will be maintained for each Member and
----------------
credited, charged and otherwise adjusted in accordance with generally accepted
accounting principles consistently applied. Each Member's Capital Account will
be:
[a] Credited with [i] the capital contributions (net of liabilities secured by
such property that the Company takes subject to or assumes), [ii] the Member's
allocable share of Profits and [iii] all other items properly credited to the
Member's Capital Account; and
[b] Charged with [i] the amount of cash distributed to the Member by the
Company, [ii] the Fair Market Value of property distributed to the Member by the
Company (net of liabilities secured by such property that the Member takes
subject to or assumes), [iii] the Member's allocable share of Losses and [iv]
all other items properly charged to the Member's Capital Account.
Any unrealized appreciation or depreciation with respect to any asset
distributed in kind will be allocated among the Members in accordance with the
provisions of Article 5 as though such asset had been sold for its Fair Market
Value on the date of Distribution, and each Member's Capital Account will be
adjusted to reflect both the deemed realization of such appreciation or
depreciation and the Distribution of such property. In determining the Fair
Market Value of any asset of the Company for purposes of any Distribution, the
Company may obtain the written report of any one or more independent qualified
appraisers (or appraisal firms). If more than one appraisal report is obtained
by the Company, Fair Market Value will be determined as the average of such
appraised values. The Company will select each such appraiser (or appraisal
firm), and bear the cost of any such appraisal.
The Capital Account of each Member shall be determined and maintained in
accordance with generally accepted accounting principles consistently applied in
the casino industry. For income tax purposes, the Company shall make all
required elections under Section 704(b) of the Code.
3.7 Transfer. If all or any part of an Ownership Interest is transferred in
--------
accordance with this Agreement, the Capital Account and Ownership Interest of
the Transferor (including a pro-rata share of Capital Contributions) that is
attributable to the transferred interest will carry over to the Transferee.
3.8 Certificates for Units Representing Ownership Interests. Ownership
-------------------------------------------------------
Interests in the Company shall be represented by Units and a Person's Ownership
Interest shall equal the number of Units owned by such Person divided by the
total number of Units issued and outstanding. The Units shall be represented by
Certificates, which shall be in such form as may be determined by the Managers.
Certificates shall be signed by a majority of the Managers. All Certificates
shall be consecutively numbered or otherwise identified. The name of the Person
to whom the Units are issued, with the number of Units and the date of issue,
shall be entered on the books of the Company. All Certificates surrendered to
the Company for transfer shall be canceled and no new Certificate shall be
issued until the former Certificate for a like number of Units shall have been
surrendered and canceled, except that in the case of a lost, destroyed or
mutilated certificate a new one may be
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<PAGE>
issued therefor upon such terms and indemnity to the Company as the Managers may
prescribe. Transfers of Units of the Company shall be made only on the books of
the Company by the holder of record thereof or by his legal representative, who
shall furnish proper evidence of authority to transfer, or by his attorney
thereunto authorized by power of attorney duly executed and filed with the
Company, and, on surrender for cancellation of the Certificate for such Units.
The Person in whose name a Unit or Units stands on the books of the Company
shall be deemed the owner thereof for all purposes as regards the Company.
ARTICLE 4: MEMBERS AND MANAGERS
4.1 Management by Managers. Except as to matters expressly reserved to the
----------------------
Members by statute or by this Operating Agreement, the business and affairs of
the Company shall be managed by the Managers set forth below, as such Managers
may be changed from time to time as set forth herein. The initial Managers of
the Company shall be John M. Gallaway, Allan B. Solomon, whose address is 711
Washinton Loop, Biloxi, Mississippi, and H. Thomas Winn, whose address is 3040
Post Oak Boulevard, Suite 675 Houston, Texas. Each Member shall have the right
to elect one Manager, except that so long as Casino America of Colorado or its
Affiliates own a Majority In Interest of the Company, Casino America of Colorado
or its Affiliates shall be entitled to elect a majority of the Managers, which
initially shall be two Managers, and Blackhawk Gold shall be entitled to elect
one Manager. Each Member shall have the right to remove, replace, fill a vacancy
or designate a temporary replacement for the Manager or Managers elected by it.
Managers shall hold office for a term of one year from election, or until
the next Annual Meeting of Members. Any action provided for in this Agreement
that may be taken by the Company may, except as otherwise provided in this
Agreement, only be taken with the consent of a majority of the Managers or by
the officers of the Company to the extent a majority of the Managers have
delegated authority with respect to such actions to such officers. Except as
provided in Section 4.9 below or as to any other matter the Members agree shall
require a unanimous vote, actions of the Managers shall be by majority vote at
meetings duly called for purposes of taking action at which a quorum is present.
A quorum at any meeting of the Managers shall consist of a majority of the
Managers then appointed. The Managers may also act by unanimous written consent
in lieu of a meeting.
Meetings of the Managers shall be held no less often than quarterly (one
of which shall be the Annual Meeting of the Members) on dates established
therefor at each preceding Annual Meeting of the Managers. Special meetings of
the Managers shall be held from time to time as called by any of the Managers on
no less than five (5) days advance notice given in writing by the Manager
calling such meeting, which notice may be given by facsimile, Federal Express or
similar courier service, certified mail or personal delivery. Notices of
meetings shall be effective when sent, if sent by facsimile, or upon receipt, if
given by certified mail, overnight courier or personal delivery, in each case at
the address of each of the Managers on the books and records of the Company.
The Managers may participate in a meeting by means of conference telephone or
similar communication equipment by which all the members participating in the
meeting can hear each other at the same time. Such participation will
constitute presence in person at the meeting and waiver of any required
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notice.
4.2 Member's Representative. Each Member which is not an individual will
-----------------------
designate one or more individuals to act as such Member's duly authorized
representative and agent for purposes of exercising such Member's vote on any
matter involving the Company requiring the approval or action of the Members.
Each Member which is not an individual may also designate one or more
individuals as an alternate in the event that the primary representative is
unavailable to act for any reason. A Member may change any such designation at
any time upon similar notice. The representatives of a Member will cast the vote
of each Member in accordance with such Member's Ownership Interest, as provided
in this Article.
4.3 Majority Voting. All decisions reserved by the Act or this Operating
---------------
Agreement to the Members will be made by the affirmative vote of Members owning
more than 50% of the Ownership Interests held by all Members, without regard to
quorum requirements, unless the unanimous vote (under Section 4.9) provisions
apply or except as to any other matter the Member agree shall require a
unanimous vote or as otherwise specifically provided in this Agreement. Any
determination to be made by the Members will be made in each Member's sole and
absolute discretion.
4.4 No Resignation or Retirement. Each Member agrees not to voluntarily resign
----------------------------
or retire as a Member in the Company. However, if such voluntary resignation or
retirement occurs in contravention of this Agreement, the withdrawing Member
will, without further act, become a Transferee of such Ownership Interest (with
the limited rights of a Transferee as set forth in Section 13.6). Any Member who
resigns or retires from the Company in contravention of this Agreement will be
liable to the Company and the other Members for proven monetary damages (but any
such action or proposed action to resign or retire will not be subject to any
equitable action for injunctive relief or specific performance).
4.5 Powers. Each Manager is an agent of the Company for the purpose of
------
conducting its business and affairs. The act of any Manager for apparently
carrying on in the usual way of the Company's business or affairs binds the
Company unless the Manager so acting has, in fact, no authority to act for the
Company in the particular matter and the person with whom such Member is dealing
has knowledge of such lack of authority. The act of any Manager which is not
apparently for the carrying on in the usual way of the Company's business or
affairs does not bind the Company unless authorized in accordance with this
Agreement. Each Manager agrees to act on behalf of the Company only in
compliance with this Agreement, and agrees that any act in contravention of this
Agreement renders such Manager liable to the Company and other Members for
monetary damages and other relief.
4.6 Substitute Members. A Transferee may be admitted as a substitute Member of
------------------
the Company only upon the affirmative written agreement of all of the Members
(excluding the Transferor Member), effective upon a date specified (which must
be on or after the effective date of the Transfer, as determined under Section
13.5).
4.7 Additional Members. Subject to Section 4.9, additional Members of the
------------------
Company may be admitted incident to the contribution of money or other property
to the Company (or otherwise) only
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<PAGE>
upon the affirmation written agreement of all Members, effective upon a date
specified by all the Members.
4.8 Officers. The Company, acting through the Managers, may appoint and remove
--------
such officers as it determines to be necessary or desirable to carry out the
day-to-day management of the Company. The Company's officers may include a
president, one or more vice presidents, a secretary and a treasurer, as well as
one or more assistant vice presidents, secretaries and treasurers. Such officers
may also include a chief executive officer, chief operating officer and chief
financial officer. Appointment as an officer or agent of the Company will not,
of itself create any contract rights. The officers of the Company, acting in
their capacity as such, will be agents acting on behalf of the Company as
principal. No officer of the Company has the continuing exclusive authority to
make independent business decisions on behalf of the Company without the
approval of the Managers as set forth in this Article.
4.9 Unanimous Vote. The following actions by the Company will require the
--------------
affirmative vote of all Managers and the Members, without regard to quorum
requirements.
[a] The admission of an additional Member under Section 4.7;
[b] Any non pro-rata distribution, including the non pro-rata distribution of
assets in kind in Liquidation under Section 12.3;
[c] The amendment of this Agreement, except as provided in Section 14.1 of this
Agreement.
[d] The merger of the Company with any other business entity as provided by
governing law; or
[e] The sale of substantially all of the Company's assets.
ARTICLE 5: ALLOCATION OF PROFITS AND LOSSES
5.1 Profits and Losses. For each Fiscal Year, Profits or Losses of the Company
------------------
will be an amount equal to the Company's income or loss determined under the
accrual method of accounting, in accordance with generally accepted accounting
principles consistently applied.
5.2 General Allocation Rule. Except as otherwise provided in (or until changed
-----------------------
pursuant to) this Agreement, the Profits or Losses of the Company, including
items of income, gain, loss and deduction for each Fiscal Year, will be
allocated to the Members in proportion to their respective Ownership Interests
as defined herein. Appropriate adjustment during the Fiscal Year of any change
in this allocation will be determined in accordance with Section 706 of the Code
and the Section 706 Regulation to take into account the varying interests of the
Members in the Company during such Fiscal Year, in the manner determined by the
Company.
5.3 Exception. Notwithstanding the general rule on allocation and for tax
---------
accounting purposes only and not for financial statement purposes or any other
provision of this Operating Agreement, no cash shall be distributed to any
Member if the effect thereof would be to create a deficit in his
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<PAGE>
Capital Account balance or increase the deficit in his Capital Account below the
sum of [1] the amount (if any,) which he is required to contribute to the
Company and [2] said Member's share of gain which the Company would recognize
upon a sale of its property for an amount equal to the balance of the non-
recourse debt encumbering it, (the "Company's Minimum Gain") and such cash shall
be retained by the Company and shall be distributed to the Member at the
earliest time or times possible when such distributions will not cause such a
deficit or increase such a deficit in the distributee's Capital Account balance.
Notwithstanding the provisions of Section 5.2, the following allocations of net
profits and net losses and items thereof shall be made:
[a] If in any taxable year there is a net decrease in the amount of the
Company's Minimum Gain, each Member shall be allocated items of the
Company's net profits for that year (and if necessary, subsequent years)
equal to that Member's share of the net decrease in the Company's Minimum
Gain (within the meaning of Treasury Regulation Section 1.704-2(g)(2)). The
items to be so allocated shall be determined in accordance with Treasury
Regulation Section 1.704-2(j). This Section 5.3 is intended to comply with
the Minimum Gain Chargeback requirement in Treasury Regulation Section
1.704-2 and shall be interpreted consistently therewith.
[b] If during any taxable year a Member unexpectedly receives any adjustments,
allocations or distributions described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5), or (6), then items of net profits shall be
specially allocated to each Member in an amount and manner sufficient to
eliminate, to the extent required by Treasury Regulation Section 1.704-
(1)(b)(2)(ii)(d), the deficit in the Capital Account of such Member as
quickly as possible, provided that an allocation pursuant to this Section
5.3[b] shall be made only if and to the extent that such Member has an
adjusted Capital Account deficit after all other allocations provided for
in this Article 5 have been tentatively made and as if this Section 5.3[b]
were not in this Agreement. This Section 5.3[b] is intended to comply with
the Qualified Income Offset requirements in Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
It is the intent of the Members that the allocations provided for in this
Operating Agreement have "substantial economic effect," as that term is defined
in Section 704(b) of the Code. Notwithstanding anything in this Section 5.3 to
the contrary, nothing contained in this Section 5.3 shall serve to restrict any
distribution by the Company to any Member.
5.4 Tax Allocations. Allocation of items of income, gain, loss and deduction of
---------------
the Company for federal income tax purposes for a Fiscal Year will be allocated,
as nearly as is practicable, in accordance with the manner in which such items
are reflected in the allocations of Profits and Losses among the Members for
such Fiscal Year. To the extent possible, principles identical to those that
apply to allocations for federal income tax purposes will apply for state and
local income tax purposes.
5.5 Transfer. Except as otherwise provided in Section 5.2, if an Ownership
--------
Interest is transferred during any Fiscal Year (whether by Transfer or
liquidation of an Ownership Interest, of otherwise), the books of the Company
will be closed as of the effective date of Transfer. The Profits of Losses
attributed to the period from the first day of such Fiscal Year through the
effective date
-7-
<PAGE>
of Transfer will be allocated to the Transferor, and the Profits or Losses
attributed to the period commencing on the effective date of Transfer will be
allocated to the Transferee. In lieu of an interim closing of the books of the
Company and with the agreement of the Transferor and Transferee, the Company may
agree to allocate Profits and Losses for such Fiscal Year between the Transferor
and Transferee based on a daily proration of items for such Fiscal Year or any
other reasonable method of allocation (including an allocation of extraordinary
Company items, as determined by the Company, based on when such items are
recognized for federal income tax purposes).
5.6 Contributed Property. All items of income, gain, loss and deduction with
--------------------
respect to property contributed (or deemed contributed) to the Company will,
solely for tax purposes, be allocated among the Members as required by Section
704(c) of the Code so as to take into account the variation between the tax
basis of the property and its Fair Market Value at the time of contribution.
For example, if there is built-in gain with respect to contributed property,
upon the Company's sale of that property the pre-contribution taxable gain (as
subsequently adjusted under the Section 704(c) Regulations during the period
such property was held by the Company) would be allocated to the contributing
Member (and such pre-contribution gain would not again create a Capital Account
adjustment since the property was credited to Capital Account upon contribution
at its Fair Market Value). Except as limited by the following sentence, the
allocation of tax items with respect to Section 704(c) property to Members not
contributing such property will, to the extent possible, be equal to the
allocation of the corresponding book items made to such noncontributing Members
with respect to such property. If book allocations of cost recovery deductions
(such as depreciation or amortization) exceed the tax allocations of those items
so that the ceiling rule of the Section 704(c) Regulations applies, any curative
or remedial allocations of tax items will be made as the Company may determine.
All tax allocations made under this provision will be made in accordance with
Section 704(c) of the Code and the Section 704(c) Regulations.
5.7 Tax Credits. Any tax credit, and any tax credit recapture, will be
-----------
allocated to the Members in the same ratio that the federal income tax basis of
the asset (to which such tax credit relates) is allocated to the members under
the Section 46 Regulations, and if no basis is allocated, in the same manner as
Profits are allocated to the Members under Section 5.2.
ARTICLE 6: DISTRIBUTIONS
6.1 Prorata Distributions. The Company will make distributions to the Members
---------------------
in proportion to their Ownership Interests. Any Net Sales Cash that is realized
incident to the Dissolution and Liquidation of the Company will be distributed
as provided in Article 12, with any Net Sales Cash that is realized other than
incident to the Dissolution and Liquidation of the Company to be distributed in
accordance with Section 6.1.
6.2 Nonprorata Distributions. Unless the Members otherwise unanimously agree,
------------------------
the Members intend that all Distributions will be made to the Members in
proportion to their Ownership Interests. In the event any Distribution is not
made in proportion to their Ownership Interests without the unanimous consent of
the Members, any excess Distributions to a Member will be treated as an advance
or loan made by the Company to such Member, payable to the Company with Interest
-8-
<PAGE>
and on demand.
6.3 Payment. Any Distribution will be made to a Member only if such Person owns
-------
an Ownership Interest on the date of Distribution, as reflected on the books of
the Company.
6.4 Withholding. If required by the Code or by state or local law, the Company
-----------
will withhold any required amount from Distributions to a Member for payment to
the appropriate taxing authority. Any amount so withheld from a Member will be
treated as a Distribution by the Company to such Person. Each Member agrees to
timely file any agreement that is required by any taxing authority in order to
avoid any withholding obligation that would otherwise be imposed on the Company.
6.5 Distribution Limitation. Notwithstanding any other provision of this
-----------------------
Agreement, the company will not make any Distribution to the Members unless,
after the Distribution, the liabilities of the Company (other than liabilities
to Members on account of their Capital Contributions) have been paid or there
remains property of the Company sufficient to pay them.
6.6 Cash Reserves. The Company will establish and maintain reasonable cash
-------------
reserves for [a] operating expenses (other than depreciation, amortization or
similar non-cash allowances), [b] capital improvements, [c] debt service, [d]
working capital and [e] bankroll. The amount of such reserves will be as the
Company may from time to time determine.
ARTICLE 7: MEETINGS OF MEMBERS
7.1 Annual Meeting. Unless the Company determines (whether by vote or
--------------
otherwise) that an annual meeting is not necessary or desirable, the annual
meeting of the Members will be held on the second Tuesday of April in each year
at 9:00 a.m. (local time) by Notice to all other Members. The purpose of the
annual meeting is to review the Company's operations for the preceding Fiscal
Year and to transact such business as may come before the meeting. The failure
to hold any annual meeting has no adverse effect on the continuance of the
Company.
7.2 Special Meetings. Special meetings of the Members, for any purpose or
----------------
purposes, may be called by any Member or Members owning at least ten percent
(10%) of the Ownership Interests held by all Members by notice to all other
Members.
7.3 Place. The Members calling the meeting may designate any place as the place
-----
of meeting for any meeting of the Members. If no designation is made, or if a
special meeting is otherwise called, the place of meeting will be the Company's
executive offices in Colorado.
7.4 Notice. Notice of any annual meeting determined by resolution of the
------
Members or of any special meeting must be given not less than 5 days nor more
than 30 days before the date of the meeting. Such notice must state the place,
day, and hour of the meeting and, in the case of a special meeting, the purpose
for which the meeting is called.
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<PAGE>
7.5 Waiver of Notice. Any Member may waive, in writing, any notice is
----------------
required to be given to such Member, whether before or after the time stated in
such notice. Any Member who signs minutes of action (or written consent or
agreement) will be deemed to have waived any required notice with respect to
such action.
7.6 Record Date. For the purpose of determining Members entitled to notice of
-----------
or to vote at any meeting of Members, the date on which notice of the meeting is
first given will be the record date for the determination of Members. Any such
determination of Members entitled to vote at any meeting of Members will apply
to any adjournment of a meeting.
7.7 Quorum. A quorum at any meeting of Members shall consist of Members
------
owning at least 50% of the Ownership Interests held by all Members. Any meeting
at which a quorum is not present may adjourn the meeting to another place, day
and hour without further notice.
7.8 Manner of Acting. If a quorum is present, the affirmative vote of Members
----------------
as set forth in Article 4 will be the act of the Company.
7.9 Proxies. At a meeting of the Members, a Member may vote in person or by
-------
written proxy given to another Member. Such proxy must be signed by the Member
or by a duly authorized attorney-in-fact and filed with the Company before or at
the time of the meeting. No proxy will be valid after eleven months from the
date of its signing unless otherwise provided in the proxy. Attendance at the
meeting by the Member giving the proxy will revoke the proxy during the period
of attendance.
7.10 Meetings by Telephone. The Members may participate in a meeting by means
---------------------
of conference telephone or similar communications equipment by which all Members
participating in the meeting can hear each other at the same time. Such
participation will constitute presence in person at the meeting and waiver of
any required notice.
7.11 Action Without a Meeting. Any action required or permitted to be taken at
------------------------
a meeting of Members under this Article 7 may be taken without a meeting if the
action is evidenced by one or more written consents describing the action taken,
signed by Members owning total Ownership Interests sufficient for the particular
action as set forth in Article 4. Action so taken is effective when sufficient
Members approving the action have signed the consent, unless the consent
specifies a later effective date. Notice of the action must be provided to all
members.
ARTICLE 8: LIABILITY OF A MEMBER
8.1 Limited Liability. Unless otherwise provided in the Act, the Articles or
-----------------
an agreement signed by the Member to be subjected to any individual liability,
no Member of the Company is individually liable for the debts or liabilities of
the Company.
8.2 Liability to Company. Each Member is liable to the Company for any
--------------------
Capital Contribution or Distribution that has been wrongfully or erroneously
returned or paid to such Person in violation.
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<PAGE>
of the Act, the Articles or this Agreement.
ARTICLE 9: INDEMNIFICATION
9.1 Indemnification. Except with respect to any actions or omissions
---------------
described in Section 14.10 and the last sentence of Section 4.4 and 4.5, the
Company will indemnify, defend and hold harmless any Person who was or is a
party (or is threatened to be made a party) to any Proceeding by reason of the
fact that such Person was a Member, or agent or representative thereof, a
Manager, employee or agent of the Company to the fullest extent permitted by the
Act. Any such indemnification will apply to any Liability actually and
reasonably incurred in connection with the defense or settlement of the
Proceeding.
9.2 Expense Advancement. With respect to the expenses actually and reasonably
-------------------
incurred by a Member or Manager who is a party to a Proceeding, the Company
shall provide funds to such Person in advance of the final disposition of the
Proceeding if the Person furnishes the Company with such Person's written
affirmation of a good-faith belief that such Person has met the standard of
conduct described in the Act, and such Person agrees in writing to repay the
advance if it is subsequently determined that such Person has not met such
standard of conduct.
9.3 Insurance. The indemnification provisions of this Article do not limit a
---------
Member's or Manager's right to recover under any insurance policy or other
financial arrangement by the Company (including any self-insurance, trust fund,
letter of credit, guaranty or surety). If, with respect to any Liability, any
Member or Manager receives an insurance or other indemnification payment which,
together with any indemnification payment made by the Company, exceeds the
amount of such Liability, then such Member or Manager will immediately repay
such excess to the Company.
ARTICLE 10: ACCOUNTING AND REPORTING
10.1 Fiscal Year. For income tax and accounting purposes, the Fiscal Year of
-----------
the Company will end on the last Sunday in April of each year (unless otherwise
required by the Code.).
10.2 Accounting Method. For accounting purposes, the Company will use
-----------------
generally accepted accounting principles.
10.3 Tax Elections. The Company will have the authority to make such tax
-------------
elections, and to revoke any such election, as the Company may from time to time
determine.
10.4 Returns. The Company will cause the preparation and timely filing of all
-------
tax returns required to be filed by the Company pursuant to the Code, as well as
all other tax returns required in each jurisdiction in which the Company does
business.
10.5 Reports. The Company will furnish a Profit or Loss statement and a
-------
balance sheet to each
- 11 -
<PAGE>
Member within a reasonable time after the end of each fiscal quarter. The
Company books will be closed at the end of each Fiscal Year and audited
financial statements prepared showing the financial condition of the Company and
its Profits or Losses from operations. Copies of these statements will be given
to each Member. In addition, as soon as is practicable after the close of each
Fiscal Year (and in any event within 90 days following the end of each Fiscal
Year), the Company will provide each Member with all necessary tax reporting
information.
10.6 Books and Records. The records of the Company will be kept at the Company's
-----------------
business office in Colorado, and will be available for inspection and copying by
any Member at such Person's expense, during ordinary business hours.
10.7 Information. Any Member has the right to inspect and copy the Company books
-----------
and records as provided in Section 10.6 and to have a formal accounting of
Company affairs whenever circumstances render it just and reasonable. In
addition, subject to reasonable standards as established by the Company from
time to time, and upon reasonable demand for any purpose reasonably related to
the Member's interest as a Member, any Member has the right to obtain from the
Company correct and complete information relating to the state of the Company's
business and its financial condition.
10.8 Banking. The Company may establish one or more bank or financial accounts
-------
and safe deposit boxes. The Company may authorize one or more individuals to
sign checks on and withdraw funds from such bank or financial accounts and to
have access to such safe deposit boxes, and may place such limitations and
restrictions on such authority as the Company deems advisable.
10.9 Tax Matters Partner. Until further action by the Company, Casino America of
-------------------
Colorado is designated as the tax matters partner under Section 6231(a)(7) of
the Code. The tax matters partner will be responsible for notifying all Members
of ongoing proceedings, both administrative and judicial, and will represent the
Company throughout any such proceeding. The Members will furnish the tax matters
partner with such information as it may reasonably request to provide the
Internal Revenue Service with sufficient information to allow proper notice to
the Members. If an administrative proceeding with respect to a partnership item
under the Code has begun, and the tax matters partner so requests, each Member
will notify the tax matters partner of its treatment of any partnership item on
its federal income tax return, if any, which is inconsistent with the treatment
of that item on the partnership return for the Company. Any settlement agreement
with the Internal Revenue Service will be binding upon the Members only as
provided in the Code. The tax matters partner will not bind any other Member to
any extension of the statute of limitations or to a settlement agreement without
such Member's written consent. Any Member who enters into a settlement agreement
with respect to any partnership item will notify the other Members of such
settlement agreement and its terms within 30 days from the date of settlement.
If the tax matters partner does not file a petition for readjustment of the
partnership items in the Tax Court, Federal District Court or Claims Court
within the 90 day period following a notice of a final partnership
administrative adjustment, any notice partner or 5-percent group (as such terms
are defined in the Code) may institute such action within the following 60 days.
The tax matters partner will timely notify the other Members in writing of its
decision. Any notice partner or 5 percent group will notify any other Member of
its filing of any petition for readjustment.
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<PAGE>
10.10 No Partnership. The classification of the Company as a partnership will
--------------
apply only for federal (and, as appropriate, state and local) income tax
purposes. This characterization, solely, for tax purposes, does not create or
imply a general partnership between the Members for state law or any other
purpose. Instead, the Members acknowledge the status of the Company as a
limited liability company formed under the Act.
ARTICLE 11: DISSOLUTION OF THE COMPANY
11.1 Dissolution. Dissolution of the Company will occur only upon the happening
-----------
of any of the following events:
[a] An event of Withdrawal (as defined in Section 11.2) of a Member, unless
there is at least one remaining Member (including any Transferee admitted
as a substitute Member);
[b] By unanimous agreement of the Members; or
[c] December 31, 2096.
11.2 Events of Withdrawal. An event of Withdrawal of a Member occurs when any
--------------------
of the following occurs:
[a] With respect to any Member, upon the Transfer of all of such Member's
Ownership Interest not approved by a majority of the Members (which
Transfer is treated as a resignation);
[b] With respect to any Member, upon the voluntary withdrawal (including any
resignation or retirement in contravention of Section 4.4) of the Member
by notice to all other Members;
[c] With respect to any Member that is a corporation, upon filing of articles
of dissolution of the corporation;
[d] With respect to any Member that is a partnership or a limited liability
company, upon dissolution of such entity;
[e] With respect to any Member who is an individual, upon either the death or
retirement of the individual, or upon such Person's insanity or the entry
by a court of competent jurisdiction of an order adjudicating the
individual to be incompetent to manage such individual's person or estate;
[f] With respect to any Member that is a trust, upon termination of the trust;
[g] With respect to any Member that is an estate, upon final distribution of
the estate's Ownership Interest;
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<PAGE>
[h] Any other event which terminates the continued membership of a Member in
the Company;
[i] With respect to any Member, the bankruptcy of the Member, so long as there
is one or more remaining Members.
Within 30 days following the happening of any event of Withdrawal with
respect to a Member, such Member must give notice of the date and the nature of
such event to the Company. Any Member failing to give such notice will be liable
in damages for the consequences of such failure as otherwise provided in this
Agreement. Upon the occurrence of an event of Withdrawal with respect to a
Member, such Member will cease to have voting rights under Article 4, and such
Member's Ownership Interest will be deemed transferred to such Member's
Transferee or other successor in interest (which Person, unless already a Member
in such capacity, will have only the limited rights of a Transferee as set forth
in Section 13.6, unless and until admitted as a substitute Member).
11.3 Bankruptcy. Notwithstanding anything else to the contrary contained herein
----------
or in Section 7-80-801(1)(c) of the Act, the bankruptcy of a Member will not
dissolve the Company. The bankruptcy of a Member will be deemed to occur when
such Person: [a] files a voluntary petition in bankruptcy, [b] is adjudged a
bankrupt or insolvent, or has entered against such Person an order for relief in
any bankruptcy or insolvency proceeding, [c] files a petition or answer seeking
for such Person any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or regulation,
[d] files an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against such Person in any proceeding
of this nature, or [e] seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator of all or any substantial part of such Person's
properties. In addition, the bankruptcy of a Member will be deemed to occur if
any proceeding filed against a Member seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
statute, law or regulation is not dismissed within 120 days or if the
appointment without the Member's consent (or acquiescence of a trustee, receiver
or liquidator of the Member or of all or any substantial part of such Person's
properties) is not vacated or stayed within 90 days (or if after the expiration
of any stay, if the appointment is not vacated within 90 days).
ARTICLE 12: LIQUIDATION
12.1 Liquidation. Upon Dissolution of the Company, the Company will immediately
-----------
proceed to wind up its affairs and liquidate. The Managers will appoint a
liquidating trustee. The winding up and Liquidation of the Company will be
accomplished in a businesslike manner as determined by the liquidating trustee
and this Article 12. A reasonable time will be allowed for the orderly
Liquidation of the Company and the discharge of liabilities to creditors so as
to enable the Company to provide for any losses attendant upon Liquidation. Any
gain or loss on disposition of any Company assets in Liquidation will be
allocated to Members and credited or charged to Capital Accounts in accordance
with the provisions of Article 3 and 5. Any liquidating trustee is entitled to
reasonable compensation for services actually performed, and may contract for
such assistance
- 14 -
<PAGE>
in the liquidation process as such Person deems necessary. Until the filing of
articles of dissolution as provided in Section 12.6, the liquidating trustee may
settle and close the Company's business, prosecute and defend suits, dispose of
its property, discharge or make provision for its liabilities, and make
distributions in accordance with the priorities set forth in Section 12.2.
12.2 Priority of Payment. The assets of the Company will be distributed in
-------------------
Liquidation of the Company in the following order:
[a] First, to non-Member creditors of the Company in order of priority as
provided by law in payment of unpaid liabilities of the Company to the
extent required by law or under agreements with such creditors;
[b] Second, to the setting of any reserves which the Members reasonably deem
necessary for any anticipated, contingent or unforseen liabilities or
obligations of the Company arising out of or in connection with the
conduct of the Company's business. At the expiration of such period as
the Members reasonably deem advisable, the balance thereof shall be
distributed in accordance with this Section 12.2;
[c] Third, to any Member for any other loans or debts owing to such Member by
the Company;
[d] Fourth, to all Members in proportion to their Capital Account balances to
the extent allowable under Section 5.2 until their Capital Account
balances are reduced to zero; and,
[e] Fifth, the balance, if any, to all Members in proportion to their
Ownership Interests percentages under Section 5.2.
12.3 Distribution to Members. Distributions in Liquidation due to the Members
-----------------------
may be made by either or a combination of the following methods: selling the
Company assets and distributing the net proceeds, or by distributing the Company
assets to the Members at their net Fair Market Value in kind. Any liquidating
Distribution in kind to the Members may be made either by a pro-rata
Distribution of undivided interests or, upon the affirmative Vote of all
Members, by non-pro-rata Distribution of specific assets at Fair Market Value on
the effective date of Distribution. Any Distribution in kind may be made subject
to, or require assumption of, liabilities to which such property may be subject,
but in the case of any non pro-rata Distribution only upon the express written
agreement of the Member receiving the Distribution. Each Member hereby agrees
to save and hold harmless the other Members from such Member's share of any and
all such liabilities which are taken subject to or assumed. Appropriate and
customary prorations and adjustments shall be made incident to any Distribution
in kind. The Members will look solely to the assets of the Company for the
return of their Capital Contributions, and if the assets of the Company
remaining after the payment or discharge of the debts and liabilities of the
Company are insufficient to return such contributions, they will have no
recourse against any other Member.
12.4 No Restoration Obligation. Except as otherwise specifically provided in
-------------------------
Article 8, nothing contained in this Agreement imposes on any Member an
obligation to make a Capital Contribution in order to restore a deficit Capital
Account upon Liquidation of the Company. Furthermore, each Member will look
solely to the assets of the Company for the return of such Member's Capital
-15-
<PAGE>
Contribution and Capital Account.
12.5 Liquidating Reports. A report will be submitted with each liquidating
-------------------
distribution to Members, showing the collections, disbursements and
distributions during the period which is subsequent to any previous report. A
final report, showing cumulative collections, disbursements and distributions,
will be submitted upon completion of the liquidation process.
12.6 Articles of Dissolution. Upon Dissolution of the Company and the
-----------------------
completion of the winding up of its business, the Company will file articles of
dissolution (to cancel its Articles of Organization) with the Colorado Secretary
of State pursuant to the Act. At such time, the Company will also file an
application for withdrawal of its certificate of authority in any jurisdiction
where it is then qualified to do business.
ARTICLE 13: TRANSFER RESTRICTIONS
13.1 General Restriction. No Member may Transfer all or any part of its
-------------------
Ownership Interest in any manner whatsoever except: [a] to a Permitted
Transferee as set forth in Section 13.3 or [b] after full compliance with the
right of first refusal set forth in Section 13.4, and in either case only if the
requirements of Section 13.5 have also been satisfied. Any other Transfer of all
or any part of an Ownership Interest is null and void, and of no effect. Any
Member who makes a Transfer of all of such Member's Ownership Interest will be
treated as resigning from the Company on the effective date of such Transfer.
Any Member who makes a Transfer of part (but not all) of such Member's Ownership
Interest will continue as a Member (with respect to the interest retained), and
such partial Transfer will not constitute an event of Withdrawal of such Member.
The rights and obligations of any resigning Member or of any Transferee of an
Ownership Interest will be governed by the other provisions of this Agreement.
13.2 No Member Rights. No Member has the right or power to confer upon any
----------------
Transferee the attributes of a Member in the Company. The Transferee of all or
any part of an Ownership Interest by operation of law does not, by virtue of
such Transfer, succeed to any rights as a Member in the Company.
13.3 Permitted Transferee. Subject to the requirements set forth in Section
--------------------
13.5, a Person may Transfer all or any part of such Person's Ownership Interest:
[a] To an Affiliate of such Person,
[b] To another Member,
[c] To the Company,
[d] To a Person approved by all the Members;
[e] To another Person as part of a merger, reorganization, consolidation or
sale of all or substantially all of the assets of a Person that controls
any Member; or
-16-
<PAGE>
[f] In the form of a pledge or the granting of a security interest to another
Person or a foreclosure or sale in lieu of foreclosure in connection with
the granting of any such pledge or security interest as described in
Section 13.7.
13.4 Right of First Refusal. Prior to any proposed Transfer of all or any part
----------------------
of an Ownership Interest, other than to a Permitted Transferee pursuant to
Section 13.3, the Transferor must obtain a Third Party Offer. For purposes of
this Section 13.4, a Transfer of an Ownership Interest of a Member shall be
deemed to occur upon any change in control of such Member other than to a
Permitted Transferee pursuant to Section 13.3, The Third Party Offer must not be
subject to unstated conditions or contingencies or be part of a larger
transaction such that the price for the Ownership Interest stated in such Third
Party Offer does not accurately reflect the Fair Market Value (reduced by the
amount of associated liabilities) of such Ownership Interest. The Third Party
Offer must contain a description of all of the consideration, material terms and
conditions of the proposed Transfer. The Transferor will give notice of the
Third Party Offer to the Company and all the Members exclusive of Transferees
who have not been admitted as substitute Members pursuant to Section 4.6 (the
"Other Members") other than the Transferor, together with a written offer to
sell the Ownership Interest (which is the subject of the Third Party Offer) to
the Company and the other Members on the same price and terms as the Third Party
Offer as provided herein. The Company may accept such offer by the Transferor,
in whole but not in part, by giving notice to the Transferor within 30 days
after notice of such offer. Unless otherwise agreed, the closing of such sale
will be held at the Company's registered office in Colorado on a date to be
specified by the Company which is not later than 60 days after the date of the
Company's notice of acceptance. At the closing, the Company will deliver the
consideration in accordance with the terms of the Third Party Offer, and the
Transferor will by appropriate documents assign Interest to be sold, free and
clear of all liens, claims and encumbrances. Subject to Section 13.5, if the
Company has not accepted the Third Party Offer and closed the purchase in
accordance with this Section 13.4, the Other Members shall have the right, on a
pro rata basis in accordance with the ratio of their Percentage Ownership
Interest, to purchase, in whole but not in part, the Ownership Interest of the
Transferor in accordance with the terms of the Third Party Offer by written
notice to the Transferor within 30 days after the expiration of the thirty-day
period for the Company's acceptance. If all of the other Members reject the
offer or if the offer is not closed in accordance with this Section 13.4, the
Transferor will be free for a period of 60 days after the last day for such
acceptance to sell all, but not less than all, of such Ownership Interest so
offered, but only to the Third Party for a price and on terms no more favorable
to the Third Party than the Third Party Offer. If such Ownership Interest is not
so sold within such 60-day period (or within any extensions of such period
agreed to in writing by the Company), all rights to sell such Ownership Interest
pursuant to such Third Party Offer (without making another offer to the Company
pursuant to this Section 13.4) will terminate and the provisions of this Article
will continue to apply to any proposed future Transfer.
13.5 General Conditions on Transfers. No Transfer of an Ownership Interest after
-------------------------------
the date of this Agreement will be effective unless all of the conditions set
forth below are satisfied:
[a] Unless waived by the Company, the Transferor signs and delivers to the
Company an undertaking in form and substance satisfactory to the Company to pay
all reasonable expenses incurred by the Company in connection with the Transfer
(including, but not
-17-
<PAGE>
limited to, reasonable fees of counsel and accountants and the costs to be
incurred with any additional accounting required in connection with the
Transfer, and the cost and fees attributable to preparing, filing and
recording such amendments to the organizational documents or filings as may
be required by law);
[b] Such transfer does not require the registration of such transferred
interest pursuant to any applicable federal or state securities laws, and
the Transferor delivers to the Company an opinion of counsel for the
Transferor satisfactory in form and substance to the Company to the effect
that the Transfer of the Ownership Interest is in compliance with the
applicable federal and state securities laws, and a statement of the
Transferee in form and substance satisfactory to the Company making
appropriate representations and warranties in respect to compliance with
the applicable federal and state securities laws and as to any other matter
reasonably required by the Company;
[c] The Company receives an opinion from its counsel that [i] the Transfer does
not cause the Company to lose its classification as a partnership for
federal or state income tax purposes, and [ii] the Transfer, together with
all other Transfers within the preceding twelve months, does not cause a
termination of the Company for federal or state income tax purposes;
[d] The Transferor signs and delivers to the Company a copy of the assignment
of the Ownership Interest to the Transferee, together with the Certificates
for Units representing such Ownership Interest, duly executed for
assignment;
[e] The Transferee signs and delivers to the Company its agreement to be bound
by this Agreement;
[f] Such Transfer does not cause the Company to become a "Publicly Traded
Partnership," as such term is defined in Sections 469(k)(2) or 7704(b) of
the Code;
[g] Such Transfer does not subject the Company to regulation under the
Investment Company Act of 1940, the Investment Advisers Act of 1940 or the
Employee Retirement Income Security Act of 1974, each as amended;
[h] Such Transfer is in compliance with the Colorado Limited Gaming Act;
[i] Such Transfer is not made to any Person who lacks the legal right, power or
capacity to own such Interest; and
[j] The Transfer is in compliance with the other provisions of this Article.
Except as the Company and the Transferee may otherwise agree, the Transfer
of an Ownership Interest will be effective as of 12:01 a.m. (Mountain Time) on
the first day of the month following the month in which all of the above
conditions have been satisfied. Upon the effective date, Appendix I will be
deemed amended to reflect the new Ownership Interests.
-18-
<PAGE>
Notwithstanding anything to the contrary expressed or implied in this
Agreement, the sale, assignment, transfer, pledge or other disposition of any
direct or indirect interest in the Company is subject to the laws of the state
of Colorado and the requirements, limitations and decisions of the Colorado
Division of Gaming and the Colorado Limited Gaming Control Commission.
13.6 Rights of Transferees. Any Transferee of an Ownership Interest will, on
---------------------
the effective date of the Transfer, have only those rights of an assignee as
specified in the Act and this Agreement unless and until such Transferee is
admitted as a substitute Member. This provision limiting the rights of a
Transferee will not apply if such Transferee is already a Member; provided that,
any Member who resigns or retires from the Company in contravention of Section
4.4 will have only the rights of an assignee as specified in the Act and this
Agreement. Any Transferee of all or any part of an Ownership Interest who is not
admitted as a substitute Member in accordance with this Agreement has no right
[a] to participate or interfere in the management or administration of the
Company's business or affairs, [b] to vote or agree on any matter affecting the
Company or any Member, [c] to require any information on account of Company
transactions, or [d] to inspect the Company's books and records. The only right
of a Transferee of all or any part of an Ownership Interest who is not admitted
as a substitute Member in accordance with this Agreement is to receive the
allocations and Distributions to which the Transferor was entitled (to the
extent of the Ownership Interest transferred) and to receive required tax
reporting information. However, each Transferee of all or any part of any
Ownership Interest (including both immediate and remote Transferees) will be
subject to all of the obligations, restrictions and other terms contained in the
Agreement as if such Transferee were a Member. To the extent of any Ownership
Interest transferred, the Tranferor Member does not possess any right or power
as a Member. To the extent of any Ownership Interest transferred, the
Transferor Member does not possess any right or power as a Member and may not
exercise any such right or power directly or indirectly on behalf of the
Transferee. The Members acknowledge that these provisions may differ from the
rights of an assignee as set forth in the Act, and the Members agree that they
intend, to that extent, to vary those provisions by this Agreement.
13.7 Security Interest. The pledge or granting of a security interest, lien or
-----------------
other encumbrance in or against all or any part of a Member's Ownership Interest
does not cause the Member to cease to be a Member or constitute an event of
Withdrawal. Upon foreclosure or sale in lieu of foreclosure of any such secured
interest, the secured party will be entitled to receive the allocations and
Distributions as to which a security interest has been granted by such Member.
In no event will any secured party be entitled to exercise any rights under this
Agreement, and such secured party may look only to such Member for the
enforcement of any of its rights as a creditor. In no event will the Company
have any liability or obligation to any Person by reason of the Company's
payment of a Distribution to any secured party as long as the Company makes such
payment in reliance upon written instructions from the Member to whom such
Distributions would be payable. Any secured party will be entitled, with respect
to the security interest granted, only to the Distributions to which the
assigning Member would be entitled under this Agreement, and only if, as and
when such Distribution is made by the Company. Neither the Company nor any
Member will owe any fiduciary duty of any nature to a secured party. Reference
to any secured party. Reference to any secured party includes any assignee or
successor-in-interest of such Person.
13.8 Regulatory Compliance Restrictions. Notwithstanding anything to the
----------------------------------
contrary in this Agreement or elsewhere, the following provisions shall apply.
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<PAGE>
The Company shall not issue any voting securities or other voting
interests, except in accordance with the provisions of the Colorado Limited
Gaming Act and the regulations promulgated thereunder. The issuance of any
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 Colorado Limited Gaming Control Commission, or (b) the Colorado Limited
Gaming Control 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 interests, claim or charge therein or thereto shall be transferred in any
manner whatsoever except in accordance with the provisions of the Colorado
Limited Gaming Act and the regulations promulgated thereunder. Any transfer in
violation thereof shall be void until (a) the Company shall cease to be subject
to the jurisdiction of the Colorado Limited Gaming Control Commission, or (b)
the Colorado Limited Gaming Control Commission shall, by affirmative action,
validate said transfer or waive any defect in said transfer.
If the Colorado Limited Gaming Control Commission at any time determines
that a holder of voting securities or other voting interests of this Company is
unsuitable to hold such securities or other voting interests, then the Company
may, within sixty (60) days after the findings of unsuitability, purchase such
voting securities or other voting interests of such unsuitable Person at the
lesser of (i) the cash equivalent of such Person's investment in the Company, or
(ii) the current market price as of the date of the finding of unsuitability
unless such voting securities or other voting interests are transferred to a
suitable person (as determined by the Commission) within sixty (60) days after
the finding of unsuitability. Until such voting securities or other voting
interests are owned by Persons found by the Commission to be suitable to own
them, (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 the holder of the voting securities shall not for any
purposes be included in the voting securities or other voting interests of the
Company entitled to vote, and (c) the Company shall not pay any remuneration in
any form to the holder of the voting securities or other voting interests except
in exchange for such voting securities or other voting interests as provided in
this paragraph.
ARTICLE 14: GENERAL PROVISIONS
14.1 Amendment. This Agreement may be amended by the unanimous written agreement
---------
of the Members. Any amendment will become effective upon such approval, unless
otherwise provided. Notice of any proposed amendment must be given at least 5
days in advance of the meeting at which the amendment will be considered (unless
the approval is evidenced by duly signed minutes of action). Any duly adopted
amendment to this Agreement is binding upon, and inures to the benefit of, each
Person who holds an Ownership Interest at the time of such amendment.
Notwithstanding any other provision of this Agreement, with respect to any
Transferee not admitted as a substitute Member, no amendment to Section 5.2
(relating to the general allocation rule for allocation of Profits
-20-
<PAGE>
or Losses), Section 6.1 (relating to pro-rata Distributions), Section 12.2
(relating to Distributions in Liquidation) and Section 14.1 (relating to
amendment of this Agreement) will be effective, nor will such Person be
required to make any Capital Contribution, without such Person's written
consent. Non-Material amendments relating to this Agreement or that are
necessary for compliance with applicable law may be made by the Managers.
14.2 Unregistered Interests. Each Member [a] acknowledges that the Ownership
----------------------
Interests are being offered and sold without registration under The Securities
Act of 1933, as amended, or under similar provisions, of state law, [b]
represents and warrants that such Person is an accredited investor as defined
for federal securities laws purposes, [c] represents and warrants that it is
acquiring an Ownership Interest for such Person's own account, for investment,
and with no view to the distribution of the Ownership Interest, and [d] agrees
not the Transfer, or to attempt to Transfer, all or any part of its Ownership
Interest without registration under the Securities Act of 1933, as amended, and
any applicable state securities laws, unless the Transfer is exempt from such
registration requirements.
14.3 Waiver of Partition Right. Each Member waives and renounces any right that
-------------------------
such Person may have prior to Dissolution and Liquidation to institute or
maintain any action for partition with respect to any real property owned by the
Company.
14.4 Waivers Generally. No course of dealing will be deemed to amend or
-----------------
discharge any provision of this Agreement. No delay in the exercise of any right
will operate as a waiver of such right. No single or partial exercise of any
right will preclude its further exercise. A waiver of any right on occasion will
not be construed as a bar to, or waiver of, any such right on any other
occasion.
14.5 Equitable Relief. If any Person proposes to Transfer all or any part of
----------------
such Person's Ownership Interest in violation of the terms of this Agreement,
the Company or any Member may apply to any court of competent jurisdiction for
an injunctive order prohibiting such proposed Transfer except upon compliance
with the terms of this Agreement, and the Company or any Member may institute
and maintain any action or proceeding against the Person proposing to make such
Transfer to compel the specific performance of this Agreement. Any attempted
Transfer in violation of this Agreement is null and void, and no force and
effect. The Person against whom such action or proceeding is brought waives the
claim or defense that an adequate remedy at law exists, and such Person will not
urge in any such action or proceeding the claim or defense that such remedy at
law exists.
14.6 Remedies for Breach. The rights and remedies of the Members set forth in
-------------------
this Agreement are neither mutually exclusive nor exclusive of any right or
remedy provided by law, in equity or otherwise. The Members agree that all
legal remedies (such as monetary damages) as well as all equitable remedies
(such as specific performance) will be available for any breach or threatened
breach of any provision of this Agreement.
14.7 Original. This Agreement is signed in two original documents that are to
--------
be delivered to each initial Member. A photocopy of this Agreement, as signed,
will be delivered to each substitute
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<PAGE>
or additional Member, and each such photocopy will be deemed to be an original
document.
14.8 Notices. Any notices (including any communication or delivery) required
-------
or permitted under this agreement will be in writing and will be addressed to
the Members at their respective addresses, as set forth on the Register of
Members maintained by the Company. All notices may be made by mail, personal
delivery, courier service or facsimile machine, and will be effective upon
delivery. Any Member may change such Person's address by notice to the Company
and each other Member.
14.9 Costs. If the Company or any Member retains counsel for the purpose of
-----
enforcing or preventing the breach or any threatened breach of any provision of
this Agreement or for any other remedy relating to it, then the prevailing party
will be entitled to be reimbursed by the non-prevailing party for all costs and
expenses so incurred (including reasonable attorneys' fees, costs of bonds, and
fees and expenses for expert witnesses) unless the arbitrator or other trier of
fact determined otherwise in the interest of fairness.
14.10 Indemnification. Each Member hereby indemnifies and agrees to hold
---------------
harmless the Company and each other Member from any liability, cost or expense
arising from or related to any act or failure to act of such Member which is in
violation of this Agreement.
14.11 Partial Invalidity. Wherever possible, each provision of this Agreement
------------------
will be interpreted in such manner as to be effective and valid under applicable
law. However, if for any reason any one or more of the provisions of this
Agreement are held to be invalid, illegal or unenforceable in any respect, such
action will not affect any other provision of this Agreement. In such event,
this Agreement will be construed as if such invalid, illegal, or unenforceable
provision had never been contained in it.
14.12 Entire Agreement. This Agreement, together with the Members Agreement,
----------------
contains the entire agreement and understanding of the Members with respect to
its subject matter, and it supersedes all prior written and oral agreements. No
amendment of this Agreement will be effective for any purpose unless it is made
in accordance with Section 14.1.
14.13 Benefit. The contribution obligations of each Member will inure solely
-------
to the benefit of the other Members and the Company, without conferring on any
other Person any rights of enforcement or other rights.
14.14 Binding Effect. This Agreement is binding upon, and inures to the
--------------
benefit of, the Members and their permitted successors and assigns; provided
that, any Transferee will have only the rights specified in Section 13.6 unless
admitted as a substitute Member in accordance with this Agreement.
14.15 Further Assurances. Each Member agrees, without further consideration,
------------------
to sign and deliver such other documents of further assurance as may reasonably
be necessary to effectuate the provisions of this Agreement.
14.16 Headings. Article and section titles have been inserted for convenience
--------
of reference only. They are not intended to affect the meaning or interpretation
of this Agreement.
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<PAGE>
14.17 Terms. Terms used with initial capital letters will have the meanings
-----
specified, applicable to both singular and plural forms, for all purposes of
this Agreement. All pronouns (and any variation) will be deemed to refer to the
masculine, feminine or neuter, as the identity of the Person may require. The
singular or plural include the other, as the context requires or permits. The
word include (and any variation) is used in an illustrative sense rather than a
limiting sense.
14.18 Governing Law: Conflicts. This Agreement will be governed by, and
------------------------
construed in accordance with, the laws of the State of Colorado (except to the
extent preempted by any federal law or the gaming laws of any state or
governmental agency having jurisdiction over the affairs of any Member). Any
conflict or apparent conflict between this Agreement and the Act will be
resolved in favor of this Agreement except as otherwise required by the Act. The
Members have entered into a Members Agreement, dated as of the date of this
Agreement, which Members Agreement contains certain provisions as to the Company
and the conduct of its business and which, for purposes of the Act, shall be
considered, together with this Agreement, as an "operating agreement" of the
Company.
14.19 Effectiveness. The effectiveness and enforceability of this Agreement are
-------------
subject to the occurrence of the Closing. This Agreement shall automatically,
without further action by any of the parties, become effective and enforceable
according to its terms, and shall supersede and replace the Operating Agreement,
as of the Closing Date. In the event the Closing shall not have occurred by
September 3, 1997, this Agreement shall be null and void ab initio and none of
-- ------
the parties shall have any rights or obligations of any kind under or pursuant
to this Agreement. The Operating Agreement shall remain effective, and its terms
shall apply, until the Closing.
IN WITNESS WHEREOF, the initial Members have signed this Amended and Restated
Operating Agreement of Isle of Capri Black Hawk, L.L.C. as of the date first set
forth above.
CASINO AMERICA OF COLORADO, INC.,
a Colorado corporation
By: /s/ Allan S. Soloman
-----------------------------------
BLACKHAWK GOLD, LTD.,
a Nevada Corporation
By: /s/ H. Thomas Winn
-----------------------------------
H. Thomas Winn, President
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<PAGE>
14.17 Terms. Terms used with initial capital letters will have the meanings
-----
specified, applicable to both singular and plural forms, for all purposes of
this Agreement. All pronouns (and any variation) will be deemed to refer to the
masculine, feminine or neuter, as the identity of the Person may require. The
singular or plural include the other, as the context requires or permits. The
word include (and any variation) is used in an illustrative sense rather than a
limiting sense.
14.18 Governing Law: Conflicts. This Agreement will be governed by, and
------------------------
construed in accordance with, the laws of the State of Colorado (except to the
extent preempted by any federal law or the gaming laws of any state or
governmental agency having jurisdiction over the affairs of any Member). Any
conflict or apparent conflict between this Agreement and the Act will be
resolved in favor of this Agreement except as otherwise required by the Act. The
Members have entered into a Members Agreement, dated as of the date of this
Agreement, which Members Agreement contains certain provisions as to affairs of
the Company and the conduct of its business and which, for purposes of the Act,
shall be considered, together with this Agreement, as an "operating agreement"
of the Company.
14.19 Effectiveness. The effectiveness and enforceability of this Agreement are
-------------
subject to the occurrence of the Closing. This Agreement shall automatically,
without further action by any of the parties, become effective and enforceable
according to its terms, and shall supersede and replace the Operating Agreement,
as of the Closing Date. In the event the Closing shall not have occurred by
September 3, 1997, this Agreement shall be null and void ab initio and none of
-- ------
the parties shall have any rights or obligations of any kind under or pursuant
to this Agreement. The Operating Agreement shall remain effective, and its terms
shall apply, until the Closing.
IN WITNESS WHEREOF, the initial Members have signed this Amended and Restated
Operating Agreement of Isle of Capri Black Hawk, L.L.C. as of the date first set
forth above.
CASINO AMERICA OF COLORADO, INC.,
a Colorado corporation
By: /s/ Allan S. Soloman
-----------------------------------
BLACKHAWK GOLD, LTD.,
a Nevada Corporation
By: /s/ H. Thomas Winn
-----------------------------------
H. Thomas Winn, President
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<PAGE>
14.17 Terms. Terms used with initial capital letters will have the meanings
-----
specified, applicable to both singular and plural forms, for all purposes of
this Agreement. All pronouns (and any variation) will be deemed to refer to the
masculine, feminine or neuter, as the identity of the Person may require. The
singular or plural include the other, as the context requires or permits. the
word include (and any variation) is used in an illustrative sense rather than a
limiting sense.
14.18 Governing Law; Conflicts. This Agreement will be governed by, and
------------------------
construed in accordance with, the laws of the State of Colorado (except to the
extent preempted by any federal law or the gaming laws of any state or
governmental agency having jurisdiction over the affairs of any Member). Any
conflict or apparent conflict between this Agreement and the Act will be
resolved in favor of this Agreement except as otherwise required by the Act.
The Members have entered into a Members Agreement, dated as of the date of this
Agreement, which Members Agreement contains certain provisions as to the affairs
of the Company and the conduct of its business and which, for purposes of the
Act, shall be considered, together with this Agreement, as an "operating
agreement" of the Company.
14.19. Effectiveness. The effectiveness and enforceability of this Agreement
-------------
are subject to the occurrence of the Closing. This Agreement shall
automatically, without further action by any of the parties, become effective
and enforceable according to its terms, and shall supersede and replace the
Operating Agreement, as of the Closing Date. In the event the Closing shall not
have occurred by September 3, 1997, this Agreement shall be null and void ab
--
initio and none of the parties shall have any rights or obligations of any kind
- ------
under or pursuant to this Agreement. The Operating Agreement shall remain
effective, and its terms shall apply, until the Closing.
IN WITNESS WHEREOF, the initial Members have signed this Amended and Restated
Operating Agreement of Isle of Capri Black Hawk, L.L.C. as of the date first set
forth above.
CASINO AMERICA OF COLORADO, INC.,
a Colorado corporation
By: /s/ Allen B. Solomon
-------------------------------
BLACKHAWK GOLD, LTD.,
a Nevada corporation
By: /s/ H. Thomas Winn
-------------------------------
H. Thomas Winn, President
-23-
<PAGE>
APPENDIX I
Ownership Interests
<TABLE>
<CAPTION>
Date Ownership Interests
---- -------------------
<C> <S> <C> <C>
1. April 25, 1997 Casino America of Colorado, Inc. 51.6%
Blackhawk Gold, Ltd. 48.4%
2. July __, 1997 Casino America of Colorado, Inc. 55%
Blackhawk Gold, Ltd. 45%
3.* August __, 1997 Casino America of Colorado, Inc. 59.20%
Blackhawk Gold, Ltd. 40.80%
4.
5.
6.
7.
8.
9.
10.
</TABLE>
*Effective at the Closing Date.
<PAGE>
EXHIBIT "A"
Definitions
Act: The Colorado Limited Liability Company Act, as
amended from time to time.
Affiliate: An "Affiliate" of a Person means a Person directly
or indirectly controlling, controlled by or under
common control with such Person. For this purpose
and for purposes of the use of the term "control"
in this Agreement, control means the possession,
direct or indirect, of the power to direct or cause
the direction of the management and policies of a
Person, whether through the ownership of voting
securities, by contract or otherwise.
Agreement: This Amended and Restated Operating Agreement, as
amended from time to time.
Articles: The Articles of Organization of the Company as
filed under the Act, as amended from time to time.
Blackhawk Gold: Blackhawk Gold, Ltd., a Nevada corporation, and its
Permitted Transferees (provided that any Transferee
will become a substitute Member only in accordance
with the Agreement).
Capital Account: The book value capital account maintained under
Section 3.6.
Capital Contribution: Any contribution by a Member to the Company.
Capital Transaction: Any sale, exchange, condemnation (including any
eminent domain or similar transaction), casualty,
financing, refinancing or other disposition with
respect to any real or personal property owned by
the Company which is not in the ordinary course
of business.
Casino America of Casino America of Colorado, Inc., a Colorado
Colorado: corporation, and its Permitted Transferees
(provided that any Transferee will become a
substitute Member only in accordance with the
Agreement).
Closing: The consummation of the sale of $75 million first
mortgage notes due 2004 issued by the Company and
Isle of Capri Black Hawk Capital Corp. to finance
the development, construction, equipping and
operation of the casino gaming project and related
facilities in Black Hawk, Colorado.
Closing Date: The date and time at which the Closing occurs.
Code: The Internal Revenue Code of 1986, as amended from
time to time (including corresponding provisions
of subsequent revenue laws).
Company: Isle of Capri Blackhawk, L.L.C., as formed under
the Articles
<PAGE>
and as operating under this Agreement.
Dissolution: The dissolution of the Company as provided in
Section 11.1.
Distribution: A distribution of money or other property made by the
Company with respect to any Ownership Interest.
Fair Market Value: As to any property, the price at which a willing
seller would sell and a willing buyer would buy such
property having full knowledge of the relevant facts,
in an arm's-length transaction without time
constraints, and without being under any compulsion
to buy or sell, or the value otherwise agreed by the
Members to be the Fair Market Value.
Fiscal Year: The fiscal and taxable year of the Company as
determined under this Agreement, including both 12-
month and short taxable years.
Initial Ownership: The relative Ownership Interest of the Members
existing upon the execution of this Agreement
entitling the holders thereof to all the benefits of
ownership in the Company, but which Ownership
Interests may be changed from time to time as set
forth in this Agreement.
Liability: The obligation to pay any judgement, settlement,
penalty, fine or reasonable expense (including
attorney's fees) incurred with respect to any
Proceeding.
Liquidation: The process of terminating the Company and winding up
its business under Article 12 after its Dissolution.
Losses: The Company's net loss (including deductions) for any
Fiscal Year, determined under Section 5.1.
Majority In Interest: More than 50% of the Ownership Interests.
Member: A person who is an initial Member of the Company, or
who is subsequently admitted as a substitute or an
additional Member as provided in this Agreement.
Members Agreement: The agreement, of even date with this Agreement,
between the Company, Blackhawk Gold, Casino America
of Colorado, Casino America Inc., and Nevada Gold &
Casinos, Inc.
Net Sales Cash: Cash receipts of the Company from a Capital
Transaction, less payment of fees or expenses related
to the Capital Transaction.
Notice: Written notice (including any communication or
delivery), actually given pursuant to Section 14.8.
Ownership Interest: With respect to each Person owning an interest in the
Company, all of the interests of such Person in the
Company (including, without limitation, an interest
in Profits and Losses of the Company, a Capital
Account interest, and all other rights and
obligations of such Person under this Agreement),
expressed as a percentage (carried to the nearest
one-thousandth of a percent, if
<PAGE>
other than an even percentage), as initially set
forth in Section 1.2 and as subsequently changed in
accordance with this Agreement.
Permitted Transferee: A person described in Section 13.3 to whom an
Ownership Interest may be transferred without
compliance with a right of first refusal.
Person: An individual, corporation, trust, partnership,
limited liability company, limited liability
association, unincorporated organization, association
or other entity.
Proceeding: Any threatened, pending or completed claim, action,
suit or proceeding, whether formal or informal, and
whether civil, administrative, investigative or
criminal.
Profits: The Company's net profit (including income and gains)
for any Fiscal Year, determined under Section 5.1.
Profits Interest: Each Member's (or Transferee's) percentage interest
(carried to the nearest one-thousandth of a percent,
if other than an even percentage), in the Profits of
the Company, determined under Section 5.2.
Regulations: The Treasury Regulations (including temporary
regulations) promulgated under the Code, as amended
from time to time (including corresponding provisions
of succeeding regulations).
Third Party: With respect to any Member, a Person other than an
Affiliate.
Third Party Offer: A bona fide, non-collusive, binding, arm's-length
written offer from a Third Party stated in terms of
U.S. dollars.
Transfer: A sale, exchange, assignment or other disposition of
Ownership Interest, whether voluntary or by operation
of law.
Transferee: A person to whom an Ownership Interest is transferred
in compliance with this Agreement.
Transferor: A person who transfers an Ownership Interest in
compliance with this Agreement.
Withdrawal: The occurrence of an event with respect to a Member
which terminates membership in the Company, as
provided in Section 11.2.
<PAGE>
EXHIBIT 10.2
MEMBERS AGREEMENT
This Agreement is made as of this 29th day of July, 1997 among Casino
America of Colorado, Inc., a Colorado corporation ("CAC"), Casino America, Inc.,
a Delaware corporation ("CA"), Blackhawk Gold, Ltd., a Colorado corporation
("BG") and Nevada Gold & Casinos, Inc., a Nevada corporation ("NG"). CAC BG are
sometimes herein referred to as the "Members" or individually as a "Member".
WHEREAS, CAC and BG are the initial members of Isle of Capri Black Hawk
L.L.C., a Colorado limited liability company (the "Company") and are parties to
an Amended and Restated Operating Agreement of the Company dated as of the date
of this Agreement;
WHEREAS, CAC is a wholly-owned subsidiary of CA and BG is a wholly-owned
subsidiary of NG;
WHEREAS, the Company was formed for the purpose of developing, constructing
and operating a casino and related facilities in Black Hawk, Colorado;
WHEREAS, the Company has entered into a Management Agreement, dated April
25, 1997, as amended effective as of the date hereof, with CA for CA to manage
the foregoing project;
WHEREAS, the parties wish to set forth certain agreements with respect to
the foregoing project and their respective rights and obligations;
THEREFORE, the parties agree as follows:
ARTICLE 1: INITIAL OWNERSHIP INTEREST AND DEFINITIONS
1.1 Initial Ownership. The parties agree that, after giving effect to
-----------------
the sale of Ownership Interests pursuant to Section 3.2[a] below, the respective
percentage Ownership Interests are as follows: BG-40.80% and CAC-59.20%, and
that Appendix I to the Operating Agreement will be amended accordingly.
1.2 Definitions. Capitalized terms not otherwise defined in Exhibit A hereto
-----------
shall have the respective meanings ascribed for those in the Operating
Agreement, applicable to both singular and plural forms, for all purposes of the
Agreement.
ARTICLE 2: PROJECT DEVELOPMENT
2.1 General Intent. The Members anticipate that certain expenditures will be
--------------
made in the development of the Project pursuant to the Development Plan
(including feasibility studies, development planning, regulatory approvals and
the obtaining of financing). The Members
1
<PAGE>
anticipate that these costs will be funded by CAC pursuant and subject to the
terms of Section 3.1 and 3.3 hereof and subject to the other terms and
conditions of this Agreement.
2.2 Employee Costs. Except as otherwise expressly provided in this Agreement or
--------------
in the Management Agreement, each Member will be separately responsible for its
own payroll and benefit expense of its employees and independent contractors
with respect to the Project or Company business.
2.3 Debt Financing. Except for the Initial Contributions by the Members and any
--------------
contributions under the CA Completion Capital Commitment, the Members
acknowledge and agree that, to the extent commercially reasonable, the Project
will be funded through debt financing. The Company shall incur no debt or
liability for which the Members or their respective Affiliates would be
obligated in any way. Without limiting the foregoing, no Member or Affiliate
will be required to guarantee or co-sign any loan made to the Company or any
other obligation of the Company.
2.4 Development Plan. CAC will use its reasonable commercial efforts to attempt
----------------
to develop the Project on behalf of the Company. A description of the
Development Plan is contained in the Offering Circular, and such plan is hereby
approved by the Members. In consideration for contributing the Development Plan
for the Project to the Company, CAC has, effective as of the date of this
Agreement, received a credit to its capital account in the Company.
Neither CAC nor any Affiliate shall be liable to the Company or BG or its
Affiliates for any losses, damages, liabilities or expenses resulting or arising
from the Development Plan, other than as a direct and proximate result of the
gross negligence or willful misconduct of CAC; and neither CAC nor its
Affiliates makes any representations or warranties as to the Development Plan or
the successful completion of the Project.
BG and its Affiliates will cooperated with CAC in connection with the
development of the Project in all reasonable respects, including without
limitation, providing pertinent information, documents or records or making
appearances before regulatory authorities whose approvals are required for the
Project. Additionally, NG hereby agrees to allow the Company to dispose of
excavated rock or soil on property in Gilpin County owned by NG, subject to a
commercially reasonable fee, or to locate for the Company a reasonably
acceptable alternative site to dispose of such materials.
Notwithstanding anything to the contrary in this Agreement or elsewhere,
all costs, expenses, liabilities or obligations (the "Development and
Pre-Opening Costs") incurred by CAC or any Affiliate in connection with the
Development Plan or in connection with any other matter of any kind or nature
prior to the opening for public business of the Casino Facility (other than
costs of services provided by the regular employees of CA at no additional cost
to it), (i) shall not exceed the sum of one million dollars ($1,000,000) without
the consent of CAC and (ii) shall be deemed, as and when incurred or paid by CAC
or its Affiliates, to be a contribution to the capital of the Company pursuant
to Section 3.1(b)(i) below.
2
<PAGE>
ARTICLE 3: CAPITAL CONTRIBUTIONS
3.1 Initial Contributions.
---------------------
[a] By BG: Upon the Closing, BG will have made an Initial Contribution of the
-----
property described in the attached Exhibit "C" (the "BG Land"). The Members
agree that the Fair Market Value of the BG Land is $7.5 million.
[b] By CAC: Upon the Closing, CAC will have made an Initial Contribution
------
aggregating $9.2 million, consisting of the following; (i) the sum of $1
million, less the aggregate amount of the Development and Pre-Opening Costs
paid or incurred by CAC or its Affiliates through the Closing Date, (ii)
the Development Plan, which effective as of the Closing Date, shall be
deemed to have been contributed by CAC to the Company, (iii) an assignment
of the right to acquire the Caesars Land, together with the amount of $6.4
million, representing the balance of the total purchase price of $6.5
million for the Caesars Land and (iv) the benefits to the Company resulting
from the CA Completion Capital Commitment and the Fee Subordination
Agreement.
3.2 Certain Transactions Between CAC and BG at the Closing. Effective as of the
------------------------------------------------------
Closing, the following will have occurred:
[a] BG will have sold to CAC and CAC will have purchased from BG, a portion of
BG's Ownership Interest representing 4.20% of the total Ownership Interests
in the Company, for the sum of $700,000, which the parties acknowledge will
have been paid in full as of the Closing Date. BG represents and warrants
to CAC that, as of the Closing Date, it will have transferred, conveyed and
assigned to CAC the foregoing Ownership Interest, free and clear of all
liens, restrictions, rights or encumbrances of any kind whatsoever.
[b] CAC will have granted BG a non-assignable, non-transferrable right (the
"Put") to require CAC to purchase from BG an additional 4.80% of the total
Ownership Interest of the Company for a price of $800,000 (or such lesser
portion thereof for a prorata portion of such price). BG must exercise the
Put, if at all, by written notice to CAC pursuant to Section 8.9 hereof by
no later than the 5:00 P.M. Mountain time on the first business day
following the first anniversary of the Closing Date. The closing of the
purchase and sale pursuant to any exercise of the Put, including the
payment of the purchase price and the delivery of the Certificates for the
Ownership Interest being purchased, shall occur no later than 10 days
following the effective date of the notice. Any Ownership Interest
purchased pursuant to the exercise of the Put shall be free and clear of
all liens, encumbrances, rights or restrictions of any kind whatsoever, and
BG shall provide such representations and warranties regarding title to the
Ownership Interests being conveyed as CAC may request. The Put shall
automatically expire in the event BG shall cease to be a Member of the
Company at any time or is subject to a bankruptcy as defined in Section
11.3 of the Operating Agreement.
[c] CAC will have loaned BG and NG the sum of $500,000, for which they shall be
jointly and severally liable, for a term expiring on the third anniversary
of the Closing Date, bearing interest at the Interest rate, and secured by
a pledge of all of BG's Ownership Interest in the
3
<PAGE>
Company, pursuant and subject to the terms of a Promissory Note and Pledge
Agreement in the form attached hereto as Exhibit B, which BG and NG will
have executed and delivered as of the Closing.
3.3 Additional Contributions. Except upon the agreement of all Members and upon
------------------------
such terms and conditions as they may agree in writing, no Additional
Contributions will be required or permitted from the members of the Company,
except for any amounts contributed to the Company pursuant to the terms of the
CA Completion Capital Commitment and except that the Company may, by vote of the
Majority In Interest, require Additional Contributions from Members (i) if
required by governing law, (ii) as reasonably required in connection with the
development and construction of a hotel on the Project, but only to the extent
that the total funds available to complete the hotel from the unused portion of
the CA Completion Capital Commitment and from the proceeds of the $75 million of
Project financing are insufficient to permit the completion of the hotel, (iii)
for replacement of fixtures, furnishings or equipment of the Project and (iv)
not to exceed a total cumulative additional sum of $4 million, as reasonably
required for implementation of the Development Plan or other reasonably required
capital expenditures of the Company. The Member that provides any Additional
Contribution shall receive a corresponding credit to its capital account and its
Ownership Interest shall be increased proportionately with the increase in its
capital account.
3.4 Default. If a Member fails to make a required Capital Contribution timely
-------
when due, each other Member which is not in default will have the option to:
[a] Make all or part of such Capital Contribution on its own behalf and
increase its Ownership Interest accordingly; or
[b] Loan all or part of such Capital Contribution amount to the Company, with
such loan payable on demand and with Interest (and such amount will be
treated as a loan rather than as a Capital Contribution).
If there is more than one Member which is not in default in its required
Capital Contributions, the non-defaulting Members will agree among themselves as
to the allocation of any required Capital Contribution that is either
contributed or loaned, and if they do not agree, each such Member will be
entitled to contribute and to loan an amount equal to its proportionate share
(based on the ratio of their Capital Contributions previously made).
3.5 Loans by Members. Subject to term of the Indenture, the Members or their
----------------
Affiliates may loan money to the Company for Company purposes as provided in the
Operating Agreement, at the Interest rate.
3.6 Distributions. The parties agree to cause the Managers appointed by them to
-------------
cause the Company, at least quarterly, to distribute to Members from Available
Company Cash the maximum amount that may be distributed with respect to the
Ownership Interests subject to the terms of the Indenture. "Available Company
Cash" means cash in excess of the cash reserves provided for in Section 6.6 of
the Operating Agreement. In the event CA (or CAC) is required to make any
payment pursuant to the CA Completion Capital Commitment, at CAC's election upon
notice to BG, the
4
<PAGE>
parties agree and consent, pursuant to Section 6.2 of the Operating Agreement,
to the distribution to CAC of the entire amount of any and all distributions by
the Company with respect to the Ownership Interests of all the Members, up to
the aggregate amount of the payments made under the CA Completion Capital
Commitment less any amount paid by BG to CAC for any part of the Increased
Ownership Interest that CAC acquired as a result of such payments under the CA
Completion Capital Commitment, before any distributions are made to any other
Member. The capital account and Ownership Interest of CAC shall be appropriately
adjusted to reflect any such priority distribution to CAC.
3.7 Optional Purchase of Ownership Interest from CAC. BG shall have the option
------------------------------------------------
to purchase for cash (unless otherwise agreed) from CAC portions of its
Increased Ownership Interest sufficient to permit BG to hold up to forty-five
percent (45.0%) of the Ownership Interest of the Company under the following
terms and conditions:
[a] BG must provide CAC not less than fourteen (14) days prior written notice
of BG's intention to exercise such option:
[b] The price for such Increased Ownership Interest will be the price paid by
CAC for such Increased Ownership Interest plus Interest from the date the
Increased Ownership Interest was paid for by CAC through the date of
payment by BG; and
[c] Any option to be exercised by BG under this Section 3.7 must be exercised
within 180 days from the date that CAC acquired such portion of its
Increased Ownership Interest in excess of 55.0%.
Upon the completion of such purchase or purchases, Appendix I to the
Operating Agreement shall be automatically adjusted proportionately to reflect
such purchase(s).
Notwithstanding anything to the contrary herein, BG may not exercise an
option to purchase an Increased Ownership Interest from CAC if, after giving
effect to the exercise, CAC's Ownership Interest would be less than 55.0%.
ARTICLE 4: MANAGEMENT
4.1 Unanimous Vote. The parties agree to cause the Managers appointed by them
--------------
not to cause the Company to effect any of the following matters without (i) the
unanimous consent of each of the other Managers and (ii) the unanimous consent
of the Members:
[a] The making of material changes to the Development Plan described in the
Offering Circular;
[b] The adoption of any Annual Budget for any year following the opening of the
Project for public business calling for capital expenditures for such
budgeted year greater than $4,000,000;
5
<PAGE>
[c] A call for Additional Contributions by the Members other than as provided
for under Section 3.3; and,
[d] The approval of the principal terms of any refinancing of the Project
financing described in Section 8.21(i) or the incurrence of indebtedness
outside of the normal operating requirements of the Project in an
outstanding amount which at any time exceeds $1 million, except for
indebtedness incurred for replacement of furnishing, fixtures or equipment
or as may be otherwise specifically authorized by this Agreement.
4.2 Annual Budgets. CAC will prepare an Annual Budget within a reasonable time
--------------
before the beginning of each Fiscal Year, including the budget submitted under
the Management Agreement (Exhibit "D"). An Annual Budget will include the amount
of any Additional Contribution that is determined to be necessary or desirable
(to be made in the proportion of the Capital Contributions previously made), and
the date or dates on which such contribution to capital will be due.
ARTICLE 5; SALE OF PROPERTY ON DISSOLUTION
5.1 Sale of Real Property on Dissolution. In connection with any liquidation of
------------------------------------
the real property described in Section 3.1, together with any improvements
thereon (the "Property"), the Members agree to vote and to cause the Managers
appointed by them to vote to apply the following procedures in connection with
such liquidation:
[a] The Company will seek to sell the Property, by listing it with a reputable
broker or through such other means as it may deem appropriate to maximize
the proceeds from the sale. The initial price at which the Property is
offered for sale shall be the book value of the Property as reflected on
the Company's books and records, unless otherwise agreed by all the
Members.
[b] If any bona fide offer (the "Offer") is made for the Property, and all the
Members deem the Offer acceptable, the Company shall sell the Property
pursuant to the Offer. If one Member deems the Offer acceptable (the
"Selling Member") and another deems it unacceptable (the "Non-Selling
Member"), the following procedure shall apply: the Non-Selling Member shall
have thirty (30) days from the date it receives written notice of the Offer
to exercise a right of first refusal to purchase the Property on the same
terms and conditions as contained in the Offer. The Non-Selling Member
shall exercise such right of first refusal by written notice to the Selling
Member within such thirty (30) day period, which notice shall be
accompanied by evidence, reasonably satisfactory to the Selling Member,
that the Non-Selling Member has a commitment to finance the purchase of the
Property. The purchase of the Property pursuant to the exercise of the
right of first refusal shall occur within sixty (60) days after exercise of
this right of first refusal. If the Non-Selling Member does not exercise
its right of first refusal, or if it is unable to adequately demonstrate
the availability of financing for the purchase, or if it does not close the
purchase within such sixty (60) day period, the
6
<PAGE>
Company shall sell the Property pursuant to the Offer, or pursuant to any
other Offer it may receive, the terms of which are at least as favorable as
those contained in the Offer.
ARTICLE 6: DISPUTE RESOLUTION
6.1 Disputes. Except as to any disputes for which injunctive relief may be
--------
available, in the event a dispute of any kind arises in connection with this
Agreement (including any dispute concerning its construction, performance or
breach), the parties to the dispute (who may be any combination of the Company
and any one or more of the Members) will attempt to resolve the dispute as set
forth in Section 6.2 before proceeding to arbitration as provided in Section
6.3. All documents, discovery and other information related at any such
dispute, and the attempts to resolve or arbitrate such dispute, will be kept
confidential to the fullest extent possible. This Article 6 shall not apply to
disputes arising under the Management Agreement.
6.2 Negotiation. If a dispute arises, any party to the dispute will give
-----------
notice to each other party. If the Company is not a party to the dispute, notice
will be given to the Company. After notice has been given, the parties in good
faith will attempt to negotiate a resolution of the dispute.
6.3 Arbitration. If within 30 days after the notice provided in Section 6.2, a
-----------
dispute is not resolved through negotiation or mediation, the dispute will be
arbitrated. The parties to the dispute agree to be bound by the selection of an
arbitrator, and to settle the dispute exclusively by binding arbitration in
accordance with the following provisions:
(a) all parties to the dispute will collectively select one arbitrator. If they
fail to do so within 45 days after the notice provided in Section 6.2, one
or more parties will request the American Arbitration Association to submit
a panel five arbitrators who ar qualified to resolve the matters in dispute
from which the choice will be made. The party requesting the arbitration
will strike first, followed by alternative striking until one name remains.
A similar procedure will be followed if there are more than two parties.
The parties may by agreement reject one entire list, and request a second
list. If selection by the above method is not completed within 90 days
after the notice provided in Section 6.2, of if there are more than four
parties, then an arbitrator will be selected by the American Arbitration
Association. The arbitrator so selected will then arbitrate the dispute in
Denver, Colorado, and issue an award.
(b) To the extent consistent with the provisions of this Article, the
arbitration will be conducted under the Commercial Arbitration Rules of the
American Arbitration Association and in accordance with Colorado law. The
arbitrators decision will be made pursuant to the relative substantive law
of the State of Colorado. The award of the arbitrator will be final,
binding and non-appealable. Judgement on the award may be entered in any
court, state or federal court having jurisdiction.
[c] The fees and expenses of the arbitrator, and the other direct costs of the
arbitration, will be shared by the parties to the dispute in equal
proportions. Each party to the dispute will bear all other costs and
expenses as provided in Section 8.10. If one or more Members are
7
<PAGE>
included in the arbitration because of their membership or former
membership in the Company, such group will collectively be treated as one
party to the dispute (through the Company as a party).
ARTICLE 7: PRIVILEGED LICENSE PROTECTION
7.1 Regulatory Compliance. BG acknowledges that as a result of the transactions
---------------------
contemplated by this Agreement, BG and its agents and Affiliates may be subject
to licensing and other regulatory review and approval procedures ("Regulatory
Review"), by any governmental or quasi-governmental agency which is authorized
or empowered to regulate the gaming operations of CA and its Affiliates
("Regulatory Authority") in the jurisdictions in which CA and its Affiliates
conduct or propose to conduct gaming activities including, without limitation,
Colorado, Mississippi, Louisiana and Florida. BG agrees to cooperate fully and
to cause its Affiliates to cooperate fully with the representatives of all such
Regulatory Authorities in making applications, supplying information, providing
reports, attending licensing and other hearings, and otherwise cooperating with
and complying with the requirements of all such Regulatory Authorities so as not
to interfere with CA or its Affiliates ability to develop new business or to
continue to conduct its existing business. BG agrees that in the event the Board
of Directors of CA reasonably determines based upon communications with a
Regulatory Authority that BG or any of its Affiliates is likely to be determined
unsuitable by such Regulatory Authority and as a result CAC or its Affiliates
may not be permitted to engage or to continue to engage in a gaming activity
(collectively a "Licensing Problem"), then, within the lesser of 150 days of
notice of such event from CAC to BG or the applicable period prescribed by the
appropriate Regulatory Authority (provided CAC timely notifies BG of such a
determination) BG shall eliminate the Licensing Problem to the reasonable
satisfaction of CA's Board or transfer its rights and obligations hereunder and
its Ownership Interest to a Person reasonably acceptable to CA, who does not
have a Licensing Problem, and such Person shall be accepted as a Member of the
Company for all purposes. Any such transfer shall be subject to the terms and
conditions contained in Article 13 of the Operating Agreement. In the event such
transfer does not occur (or is not subject to a binding contract for a bona fide
sale to a Third Party to close within thirty (30) days of the expiration of the
one hundred fifty (150) day period described above), or the Licensing Problem is
not eliminated within the prescribed one hundred fifty (150) day period, BG
shall immediately convey its Ownership Interest under the agreement to CAC or an
Affiliate designated by CAC for the sum equal to its Capital Account balance
determined as of the end of the most recent month preceding the date of transfer
with such amount payable over a five (5) year period with interest at the Prime
Rate and without penalty for early payment thereof. All qualification and other
expenses relating to the foregoing applications shall be borne by the respective
parties submitting the applications; provided that the parties will be
reimbursed by the Company for such expenses from the debt financing for the
Project to the extent provided in the Offering Circular not inconsistent with
the Indenture.
Notwithstanding the foregoing, in the event that the Board of Directors of
CA reasonably determines, based upon communications with a Regulatory Authority,
that the opening of the Project might be delayed because (i) the licensing
and/or background investigations of BG or any of its Affiliates, agents or
related Persons are incomplete or (ii) any of such Persons are likely to be
found unsuitable, then BG agrees to take whatever action the Regulatory
Authority deems acceptable to
8
<PAGE>
avoid a delay in opening the Project, which actions may include, without
limitation, placing BG's Ownership Interests in escrow, transferring its
Ownership Interest to a Person, reasonably acceptable to CA, who is licensed by
the applicable regulatory authority or conveying its Ownership Interest to the
Company or to CAC or an Affiliate designated by CAC for such consideration as
the Regulatory Authority may prescribe.
7.2 No Unsuitability Knowledge. neither BG nor CAC is aware of any facts or
--------------------------
circumstances which would make any Member or the officers, directors, managers,
or owners (directly or indirectly) of such Member, a Person or entity unsuitable
for licensing under applicable Colorado gaming laws, rules and regulations.
7.3 Additional Regulatory Compliance Matters. The following restrictions shall
----------------------------------------
be in addition to, and shall govern in the event of a conflict with, the
provisions of Section 7.1 above.
The parties agree to cause the Company not to issue any voting securities
or other voting interests, except in accordance with the provisions of the
Colorado Limited Gaming Act and the regulations promulgated thereunder. The
issuance of any voting securities or other voting interests in noncompliance
with the preceding sentence shall be deemed not to be issued and outstanding
until (a) the Company shall cease to be subject to the jurisdiction of the
Colorado Limited Gaming Control Commission, or (b) the Colorado Limited Gaming
Control 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
interests, claim or charge therein or thereto shall be transferred in any manner
whatsoever except in accordance with the provisions of the Colorado Limited
Gaming Act and the regulations promulgated thereunder. Any transfer in
violation thereof shall be void until (a) the Company shall cease to be subject
to the jurisdiction of the Colorado Limited Gaming Control Commission, or (b)
the Colorado Limited Gaming Control Commission shall, by affirmative action,
validate said transfer or waive any defect in said transfer.
If the Colorado Limited Gaming Control Commission at any time determines
that a holder of voting securities or other voting interests of this Company is
unsuitable to hold such securities or other voting interests, then the Company
may, within sixty (60) days after the findings of unsuitability, purchase such
voting securities or other voting interests of such unsuitable Person at the
lesser of (i) the cash equivalent of such Person's investment in the Company, or
(ii) the current market price as of the date of the finding of unsuitability
unless such voting securities or other voting interests are transferred to a
suitable Person (as determined by the Commission) within sixty (60) days after
the finding of unsuitability. Until such voting securities or other voting
interests are owned by Persons found by the Commission to be suitable to own
them, (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 the holder of the voting securities shall not for any
purposes be included in the voting securities or other voting interests of the
Company entitled to vote, and (c) the Company shall not pay any remuneration in
any form to the holder of the voting securities or other voting interests except
in exchange for such voting securities or other voting interests as provided in
this paragraph.
9
<PAGE>
ARTICLE 8: GENERAL PROVISIONS
8.1 Amendment; Effective Date. This Agreement may be amended by the unanimous
-------------------------
written agreement of the parties. Any amendment will become effective upon such
approval, unless otherwise provided. The effectiveness and enforceability of
this Agreement are subject to the occurrence of the Closing. This Agreement
shall automatically, without further action by any of the parties, become
effective and enforceable according to its terms as of the Closing Date. In the
event the Closing shall not have occurred by September 3, 1997, this Agreement
shall be null and void ab initio and none of the parties shall have any rights
-- ------
or obligations of any kind under or pursuant to this Agreement.
8.2 Representations. Each of the parties represents and warrants (which
---------------
representations and warranties shall survive the Closing) to each of the other
parties that, as of the signing of this Agreement and as of the Closing:
[a] Such party is duly organized, validly existing and in good standing under
the laws of the jurisdiction where it purports to be organized, and is a
United States Person;
[b] Such party has full power and authority to enter into and perform this
Agreement and, in the case of BG and CAC, the Operating Agreement;
[c] All actions necessary to authorize the signing and delivery of this
Agreement and the Operating Agreement, and the performance of the
respective obligations of the parties to each of such agreements, have
been duly taken;
[d] This Agreement and the Operating Agreement have each been duly signed and
delivered by a duly authorized officer or other representative of each of
the parties that are signatories thereto, and each such agreement
constitutes the legal, valid and binding obligation of each such party
enforceable in accordance with its respective terms (except as such
enforceability may be affected by applicable bankruptcy, insolvency or
other similar laws effecting creditors' rights generally, and except that
the availability of equitable remedies is subject to judicial discretion);
[e] No consent or approval of any other Person is required in connection with
the signing, delivery and performance of this Agreement by the parties or
the Operating Agreement by BG and CAC; and
[f] The signing, delivery and performance of this Agreement or the Operating
Agreement do not violate the organizational documents of such party, or
any material agreement to which such party is a party or by which such
party is bound.
10
<PAGE>
8.3 Unregistered Interests. Each Member [a] acknowledges that the Ownership
----------------------
Interests are being offered and sold without registration under the Securities
Act of 1933, as amended, or under similar provisions of state law, [b]
represents and warrants that such Person is an accredited investor as defined
for federal securities laws purposes, [c] represents and warrants that it is
acquiring an Ownership Interest for such Person's own account, for investment,
and with no view to the distribution of the Ownership Interest, and [d] agrees
not to Transfer, or to attempt to Transfer, all or any part of its Ownership
Interest without registration under The Securities Act of 1933, as amended, and
any applicable state securities laws, unless the Transfer is exempt from such
registration requirements.
8.4 Confidentiality. A Member may make such announcements, file such documents
---------------
(including this Agreement) with the Securities and Exchange Commission, and
other regulatory authorities, and otherwise take such actions to comply with the
requirements of federal and state securities laws as it deems appropriate. To
the extent reasonably practicable, each Member will provide the other with the
portion of any such announcement or filing that refers to this Agreement and the
transactions contemplated by it no later than concurrently with releasing or
filing the same.
8.5 Exclusivity. During the term of this Agreement, no Member nor any of its
-----------
Affiliates will seek to manage, develop or engage in a casino gaming operation
in Gilpin County, Colorado except through this Agreement and the Operation
Agreement. Notwithstanding any other provision of this Agreement, the Members
acknowledge and agree that NG's interest in Gold Mountain Development shall not
be a violation of this exclusivity restriction, provided such interest does not
expand beyond the scope set forth on the attached Exhibit "E", CAC may, however,
participate as an equal joint venture partner with BG or its Affiliates in any
hotel project proposed for the property described in Exhibit E provided (i) CAC
is willing to make a contribution to such venture equal in value to the
contribution to be made by BG or its Affiliates and (ii) CAC shall have thirty
(30) days from its receipt in writing of notice of the proposed venture
(together with a reasonably detailed description of the project and the proposed
terms of the venture) to accept or reject the opportunity. The Members agree
that any such hotel or related project will have a permanent license to connect
to and access the Project in a manner reasonably agreeable to the Company and
not disruptive to the operation of the Project.
8.6 Conflicts. In the course of operating gaming at the Project, it is expected
---------
that information will be shared between the Project and other operations carried
on by Affiliates of CAC and BG. Also, Affiliates of CAC and BG will be entitled
to carry on existing gaming and hotel businesses, and to manage or develop any
new gaming or hotel business anywhere in the world, subject to Section 8.5. In
the course of operating any such gaming and hotel businesses, CAC and BG and
their respective Affiliates will be entitled to solicit customers in competition
with the Project anywhere in the world including Gilpin County and any such
activities shall not be deemed to be a conflict of interest or breach of any
fiduciary obligation on the part of CAC or BG.
8.7 Waivers Generally. No course of dealing will be deemed to amend or
-----------------
discharge any provision of this Agreement. No delay in the exercise of any right
will operate as a waiver of such right. No single or partial exercise of any
right will preclude its further exercise, a waiver of any right on any one
occasion will not be construed as a bar to, or waiver of, any such right on any
other occasion.
11
<PAGE>
8.8 Remedies for Breach. The rights and remedies of the parties set forth in
-------------------
this Agreement are neither mututally exclusive nor exclusive of any right or
remedy provided by law, in equity or otherwise. The parties agree that all legal
remedies (such as monetary damages), subject to the dispute resolution
provisions of Article 6, as well as all equitable remedies (such as specific
performance), will be available for any breach or threatened breach of any
provision of this Agreement; provided, however, that no breach or threatened
breach of this Agreement shall serve as the basis for or entitle any party to
assert any claim against the Company for damages or for any injunctive or
equitable remedy against the Company.
8.9 Notices. Any notices (including any communication or delivery) required or
-------
permitted under this Agreement will be in writing and will be addressed as
follows:
If to CAC:
Casino America of Colorado, Inc.
Attention: John Gallaway
711 Washington Loop
Biloxi, MS 39530
With a copy to: Allan B. Solomon
2200 Corporate Blvd., NW, Suite 310
Boca Raton, FL 33431
If to BG:
Blackhawk Gold, Ltd.
3040 Post Oak Boulevard, Suite 675
Houston, Texas 77056
Telephone: (713) 621-2245
Telecopier: (713) 621-6919
Attention: H. Thomas Winn
With a copy to: Adams & Reese, L.L.P.
1221 McKinney, Suite 4400
Houston, Texas 77010
Telephone: (713) 652-5151
Telecopier: (713) 652-5152
Attention: Mark W. Coffin
All notices may be made by mail, personal delivery, courier service or facsimile
machine, and will be effective upon delivery. Any Member may change such
Person's address by notice to each other Member.
8.10 Costs. If the Company or any Member retains counsel for the purpose of
-----
enforcing or preventing the breach or any threatened breach of any provision of
this Agreement or the Operating Agreement or for any other remedy relating to
it, then the prevailing party will be entitled to be reimbursed by the
nonprevailing party for all costs and expenses so incurred (including reasonable
12
<PAGE>
attorneys' fees, costs of bonds, and fees and expenses for expert witnesses)
unless the arbitrator or other trier of fact determined otherwise in the
interest of fairness.
8.11 Indemnification. Subject to Section 2.4 above, each Member hereby
---------------
indemnifies and agrees to hold harmless the Company and each other Member from
any liability, cost or expense arising from or related to any act or failure to
act of such Member which is in violation of this Agreement or the Operating
Agreement.
8.12 Partial Invalidity. Wherever possible, each provision of this Agreement
------------------
will be interpreted in such manner as to be effective and valid under applicable
law. However, if for any reason any one or more of the provisions of this
Agreement are held to be invalid, illegal or unenforceable in any respect such
action will not affect any other provision of this Agreement. In such event,
this Agreement will be construed as if such invalid, illegal or unenforceable
provision had never been contained in it.
8.13 Entire Agreement. This Agreement, together with the Operating Agreement,
----------------
which is incorporated by reference herein, contains the entire agreement and
understanding of the Members with respect to its subject matter, and it
supersedes all prior written and oral agreements. No amendment of this Agreement
will be effective for any purpose unless it is made in accordance with Section
8.1.
8.14 Benefit. The contribution obligations of each Member will inure solely to
-------
the benefit of the other Members and the Company, without conferring on any
other Person any rights of enforcement or other rights.
8.15 Binding Effect. This Agreement is binding upon, and inures to the benefit
--------------
of, the Members and their permitted successors and assigns; provided that, the
parties acknowledge that any Transferee will have only the rights specified in
Section 13.6 of the Operating Agreement (and no rights under this Agreement)
unless admitted as a substitute Member in accordance with the Operating
Agreement.
8.16 Further Assurances. Each Member agrees, without further consideration, to
------------------
sign and deliver such other documents of further assurance as may reasonably be
necessary to effectuate the provisions of this Agreement.
8.17 Headings. Article and section titles have been inserted for convenience of
--------
reference only. They are not intended to affect the meaning or interpretation of
this Agreement.
8.18 Terms. Terms used with initial capital letters will have the meanings
-----
specified, applicable to both singular and plural forms, for all purposes of
this Agreement. All pronouns (and any variation) will be deemed to refer to the
masculine, feminine or neuter, as the identity of the Person may require. The
singular or plural include the other, as the context requires or permits. The
word include (and any variation) is used in an illustrative sense rather than a
limiting sense.
8.19 Governing Law; Conflicts with Operating Agreement. This Agreement will be
-------------------------------------------------
governed by, and construed in accordance with, the laws of the State of Colorado
(except to the extent
13
<PAGE>
preempted by any federal law or the gaming laws of any state or governmental
agency having jurisdiction over the affairs of any Member). For purposes of the
Act, this Agreement shall be deemed, together with the Operating Agreement, as
the operating agreement of the Company. Any conflict or apparent conflict
between the provisions of Article 4 of this Agreement and the Operating
Agreement or the Act will be resolved in favor of the Operating Agreement except
as otherwise required by the Act.
8.20 Brokers Fees. The parties represent and warrant to one another that no
------------
brokers fees will be due and owing by the Company to any party in connection
with the Project. Without limitation of the foregoing, NG and BG, jointly and
severally, hereby agree to indemnify the Company, CAC and CA and their
respective officers, directors and members and hold them harmless from all
suits, actions, injuries damages, liabilities, and expenses of any kind,
including reasonable attorneys' fees and court costs, incurred in connection
with any claims brought by, or on behalf of Praven Banker. The parties
acknowledge the investment banking fees that may be owed to Jefferies & Company,
Inc. ("Jefferies") pursuant to that certain Engagement Agreement between NG and
Jefferies dated January 10, 1997, as amended, and the parties will cause the
Company to expressly and fully assume such agreement. However, the parties
acknowledge and agree that neither the Company, CA nor CAC will be liable for
any introduction fee in connection with the Project or for any fee to D.E. Frey
& Co.
8.21 Approvals. The Members hereby approve the Offering Circular and the
---------
transactions and matters described therein, including, without limitation, (i)
the terms of the issuance by the Company of approximately $75 million in first
mortgage notes, underwritten by Jefferies & Company, to be secured by
substantially all of the assets of the Company, (ii) the other financings
described in or contemplated by the Offering Circular and (iii) the Management
Agreement.
8.22 Guarantees. In addition to the respective obligations of CA and NG under
----------
this Agreement, CA agrees to guarantee the obligations of CAC under this
Agreement and NG agrees to guarantee the obligations of BG under this Agreement.
8.23 No Joint Venture. This Agreement shall not be deemed or construed to
----------------
create an agency relationship or joint venture among the parties hereto.
[THIS SPACE LEFT INTENTIONALLY BLANK]
14
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
CASINO AMERICA OF COLORADO, INC.
a Colorado corporation
By: /s/ Allan B. Solomon
-----------------------------------
BLACKHAWK GOLD, LTD.,
a Nevada corporation
By: /s/ H. Thomas Winn
-----------------------------------
H. Thomas Winn, President
CASINO AMERICA, INC.,
a Delaware corporation
By: /s/ Allan B. Solomon
-----------------------------------
NEVADA GOLD & CASINOS, INC.,
a Nevada corporation,
By: /s/ H. Thomas Winn
-----------------------------------
15
<PAGE>
EXHIBIT "A"
Definitions
Additional Contribution: A capital contribution (other than the Initial
Contribution) that a Member makes to the Company, as
described in Section 3.3.
Agreement: This Agreement, as amended from time to time.
Annual Budget: The Annual Budget for the Project.
Available Company Cash: Cash available for distribution as provided in Section
3.6 of the Agreement.
BG: Blackhawk Gold, Ltd., a Nevada corporation, and its
Permitted Transferees (provided that any Transferee
will become a substitute Member only in accordance
with the Operating Agreement).
CA Completion Capital The Completion Capital Commitment of CA, as defined in
Commitment: the Offering Circular.
CAC: Casino America Corporation of Colorado, Inc., a
Colorado corporation, and its Permitted Transferees
under the terms of this Agreement (provided that any
Transferee will become a substitute Member only in
accordance with the Operating Agreement).
Casino Facility: The casino to be developed as part of the Project.
Closing: The consummation of the sale of $75 million first
mortgage notes due 2004 issued by the Company and Isle
of Capri Black Hawk Capital Corp. pursuant to the
Offering Circular.
Closing Date: The date and time at which the Closing occurs.
Development Plan: The description of the development of the Project, as
contained in the Offering Circular.
Fee Subordination The agreement of CA, contained in the Indenture, that
Agreement: the right of CA to receive payment of fees under the
Management Agreement shall be subordinate in right of
payment to the right of the holders of such notes to
receive payment pursuant to the notes.
Indenture: The Indenture for the First Mortgage Notes due 2004 to
be issued pursuant to the Offering Circular.
Increased Ownership That portion of the Ownership Interest of CAC which is
Interest: in excess of 55% and which it acquired as a result of
(i) making an Additional Contribution, (ii) the
purchase of a portion of BG's
<PAGE>
Ownership Interest pursuant to Section 3.2(a) of the
Agreement or (iii) the exercise of the Put by BG.
Initial Contribution: The initial capital contribution that a Member makes to
the Company, as described in Section 3.1.
Interest: The higher of (i) 14.50%, or (ii) the base rate of the
highest effective yield to maturity currently being paid
by CA. Inc. to any third party lender, plus two
percentage points; provided that, the interest rate may
not exceed the highest rate allowed by governing law.
Management Agreement: That certain Management Agreement between the Company
and CAC, Inc. dated as of April 25, 1997, as amended as
of the date of the Agreement, concerning the management
of the Project, which is attached as Exhibit C.
Notice: Written notice (including any communication or
delivery), actually given pursuant to Section 8.9.
Offering Circular: The Offering Circular for the offering by the Company of
$75 million of __% First Mortgage Notes due 2004.
Operating Agreement: The Amended and Restated Operating Agreement of the
Company dated as of the date of the Agreement.
Project: The development and operation of a casino gaming
facility and related facilities in Black Hawk, Colorado,
as contemplated by this Agreement.
Put: The right of BG to cause CAC to purchase a certain
portion of its Ownership Interest as provided in Section
3.2(b) of the Agreement.
<PAGE>
EXHIBIT B
Promissory Note and Pledge Agreement
<PAGE>
PROMISSORY NOTE
---------------
$500,000.00 Denver, Colorado
______, 1997
FOR VALUE RECEIVED, Blackhawk Gold, Ltd., a Colorado corporation
("Blackhawk") and Nevada Gold & Casinos, Inc., a Nevada corporation ("Nevada
Gold"), (Blackhawk Gold and Nevada Gold being collectively called "Maker"),
promise to pay to the order of Casino America of Colorado, Inc., a Colorado
corporation ("Lender"), in lawful money of the United States of America, in
immediately available funds, at such place as the holder hereof may from time to
time designate, or in the absence of such designation, at the office of the
Lender, 711 Washington Loop, Biloxi, Mississippi 39530, the principal sum of
FIVE-HUNDRED THOUSAND DOLLARS ($500,000.00), or so much thereof as shall be
outstanding from time to time (the "Loan"), in accordance with the following
terms and provisions. Except as otherwise defined in this Note, terms used with
initial capital letters will have the meanings ascribed to them in the Members
Agreement of even date among Maker, Lender and Casino America, Inc.
1. The principal amount of the Loan plus all accrued interest shall be
due and payable on ______, 2000. The Loan may not be prepaid without the
express written consent of the Lender, which may be granted or withheld in
holder's sole and absolute discretion.
2. The unpaid principal amount of the Loan shall bear interest from the
date hereof at the following rates per annum: (A) prior to maturity, at the
higher of (i) 14.50% or (ii) the base rate of the highest effective yield to
maturity currently being paid by Casino America, Inc. to any third party lender,
plus two percentage points, and (B) after maturity, whether by acceleration or
otherwise, at ___%. Interest at the foregoing rate shall accrue and be
compounded semi-annually and shall be payable on the due date of the Loan.
Interest shall be computed for the actual number of days elapsed on the basis of
a year consisting of 360 days.
3. This Note is secured by a Pledge Agreement of even date herewith (the
"Pledge") given by Blackhawk Gold for the benefit of the holder hereof
encumbering all of Blackhawk Gold's interest in Isle of Capri Black Hawk, LLC, a
Colorado limited liability company. This Note and the Pledge and any other
documents or instruments evidencing or securing the Loan are collectively
referred to herein as the "Loan Documents".
4. Until the Loan and any other amounts due under the Loan Documents are
paid in full, Maker covenants that neither Blackhawk Gold nor Nevada Gold shall
incur or permit to exist any indebtedness or liability on account of advances or
for borrowed money or for the deferred purchase price of any property or
services, except (i) the Loan and (ii) current accounts payable of Blackhawk
Gold or Nevada Gold arising in the ordinary course of business and payable
within 30 days in an aggregate amount (including the accounts payable of both
Blackhawk Gold and Nevada Gold) that does not at any time exceed $50,000.
<PAGE>
5. Each Maker hereby covenants, represents and agrees that (i) the
schedule attached hereto contains, as of the date of this Note, all the
liabilities (the "Maker Liabilities") of any kind, whether fixed or contingent,
of Blackhawk Gold and Nevada Gold and (ii) the proceeds of the Loan, together
with the $700,000 paid by Lender to Blackhawk Gold pursuant to Section 3.2[a] of
the Agreement and any and all amounts paid by Lender to Blackhawk Gold as a
result of the exercise of the Put under Section 3.2[b] of the Agreement, will be
promptly applied by Maker solely to pay the Maker Liabilities, excluding any
liabilities to any Affiliates of either Maker.
6. If (a) any default occurs in the payment of any principal, interest or
any other sums when due hereunder, or in the performance of any covenant or
agreement hereunder or in any of the other Loan Documents, and such default
continues for a period of five (5) Business Days after written notice thereof to
Maker, then the outstanding principal amount of the Loan, any interest accrued
thereon from time to time, and any other sums then remaining unpaid hereunder,
at the option of the holder hereof and without notice, shall become immediately
due and payable. Failure to exercise any such option shall not constitute a
waiver of the right to exercise the same at a later time or in the event of any
subsequent default.
7. Blackhawk Gold and Nevada Gold shall be jointly and severally liable
for Maker's obligations under this Note, including the payment of all amounts
due hereunder.
8. Maker and all endorsers, guarantors and all persons liable or to
become liable under this Note hereby waive to the fullest extent permitted by
law presentment, demand, protest, notice of protest, notice of dishonor and
notice of any other kind (except as specifically required herein or in the other
Loan Documents) in connection with this Note.
9. Maker agrees to pay all costs and out-of-pocket expenses (including,
but not limited to, attorneys' fees and expenses) incurred by holder in
connection with the collection or enforcement of this Note, the Pledge or any
other Loan Documents.
10. This Note shall be construed in accordance with and governed by the
internal laws and decisions of Colorado, without giving effect to Colorado
choice of law principles.
11. The parties hereto intend and believe that each provision of this Note
comports with all applicable local, state and federal laws and judicial
decisions. However, if any provision or provisions, or if any portion of any
provision or provisions of this Note or the other Loan Documents is found by a
court of law to be in violation of any applicable local, state or federal
ordinance, statute law, administrative or judicial decision, or public policy,
and if such court should declare such portion, provision or provisions of this
Note or other Loan Documents to be illegal, invalid, unlawful, void or
unenforceable as written, then it is the intent of all parties hereto that such
portion, provision or provisions shall be given force to the fullest possible
extent that it or they are legal, valid and enforceable, that the remainder of
this Note and other Loan Documents shall be construed as if such illegal,
invalid, unlawful, void or unenforceable portion, provision or provisions were
not contained herein, and that the rights, obligations and interest of Maker and
holder hereof under the
2
<PAGE>
remainder of this Note shall continue in full force and effect. All agreements
herein are expressly limited so that in no contingency or event whatever,
whether by reason of advancement of the proceeds hereof, acceleration of
maturity of the unpaid principal balance hereof or otherwise, shall the amount
paid or agreed to be paid to the holder hereof for the use, forbearance or
detention of the money to be advanced hereunder exceed the highest lawful rate
permissible under applicable usury laws. If, from any circumstances whatever,
the fulfillment of any provision hereof or of the other Loan Documents, at the
time performance of such provision shall be due, shall involve transcending the
limit of validity prescribed by law which a court of competent jurisdiction may
deem applicable hereto, then ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity; and if, from many circumstance the holder
hereof shall ever receive as interest an amount which would exceed the highest
lawful rate, such amount which would be excess interest shall be applied to the
reduction of the unpaid principal balance due hereunder and not the payment of
the interest and any excess after application to the unpaid principal balance
shall be paid to Maker.
12. No modification, waiver, amendment, discharge or change of this Note
shall be valid unless the same is in writing and signed by the party against
which the enforcement of such modification, waiver, amendment, discharge or
change is sought.
13. Time is hereby declared to be of the essence of this Note and of every
part hereof.
14. This Note shall inure to the benefit of and shall be binding on the
parties hereto and their respective successors and assigns.
15. Any notice, demand, request or other communication which any party
hereto may be required or may desire to give hereunder shall be given in
accordance with Section 21 of the Pledge, except that notice to Nevada Gold may
be provided to it at the same address and in the same manner as specified for
Blackhawk Gold.
IN WITNESS WHEREOF, Maker has caused this Note to be executed and delivered
as of the date first above written.
[SIGNATURES ON FOLLOWING PAGE]
3
<PAGE>
MAKER:
------
BLACKHAWK GOLD, LTD.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
NEVADA GOLD & CASINOS, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
4
<PAGE>
PLEDGE AGREEMENT
----------------
THIS PLEDGE AGREEMENT ("Agreement") entered into this __ day of ______,
1997, by and between Blackhawk Gold, Ltd., a Colorado corporation ("Pledgor"),
in favor of Casino America of Colorado, Inc., a Colorado corporation
("Pledgee").
WITNESSETH:
-----------
WHEREAS, Pledgor, together with Nevada Gold & Casinos, Inc. (together the
"Maker"), has executed a promissory note in the original principal amount of
$500,000.00 (the "Note") in favor of Pledgee;
WHEREAS, each of Maker is a party to a Members Agreement among each Maker,
Casino America, Inc. and Nevada Gold & Casinos, Inc. (the "Agreement") relating
to Isle of Capri Black Hawk, L.L.C., a Colorado limited liability company (the
"Company");
WHEREAS, Pledgor has agreed to secure the Note and its obligations under
the Agreement by pledging and granting a security interest in the Pledgor's
Ownership Interest in the Company.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Pledgor and Pledgee agree as follows: All capitalized terms not
otherwise defined herein shall have the respective meanings ascribed to them in
Agreement. The reference to "Maker" hereunder shall mean Pledgor and Nevada Gold
& Casinos, Ltd.
1. Pledge.
-------
1.1 As security for the prompt and complete payment and performance of
the obligations of Maker under the Note and the Agreement (including without
limitation the representations of Maker in the Agreement) and the obligations of
Pledgor under this Pledge Agreement (the "Liabilities"). Pledgor hereby
delivers, pledges and grants a security interest to Pledgee in the following:
(a) All Ownership Interests (or Units representing Ownership
Interests) in the Company now or hereafter acquired by Pledgor,
and all certificates or other indicia of ownership representing
such Ownership Interests (or Units), referred to together with
all rights to the proceeds thereof as the "Units";
(b) All dividends and other distributions received by Pledgor in
accordance with Section 6 hereof; and
(c) All "Proceeds", as such term is defined in the Uniform
Commercial Code as the same may from time-to-time be effect in
the State of Colorado (the "Code").
<PAGE>
The Units are hereby delivered to Pledgee accompanied by stock powers
("Powers") duly executed in blank. The Units, Powers and Proceeds thereof,
together with the Property and interests in Property described in Section 6
below, are hereinafter collectively referred to as the "Collateral". Pledgor
hereby appoints Pledgee its attorney-in-fact to arrange at Pledgee's option for
the transfer upon or at any time after the existence or occurrence of an "Event
of Default" of the Collateral on the books of the Company to the name of Pledgee
or to the name of Pledgee's nominee. For purposes of this Agreement, an "Event
of Default" shall mean any failure of either Maker to perform, comply with or
observe any obligation, covenant, representation or agreement under the Note or
the Agreement or of Pledgor to perform, comply with or observe any obligation,
covenant, representation or agreement under this Pledge Agreement.
2. Voting Rights.
-------------
2.1 During the term of this Pledge Agreement, and so long as there shall
not occur or exist an Event of Default, Pledgor shall have the right to vote the
Units on all Company questions; provided, however, that no action shall be taken
that would impair the value of the Collateral or be inconsistent with or violate
any provision of this Pledge Agreement or the Note. Upon the existence or
occurrence of an Event of Default, Pledgee shall thereafter be entitled to
exercise all voting powers pertaining to the Collateral.
3. Representations.
---------------
3.1 Pledgor represents, warrants and agrees as follows:
(a) Pledgor holds Ownership Interests in the Company, representing
40.8% of all the outstanding Ownership Interests in the Company;
(b) Pledgor has full power and authority to enter into this Pledge
Agreement;
(c) Pledgor has the right to vote, pledge and grant a security
interest in or otherwise transfer such Collateral free of any
liens, claims and encumbrances; and
(d) The Powers are duly executed and give the legal holder thereof
the authority they purport to confer.
4. Limitation on Liens and Dispositions.
------------------------------------
4.1 Pledgor agrees that it 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, encumbrance, charge or right (a "Lien") on or against the
Collateral and will defend the right, title and interest of Pledgee in and to
any of Pledgor's right, title and interest in and to the Collateral against the
claims and demands of all other Persons. Pledgor will not sell, assign,
exchange, grant a security interest in, transfer, encumber, or otherwise dispose
of, any of the Collateral, or attempt or contract to do so.
5. Subsequent Changes Affecting Collateral.
---------------------------------------
<PAGE>
5.1 Pledgor represents to Pledgee that Pledgor has made its own
arrangements for keeping informed of changes or potential changes affecting the
Collateral, and Pledgor agrees that Pledgee shall not have any responsibility or
liability for informing Pledgor of any such changes or potential changes or for
taking any action or omitting to take any action with respect thereto. Pledgee
may, upon or at any time after the occurrence of an Event of Default, without
notice and at its option, transfer or register the Collateral or any part
thereof into its or its nominee's name with or without any indication that such
Collateral is subject to the security interest hereunder.
6. Distributions.
-------------
6.1 If at any time this Pledge Agreement is effective, Pledgor, by reason
of its ownership of the Units, shall become entitled to receive, or shall
receive, any Ownership Interest (including, without limitation, any Ownership
Interest representing a dividend or a distribution in connection with any
reclassification, increase or reduction of capital, or reorganization), option,
warrant, or other rights, whether as an addition to, in substitution of, or in
exchange for any Units, whether by declared dividend, stock split, or other
method, Pledgor agrees it shall accept the same as Pledgee's agent and hold the
same in trust for Pledgee and deliver the same forthwith to Pledgee in the exact
form received, with the endorsement of Pledgor when requested by Pledgee and/or
appropriate undated stock powers duly executed in blank, to be held by Pledgee
as additional collateral security for the Liabilities.
Any sums or property paid upon or in respect of the Units or any other
securities received under this section upon the reorganization, liquidation
(whether complete or partial), or dissolution of the issuer of any of the Units
or any such other securities shall immediately be paid over to Pledgee to be
held by Pledgee as additional collateral security for the Liabilities. All sums
of money and property so paid or distributed in respect of the Units that are
received by Pledgor shall, until paid or delivered to Pledgee, be segregated
from the other property of funds of Pledgor and held by Pledgor in trust as
additional collateral security for the Liabilities. All sums of money and
property so paid or distributed in respect of the Units that are received by
Pledgor shall, until paid or delivered to Pledgee, be segregated from the other
property of funds of Pledgor and held by Pledgor in trust as additional
collateral security of the Liabilities. Pledgor agrees to give Pledgee 30 days
prior notice of any such distribution.
6.2 Pledgor shall be entitled to receive all cash dividends or
distributions declared and paid with respect to any Units, free of any security
interest in favor of Pledgee hereunder provided, that no Event of Default exists
at the time of such dividend or distribution or will exist as a result of such
dividend or distribution. Upon the occurrence and continuance of any Event of
Default, Pledgee shall be entitled to receive any and all such cash dividends or
distributions, and Pledgor shall immediately deliver to Pledgee any such cash
dividends or distributions which it receives. Pledgee shall hold any such cash
dividends or distributions as Collateral pursuant to this Pledge Agreement, or,
at Pledgee's election, may apply any such cash dividends or distributions to the
reduction of any Liabilities.
7. Power of Attorney.
-----------------
7.1 Pledgor does hereby irrevocably constitute and appoint Pledgee its
true and lawful attorney, with full power of substitution, for them and in their
name, place and stead, to ask, demand, collect, receive, receipt for, sue for,
compound and give acquittance for any and all sums or
3
<PAGE>
properties which may be or become due, payable or distributable on or in respect
of the Collateral or which constitute a part thereof, with full power to settle,
adjust or compromise any claim thereunder or therefor as fully as Pledgor could
themselves do, and to endorse or sign the names of Pledgor on all commercial
paper given in payment or in part payment thereof and on all documents of
satisfaction, discharge or receipt required or requested in connection
therewith, and in its discretion, to file any claim or take any other action or
proceeding, either in its own name or in the names of Pledgor, or otherwise,
which Pledgee may deem necessary or appropriate to collect or otherwise realize
upon any and all of the Collateral, or effect a transfer thereof, or which may
be necessary or appropriate to protect and preserve the right, title and
interest of Pledgee in and to such Collateral and the security intended to be
afforded hereby. Pledgee shall not exercise its rights under this Section 7
unless and until there exists an Event of Default.
8. Consent.
-------
8.1 Pledgor hereby consents that, from time-to-time, before or after the
occurrence or existence of an Event of Default, with or without notice to or
assent from Pledgor, any other security at any time held by or available to
Pledgee for any of the Liabilities or any security at any time held by or
available to Pledgee for any obligation of any other person, firm or corporation
secondarily or otherwise liable for any of the Liabilities, may be changed,
altered, renewed, extended, continued, surrendered, compromised, waived or
released, in whole or in part, as Pledgee may see fit, and Pledgor shall remain
bound under this Pledge Agreement notwithstanding any such exchange, surrender,
release, alteration, renewal, extension, continuance, compromise, waiver or
inaction, extension of further credit or other dealing.
9. Remedies.
--------
9.1 Upon the occurrence or existence of an Event of Default, Pledgee shall
have, in addition to any other rights given by law or hereunder, all of the
rights and remedies with respect to the Collateral of a secured party under the
Uniform Commercial Code in effect in the State of Colorado. In addition, with
respect to the Collateral, or any part thereof, which shall then be or shall
thereafter come into the possession or custody of Pledgee. Pledgee may in its
sole discretion, without notice except as specified below, 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 Pledgee may deem best, and for cash
or on credit or for future delivery, without assumption of any credit risk, and
the purchaser of any or all of the Collateral so sold shall thereafter hold the
same, absolutely free from any claim, encumbrance or right of any kind
whatsoever. Pledgee may, in its own name, or in the name of a designee or
nominee, buy the Collateral at any public sale, and if permitted by applicable
law, buy the Collateral at any private sale. Pledgor hereby waives all of its
rights or redemption from any sale or other disposition of the Collateral.
Pledgor will pay to Pledgee all expenses (including, without limitation, court
costs and reasonable attorneys' and paralegals' fees and expenses) of, or
incident to, the enforcement of any provisions hereof. Neither Pledgee nor any
party acting as its attorney, shall be liable for any acts or omissions or for
any error of judgment or mistake of fact or law other than their gross
negligence or willful misconduct. Pledgee agrees to return to Pledgor any
proceeds of the sale of the Collateral that exceed the then outstanding balance
of the Liabilities and the expenses described above. Pledgor shall be liable
for any deficiency following the sale of the Collateral.
4
<PAGE>
9.2 Unless any of the Collateral threatens to decline speedily in value or
is or becomes of a type sold on a recognized market. Pledgee will give 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 Collateral conducted in conformity with reasonable commercial
practices of banks, commercial finance companies, insurance companies or other
financial institution disposing of property similar to the Collateral shall be
deemed to be commercially reasonable. Notwithstanding any provisions to be
contrary contained herein any requirements of reasonable notice shall be met if
such notice is received by Pledgor as provided in Section 21 below, at least
five (5) days before the time of the sale or disposition. Any other requirement
of notice, demand or advertisement for sale is, to the extent permitted by law,
waived.
9.3 In view of the fact that federal and state security laws may impose
certain restrictions on the method by which a sale of the Collateral may be
effected after an Event of Default, Pledgor agrees that, upon the occurrence or
existence of an Event of Default, Pledgee may, from time-to-time, attempt to
sell all or any part of the Collateral by means of a private placement
restricting the bidder and prospective purchasers to those who will represent
and agree that they are purchasing for investment only and not for distribution.
In so doing, Pledgee may solicit offers to buy the Collateral, or any part of
it, for cash, from a limited number of investors deemed by Pledgee, in its
reasonable judgment, to be respectable parties who might be interested in
purchasing the Collateral, and if Pledgee solicits such offers from not less
than two (2) such investors, then the acceptance by Pledgee of the highest offer
obtained therefrom shall be deemed to be a commercially reasonable method of
disposition of such Collateral.
9.4 Notwithstanding anything to the contrary in this Pledge Agreement, any
transfer of the Units will be subject to licensing and other regulatory review
and approval requirements and procedures of any Regulatory Authority (as defined
in Section 7.1 of the Agreement).
10. Security Interest, etc.
-----------------------
10.1 The Pledge and security interests herein created and provided for
stand as direct and primary security for all of the Liabilities. No application
of any sums received by Pledgee in respect of the Collateral or any disposition
thereof to the reduction of the Liabilities or any part thereof shall in any
manner entitle Pledgor to any right, title or interest in or to the Liabilities
of any Collateral security therefor unless and until all Liabilities have been
fully paid and satisfied. Pledgor acknowledges and agrees that the pledge and
security interest hereby created are absolute and unconditional and shall not in
any manner be effected or impaired by any acts or omissions whatsoever of
Pledgee or any other holder of any of the Liabilities, and without limiting the
generality of the foregoing, the pledge and security hereof shall not be
impaired by acceptance by Pledgee or any other holder of any of the Liabilities
of any other security for guarantors upon any of the Liabilities or by any
failure, neglect or omission on the part of Pledgee or any other holder of any
of the Liabilities, or of any Collateral security therefor; The Pledge and
security hereof shall not in any manner be impaired or affected by (and,
Pledgee, without notice to any one is hereby authorized to make from
time-to-time) any sale, pledge, surrender, compromise, settlement, release,
renewal, extension, indulgence, alteration, substitution, exchange, change in,
modification or disposition of any of the Liabilities, or of any collateral
security
5
<PAGE>
therefor, or of any guaranty thereof, or of any loan agreement executed in
connection herewith.
11. Waivers and Consents.
--------------------
11.1 Upon the occurrence or existence of an Event of Default, Pledgee may
enforce this Pledge Agreement independently or any other remedy or security
Pledgee at any time may have or hold in connection with the Liabilities, and
shall not be necessary for Pledgee to marshal assets in favor of Pledgor or any
other person or entity or to proceed upon or against and/or exhaust any other
security or remedy before proceeding to enforce this Pledge Agreement. Pledgor
expressly waives any right to require Pledgee to marshall assets in favor of
Pledgor or any other person or entity or to proceed against any other person or
entity or any Collateral provided by any other person or entity, and agrees that
Pledgee may proceed against Pledgor and/or any other person or entity and/or the
Collateral in such order as it shall determine in its sole and absolute
direction. Pledgee may file a separate action or separate actions against
Pledgor, whether brought or prosecuted with respect to any other security or
against any other person or entity, or whether any other person or entity is
joined in any such action or actions, Pledgor agrees that Pledgee, and any
Affiliate of Pledgee, and Pledgor, and any Affiliate of Pledgor, may deal with
each other in connection with the Liabilities, or otherwise, or alter any
contracts or Agreements now or hereafter existing between any of them, in any
manner whatsoever, all without in any way altering or affecting the Liens
created or granted herein. Pledgee's rights hereunder shall be reinstated and
revived, and the enforceability under this Pledge Agreement. Pledgor expressly
waives the benefit of an statute(s) of limitations affecting its liability
hereunder or the enforcement of the Liabilities, or any Liens created or granted
herein. Pledgee's rights hereunder shall be required to be restored or returned
by Pledgee (whether as a "voidable preference", "fraudulent conveyance" or
otherwise) upon the bankruptcy, insolvency or reorganization of Pledgor, or
otherwise, all as though such amount had not been paid. The Liens created or
granted herein and the enforceability of this Pledge Agreement at all times
shall remain effective to secure the full amount of all the Liabilities even
though the Liabilities including any part thereof or any other security or
---------
guaranty thereof, may be or hereafter may become invalid or otherwise
unenforceable as against Pledgor and whether or not Pledgor shall have any
personal liability with respect thereto. Pledgor expressly waives any and all
of the following defenses now or hereafter arising or asserted by reason of (a)
any disability or other defense of Pledgor with respect to the Liabilities, (b)
the unenforceability or invalidity of any security or guaranty for the
Liabilities or the lack of perfection or continuing perfection or failure of
priority of any security for the Liabilities, (c) any failure of Pledgee to
marshal assets in favor of Pledgor or any other person or entity (except
Pledgor) in connection with any sale or disposition of Collateral, (d) any
failure of Pledgee to give notice of sale or other disposition of Collateral to
any person or entity (except Pledgor) or any defect in any notice that may be
given to any person or entity (except Pledgor) in connection with any sale or
disposition of Collateral, (e) any failure of Pledgee to comply with applicable
laws in connection with the sale or other disposition of any Collateral or other
security for any Liabilities, including without limitation, any failure of
---------
Pledgee to conduct a commercially reasonable sale of other disposition of any
Collateral or other security for any Liability, (f) any act or omission of
Pledgee or others that directly or indirectly results in or aids the discharge
or release of any portion of the Liabilities or any other security or guaranty
therefor by operation of law or otherwise, except any act of gross negligence
which Pledgee is determined by the judgement of a court of competent
jurisdiction (sustained on appeal, if any) to have committed, (g) any failure of
Pledgee to file or enforce a claim in any bankruptcy or other proceeding with
respect to any person
6
<PAGE>
or entity, (h) the election by Pledgee, in any bankruptcy proceeding of any
person or entity of the application or non-application of Section 1111(b)(2) of
the United States Bankruptcy Code, (i) any extension of credit or the grant of
any Lien under Section 364 of the United States Bankruptcy Code, (j) any use of
cash Collateral under Section 363 of the United States Bankruptcy Code, (k) any
agreement or stipulation with respect to the provision of adequate protection in
any bankruptcy proceeding of any person or entity, (1) the avoidance of any Lien
in favor of Pledgee for any reason, (m) any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, liquidation or dissolution
proceeding commenced by or against any person or entirety, including any
---------
discharge of, or bar or stay against collecting, all or any of the Liabilities
(or any interest thereon) in or as a result of any such proceeding, or (n) any
action taken by Pledgee that is authorized by this Section 11 or any other
provision of this Pledge Agreement or the Note. Pledgor expressly waives all
presentments, demands for payment or performance, notices of nonpayment or
nonperformance, protests, notices of protest, notices of dishonor and all other
notices or demands of any kind or nature whatsoever with respect to the
Liabilities, and all notices of acceptance of this Pledge Agreement or of the
existence, creation or incurring of new or additional Liabilities.
12. Waiver of Rights of Subrogation.
-------------------------------
12.1 Notwithstanding anything to the contrary elsewhere contained herein,
the Agreement, the Note or in any other Collateral Document to which Pledgor is
a party, Pledgor hereby expressly waives with respect to Pledgor and its
successors and assigns (including any surety) and any other person or entity,
---------
any and all rights at law or in equity to subrogation, to reimbursement, to
exoneration, to contribution, to set off or to any other rights that could
accrue to a surety against a principal, to a guarantor against a marker or
obligor, to an accommodation party against the party accommodated, or to a
holder or transferee against a maker, and which Pledgor may have or hereafter
acquire against any person or entity in connection with or as a result of
Pledgor's execution, delivery and/or performance of this Pledge Agreement, or
any other documents to which Pledgor is a party. Pledgor expressly waives any
"claim" (as such term is defined in the United States Bankruptcy Code) of any
kind against Pledgee. Pledgor agrees that they shall not have or assert any such
rights against any person or entity (including any surety), either directly or
as an attempted setoff to any action commenced against Pledgor by Pledgee or any
other person or entity. Pledgor hereby acknowledges and agrees that this waiver
is intended to benefit Pledgee and shall not limit or otherwise affect Pledgor's
liability hereunder or the enforceability hereof.
13. Understanding With Respect to Waivers and Consents.
--------------------------------------------------
13.1 Pledgor warrants and agrees that each of the waivers and consents set
forth herein are made after consultation with legal counsel and with full
knowledge of their significance and consequences, with the understanding that
events giving rise to any defense or right waived may diminish, destroy or
otherwise adversely affect rights which Pledgor otherwise may have against
Pledgee or others or against the Collateral, and that, under the circumstances,
the waivers and consents herein given are reasonable and not contrary to public
policy or law. Such waivers and consents shall be effective to the maximum
extent permitted by law.
14. Term.
----
7
<PAGE>
14.1 This pledge Agreement shall remain in full force and effect until all
the Liabilities have been fully paid and satisfied. This Pledge Agreement shall
remain in full force and effect and continue to be effective should any petition
be filed by or against Pledgor for liquidation or reorganization, should Pledgor
become insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of Pledgor's
assets, and shall continue to be effective or be reinstated, as the case may be,
if any time payment and performance of the Liabilities, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount or must otherwise be
restored or returned by any obligee of the Liabilities, whether as a "voidable
preference," "fraudulent conveyance," or otherwise, all as though such payment
or performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Liabilities shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned. Upon the termination of the Pledge Agreement as
provided above (other than as a result of the sale of the Collateral), Pledgee
will release the security interest and Lien created hereunder and will deliver
the Collateral to Pledgor.
15. Covenants.
---------
15.1 Pledgor shall comply with all of its covenants in the Agreement,
which covenants are hereby incorporated herein by reference.
16. Terms.
-----
16.1 The singular shall include plural and vice versa and any gender shall
include any other gender as the text shall indicate.
17. Successor and Assigns.
---------------------
17.1 This Pledge Agreement shall be binding upon and inure to the benefit
of Pledgor, Pledgee and their respective successor and assigns. Pledgor's
successors and assigns shall include, without limitation, a receiver, trustee to
debtor in possession of or for the Pledgor. Without limiting the generality of
the foregoing, Pledgee may assign or otherwise transfer its rights to receive
payment or performance of the Liabilities (or any part thereof) to any other
person or entity, and such other person or entity shall thereupon become vested
with all of the rights in respect thereof granted to Pledgee herein or
otherwise. Pledgor hereby releases Pledgee and its agents from any liability for
any act or omission relating to the Collateral or this Pledge Agreement except
the gross negligence or willful misconduct of Pledgee.
18. Applicable Law.
--------------
18.1 This Pledge Agreement shall be governed by and construed under the
internal laws (as opposed to conflict of laws provisions) of the State of
Colorado. Whenever possible, each provision of this Pledge Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but, if any provision of this Pledge Agreement shall be held to be prohibited by
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 Pledge Agreement.
8
<PAGE>
19. Further Assurances.
-------------------
19.1 Pledgor agrees that it will cooperate with Pledgee 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 action,
including, without limitation, the filling of financing statements, as Pledgee
may reasonable request from time-to-time in order to carry out the provisions
and purposes hereof.
20. Obligation.
-----------
20.1 Pledgee shall be under no obligation to take any steps necessary to
preserve rights in the Collateral against any other parties but may do so at its
option, and all expenses incurred in connection therewith shall be for the sole
account of Pledgor.
21. Notices.
--------
21.1 All notices and other communications provided for hereunder shall be
in writing (including telegraphic communication) and mailed or telegraphed,
telecopied or delivered,
if to Pledgor, at:
Blackhawk Gold, Ltd.
c/o H. Thomas Winn
3040 Post Oak Boulevard
Suite 675
Houston, TX 77056
if to Pledgee, at:
Casino America of Colorado, Inc.
711 Washington Loop
Biloxi, MS 39530
with a copy to:
Allan B. Solomon, Esq.
2200 Corporate Boulevard, N.W.
Suite 310
Boca Raton, FL 33431
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) three (3) days following
deposit in the United States mail, with proper postage prepaid; (ii) upon
delivery thereof if delivered by hand to the party to be notified as set forth
above; or (iii) upon acknowledgment of receipt thereof if transmitted to a valid
telecopier number for the party to
9
<PAGE>
be notified as set forth above.
22. Section Headings.
-----------------
22.1 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.
23. Miscellaneous.
--------------
23.1 No failure or delay on the part of Pledgee in the exercise of any
power or right, and no course of dealing between Pledgor and Pledgee shall
operate as a waiver of such power or right, nor shall any single or partial
exercise of any power or right preclude any further to other exercise thereof of
the exercise of any other power or right. The remedies provided for herein are
cumulative and not exclusive of any remedies which may be available to Pledgee
at law or in equity. Any waiver of any provision of this Pledge Agreement, and
any consent to any departure by provision of this Pledge Agreement, and any
consent to any departure by the Pledgor from the terms of any provision of this
Pledge Agreement, shall be effective only in the specific instance and for the
specific purpose for which given.
IN WITNESS WHEREOF, Pledgor has executed and delivered this Pledge
Agreement as of the date first written above.
Pledgor:
Blackhawk Gold, Ltd.
By:
-----------------------------------
H. Thomas Winn
AGREED TO AND ACCEPTED BY:
Casino America of Colorado, Inc.
By:
------------------------------
10
<PAGE>
EXHIBIT "C"
Initial Capital Contributions of BG
1. Those portions of the properties which are set forth in blue on the
boundary survey of Clear Mountain Surveying, Inc., dated August 26,
1996, under Job No. E209600, a true and correct copy of which is
attached hereto and made a part hereof by reference, excluding the land
commonly referred to as "Parcel C"; and,
2. That portion of the properties which is set forth in brown on the
attached survey and which is commonly known as "Parcel D", which the
parties acknowledge will be exchanged on or prior to the Transfer Date
for that portion of the properties on the attached survey which is set
forth in blue and white stripes and which is commonly known as "Parcel
E2".
Subject to the following encumbrances:
A. A $350,000.00 lien created by that certain Deed of Trust dated May 11,
1995 in favor of River Oaks Trust Company on behalf of certain note
holders; and,
B. The requirements of the United Stated Environmental Protection Agency as
set forth in that certain Administrative Order on Consent dated June 6,
1995,
which encumbrances are subject to the provisions of Section 4.1[a] of the
Operating Agreement.
The parties may substitute the attached survey with a more current survey
setting forth metes and bounds.
<PAGE>
EXHIBIT D
Management Agreement
<PAGE>
AMENDED AND RESTATED MANAGEMENT AGREEMENT
This AMENDED AND RESTATED MANAGEMENT AGREEMENT (the "Management
Agreement"), dated as of this 29th day of July, 1997, is by and between CASINO
AMERICA, INC., a Delaware corporation ("Manager"), and ISLE OF CAPRI BLACK HAWK,
LLC, a Colorado limited liability company ("Owner") and is effective as of the
Closing Date, as defined in the Amended and Restated Operating Agreement of the
Owner of even date.
RECITALS:
--------
A. Owner proposes to acquire, construct, develop and equip a Casino
Facility including a casino, restaurant and a hotel in Black Hawk, Colorado.
B. Owner desires to have Manager manage the business operations of its
Casino Facility and Manager desires to manage Owner's Casino Facility, all upon
the terms and conditions of this Agreement.
C. Owner and Manager executed a Management Agreement, dated as of April
25, 1997, and wish by this Agreement to amend and restate the Management
Agreement dated as of April 25, 1997.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, Owner and Manager agree as follows:
1. DEFINITIONS AND REFERENCES.
--------------------------
1.1 Definitions. As used herein, the following terms shall have the
-----------
respective meanings indicated below:
(a) Annual Plan - The Annual Plan to be prepared by Manager and approved
by Owner in accordance with the provisions of Section 6.2 hereof.
(b) Casino Facility - The Casino Facility to be owned by Owner and
operated in Black Hawk, Colorado by Manager. The Casino Facility may have
gaming, hotel rooms, parking, food and beverage, gift shop and entertainment
together with related activities.
(c) Commencement Date - The date upon which Owner first opens the Casino
Facility to the public for business, which date shall be confirmed in writing by
Owner and Manager.
<PAGE>
(d) Compensation - The direct salaries and wages paid to, or accrued for
the benefit of, any executive or other employee, including, without limitation,
employer's contributions under F.I.C.A., unemployment compensation or other
employment taxes, pension fund contributions, Worker's Compensation, group life,
accident, health and other insurance premiums, profit sharing, and retirement
plans, disability and other similar benefits.
(e) Operating Agreement - That certain Amended and Restated Operating
Agreement of Owner dated as of even date herewith by and between Casino America
of Colorado, Inc. and Blackhawk Gold, Ltd.
2. SCOPE OF AGREEMENT, RESPONSIBILITIES.
------------------------------------
2.1 Authority of Owner. Owner shall determine the general policy with
------------------
respect to the management of its Casino Facility and shall have all other
decision making powers customarily afforded to an owner of a casino/hotel
facility, as well as any additional powers reserved to Owner hereunder.
2.2 Authority of Manager. Subject to the foregoing general authority of
--------------------
Owner, and subject to the terms of this Management Agreement, Manager shall have
the authority to exclusively supervise and direct the management and operation
of the day-to-day activities of the Casino Facility for the account of Owner.
Manager shall have the authority and responsibility (i) to determine operating
policy, standards of operation, quality of service, the maintenance and physical
appearance of the Casino Facility and any other matters affecting operations and
maintenance; (ii) to supervise and direct all phases of advertising, sales and
business promotion for the Casino Facility; and (iii) to carry out all programs
contemplated by the Annual Plan. Owner agrees that it will cooperate with
Manager in every reasonable and proper way to permit and assist Manager to carry
out its duties hereunder and comply with any conditions or restrictions, if any,
placed upon Manager by any gaming authority.
2.3 Duties and Obligations of Manager. Manager shall take all actions
---------------------------------
which may, in its sole discretion, be reasonably necessary or appropriate in
connection with the authority granted to it in accordance with the provisions of
this Management Agreement. Manager shall devote to its responsibilities such
time as may be reasonably necessary for the proper performance of all duties
hereunder. The standard of performance by Manager in managing the Casino
Facility shall be measured by commercial standards of reasonableness in the
industry consistent with good business practices and policies. An organizational
chart detailing the supervisory and management positions and all other employees
of the Manager will be provided by Manager to Owner.
2.4 Consultation with Owner. Notwithstanding the foregoing, Manager
-----------------------
shall at all times keep Owner reasonably apprised and aware of all operating
policies. Manager agrees to
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consult with Owner as frequently as Owner shall reasonably request to review
operating policies and other matters referred to herein. Owner shall, at all
times, have the right to enter the Casino Facility for the purpose of inspecting
same and reviewing the operations. Owner agrees that it and its representatives
will, at no time, act in a manner which is inconsistent with the authority
granted to Manager.
3. LICENSING. Other than as set forth in the Operating Agreement, Owner and
---------
Manager shall apply for and maintain at Owner's expense any and all licenses and
approvals required in order to implement the provisions of this Management
Agreement. The performance of any services pursuant to this Management Agreement
that require any such licenses and approvals is contingent upon the receipt of
all such licenses and approvals.
4. TERM. The term of this Management Agreement shall continue until December
----
31, 2096, unless sooner terminated as hereinafter set forth.
5. PRE-COMMENCEMENT DATE RESPONSIBILITIES.
--------------------------------------
5.1 Owner's Responsibilities. Owner, without cost or expense to Manager,
------------------------
shall design, acquire, construct and equip the Casino Facility. All expenses and
fees incident thereto shall be paid by Owner.
5.2 Manager's Responsibilities. From the date of this Management
--------------------------
Agreement to the Commencement Date, Manager shall be available to consult with
Owner in designing, acquiring, constructing and equipping all assets to be used
by Owner in the operation of the Casino Facility. Manager shall, at Owner's
expense and with Owner's approval, also be responsible for the development and
implementation of all pre-opening activities.
6. OPERATION OF THE BUSINESS.
-------------------------
6.1 Permits. Manager and Owner shall timely apply for, obtain and
-------
maintain all licenses and permits required to operate the business (other then
gaming authority permits, licenses and approvals required to be obtained by
parties other than owner or Manager), at Owner's expense.
6.2 Annual Plan.
-----------
6.2.1 Preparation. With such cooperation and assistance of
-----------
Owner as Manager may request, Manager shall prepare for Owner's review and
approval not less than thirty (30) days in advance of each fiscal year, an
Annual Plan for approval by Owner, which shall include:
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<PAGE>
(a) a forecast comprised of estimated income and expenses by month
for the coming fiscal year;
(b) an estimated cash flow projection by month, and an estimate as
to the amount of funds needed for working capital requirements;
(c) a budget covering estimated expenditures for capital
improvements;
(d) an annual marketing plan; and
(e) an organizational chart of Owner, as of the date of the Annual
Plan, listing all employees' names, positions and compensation
(including key employees whether employees of Owner or charged
to Owner).
Manager shall not be deemed to have made any guarantee or warranty in connection
with the results of operations or performance set forth in the Annual Plan since
the parties acknowledge that the Annual Plan is intended to set forth objectives
and goals based upon Manager's best judgment of the facts and circumstances
known by Manager at the time of preparation.
6.2.2 Owner's Review and Approval. The Annual Plan will be subject
---------------------------
to the approval of Owner, which approval will not be unreasonably withheld or
delayed. Owner shall approve or disapprove the Annual Plan within twenty (20)
days after submission to Owner. If Owner fails to provide written notice to
Manager of any specific objections to a proposed Annual Plan within such twenty
(20)-day period, such Annual Plan shall be deemed to have been approved by Owner
as submitted. In the event Owner disapproves or raises any objections to the
proposed Annual Plan or any revisions thereto, Owner and Manager agree to
cooperate with each other in good faith to resolve the dispute. Owner agrees,
consistent with the Annual Plan, to provide the funds necessary to operate the
Casino Facility.
6.2.3 Compliance. Manager shall use all reasonable efforts to
----------
comply with the Annual Plan and shall not deviate in any substantial respect
therefrom. In the event Manager encounters circumstances which require
unexpected expenditures not foreseen at the time of preparation of the Annual
Plan and which Manager deems reasonably necessary, Manager may without Owner's
approval, make or cause to be made on account of Owner, any expenditures,
provided, however, that no such expenditures shall be made in violation of the
applicable provisions of the Operating Agreement. Manager, without Owner's
approval, on a monthly basis with full reporting to Owner, shall be entitled to
increase the total expenses budgeted within the Annual Plan by a percentage
approved by Owner to cover any expenditures chat were underestimated at the time
the Annual Plan was prepared and that are reasonably necessary in Manager's sole
discretion, to carry out the provisions of this Agreement. Owner and Manager
agree to cooperate with each other in good faith in resolving disputes. Policy
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<PAGE>
changes not anticipated in the Annual Plan shall be submitted to Owner for
approval, which approval shall not be unreasonably delayed or withheld.
6.2.4 Specific Matters. The description of specific matters
----------------
hereinafter stated are in every respect subject to the prior approval of Owner
as part of its approval of the Annual Plan.
6.3 Personnel.
---------
6.3.1 General. Manager, for the account of Owner, shall hire,
-------
supervise, direct, discharge and determine terms of employment of all personnel
working for the Casino Facility. An organizational chart detailing the specific
type of personnel and functions shall be provided to Owner by Manager. The
determination of Compensation for all employees shall be part of the Annual Plan
approved by Owner.
6.3.2 Key Employees. The key employees may include, but are not
-------------
limited to, the general manager, director of gaming, director of food, beverage
and entertainment, director of marketing and director of finance and may, at the
option of Manager and with prior approval of Owner, be employees of Manager.
Owner shall reimburse Manager for the Compensation of such employees working for
the Casino Facility or primarily on behalf of Owner in connection with the
Casino Facility.
6.3.3 Personnel Expenses and Compensation. Subject to the above, it
-----------------------------------
is expressly understood and agreed that all other personnel of Owner are in the
sole employ of Owner.
6.3.4 Professional and Other Specialists. Manager shall have the
----------------------------------
right to retain legal counsel and such other professionals, consultants and
specialists as Manager deems necessary or appropriate in connection with the
operation of the Casino Facility. The selection of all professional firms shall
be subject to Owner's prior approval.
6.4 Sales, Marketing and Advertising. Manager shall advertise and
--------------------------------
promote the Casino Facility for Owner's account and shall institute and
supervise a sales and marketing program. Manager, in its sole discretion, may
cause participation in sales and promotional campaigns and activities Involving
complimentary passage, food and beverages to travel agents, tourist officials
and airline representatives.
6.5 Other Services Provided by Manager. Other services, such as data
----------------------------------
processing, reservation system, internal audit, etc. may be provided by Manager
to Owner at an additional cost on a commercially reasonable basis, or may be
contracted for separately.
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<PAGE>
6.6 Maintenance and Repair. Owner shall be responsible for maintaining
----------------------
the property utilized is the business in good repair and condition. To
implement Owner's responsibility, Manager shall, on behalf of Owner, and at
Owner's expense, make or cause to be made, all repairs, replacements,
corrections and maintenance items as shall be required in the normal and
ordinary course of operation of the business.
6.7 Capital Expenditures. Owner recognizes the necessity of capital
--------------------
improvements and shall expend such amount for capital improvements as shall be
required in the normal and ordinary course of operation of the business in
conformity with the amounts approved as part of the Annual Plan.
6.8 Reimbursement. In addition to the Compensation provided for in
-------------
Section 9 of this Management Agreement, Manager shall be entitled to be
reimbursed for the actual reasonable travel and entertainment expenses of all
officers and employees of Manager incurred in performing its duties hereunder in
connection with any phase of the operation of the Casino Facility. In addition,
if employees of Manager on a specific assignment for the benefit of the Casino
Facility are in a position that would otherwise be filled by an employee of
Owner, then Manager shall be entitled to be reimbursed by Owner for the
Compensation payable to such employees while working for the Casino Facility.
However, Manager shall not be entitled to reimbursement for (i) any cost,
expense, liability or obligation deemed a contribution to the capital of Owner
under Section 3.1[b] of the Members Agreement of even date among Manager, Nevada
Gold & Casinos, Inc., Casino America of Colorado, Inc. and Blackhawk Gold, Ltd.
or (ii) the compensation of any other employee unless otherwise provided in this
Management Agreement. Manager shall be entitled to all reimbursements authorized
under this Section 6.8, or under any other provision of this Agreement, provided
that, (i) no such reimbursement shall exceed the actual costs incurred by
Manager or, if such costs are not determinable, the fair market value of items
for which reimbursement is sought and (ii) all such reimbursements shall be made
in a manner which is consistent with the provision of the Annual Plan or as
otherwise agreed with Owner.
7. FISCAL MATTERS.
--------------
7.1 Accounting Matters and Fiscal Periods.
--------------------------------------
7.1.1 Books and Records. Manager shall maintain, or cause to be
-----------------
maintained, at Owner's expense, full and complete books of account and such
other records as are necessary to reflect the operating results of the Casino
Facility. Manager shall also prepare and file for Owner, at Owner's expense, all
informational and/or tax returns which may be required by any governmental
authority.
7.1.2 Reports to Owner. Manager, at Owner's expense, shall deliver
----------------
or cause to be delivered to Owner, monthly financial statements, which shall
include a statement of
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<PAGE>
cash flows, and monthly comparison of operational income and expenses versus the
Annual Plan.
7.1.3 Owner's Right to Audit. Owner and the individual members of
----------------------
the limited liability company reserve the right upon reasonable prior notice, to
perform any and all additional audit procedures relating to the business where
accounting books and records are kept.
7.2 Bank Account. All bank accounts for the Casino Facility shall
------------
be in the name of Manager, as agent for Owner. Owner and Manager shall agree on
the procedures for withdrawals and deposits of funds. Manager shall have the
right to designate individuals to disburse funds from the business bank accounts
to pay all costs and expenses of managing, operating and maintaining the
business and its properties, including authorized capital expenditures and
management fees due to Manager. Owner agrees that at all times during the term
of this Management Agreement, a bank balance as approved in the Annual Plan
shall be maintained in an amount necessary to provide sufficient working capital
to assure the uninterrupted and efficient operation of the business. Excess
funds shall be disbursed to Owner.
8. TITLE, OTHER MATTERS.
---------------------
8.1 Covenant of Title. Owner shall enable Manager to peaceably and
-----------------
quietly operate the business in accordance with the terms of this Management
Agreement.
8.2 Proprietary Information. All specifically identifiable information
-----------------------
developed by Manager for Owner shall be the property of both Manager and Owner.
All existing information of Manager previously developed by Manager at Manager's
expense, including, without limitation, all customer lists, gaming and marketing
strategies and other similar information, shall be the property of Manager and
not Owner and neither Owner nor any of its affiliates or successors may use such
proprietary information without the consent of Manager, which consent shall not
be unreasonably withheld. The parties agree that Proprietary Information does
not include information which is clearly available in the public domain.
8.3 Outside Activities of Parties. This Management Agreement shall be
-----------------------------
limited to the purposes set forth herein and nothing in this Management
Agreement, whether by implication or otherwise, shall be construed to extend the
relationship of the parties beyond such purposes. Each party acknowledges that
the other party and their respective affiliates are or may hereafter become
interested, directly or indirectly, by ownership, contract, agency or otherwise,
in business opportunities which are not within the purpose of this Management
Agreement and which may compete with or otherwise affect all or some aspects of
the Casino
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<PAGE>
Facility. However, both parties agree that they will not compete in any gaming
activities in Gilpin County, Colorado during the Term except as permitted under
the Operating Agreement.
9. COMPENSATION OF MANAGER.
-----------------------
9.1 In consideration for the services to be performed by Manager after the
Commencement Date, Manager shall be entitled to an annual management fee equal
to two percent (2%) of Revenues (as defined below), plus ten percent (10%) of
Operating Income (as defined below), but such fee shall not, in the aggregate,
exceed four percent (4.0%) of Revenues.
(a) Revenues means all revenues, less sales tax on such revenues,
determined on an annual basis received from the following sources: (i) gross
gaming receipts from the Casino Facility, less 50% of applicable gaming and
admission taxes from the operation of gaming in the Casino Facility; (ii) hotel
operations; (iii) food and beverage operations; (iv) all parking fees; (v)
all revenues generated from gift shops and arcades; (vi) other revenues, fees
and income, which are attributable to the operation of the Casino Facility.
Revenues derived from non-operating activities, such as the sale of capital
assets are excluded from the definition of Revenues.
(b) Operating Income means the income of the Casino Facility before
any management fee paid to Manager, distributions to Members of Owner, interest,
depreciation, amortization and write-off or start-up and pre-opening type
expenses and income taxes.
(c) The fee shall become due and payable ten(10) days after the end
of each month based upon the revenues and Operating Income for the previous
month. Payment of such compensation may be paid to Manager by withholding
Revenues it has received for Owner's account; provided, however, that the fee
shall be accrued as a liability and not paid to the extent that Owner has not
generated sufficient cash flow to pay such fee. For these purposes, cash flow
shall be determined before capital expenditures and distributions to Members of
Owner.
10. INSURANCE.
---------
10.1 Coverage. Owner, for the benefit of both Owner and Manager, shall
--------
maintain adequate insurance during the term of this Agreement. The type and
amount of coverage shall be approved by Owner.
10.2 Policies and Endorsements.
-------------------------
10.2.1 Policies. All insurance coverage provided for hereunder shall
--------
be effected by policies issued by insurance companies with sound and adequate
financial
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<PAGE>
responsibility, or by self-insurance programs of either Manager or Owner.
Either party shall be entitled to object to an insurance company. Owner shall
deliver to the Manager duplicate copies of the insurance policies or
certificates of insurance with respect to all of the policies of insurance so
procured, including existing, additional and renewal policies, and in the case
of insurance about to expire, shall deliver duplicate copies of the insurance
policies or insurance certificates with respect to the renewal policies to the
other party not less than thirty (30) days prior to the respective dates of
expiration.
10.2.2 Endorsement. All insurance shall, to the extent obtainable,
-----------
have attached thereto;
(a) an endorsement that such policy shall not be canceled or
materially changed without at least thirty (30) days' prior written notice to
Owner and Manager; and
(b) an endorsement to the effect that no act or omission of Owner
or Manager shall affect the obligation of the insurer to pay the full amount of
any loss sustained.
(c) Owner and its members shall be named as additional insureds on
all policies.
10.2.3 Named Insureds. All policies of insurance shall be carried in
--------------
the name of Owner and Manager. All liability policies shall name Owner and
Manager, and their respective members, managers, directors, officers, agents and
employees, as additional insureds.
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<PAGE>
11. Indemnification.
---------------
11.1 Indemnification. Manager agrees to indemnify and hold Owner free and
---------------
harmless from any loss, liability, claim, demand, legal proceeding or cost
(including attorneys' fees, costs, expenses and other charges) which is not
covered by insurance proceeds and which Owner may sustain, incur or assume as a
result of any allegation, claim, civil or criminal action, proceeding, charge or
prosecution (collectively "Claims") which may be alleged, made, instituted or
maintained against Manager or Owner, jointly or severally, to the extent arising
out of or based upon (a) Claims by the employees of the Manager (including
without limitation injury or compensation Claims); (b) the performance or
non-performance of the Management Agreement by Manager, its agents or employees;
or (c) the acts or failure to act of Manager, its employees or agents in a
manner consistent with the standards set forth in Section 2.3 above.
Notwithstanding the foregoing, Manager shall not be liable to indemnify and hold
Owner harmless to the extent of any such loss, liability or cost which (i)
results from the negligence of Owner, its agents (other than Manager) or
employees or (ii) consists of consequential or punitive damages (including any
such damages asserted by a third party). Nothing contained in this Section 11
or this Agreement shall constitute a guaranty or commitment by the Manager of
the operating results or business prospects of the Casino Facility.
11.2 Related Matters.
---------------
11.2.1 Legal Fees, Etc., Procedures. Manager shall reimburse Owner
----------------------------
for any legal fees and costs, including attorney's fees and other litigation
expenses, incurred by Owner in respect to which indemnity is granted hereunder.
If Claims are asserted or threatened, or if any action or suit is commenced or
threatened with respect thereto, for which indemnity may be sought against
Manager hereunder, Owner shall notify Manager in writing within thirty (30) days
after Owner shall have had actual knowledge of the threat, assertion or
commencement of the Claims, which notice shall specify in reasonable detail the
matter for which indemnity may be sought. Manager shall have the right, upon
notice to Owner given within thirty (30) days of its receipt of Owner's notice,
to take primary responsibility for the prosecution, defense or settlement of
such matter and payment of expenses in connection therewith. Owner shall
provide, without cost to Manager, all relevant records and information
reasonably required by Manager for such prosecution, defense or settlement and
shall cooperate with Manager to the fullest extent possible. Owner, at Owner's
sole cost and expense, shall have the right to employ its own counsel in any
such matter with respect to which Manager has elected to take primary
responsibility for prosecution, defense or settlement.
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<PAGE>
11.2.2 Indemnified Parties. The indemnities contained in this Section 11
-------------------
shall run to the benefit of both Owner and its affiliates, and its directors,
officers, shareholders and employees.
11.2.3 Survival. The provisions of this Section 11 shall survive any
--------
cancellation, termination or expiration of this Management Agreement and shall
remain in full force and effect until such time as the applicable statute of
limitation shall cut off all claims which are subject to the provisions of this
Section 11.
12. DAMAGE TO AND DESTRUCTION OF THE BUSINESS.
-----------------------------------------
12.1 Restoration. Provided that there are sufficient insurance proceeds, in
-----------
the event fire or other casualty shall damage or destroy the property used in
the Casino Facility, Owner shall be required to repair, restore or replace the
same to the extent as may be limited by insurance proceeds. If there are not
sufficient insurance proceeds and Owner no longer desires to operate the Casino
Facility, Manager shall have the option, exercisable within ninety (90) days of
such casualty, to obtain the license to operate the Casino Facility subject to
appropriate regulatory approval. Owner shall use its best efforts to assist
Manager in obtaining the license. In the event fire or other casualty shall
damage or destroy the Casino Facility, Owner shall have the choice of repairing,
restoring or replacing the same to the extent as may be limited by insurance
proceeds. If Owner determines that it is not in its best interest to restore
the Casino Facility, the Management Agreement will terminate.
13. DEFAULT AND TERMINATION.
-----------------------
13.1 Events of Default. It shall be an event of default hereunder (an
-----------------
"Event of Default") if Manager or Owner (the "Defaulting Party") as hereinafter
defined fails to keep, perform or observe any material covenant, obligation or
agreement required to be kept, performed or observed by such party under the
terms of this Management Agreement, followed by written notice of such breach,
default or non-compliance from the other party (the "Non-Defaulting Party" as
hereinafter defined) to the Defaulting Party and the Defaulting Party fails to
remedy or correct such breach, default or non-compliance within thirty (30) days
after receipt of such notice. If the breach, default or non-compliance is other
than payment of money and is of a nature such that it cannot reasonably be cured
within such thirty (30) day period, the period for curing the default shall be
extended so long as the Defaulting Party commences immediately and expediently
as possible to cure the breach, default or non-compliance within such thirty
(30) day period.
13.2 Termination.
-----------
13.2.1 General. If an Event of Default occurs and has not been cured,
-------
this Management Agreement shall terminate at the election of the Non-Defaulting
Party. Notice of
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<PAGE>
termination pursuant to this Section 13 may be given by the Non-Defaulting Party
to the Defaulting Party at any time prior to the curing of such Event of
Default, and such termination shall be effective as of the date specified in
such notice of termination, which date shall be not less than sixty (60) not
more than one hundred twenty (120) days after the date of such notice.
Notwithstanding the foregoing, if the Event of Default pertains to the payments
of money. Manager may cease the discharge of is responsibilities hereunder
effective upon the expiration of the thirty (30)-day notice referenced in
Section 13.1 hereof. Manager shall receive all funds due to it at the time of
Termination.
13.2.2 Termination. In addition to the foregoing, this
-----------
Management Agreement shall terminate upon any of the following events:
(a) The mutual agreement of the parties; or
(b) The inability of either party to receive or maintain the
licenses to perform their obligations hereunder; or
(c) Manager shall
(i) apply for or consent to the appointment of, or
taking possession by a receiver, custodian,
trustee, liquidator or other similar official of
all of its assets;
(ii) make a general assignment for the benefit of
creditors;
(iii) be adjudicated as bankrupt or insolvent or have an
order for relief entered with respect thereto; or
(iv) file a voluntary petition, commence a voluntary
case under the federal bankruptcy laws as now or
hereafter constituted or file a petition or an
answer seeking reorganization or any arrangement
with creditors or take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debts,
dissolution or liquidation law or statute.
13.2.3 Waiver. The waiver of any one Event of Default shall not
------
be construed as the waiver of any other Event of Default.
13.3 Remedies Cumulative. Except as herein provided to the contrary, the
-------------------
termination of this Management Agreement by the Non-Defaulting Party upon an
Event of Default shall be without damage, injunctions, specific performance
or other legal or equitable
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<PAGE>
remedies by reason of any breach, default or non-compliance by the Defaulting
Party with such Defaulting Party's covenants, obligations and agreements
hereunder. Except as to any disputes for which injunctive relief would be an
appropriate remedy, in the event a dispute of any kind arises in connection with
this Agreement (including any dispute concerning its construction, performance
or breach), the parties to the dispute will attempt to resolve the dispute as
set forth in Section 13.4 before proceeding to arbitration as provided in
Section 13.5. All documents, discovery and other information related to any such
dispute, and the attempts to resolve or arbitrate such dispute, will be kept
confidential to the fullest extent possible.
13.4 Negotiation. If a dispute arises, any party to the dispute will give
-----------
notice to each other party. If Owner is not a party to the dispute, notice will
be given to Owner. After notice has been given, the parties in good faith will
attempt to negotiate a resolution of the dispute.
13.5 Arbitration. If, within 30 days after the notice provided in Section
-----------
13.4, a dispute is not resolved through negotiation or mediation, the dispute
will be arbitrated. The parties to the dispute agree to be bound by the
selection of an arbitrator, and to settle the dispute exclusively by binding
arbitration in accordance with the following provisions:
(a) All parties to the dispute will collectively select one
arbitrator. If they fail to do so within 45 days after the notice provided in
Section 13.4, one or more parties will request the American Arbitration
Association to submit a panel of five arbitrators who are qualified to resolve
the matters in dispute from which the choice will be made. The party requesting
the arbitration will strike first, followed by alternative striking until one
name remains. A similar procedure will be followed if there are more than two
parties. The parties may by agreement reject one entire list, and request a
second list. If selection by the above method is not completed within 90 days
after the notice provided in Section 13.4, or if there are more than four
parties, then an arbitrator will be selected by the American Arbitration
Association. The arbitrator so selected will then arbitrate the dispute in
Denver, Colorado, and issue an award.
(b) To the extent consistent with the provisions of this Article,
the arbitration will be conducted under the Commercial Arbitration Rules of the
American Arbitration Association and in accordance with Colorado law. The
arbitrator's decision will be made pursuant to the relevant substantive law of
the State of Colorado. The award of the arbitrator will be final, binding and
non-appealable. Judgment on the award may be entered in any court, state or
federal, having jurisdiction.
(c) The fees and expenses of the arbitrator, and the other direct
costs of the arbitration, will be shared by the parties to the dispute in equal
proportions. Each party to the dispute will bear its other respective costs and
expenses. If one or more Members are
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<PAGE>
included in the arbitration because of their membership or former membership in
Owner, such group will collectively be treated as one party to the dispute
(through Owner as a party).
14. NOTICES.
-------
14.1 Notices. Every notice, demand, consent, approval or other document or
-------
instrument required or permitted to be served upon any of the parties hereto
shall be in writing and shall be deemed to have been duly served on the day of
mailing, and shall be sent by registered or certified United States Mail,
postage prepaid, return receipt requested, addressed to the respective parties
at the addresses stated below:
If to Manager: John M. Gallaway, President
or his designee Manager
711 Washington Loop
Biloxi, MS 39530
With copies thereof to the following:
Allan B. Solomon, Esq,
2200 Corporate Blvd. NW
Suite 310
Boca Raton, FL 33434
If to Owner: Isle of Capri Black Hawk L.L.C.
711 Washington Loop
Biloxi, MS 39530
Attention: John M. Gallaway
With copies thereof to the following:
H. Thomas Winn, President, or his designee,
Nevada Gold and Casinos, Inc.
3040 Post Oak Boulevard, Suite 675
Houston, TX 77056
or to such other address as either Manager or Owner may have specified in a
notice duly given as required herein to the other.
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<PAGE>
150 RELATIONSHIP, AUTHORITY AND FURTHER ACTIONS.
-------------------------------------------
15.1 Relationship. Manager and Owner shall not be construed as joint
------------
venturers or partners of each other by reason of this Management Agreement and
neither shall have the power to bind or obligate the other except as
specifically authorized and set forth in this Management Agreement.
Nevertheless, Manager is granted such authority and powers as may be reasonably
necessary for it to carry out the provisions of this Management Agreement. This
Management Agreement, either alone or in conjunction with any other documents,
shall not be deemed to constitute or create a lease of all or any portion of the
Casino Facility.
15.2 Contractual Authority. Subject to the limitations thereon set forth
---------------------
in this Management Agreement, and in conformity with the Annual Plan, Manager is
authorized to make, enter into and perform in the name of, for the account of,
on behalf of and at the expense of Owner any contracts and agreements
(including, nut not limited to bank accounts) which are reasonably necessary and
appropriate to carry out and place in effect the terms and conditions of this
Management Agreement. Copies of all executed contracts shall be immediately
conformed and furnished to Owner.
15.3 Further Actions. Owner and Manager agree to execute all contracts,
---------------
agreements and documents and take all actions necessary to comply with the
provisions of this Management Agreement and the intent hereof.
160 APPLICABLE LAW. This Management Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of Colorado. If any of the
terms and provisions hereof shall be held invalid or unenforceable for any
reason, such validity or unenforceability shall in no event affect any of the
other terms or provisions hereof, all such other terms and provisions to be held
valid and enforceable to the fullest extent permitted by law; provided, however,
that in the event any material part of Owner's obligations under this Management
Agreement shall be declared invalid or unenforceable, Manager shall have the
option to terminate this Management Agreement.
170 MISCELLANEOUS.
-------------
17.1 Successors and Assigns. Manager shall not assign the whole or any
----------------------
portion of this Management Agreement or any payments due Manager hereunder,
without the unanimous consent of the Members of Owner, which consent will not be
unreasonably withheld, except that Manager may make such an assignment, without
Owner's or the Members' consent, to a Permitted Transferee as defined in the
Operating Agreement. Owner shall not assign the whole or any portion of this
Agreement, except to an affiliate of Owner, without Manager's consent, except as
collateral for any financing obtained in connection with the development and/or
operation of the Casino Facility. If the Agreement is assigned to an affiliate
of Owner, Manager shall continue to be responsible under this agreement.
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<PAGE>
17.2 Force Majeure. If at any time it becomes necessary in Manager's or
-------------
Owner's reasonable opinion to cease operation of all or part of the Casino
Facility to protect the Casino Facility or the health, safety or welfare of
guests or employees of the Casino Facility for reasons of force majeure, such
as, but not limited to, weather, acts of war, insurrection, civil strife and
commotion, labor unrest, contagious illness, catastrophic events, or acts of
God, then in such event Manager or Owner may close and cease operations of all
or part of the Casino Facility, reopening and commencing operation when Manager
and Owner determine in good faith that such may be done without jeopardy to the
Casino Facility, its guests and employees. Neither party shall be liable for
failure to perform any obligation hereunder (other than to pay money) when
prevented by any force majeure cause not reasonably within the control of such
party, such as strike, lockout, breakdown, accident, order or regulation of or
by any governmental authority, failure of supply or inability, by the
exercise of reasonable diligence, to obtain supplies, parts or employees
necessary to perform such obligation to which such force majeure applies shall
be extended for a period of time equivalent to the delay from such cause.
17.3 Authorization. Owner and Manager represent to the other that it has
-------------
full power and authority to execute this Management Agreement and to be bound by
and perform the terms hereof. On request, each party shall furnish the other
evidence of such authority.
17.4 Interest. Any amount payable to a party hereunder which shall not be
--------
paid when due, shall accrue interest at the prime rate as published from time to
time in the Wall Street Journal.
17.5 Entire Agreement: Amendments. This Management Agreement sets forth
-----------------------------
the entire and only agreement or understanding between Owner and Manager
relating to the subject matter hereof and supersedes and cancels all previous
agreements negotiations, commitments and representations in respect hereof among
them. Owner has not relied on any projection of earnings or statements as to the
possibility of future success or other similar matters which may have been
prepared by Manager or Owner, or any of their respective affiliates, and
understands that no guaranty is made or implied by Manager or its affiliates as
to the cost or the future financial success of the operations being managed
hereunder. This Management Agreement may not be amended in any respect except by
an instrument in writing signed by Owner and Manager.
17.6 Survival of Covenants. Any covenant, term or provision of this
---------------------
Management Agreement which, in order to be effective, must survive the
termination of this Management Agreement, shall survive any such termination.
17.7 No Waiver. No waiver by either party of a breach by the other party
---------
of any of the terms, covenants or conditions of this Management Agreement, shall
be construed or held
-16-
<PAGE>
to be a waiver of any succeeding or preceding breach of the same or any other
term, covenant or condition herein contained. No waiver of any default of either
party hereunder shall be implied from any omission by the other party to take
any action on account of such default if such default persists or is repeated,
and no express waiver shall affect default other than as specified in said
waiver.
17.8 Compliance. In performing its obligations under this Management
----------
Agreement, Manager shall comply with all present and future laws, ordinances and
all rules and regulations, requirements and orders of all governmental
authorities and shall obtain all licenses and permits required to perform such
obligations and shall file all returns and reports lawfully required of Manager
in connection with its duties hereunder, including, but not limited to, income
tax withholding returns, Federal Insurance Contributions Act returns and
reports, Federal Unemployment Tax Act and worker's compensation returns and
reports, sales and use tax returns (and shall timely pay all contributions,
taxes, costs and other amounts due thereunder). All of the foregoing returns and
reports shall be maintained as a part of the books and records of Manager.
17.9 Headings. The headings hereunder are used for convenience only and
--------
shall not affect the construction or interpretation of any provision hereof.
17.10 Counterparts. For the convenience of the parties hereto, this
------------
Management Agreement may be executed in several original counterparts, each of
which shall be deemed an original for all purposes and all such counterparts
shall constitute but one and the same agreement.
17.11 Commercial Reasonableness. Anything contained in this Management
-------------------------
Agreement to the contrary notwithstanding, all contracts and agreements entered
into by Manager hereunder, including any contracts on account of Owner, shall be
commercially reasonable.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Management Agreement as of the date and year first above written.
CASINO AMERICA, INC., ISLE OF CAPRI BLACK HAWK,
a Delaware corporation L.L.C., a Colorado limited liability
company
By: /s/ Allan B. Solomon By: Casino America of Colorado, Inc.,
-------------------------- Member
Its: Executive Vice President
-------------------------
By: /s/ Allan B. Solomon
------------------------------
Title: Executive Vice President
----------------------------
Blackhawk Gold, Ltd., Member
By: /s/ H. Thomas Winn
------------------------------
Title: President
----------------------------
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<PAGE>
EXHIBIT E
Scope of Gold Mountain Development
Commercial and residential real estate activity of any kind, including the
operation of developed commercial and residential projects, by NG & Casinos,
Inc., BG, Ltd., or any of their affiliates, including Gold Mountain L.L.C., on
lands primarily located to or in the vicinity of the Gaming District of Black
Hawk, Colorado, and lands located in sections 7, 17 and 18 of Gilpin County,
Colorado, but not limited to those specific areas, provided, however, that such
activity shall not include any state regulated gaming activities.
<PAGE>
EXHIBIT 10.3
AMENDED AND RESTATED MANAGEMENT AGREEMENT
This AMENDED AND RESTATED MANAGEMENT AGREEMENT (the "Management
Agreement"), dated as of this 22th day of July, 1997, is by and between CASINO
AMERICA, INC., a Delaware corporation ("Manager"), and ISLE OF CAPRI BLACK HAWK,
LLC, a Colorado limited liability company ("Owner") and is effective as of the
Closing Date, as defined in the Amended and Restated Operating Agreement of the
Owner of even date.
RECITALS:
--------
A. Owner proposes to acquire, construct, develop and equip a Casino
Facility including a casino, restaurant and a hotel in Black Hawk, Colorado.
B. Owner desires to have Manager manage the business operations of its
Casino Facility and Manager desires to manage Owner's Casino Facility, all upon
the terms and conditions of this Agreement.
C. Owner and Manager executed a Management Agreement, dated as of April
25, 1997, and wish by this Agreement to amend and restate the Management
Agreement dated as of April 25, 1997.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, Owner and Manager agree as follows:
1. DEFINITIONS AND REFERENCES.
--------------------------
1.1 Definitions. As used herein, the following terms shall have the
-----------
respective meanings indicated below:
(a) Annual Plan - The Annual Plan to be prepared by Manager and approved
by Owner in accordance with the provisions of Section 6.2 hereof.
(b) Casino Facility - The Casino Facility to be owned by Owner and
operated in Black Hawk, Colorado by Manager. The Casino Facility may have
gaming, hotel rooms, parking, food and beverage, gift shop and entertainment
together with other related activities.
(c) Commencement Date - The date upon which Owner first opens the Casino
Facility to the public for business, which date shall be confirmed in writing by
Owner and Manager.
<PAGE>
(d) Compensation- The direct salaries and wages paid to, or accrued for the
benefit of, any executive or other employee, including, without limitation,
employer's contributions under F.I.C.A., unemployment compensation or other
employment taxes, pension fund contributions, Worker's Compensation, group life,
accident, health and other insurance premiums, profit sharing, and retirement
plans, disability and other similar benefits.
(e) Operating Agreement- That certain Amended and Restated Operating
Agreement of Owner dated as of even date herewith by and between Casino America
of Colorado, Inc. and Blackhawk Gold, Ltd.
2. SCOPE OF AGREEMENT, RESPONSIBILITIES.
------------------------------------
2.1 Authority of Owner. Owner shall determine the general policy with
------------------
respect to the management of its Casino Facility and shall have all other
decision making powers customarily afforded to an owner of a casino/hotel
facility, as well as any additional powers reserved to Owner hereunder.
2.2 Authority of Manager. Subject to the foregoing general authority of
--------------------
Owner, and subject to the terms of this Management Agreement, Manager shall have
the authority to exclusively supervise and direct the management and operation
of the day-to-day activities of the Casino Facility for the account of Owner.
Manager shall have the authority and responsibility (i) to determine operating
policy, standards of operation, quality of service, the maintenance and physical
appearance of the Casino Facility and any other matters affecting operations and
maintenance; (ii) to supervise and direct all phases of advertising, sales and
business promotion for the Casino Facility; and (iii) to carry out all programs
contemplated by the Annual Plan. Owner agrees that it will cooperate with
Manager in every reasonable and proper way to permit and assist Manager to
carry out its duties hereunder and comply with any conditions or restrictions,
if any, placed upon Manager by any gaming authority.
2.3 Duties and Obligations of Manager. Manager shall take all actions which
---------------------------------
may, in its sole discretion, be reasonably necessary or appropriate in
connection with the authority granted to it in accordance with the provisions of
this Management Agreement. Manager shall devote to its responsibilities such
time as may be reasonably necessary for the proper performance of all duties
hereunder. The standard of performance by Manager in managing the Casino
Facility shall be measured by commercial standards of reasonableness in the
industry consistent with good business practices and policies. An organizational
chart detailing the supervisory and management positions and all other employees
of the Manager will be provided by Manager to Owner.
2.4 Consultation with Owner. Notwithstanding the foregoing, Manager shall
-----------------------
at all times keep Owner reasonably apprised and aware of all operating policies.
Manager agrees to
-2-
<PAGE>
consult with Owner as frequently as Owner shall reasonably request to review
operating policies and other matters referred to herein. Owner shall, at all
times, have the right to enter the Casino Facility for the purpose of inspecting
same and reviewing the operations. Owner agrees that it and its representatives
will, at no time, act in a manner which is inconsistent with the authority
granted to Manager.
3. LICENSING. Other than as set forth in the Operating Agreement, Owner and
---------
Manager shall apply for and maintain at Owner's expense any and all licenses
and approvals required in order to implement the provisions of this Management
Agreement. The performance of any services pursuant to this Management Agreement
that require any such licenses and approvals is contingent upon the receipt of
all such licenses and approvals.
4. TERM. The term of this Management Agreement shall continue until December
----
31, 2096, unless sooner terminated as hereinafter set forth.
5. PRE-COMMENCEMENT DATE RESPONSIBILITIES.
--------------------------------------
5.1 Owner's Responsibilities. Owner, without cost or expense to Manager,
------------------------
shall design, acquire, construct and equip the Casino Facility. All expenses and
fees incident thereto shall be paid by Owner.
5.2 Manager's Responsibilities. From the date of this Management Agreement
--------------------------
to the Commencement Date, Manager shall be available to consult with Owner in
designing, acquiring, constructing and equipping all assets to be used by Owner
in the operation of the Casino Facility. Manager shall, at Owner's expense and
with Owner's approval, also be responsible for the development and
implementation of all pre-opening activities.
6. OPERATION OF THE BUSINESS.
-------------------------
6.1 Permits. Manager and Owner shall timely apply for, obtain and maintain
-------
all licenses and permits required to operate the business (other then gaming
authority permits, licenses and approvals required to be obtained by parties
other than owner or Manager), at Owner's expense.
6.2 Annual Plan.
-----------
6.2.1 Preparation. With such cooperation and assistance of Owner as
-----------
Manager may request, Manager shall prepare for Owner's review and approval not
less than thirty (30) days in advance of each fiscal year, an Annual Plan for
approval by Owner, which shall include;
-3-
<PAGE>
(a) a forecast comprised of estimated income and expenses by month for
the coming fiscal year;
(b) an estimated cash flow projection by month, and an estimate as to the
amount of funds needed for working capital requirements;
(c) a budget covering estimated expenditures for capital improvements;
(d) an annual marketing plan; and
(e) an organizational chart of Owner, as of the date of the Annual Plan,
listing all employees' names, positions and compensation (including
key employees whether employees of Owner or charged to Owner).
Manager shall not be deemed to have made any guarantee or warranty in connection
with the results of operations or performance set forth in the Annual Plan since
the parties acknowledge that the Annual Plan is intended to set forth objectives
and goals based upon Manager's best judgment of the facts and circumstances
known by Manager at the time of preparation.
6.2.2 Owner's Review and Approval. The Annual Plan will be subject to the
---------------------------
approval of Owner, which approval will be unreasonably withheld or delayed.
Owner shall approve or disapprove the Annual Plan within twenty (20) days after
submission to Owner. If Owner fails to provide written notice to Manager of any
specific objections to a proposed Annual Plan within such twenty (20)-day
period, such Annual Plan shall be deemed to have been approved by Owner as
submitted. In the event Owner disapproves or raises any objections to the
proposed Annual Plan or any revisions thereto, Owner and Manager agree to
cooperate with each other in good faith to resolve the dispute. Owner agrees,
consistent with the Annual Plan, to provide the funds necessary to operate the
Casino Facility.
6.2.3 Compliance. Manager shall use all reasonable efforts to comply with
----------
the Annual Plan and shall not deviate in any substantial respect therefrom. In
the event Manager encounters circumstances which require unexpected expenditures
not foreseen at the time of preparation of the Annual Plan and which Manager
deems reasonably necessary, Manager may without Owner's approval, make or cause
to be made on account of Owner, any expenditures, provided, however, that no
such expenditures shall be made in violation of the applicable provisions of the
Operating Agreement. Manager, without Owner's aprroval, on a monthly basis with
full reporting to Owner, shall be entitled to increase the total expenses
budgeted within the Annual Plan by a percentage approved by Owner to cover any
expenditures that were underestimated at the time the Annual Plan was prepared
and that are reasonably necessary in Manager's sole discretion, to carry out the
provisions of this Agreement. Owner and Manager agree to cooperate with each
other in good faith in resolving disputes. Policy
-4-
<PAGE>
changes not anticipated in the Annual Plan shall be submitted to Owner for
approval, which approval shall not be unreasonably delayed or withheld.
6.2.4 Specific Matters. The description of specific matters
----------------
hereinafter stated are in every respect subject to the prior approval of Owner
as part of its approval of the Annual Plan
6.3 Personnel.
---------
6.3.1 General. Manager, for the account of Owner, shall hire,
-------
supervise, direct, discharge and determine terms of employment of all personnel
working for the Casino Facility. An organizational chart detailing the specific
type of personnel and functions shall be provided to Owner by Manager. The
determination of Compensation for all employees shall be part of the Annual Plan
approved by Owner.
6.3.2 Key Employees. The key employees may include, but are not
-------------
limited to, the general manager, director of gaming, director of food, beverage
and entertainment, director of marketing and director of finance and may, at the
option of Manager and with prior approval of Owner, be employees of Manager.
Owner shall reimburse Manager for the Compensation of such employees working for
the Casino Facility or primarily on behalf of Owner in connection with the
Casino Facility.
6.3.3 Personnel Expenses and Compensation. Subject to the above, it
-----------------------------------
is expressly understood and agreed that all other personnel of Owner are in the
sole employ of Owner.
6.3.4 Professional and Other Specialists. Manager shall have the
----------------------------------
right to retain legal counsel and such other professionals, consultants and
specialists as Manager deems necessary or appropriate in connection with the
operation of the Casino Facility. The selection of all professional firms shall
be subject to Owner's prior approval.
6.4 Sales, Marketing and Advertising. Manager shall advertise and promote
--------------------------------
the Casino Facility for Owner's account and shall institute and supervise a
sales and marketing program. Manager, in its sole discretion, may cause
participation in sales and promotional campaigns and activities involving
complimentary passage, food and beverages to travel agents, tourist officials
and airline representatives.
6.5 Other Services Provided by Manager. Other services, such as data
----------------------------------
processing, reservation system, internal audit, etc. may be provided by Manager
to Owner at an additional cost on a commercially reasonable basis, or may be
contracted for separately.
-5-
<PAGE>
6.6 Maintenance and Repair. Owner shall be responsible for maintaining
----------------------
the property utilized in the business in good repair and condition. To implement
Owner's responsibility, Manager shall, on behalf of Owner, and to Owner's
expense, make or cause to be made, all repairs, replacements, corrections and
maintenance items as shall be required in the normal and ordinary course of
operation of the business.
6.7 Capital Expenditures. Owner recognizes the necessity of capital
--------------------
improvements and shall expend such amount for capital improvements as shall be
required in the normal and ordinary course of operation of the business in
conformity with the amounts approved as part of the Annual Plan.
6.8 Reimbursement. In addition to the Compensation provided for in
-------------
Section 9 of this Management Agreement, Manager shall be entitled to be
reimbursed for the actual reasonable travel and entertainment expenses of all
officers and employees of Manager incurred in performing its duties hereunder in
connection with any phase of the operation of the Casino Facility. In addition,
if employees of Manager on a specific assignment for the benefit of the Casino
Facility are in a position that would otherwise be filled by an employee of
Owner, then Manager shall be entitled to be reimbursed by Owner for the
Compensation payable to such employees while working for the Casino Facility.
However, Manager shall not be entitled to reimbursement for (i) any cost,
expense, liability or obligation deemed a contribution to the capital of Owner
under Section 3.1 [b] of the Members Agreement of even date among Manager,
Nevada Gold & Casinos, Inc., Casino America of Colorado, Inc. and Blackhawk
Gold, Ltd. or (ii) the compensation of any other employee unless otherwise
provided in this Management Agreement. Manager shall be entitled to all
reimbursements authorized under this Section 6.8, or under any other provision
of this Agreement, provided that (i) no such reimbursement shall exceed the
actual costs incurred by Manager or, if such costs are not determinable, the
fair market value of items for which reimbursement is sought and (ii) all such
reimbursements shall be made in a manner which is consistent with the provision
of the Annual Plan or as otherwise agreed with Owner.
7. FISCAL MATTERS.
--------------
7.1 Accounting Matters and Fiscal Periods.
-------------------------------------
7.1.1 Books and Records. Manager shall maintain, or cause to be
-----------------
maintained, at Owner's expense, full and complete books of account and such
other records as are necessary to reflect the operating results of the Casino
Facility. Manager shall also prepare and file for Owner, at Owner's expense, all
informational and/or tax returns which may be required by any governmental
authority.
7.1.2 Reports to Owner. Manager, at Owner's expense, shall deliver
----------------
or cause to be delivered to Owner, monthly financial statements, which shall
include a statement of
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<PAGE>
cash flows, and monthly comparison of operational income and expenses versus the
Annual Plan.
7.1.3 Owner's Right to Audit. Owner and the individual members of the
----------------------
limited liability company reserve the right upon reasonable prior notice, to
perform any and all additional audit procedures relating to the business where
accounting books and records are kept.
7.2 Bank Account. All bank accounts for the Casino Facility shall be in the
------------
name of Manager, as agent for Owner. Owner and Manager shall agree on the
procedures for withdrawals and deposits of funds. Manager shall have the right
to designate individuals to disburse funds from the business bank accounts to
pay all costs and expenses of managing, operating and maintaining the business
and its properties, including authorized capital expenditures and management
fees due to Manager. Owner agrees that at all times during the term of this
Management Agreement, a bank balance as approved in the Annual Plan shall be
maintained in an amount necessary to provide sufficient working capital to
assure the uninterrupted and efficient operation of the business. Excess funds
shall be disbursed to Owner.
8. TITLE. OTHER MATTERS.
--------------------
8.1 Covenant of Title. Owner shall enable Manager to peaceably and quietly
-----------------
operate the business in accordance with the terms of this Management Agreement.
8.2 Proprietary Information. All specifically identifiable information
-----------------------
developed by Manager for Owner shall be the property of both Manager and Owner.
All existing information of Manager previously developed by Manager at Manager's
expense, including, without limitation, all customer lists, gaming and marketing
strategies and other similar information, shall be the property of Manager and
not Owner and neither Owner nor any of its affiliates or successors may use such
proprietary information without the consent of Manager, which consent shall not
be unreasonably withheld. The parties agree that Proprietary Information does
not include information which is clearly available in the public domain.
8.3 Outside Activities of Parties. This Management Agreement shall be
-----------------------------
limited to the purposes set forth herein and nothing in this Management
Agreement, whether by implication or otherwise, shall be construed to extend the
relationship of the parties beyond such purposes. Each party acknowledges that
the other party and their respective affiliates are or may hereafter become
interested, directly or indirectly, by ownership, contract, agency or otherwise,
in business opportunities which are not within the purpose of this Management
Agreement and which may compete with or otherwise affect all or some aspects of
the Casino
-7-
<PAGE>
Facility. However, both parties agree that they will not compete in any gaming
activities in Gilpin County, Colorado during the Term except as permitted under
the Operating Agreement.
9. COMPENSATION OF MANAGER.
-----------------------
9.1 In consideration for the services to be performed by Manager after
the Commencement Date, Manager shall be entitled to an annual management fee
equal to two percent (2%) of Revenues (as defined below), plus ten percent (10%)
of Operating Income (as defined below), but such fee shall not, in the
aggregate, exceed four percent (4%) of Revenues.
(a) Revenues means all revenues, less sales tax on such revenues,
determined on an annual basis received from the following sources: (i) gross
gaming receipts from the Casino Facility, less 50% of applicable gaming and
admission taxes form the operation of gaming in the Casino Facility; (ii) hotel
operations; (iii) food and beverage operations; (iv) all parking fees; (v) all
revenues generated from gift shops and arcades; (vi) other revenues, fees and
income, which are attributable to the operation of the Casino Facility.
Revenues derived from non-operating activities, such as the sale of capital
assets are excluded from the definition of Revenues.
(b) Operating Income means the income of the Casino Facility before
any management fee paid to Manager distributions to Members of Owner, interest,
depreciation, amortization and write-off or start-up and pre-opening type
expenses and income taxes.
(c) The fee shall become due and payable ten (10) days after the end
of each month based upon the Revenues and Operating Income for the previous
month. Payment of such compensation may be paid to Manager by withholding
Revenues it has received for Owner's account; provided, however, that the fee
shall be accrued as a liability and not paid to the extent that Owner has not
generated sufficient cash flow to pay such fee. For these purposes, cash flow
shall be determined before capital expenditures and distributions to Members of
Owner.
10. INSURANCE.
---------
10.1 Coverage. Owner, for the benefit of both Owner and Manager, shall
--------
maintain adequate insurance during the term of this Agreement. The type and
amount of coverage shall be approved by Owner.
10.2 Policies and Endorsements.
-------------------------
10.2.1 Policies. All insurance coverage provided for hereunder shall
--------
be effected by policies issued by insurance companies with sound and adequate
financial
-8-
<PAGE>
responsibility, or by self-insurance programs of either Manager or Owner. Either
party shall be entitled to object to an insurance company. Owner shall deliver
to the Manager duplicate copies of the insurance policies or certificates of
insurance with respect to all of the policies of insurance so procured,
including existing, additional and renewal policies, and in the case of
insurance about to expire, shall deliver duplicate copies of the insurance
policies or insurance certificates with respect to the renewal policies to the
other party not less than thirty (30) days prior to the respective dates of
expiration.
10.2.2 Endorsement. All insurance shall, to the extent obtainable,
-----------
have attached thereto:
(a) an endorsement that such policy shall not be canceled or
materially changed without at least thirty (30) days' prior written notice to
Owner and Manager; and
(b) an endorsement to the effect that no act or omission of Owner
or Manager shall affect the obligation of the insurer to pay the full amount of
any loss sustained.
(c) Owner and its members shall be named as additional insureds on
all policies.
10.2.3 Named Insureds. All policies of insurance shall be carried in
--------------
the name of Owner and Manager, All liability policies shall name Owner and
Manager, and their respective members, managers, directors, officers, agents and
employees, as additional insureds.
-9-
<PAGE>
11. Indemnification.
---------------
11.1 Indemnification. Manager agrees to indemnify and hold Owner free and
---------------
harmless from any loss, liability, claim, demand, legal proceeding or cost
(including attorneys' fees, costs, expenses and other charges) which is not
covered by insurance proceeds and which Owner may sustain, incur or assume as a
result of any allegation, claim, civil or criminal action, proceeding, charge or
prosecution (collectively "Claims") which may be alleged, made, instituted or
maintained against Manager or Owner, jointly or severally, to the extent arising
out of or based upon (a) Claims by the employees of the Manager (including
without limitation injury or compensation Claims); (b) the performance or
non-performance of the Management Agreement by Manager, its agents or employees;
or (c) the acts or failure to act of Manager, its employees or agents in a
manner consistent with the standards set forth in Section 2.3 above.
Notwithstanding the foregoing, Manager shall not be liable to indemnify and hold
Owner harmless to the extent of any such loss, liability or cost which (i)
results from the negligence of Owner, its agents (other than Manager) or
employees or (ii) consists of consequential or punitive damages (including any
such damages asserted by a third party). Nothing contained in this Section 11 or
this Agreement shall constitute a guaranty or commitment by the Manager of the
operating results or business prospects of the Casino Facility.
11.2 Related Matters.
---------------
11.2.1 Legal Fees, Etc., Procedures. Manager shall reimburse Owner
----------------------------
for any legal fees and costs, including attorney's fees and other litigation
expenses, incurred by Owner in respect to which indemnity is granted hereunder.
If Claims are asserted or threatened, or if any action or suit is commenced or
threatened with respect thereto, for which indemnity may be sought against
Manager hereunder, Owner shall notify Manager in writing within thirty (30) days
after Owner shall have had actual knowledge of the threat, assertion or
commencement of the Claims, which notice shall specify in reasonable detail the
matter for which indemnity may be sought. Manager shall have the right, upon
notice to Owner given within thirty (30) days of its receipt of Owner's notice,
to take primary responsibility for the prosecution, defense or settlement of
such matter and payment of expenses in connection therewith. Owner shall
provide, without cost to Manager, all relevant records and information
reasonably required by Manager for such prosecution, defense or settlement and
shall cooperate with Manager to the fullest extent possible. Owner, at Owner's
sole cost and expense, shall have the right to employ its own counsel in any
such matter with respect to which Manager has elected to take primary
responsibility for prosecution, defense or settlement.
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<PAGE>
11.2.2 Indemnified Parties. The indemnities contained in this
-------------------
Section 11 shall run to the benefit of both Owner and its affiliates, and its
directors, officers, shareholders and employees.
11.2.3 Survival. The provisions of this Section 11 shall survive
--------
any cancellation, termination or expiration of this Management Agreement and
shall remain in full force and effect until such time as the applicable statute
of limitation shall cut off all claims which are subject to the provisions of
this Section 11.
12. DAMAGE TO AND DESTRUCTION OF THE BUSINESS.
-----------------------------------------
12.1 Restoration. Provided that there are sufficient insurance proceeds,
-----------
in the event fire or other casualty shall damage or destroy the property used in
the Casino Facility, Owner shall be required to repair, restore or replace the
same to the extent as may be limited by insurance proceeds. If there are not
sufficient insurance proceeds and Owner no longer desires to operate the Casino
Facility, Manager shall have the option, exercisable within ninety (90) days of
such casualty; to obtain the license to operate the Casino Facility subject to
appropriate regulatory approval. Owner shall use its best efforts to assist
Manager in obtaining the license. In the event fire or other casualty shall
damage or destroy the Casino Facility, Owner shall have the choice of repairing,
restoring or replacing the same to the extent as may be limited by insurance
proceeds. If Owner determines that it is not in its best interest to restore the
Casino Facility, the Management Agreement will terminate.
13. DEFAULT AND TERMINATION.
-----------------------
13.1 Events of Default. It shall be an event of default hereunder (an
-----------------
"Event of Default") if Manager or Owner (the "Defaulting Party") as hereinafter
defined fails to keep, perform or observe any material covenant, obligation or
agreement required to be kept, performed or observed by such party under the
terms of this Management Agreement, followed by written notice of such breach,
default or non-compliance from the other party (the "Non-Defaulting Party" as
hereinafter defined) to the Defaulting Party and the Defaulting Party fails to
remedy or correct such breach, default or non-compliance within thirty (30) days
after receipt of such notice. If the breach, default or non-compliance is other
than payment of money and is of a nature such that it cannot reasonably be
cured within such thirty (30) day period, the period for curing the default
shall be extended so long as the Defaulting Party commences immediately and
expediently as possible to cure the breach, default or non-compliance within
such thirty (30) day period.
13.2 Termination.
-----------
13.2.1 General. If an Event of Default occurs and has not been
-------
cured, this Management Agreement shall terminate at the election of the
Non-Defaulting Party. Notice of
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<PAGE>
termination pursuant to this Section 13 may be given by the Non-Defaulting Party
to the Defaulting Party at any time prior to the curing of such Event of
Default, and such termination shall be effective as of the date specified in
such notice of termination, which date shall be not less than sixty (60) nor
more than one hundred twenty (120) days after the date of such notice.
Notwithstanding the foregoing, if the Event of Default pertains to the payments
of money, Manager may cease the discharge of its responsibilities hereunder
effective upon the expiration of the thirty (30)-day notice referenced in
Section 13.1 hereof. Manager shall receive all funds due to it at the time of
Termination.
13.2.2 Termination. In addition to the foregoing, this Management
-----------
Agreement shall terminate upon any of the following events:
(a) The mutual agreement of the parties; or
(b) The inability of either party to receive or maintain the
licenses to perform their obligations hereunder; or
(c) Manager shall
(i) apply for or consent to the appointment of, or
taking possession by, a receiver, custodian,
trustee, liquidator or other similar official of
all of its assets;
(ii) make a general assignment for the benefit of
creditors;
(iii) be adjudicated as bankrupt or insolvent or have an
order for relief entered with respect thereto; or
(iv) file a voluntary petition, commence a voluntary
case under the federal bankruptcy laws as now or
hereafter constituted or file a petition or an
answer seeking reorganization or any arrangement
with creditors or take advantage of any
bankruptcy, reorganization, insolvency,
readjustments of debts, dissolution or
liquidation law or statute.
13.2.3 Waiver. The waiver of any one Event of Default shall not be
------
construed as the waiver of any other Event of Default.
13.3 Remedies Cumulative. Except as herein provided to the contrary, the
-------------------
termination of this Management Agreement by the Non-Defaulting Party upon an
Event of Default shall be without damages, injunctions, specific performance or
other legal or equitable
-12-
<PAGE>
remedies by reason of any breach, default or non-compliance by the Defaulting
Party with such Defaulting Party's covenants, obligations and agreements
hereunder. Except as to any disputes for which injunctive relief would be an
appropriate remedy, in the event a dispute of any kind arises in connection with
this Agreement (including any dispute concerning its construction, performance
or breach), the parties to the dispute will attempt to resolve the dispute as
set forth in Section 13.4 before proceeding to arbitration as provided in
Section 13.5. All documents, discovery and other information related to any such
dispute, and the attempts to resolve or arbitrate such dispute, will be kept
confidential to the fullest extent possible.
13.4 Negotiation. If a dispute arises, any party to the dispute will give
-----------
notice to each other party. If Owner is not a party to the dispute, notice
will be given to Owner. After notice has been given, the parties in good faith
will attempt to negotiate a resolution of the dispute.
13.5 Arbitration. If, within 30 days after the notice provided in Section
-----------
13.4, a dispute is not resolved through negotiation or mediation, the dispute
will be arbitrated. The parties to the dispute agree to be bound by the
selection of an arbitrator, and to settle the dispute exclusively by binding
arbitration in accordance with the following provisions:
(a) All parties to the dispute will collectively select one
arbitrator. If they fail to do so within 45 days after the notice provided in
Section 13.4, one or more parties will request the American Arbitration
Association to submit a panel of five arbitrators who are qualified to resolve
the matters in dispute from which the choice will be made. The party requesting
the arbitration will strike first, followed by alternative striking until one
name remains. A similar procedure will be followed if there are more than two
parties. The parties may by agreement reject one entire list, and request a
second list. If selection by the above method is not completed within 90 days
after the notice provided in Section 13.4, or if there are more than four
parties, then an arbitrator will be selected by the American Arbitration
Association. The arbitrator so selected will then arbitrate the dispute in
Denver, Colorado, and issue an award.
(b) To the extent consistent with the provisions of this Article, the
arbitration will be conducted under the Commercial Arbitration Rules of the
American Arbitration Association and in accordance with Colorado law. The
arbitrator's decision will be made pursuant to the relevant substantive law of
the State of Colorado. The award of the arbitrator will be final, binding and
non-appealable. judgment on the award may be entered in any court, state or
federal, having jurisdiction.
(c) The fees and expenses of the arbitrator, and the other direct
costs of the arbitration, will be shared by the parties to the dispute in equal
proportions. Each party to the dispute will bear its other respective costs and
expenses. If one or more Members are
-13-
<PAGE>
included in the arbitration because of their membership or former membership in
Owner, such group will collectively be treated as one party to the dispute
(through Owner as a party).
14. NOTICES.
-------
14.1 Notices. Every notice, demand, consent, approval or other document
-------
or instrument required or permitted to be served upon any of the parties hereto
shall be in writing and shall be deemed to have been duly served on the day of
mailing, and shall be sent by registered or certified United States Mail,
postage prepaid, return receipt requested, addressed to the respective parties
at the addresses stated below:
If to Manager: John M. Gallaway, President
or his designee Manager
711 Washington Loop
Biloxi, MS 39530
With copies thereof to the following:
Allan B. Solomon, Esq.
2200 Corporate Blvd. NW
Suite 310
Boca Raton, FL 33434
If to Owner: Isle of Capri Black Hawk L.L.C.
711 Washington Loop
Biloxi, MS 39530
Attention: John M. Gallaway
With copies thereof to the following:
H. Thomas Winn, President, or his designee,
Nevada Gold and Casinos, Inc.
3040 Post Oak Boulevard, Suite 675
Houston, TX 77056
or to such other address as either Manager or Owner may have specified in a
notice duly given as required herein to the other.
-14-
<PAGE>
150 RELATIONSHIP, AUTHORITY AND FURTHER ACTIONS.
-------------------------------------------
15.1 Relationship. Manager and Owner shall not be construed as joint
------------
ventures or partners of each other by reason of this Management Agreement and
neither shall have the power to bind or obligate the other except as
specifically authorized and set forth in this Management Agreement.
Nevertheless, Manager is granted such authority and powers as may be reasonably
necessary for it to carry out the provisions of this Management Agreement. This
Management Agreement, either alone or in conjunction with any other documents,
shall not be deemed to constitute or create a lease of all or any portion of the
Casino Facility.
15.2 Contractual Authority. Subject to the limitations thereon set forth in
---------------------
this Management Agreement, and in conformity with the Annual Plan, Manager is
authorized to make, enter into and perform in the name of, for the account of,
on behalf of and at the expense of Owner any contracts and agreements
(including, but not limited to bank accounts) which are reasonably necessary and
appropriate to carry out and place in effect the terms and conditions of this
Management Agreement. Copies of all executed contracts shall be immediately
conformed and furnished to Owner.
15.3 Further Actions. Owner and Manager agree to execute all contracts,
---------------
agreements and documents and to take all actions necessary to comply with the
provisions of this Management Agreement and the intent hereof.
160 APPLICABLE LAW. This Management Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of Colorado. If any of the
terms and provisions hereof shall be held invalid or unenforceable for any
reason, such validity or unenforceability shall in no event affect any of the
other terms or provisions hereof, all such other terms and provisions to be held
valid and enforceable to the fullest extent permitted by law; provided, however,
that in the event any material part of Owner's obligations under this Management
Agreement shall be declared invalid or unenforceable, Manager shall have the
option to terminate this Management Agreement.
170 MISCELLANEOUS.
-------------
17.1 Successors and Assigns. Manager shall not assign the whole or any
----------------------
portion of this Management Agreement or any payments due Manager hereunder,
without the unanimous consent of the Members of Owner, which consent will not be
unreasonably withheld, except that Manager may make such an assignment, without
Owner's or the Members' consent, to a Permitted Transferee as defined in the
Operating Agreement. Owner shall not assign the whole or any portion of this
Agreement, except to an affiliate of Owner, without Manager's consent, except as
collateral for any financing obtained in connection with the development and/or
operation of the Casino Facility. If the Agreement is assigned to an affiliate
Owner, Manager shall continue to be responsible under this agreement.
-15-
<PAGE>
17.2 Force Majeure. If at any time it becomes necessary in Manager's or
-------------
Owner's reasonable opinion to cease operation of all or part of the Casino
Facility to protect the Casino Facility or the health, safety or welfare of
guests or employees of the Casino Facility for reasons of force majeure, such
as, but not limited to, weather, acts of war, insurrection, civil strife and
commotion, labor unrest, contagious illness, catastrophic events, or acts of
God, then in such event Manager or Owner may close and cease operations of all
or part of the Casino Facility, reopening and commencing operation when Manager
and Owner determine in good faith that such may be done without jeopardy to the
Casino Facility, its guests and employees. Neither party shall be liable for
failure to perform any obligation hereunder (other than to pay money) when
prevented by any force majeure cause not reasonably within the control of such
party, such as strike, lockout, breakdown, accident, order or regulation of or
by any governmental authority, failure of supply or inability, by the exercise
of reasonable diligence, to obtain supplies, parts or employees necessary to
perform such obligation to which such force majeure applies shall be extended
for a period of time equivalent to the delay from such cause.
17.3 Authorization. Owner and Manager represent to the other that it has
-------------
full power and authority to execute this Management Agreement and to be bound by
and perform the terms hereof. On request, each party shall furnish the other
evidence of such authority.
17.4 Interest. Any amount payable to a party hereunder which shall not be
--------
paid when due, shall accrue interest at the prime rate as published from time to
time in the Wall Street Journal.
17.5 Entire Agreement: Amendments. This Management Agreement sets forth the
----------------------------
entire and only agreement or understanding between Owner and Manager relating to
the subject matter hereof and supersedes and cancels all previous agreements,
negotiations, commitments and representations in respect hereof among them.
Owner has not relied on any projection of earnings or statements as to the
possibility of future success or other similar matters which may have been
prepared by Manager or Owner, or any of their respective affiliates, and
understands that no guaranty is made or implied by Manager or its affiliates as
to the cost or the future financial success of the operations being managed
hereunder. This Management Agreement may not be amended in any respect except by
an instrument in writing signed by Owner and Manager.
17.6 Survival of Covenants. Any covenant, term or provision of this
---------------------
Management Agreement which, in order to be effective, must survive the
termination of this Management Agreement, shall survive any such termination.
17.7 No Waiver. No waiver by either party of a breach by the other party of
---------
any of the terms, covenants or conditions of this Management Agreement, shall be
construed or held
-16-
<PAGE>
to be a waiver of any succeeding or preceding breach of the same or any other
term, covenant or condition herein contained. No waiver of any default of either
party hereunder shall be implied from any omission by the other party to take
any action on account of such default if such default persists or is repeated,
and no express waiver shall affect default other than as specified in said
waiver.
17.8 Compliance. In performing its obligations under this Management
----------
Agreement, Manager shall comply with all present and future laws, ordinances and
all rules and regulations, requirements and orders of all governmental
authorities and shall obtain all licenses and permits required to perform such
obligations and shall file all returns and reports lawfully required of Manager
in connection with its duties hereunder, including, but not limited to, income
tax withholding returns, Federal Insurance Contributions Act returns and
reports, Federal Unemployment Tax Act and worker's compensation returns and
reports, sales and use tax returns (and shall timely pay all contributions,
taxes, costs and other amounts due thereunder). All of the foregoing returns and
reports shall be maintained as a part of the books and records of Manager.
17.9 Headings. The headings hereunder are used for convenience only
--------
and shall not affect the construction or interpretation of any provision hereof.
17.10 Counterparts. For the convenience of the parties hereto, this
------------
Management Agreement may be executed in several original counterparts, each of
which shall be deemed an original for all purposes and all such counterparts
shall constitute but one and the same agreement.
17.11 Commercial Reasonableness. Anything contained in this Management
-------------------------
Agreement to the contrary notwithstanding, all contracts and agreements entered
into by Manager hereunder, including any contracts on account of Owner, shall be
commercially reasonable.
-17-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Management Agreement as of the date and year first above written.
CASINO AMERICA, INC., ISLE OF CAPRI BLACK HAWK,
a Delaware corporation L.L.C., a Colorado limited liability
company
By: /s/ Allan B. Solomon By: Casino America of Colorado, Inc.,
------------------------- Member
Its:
------------------------
By: /s/ Allan B. Solomon
------------------------------------
Title: Exec. V.P.
---------------------------------
Blackhawk Gold, Ltd., Member
By: /s/ H. Thomas Winn
------------------------------------
Title: President
---------------------------------
-18-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Management Agreement as of the date and year first above written.
CASINO AMERICA, INC., ISLE OF CAPRI BLACK HAWK,
a Delaware corporation L.L.C., a Colorado limited liability
company
By: /s/ Allan B. Solomon By: Casino America of Colorado, Inc.,
-------------------------------- Member
Its:
-------------------------------
By: /s/ Allan B. Solomon
-------------------------------
Title: Exec. V.P.
----------------------------
Blackhawk Gold, Ltd., Member
By: /s/ H. Thomas Winn
-------------------------------
Title: President
----------------------------
-18-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Management Agreement as of the date and year first above written.
CASINO AMERICA, INC. ISLE OF CAPRI BLACK HAWK,
a Delaware corporation L.L.C., a Colorado limited liability
company
By: /s/ Allan B. Solomon By: Casino America of Colorado, Inc.,
----------------------------- Member
Its:
----------------------------
By: /s/ Allan B. Solomon
------------------------------
Title: Exec. V.P.
---------------------------
Blackhawk Gold, Ltd., Member
By: /s/ H. Thomas Winn
------------------------------
Title: PRESIDENT
---------------------------
-18-
<PAGE>
Amendment to Amended and Restated
Management Agreement
---------------------------------
This is an amendment, dated as of August 14, 1997, to the Amended and
Restated Management Agreement, dated July 29, 1997 (the "Management Agreement")
by and between Isle of Capri Black Hawk L.L.C., a Colorado limited liability
company ("Owner") and Casino America, Inc., a Delaware corporation ("Manager").
WHEREAS, the parties wish to amend the Management Agreement in certain
respects, as provided below.
NOW, THEREFORE, for $10.00 and other consideration, the receipt and
sufficiency of which is hereby acknowledged and in accordance with Section 17.5
of the Management Agreement, the parties hereby agree that Section 6.8 of the
Management Agreement is hereby amended and restated to provide, in its entirety,
as follows:
6.8 Reimbursement. In addition to the compensation provided for
-------------
in Section 9 of this Management Agreement, Manager shall be entitled to be
reimbursed for the following costs:
(a) The actual reasonable travel and entertainment expenses
of all officers and employees of Manager incurred in performing its
duties hereunder in connection with any phase of the operation of the
Casino Facility. In addition, if employees of Manager on a specific
assignment for the benefit of the Casino Facility are in a position that
would otherwise be filled by an employee of Owner, then Manager shall be
entitled to be reimbursed by Owner for the Compensation payable to such
employees while working for the Casino Facility. However, Manager shall
not be entitled to reimbursement for (i) any cost, expense, liability or
obligation deemed a contribution to the capital of Owner under Section
3.1[b] of the Members Agreement dated July 29, 1997 by and among
Manager, Nevada Gold & Casinos, Inc., Casino America of Colorado, Inc.
and Blackhawk Gold, Ltd. or (ii) the compensation of any other employee
unless otherwise provided in this Management Agreement. Manager shall be
entitled to all reimbursements authorized under this Section 6.8(a), or
under any other provision of this Agreement, provided that (i) no such
reimbursement shall exceed the actual costs incurred by Manager or, if
such costs are not determinable, the fair market value of items for
which reimbursement is sought and (ii) all such reimbursements shall be
made in a manner which is consistent with the provision of the Annual
Plan or as otherwise agreed with Owner.
(b) In addition to the reimbursements set forth in Section
6.8(a), in each fiscal year of the Manager in which (i) it is required
to recognize as income for state and/or federal income tax purposes all
or
<PAGE>
any portion of any item of compensation for services rendered under
this Management Agreement including without limitation any
compensation provided for in Section 9 (the "Accrued Compensation")
and (ii) Owner is prohibited or restricted from paying Manager the
amount of the Accrued Compensation under any provision of the
Indenture dated as of August 20, 1997 by and among the Owner, Isle of
Capri Black Hawk Capital Corp. and IBJ Schroder Bank & Trust Company
(the "Trustee") or the Manager Subordination Agreement of that date by
and among the Trustee, Manager and Owner, then Owner shall pay the
Manager an amount equal to the state and federal income taxes payable
with respect to the Accrued Compensation (the "Reimbursable Tax Cost")
certified in a certificate from the Chief Financial Officer of the
Manager promptly after delivery of said certificate. The amount of the
Accrued Compensation due and payable to Manager shall be reduced by
the amount of the Reimbursable Tax Cost.
WHEREFORE, the parties have executed this Amendment as of the date set
forth above.
OWNER:
Isle of Capri Black Hawk, L.L.C.
By: Blackhawk Gold, Ltd. Member
By: /s/ H. Thomas Winn
---------------------------------------
H. Thomas Winn
President
By: Casino America of Colorado, Inc. Member
By: /s/ Allan B. Solomon
---------------------------------------
Allan B. Solomon
Executive Vice President, General
Counsel and Secretary
MANAGER
Casino America, Inc.
By: [SIGNATURE APPEARS HERE]
---------------------------------------
2
<PAGE>
EXHIBIT 10.4
LICENSE AGREEMENT
This LICENSE AGREEMENT (the "Agreement"), dated as of this 29th day of July,
1997, is by and between CASINO AMERICA, INC., a Delaware corporation
("Licensor"), and ISLE OF CAPRI BLACK HAWK L.L.C., a Colorado limited liability
company ("Licensee") and is effective as of the Closing Date, as defined in the
Amended and Restated Operating Agreement of the Licensee of even date.
Whereas, Licensor and Licensee are parties to an Amended and Restated
Management Agreement of even date (the "Management Agreement"), pursuant to
which Licensor will manage the business operations on the Casino Facility;
Whereas, Licensee desires to use the name "Isle of Capri" as part of its
company name and to use such name and the other trade or service marks set forth
on Exhibit A hereto or such other names or trade or service marks used in
connection with other Isle of Capri casinos or hotel facilities (each, a "Mark,"
collectively, the "Marks") in connection with the operation of the Casino
Facility;
Whereas, Licensor is willing to license the use of the Marks, subject to
the terms and limitations contained herein.
NOW, THEREFORE, in consideration of the payment of $2.00 to Licensor by
Licensee, the receipt and sufficiency of which are hereby acknowledged, and in
consideration of the mutual promises and covenants herein contained, Licensor
and Licensee agree as follows:
1. Except as otherwise provided herein, all capital terms shall have the
respective meanings ascribed to them in the Management Agreement.
2. Licensee hereby acknowledges that Licensor is the sole owner of all
right, title and interest in and to the Marks as used in connection with the
operation of the Casino Facility, and that Licensee's rights to use the Marks
derive solely from and are limited to this Agreement.
3. Licensor hereby grants to Licensee the non-exclusive license to use
the Marks solely in connection with the operation of the Casino Facility.
Licensee agrees not to use the Marks in any other business. Licensee's rights
hereunder shall extend only to operations in the city of Blackhawk, Colorado and
to the promotion and marketing of Licensee's gaming activities in a manner
generally consistent with the marketing and promotional activities of Licensor
and its Affiliates. All use of the Marks shall inure to the benefit of
Licensor. Licensor agrees that during the term of this Agreement, it shall,
upon request of Licensee, promptly license to Licensee any of its service marks
or trade names that Licensor has the rights to license, whether existing as of
the date of this Agreement or acquired subsequently, which are, or become used
1
<PAGE>
in connection with any gaming facility of the Company or its Affiliates
operating under the Marks, on the terms and conditions set forth herein, and,
upon request of Licensee, shall amend Exhibit A accordingly.
4. Licensor or its authorized representatives shall have the right to
inspect the services provided by Licensee in connection with the Marks, at any
reasonable time with prior notice to Licensee. If Licensor reasonably determines
that Licensee has directly caused any aspect of such services, or licensee's use
of the Marks, in connection with the promotion, marketing or provision of the
services, to be used in a manner that is not reasonably consistent with the
Licensor's use thereof so as to cause material noncompliance with Licensor's
quality standards or Licensor's requirements regarding the appearance of the
Marks, and such noncompliance was not caused by Licensor, then Licensor shall
notify Licensee in writing specifying such deficiencies. If Licensee fails to
correct all such deficiency to Licensor's reasonable satisfaction within a
reasonable time, but not more than 10 days from receipt of notice of such
deficiencies, than Licensor may provide Licensee notice for breach or
nonperformance as provided in paragraph 8.
5. Licensee agrees to display and use the Marks only in a manner (i)
reasonably consistent with the use of the Marks by Licensor or other licensees
of Licensor, and (ii) which does not unreasonably diminish the value of the
Marks. If Licensee desires to use the Marks in a manner not reasonably
consistent with the use by Licensor or other licenses of Licensor. Licensee
shall first submit such change to Licensor for its approval.
6. Licensee will not register or attempt to register any of the Marks
as any part of its own name or marks, and will cooperated as reasonably
requested by Licensor in connection with any registration by Licensor of any of
the Marks. Licensee will promptly inform Licensor of any infringement of any of
the marks or of any protest by others to Licensee concerning its use of any
Mark, in each case, to the best of its knowledge, and will cooperate with
Licensor in all reasonable respects in connection with any litigation,
administrative proceedings or protests which Licensor deems reasonably
desirable in connection with the protection of or maintenance of rights to make
decisions concerning the initiation, defense, compromise or settlement of any
action involving any Mark; provided, however, that Licensee will be fully
indemnified and held harmless for complying with this sentence.
7. If Licensor shall not assign or transfer any of its right, title or
interest in any of the Marks to any party, unless such assignment or transfer is
subject to the terms hereof or such party enters into an agreement to licenses
such Mark or Marks to Licensee on terms and conditions identical to those
provided herein.
8. Licensor should determine that Licensee has caused a material breach
of this Agreement, then Licensor shall so inform Licensee in writing, whereupon
2
<PAGE>
Licensee shall have thirty (30) days within which to cure said breach and
deficiency. If Licensee does not cure said breach and deficiency within that
time to the satisfaction of Licensor, its right to use the Marks shall forthwith
terminate notwithstanding the terms of this license.
9. If Licensee files a petition in bankruptcy or is adjudicated a
bankrupt, if a petition in bankruptcy is filed against Licensee and such
petition is not stayed within sixty (60) days of filing, if it becomes insolvent
or makes an assignment for the benefit of creditors or any arrangements pursuant
to any bankruptcy law, if Licensee discontinues its business or a receiver is
appointed for it or its business, the license granted hereunder shall terminate,
and all use of the Marks shall cease.
10. Unless earlier terminated pursuant to the preceding two sections,
Licensee's license to use the Marks hereunder shall automatically terminate upon
termination of the Management Agreement for any reason; provided, however, that
in the event there is an Event of Default (as defined in the Indenture) and the
Trustee for the Indenture initiates a foreclosure action against the Note
Collateral (as defined in the Indenture), Licensee may continue to use the
Marks, subject to the terms of this License, for a period of six months
following any termination of the Management Agreement.
11. Upon termination of Licensee's rights to use the Marks for any reason
hereunder, Licensee shall immediately take reasonable steps to effect a change
of its trade marks, service marks, trade names, company name and assumed names
so as to remove any of the Marks or any confusing similar mark or terms.
12. Licensee may not assign, sublicense or otherwise transfer any of its
rights under the Agreement to any third party without the prior written consent
of Licensor. Subject to the other terms herein, this Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns. Notwithstanding the foregoing, (i) Licensee may assign its interest
herein to the Trustee, and (ii) any successor or assign of Licensor shall enter
into a Consent to Assignment of License, substantially in the form of that
Consent to Assignment of License entered into by Licensor for the benefit of
Trustee.
13. Every notice, demand, consent, approval or other document or
instrument required or permitted to be served upon any of the parties hereto
shall be in writing and shall be deemed to have been duly served on the day of
mailing, and shall be sent by registered or certified United States Mail,
postage prepaid, return receipt requested, addressed to the respective parties
at the address stated below:
If to Licensor: John M. Gallaway, President
or his designee
711 Washington Loop
3
<PAGE>
Biloxi, MS 39530
With copies thereof to the following:
Allan B. Solomon, Esq.
2200 Corporate Blvd. NW
Suite 310
Boca Raton, FL 33434
If to Licensee: Isle of Capri Black Hawk L.L.C.
711 Washington Loop
Biloxi, MS 39530
Attention: John M. Gallaway
With copies thereto to the following:
H. Thomas Winn, President, or his designee,
Nevada Gold and Casinos, Inc.
3040 Post Oak Boulevard, Suite 675
Houston, TX 77056
or to such other address as either Licensor or Licensee may have specified in a
notice duly given as required herein to the other.
14. This Agreement shall be governed by and construed in accordance with
laws of the State of Colorado. If any of the terms and provisions hereof shall
be held invalid or unenforceable for any reason, such validly or
unenforceability shall in no event affect any of the terms or provisions hereof,
all such other terms and provisions to be held valid and enforceable to the
fullest extent permitted by law.
15. This Agreement sets forth the entire and only agreement or
understanding between Licensee and Licensor relating to the subject matter
hereof and supersedes and cancels all previous agreements, negotiations,
commitments and representations in respect hereof among them. This Agreement may
not be amended in any respect except by an instrument in writing signed by
Licensee and Licensor.
16. For the convenience of the parties hereto, this Agreement may be
executed in several original counterparts, each of which shall be deemed an
original for all purposes and all such counterparts shall constitute but one and
the same agreement.
IN WITNESS WHEREOF, the parties, hereto have duly executed and delivered this
Agreement as of the date and year first above written.
4
<PAGE>
By: /s/ Allan B. Solomon By: Casino America of Colorado, Inc.,
------------------------ Member
Its:
------------------------
By: /s/ Allan B. Solomon
------------------------
Title:
----------------------
Blackhawk Gold, Ltd., Member
By: /s/ H. Thomas Winn
------------------------
Title: President
---------------------
5
<PAGE>
EXHIBIT 10.5
==========================================
PURCHASE AND SALE AGREEMENT
("AGREEMENT")
-by and between-
ROMAN ENTERTAINMENT CORPORATION
OF COLORADO
("SELLER")
-and-
CASINO AMERICA, INC.
("BUYER")
============================================
DATED: as of June 5, 1997
============================================
<PAGE>
===============================
PURCHASE AND SALE AGREEMENT
===============================
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is made and entered into as
of the 5th day of June, 1997, by and between ROMAN ENTERTAINMENT CORPORATION OF
COLORADO, a corporation duly organized and existing under the laws of the State
of Colorado ("Seller") and CASINO AMERICA, INC., a corporation duly organized
and existing under the laws of the State of Delaware ("Buyer").
WITNESSETH:
----------
WHEREAS, by that certain Warranty Deed dated October 31, 1995 and recorded
November 7, 1995 in Book 589 at Page 353 in the Office of the Gilpin County
Recorder ("the Woodall Parcel Deed"), Seller is the owner in fee of certain real
estate located in the County of Gilpin, State of Colorado, subject to any and
all liens, covenants, conditions, restrictions and easements of record and any
and all exceptions set forth in the Woodall Parcel Deed and title policy ("the
Woodall Parcel"); a true and correct copy of the Woodall Parcel Deed is attached
hereto as Exhibit "A" and is made a part hereof by reference; and,
WHEREAS, by that certain Special Warranty Deed dated January 16, 1996 and
recorded January 18, 1996 in Book 592 at Page 462 in the Office of the Gilpin
County Recorder ("the Weaver Parcel Deed"), Seller is the owner in fee of
certain real estate located in the County of Gilpin, State of Colorado, subject
to any and all covenants, conditions, restrictions and easements of record and
any and all exceptions set forth in the Weaver Parcel Deed and title policy
("the Weaver Parcel"); a true and correct copy of the Weaver Parcel Deed is
attached hereto as Exhibit "B" and is made a part hereof by reference; and,
<PAGE>
WHEREAS, the Woodall Parcel and the Weaver Parcel (hereinafter collectively
"the Premises") comprise all of the realty seller or its affiliates purchased
for use in connection with a proposed joint venture with Nevada Gold & Casinos,
Inc. in Black Hawk, Colorado and Buyer wishes to purchase the Premises from
Seller, and Seller is willing to sell the Premises to Buyer, under the terms and
pursuant to the conditions hereinafter set forth;
NOW, THEREFORE, for and in consideration of the foregoing recitals, and the
mutual promises, agreements, representations, undertakings, warranties,
covenants and understandings hereinafter set forth, and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged as
received, Seller and Buyer hereby covenant and agree as follows:
1. SALE OF THE PREMISES. Seller hereby agrees to sell to Buyer, and Buyer
--------------------
agrees to purchase from Seller, all of Seller's right, title and interest in and
to the Premises, as set forth in the Woodall Parcel Deed and the Weaver Parcel
Deed, in its "as is, where is" presently existing condition without warranty
express or implied except as set forth in the Woodall Parcel Deed and/or the
Weaver Parcel Deed and except as set forth in the special warranty deed or deeds
to be conveyed by Seller to Buyer at closing, and on the basis of Buyer's own
independent investigations and studies, and not based upon the basis of anything
actually said or purportedly said, furnished or implied by Seller.
2. PURCHASE PRICE. Buyer agrees to pay to Seller, and Seller agrees to
--------------
accept from Buyer, the total sum of Six Million Five Hundred Thousand Dollars
($6,500,000.00) as the purchase price for the Premises, payable as follows:
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<PAGE>
(a) The sum of One Hundred Thousand Dollars ($100,000.00)
("the Nonrefundable Deposit") in cash or other
immediately available federal funds payable from Buyer
directly to Seller upon the execution and delivery of
this Agreement; and,
(b) The sum of Nine Hundred Thousand Dollars ($900,000.00)
("the Additional Deposit") in cash or other immediately
available federal funds payable directly from Buyer to
Seller on or before Tuesday, September 2, 1997; and,
(c) The balance of the Purchase Price, in the amount of
Five Million Five Hundred Thousand Dollars
($5,500,000.00), shall be delivered by Buyer to Seller
in cash or immediately available federal funds at or
before Closing.
3. DUE DILIGENCE PERIOD. Commencing as of the date first above written
--------------------
and continuing thereafter until 5:00 p.m. EDT on Friday, June 13, 1997 ("the Due
Diligence Period"), Buyer shall have the right to conduct a due diligence
inquiry concerning the following items only:
(a) title to the Premises;
(b) liens, restrictions, encumbrances, easements, rights or
claims (whether of record or not) on or adversely
affecting the Premises;
(c) state or federal environmental matters adversely
affecting the Premises;
(d) survey or boundary matters affecting the Premises; and,
(e) permits, approvals or consents from the City of Black
Hawk, Colorado or any other local, state or federal
authority, other than permits, approvals or consents
from any gaming regulatory authority, which are
necessary or desirable for the development of the
Premises as a licensed gaming venue.
Upon execution and delivery of this Agreement, Seller shall cooperate with
Buyer's due diligence inquiry by, among other things, providing Buyer access to
all of Seller's or Seller's
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<PAGE>
agents' files and records respecting the items listed in (a) through (e), above.
If, prior to the expiration of the Due Diligence Period, Buyer fails to notify
Seller, as provided in Section 15 of this Agreement, that Buyer wishes to cancel
this Agreement, this Agreement shall become absolute; if, prior to the
expiration of the Due Diligence Period, Buyer notifies Seller, as provided in
Section 15 of this Agreement, that Buyer wishes to cancel this Agreement, then
this Agreement shall be deemed null and void and of no further force or effect
and, within five (5) business days of Buyer's demand therefor, Seller shall
refund the Nonrefundable Deposit to Buyer.
4. CLOSING
-------
(a) Closing shall be held on or before Monday, December 1, 1997 ("the
Original Closing Date") at the offices of Sherman & Howard, L.L.C., First
Interstate Tower North, 633 Seventeenth Street - Suite 3000, Denver, Colorado
80202.
(b) Notwithstanding the provisions of Section 4(a) of this Agreement,
Buyer shall have the right to extend the Closing from on or before the Original
Closing Date to and including Tuesday, December 30, 1997 ("the First Extended
Closing Date") upon the following terms and conditions: (i) on or before Monday,
November 3, 1997, Buyer shall notify Seller in writing of Buyer's election to
extend the Closing from the Original Closing Date to the First Extended Closing
Date, which notice must comply with the provisions of Section 15 of this
Agreement and (ii) accompanied by Buyer's non-refundable payment of One Hundred
Thousand Dollars ($100,000.00) ("the First Extended Closing Date Payment"), in
cash or immediately available federal funds. Upon payment, the First Extended
Closing Date Payment shall belong solely to Seller and shall not serve to reduce
the Purchase Price or any other obligation from Buyer to Seller.
-4-
<PAGE>
(c) Notwithstanding the provisions of Section 4(a) of this Agreement,
and provided Buyer has properly and fully exercised its right to extend the
Closing Date as set forth in Section 4(b) of this Agreement, Buyer shall have
the right to extend the Closing from on or before the First Extended Closing
Date to and including Friday, January 30, 1998 ("the Second Extended Closing
Date") upon the following terms and conditions: (i) on or before Monday,
December 22, 1997, Buyer shall notify Seller in writing of Buyer's election to
extend the Closing from the First Extended Closing Date to the Second Extended
Closing Date, which notice must comply with the provisions of Section 15 of this
Agreement and (ii) accompanied by Buyer's non-refundable payment of One Hundred
Thousand Dollars ($100,000.00) ("the Second Extended Closing Date Payment"), in
cash or immediately available federal funds. Upon payment, the Second Extended
Closing Date Payment shall belong solely to Seller and shall not serve to reduce
the Purchase Price or any other obligation from Buyer to Seller.
(d) Notwithstanding the provisions of Section 4(a) of this Agreement,
and provided Buyer has properly and fully exercised its right to extend the
Closing Date as set forth in Sections 4(b) and (c) of this Agreement, Buyer
shall have the right to extend the Closing from on or before the Second Extended
Closing Date to and including Monday, March 2, 1998 ("the Third Extended Closing
Date") upon the following terms and conditions: (i) on or before Tuesday,
January 20, 1998, Buyer shall notify Seller in writing of Buyer's election to
extend the Closing from the Second Extended Closing Date to the Third Extended
Closing Date, which notice must comply with the provisions of Section 15 of
this Agreement and (ii) accompanied by Buyer's non-refundable payment of One
Hundred Thousand Dollars ($100,000.00) ("the Third Extended Closing Date
Payment"), in cash or immediately available federal funds. Upon payment, the
Third Extended Closing Date Payment shall belong solely to Seller and shall not
-5-
<PAGE>
serve to reduce the Purchase Price or any other obligation from Buyer to Seller.
(e) Other than as specifically provided in this Section 4, no other
extensions of the Closing will be permitted or considered.
5. CONTINGENCIES TO CLOSING. The Closing shall be contingent on (a)
------------------------
tender by Seller to Buyer of good and marketable title, free and clear of all
liens and encumbrances other than any and all liens, covenants, conditions,
restrictions, agreements and easements of record and other than real estate
taxes not yet due and payable, all as set forth in the Woodall Parcel Deed, the
Weaver Parcel Deed, the title insurance policy originally purchased by Seller
for the Woodall Parcel (a true and correct copy of which is attached hereto as
Exhibit "C" and is made a part hereof by reference), and the title insurance
policy originally purchased by Seller for the Weaver Parcel, a true and correct
copy of which is attached hereto as Exhibit "D" and is made a part hereof by
reference, (b) the contemporaneous tender by Seller to Buyer and by Buyer to
Seller of a release and hold harmless agreement, in the forms which are attached
hereto as Exhibits "E" and "F", respectively, and are made a part hereof by
reference, from Seller to Nevada Gold & Casinos, Inc. and from Nevada Gold &
Casinos, Inc. to Seller, on their respective behalf and on behalf of any of
their respective subsidiaries and affiliates and their respective directors,
officers, agents, servants, workmen and employees (collectively "Releasor"),
whereby Releasor releases and holds the other party to the release and hold
harmless agreement and its respective subsidiaries and affiliates and its
respective directors, officers, agents, servants, workmen and employees
(collectively "Releasee") from and against any liability, action, cause of
action, demand, suit or claim arising out of or relating to the sale of the
Premises to Buyer or that certain Operating Agreement of Caesars Black Hawk,
L.L.C. dated as of February 26, 1996, (c) the contemporaneous tender by Seller
to Buyer of Seller's consent and
-6-
<PAGE>
release for the benefit of the City of Black Hawk, Colorado, in a form and of a
content reasonably acceptable to both Seller and the City of Black Hawk,
Colorado, relating to the exchange by the City of Black Hawk, Colorado of the
Parcel identified as Parcel E2 for the parcel identified as Parcel D, (d) the
contemporaneous tender by Seller to Buyer of such plans, drawings,
specifications and other development material relating to the Premises
specifically identified in writing by Buyer which is in the possession of Seller
and to which Seller has clear title, and (e) such permits, consents and
approvals relating to the Premises specifically identified by Buyer in writing
as may be assignable by Seller to Buyer. At Closing, upon tender by Buyer of the
balance of the Purchase Price and the form of release set forth in Exhibit "F"
executed by Nevada Gold & Casinos, Inc., Seller shall deliver to Buyer the
following:
(i) good and marketable title as provided in (a), above;
(ii) the form of release set forth in Exhibit "E" and executed by
Seller as provided in (b), above;
(iii) the consent and release specified in (c), above;
(iv) a general bill of sale conveying title to such of the plans,
drawings, specifications and other development material as
are specified in (d), above; and,
(v) a general assignment of such of the permits, consents or
approvals as are specified in (e), above.
Except as set forth in the special warranty deed or deeds to be tendered by
Seller to Buyer at Closing and except as otherwise specifically set forth in
this Section 5, the purchase and sale of the Premises shall be absolute and the
Premises are to be tendered in "as is, where is" condition.
6. ADJUSTMENTS AT CLOSING. Current year real estate taxes shall be
----------------------
prorated as of the date of Closing. All transfer, sales and use taxes, if any,
applicable to the purchase and
-7-
<PAGE>
sale of the Premises shall be the responsibility of and paid by Buyer. Buyer
shall be responsible for procuring its own title insurance, any and all surveys
of the Premises and all recording fees, document preparation fees and similar
fees and costs. Escrow fees and costs shall be shared equally between Seller any
Buyer.
7. TIME IS OF THE ESSENCE. Time is of the essence to this Agreement.
----------------------
Similarly, the making of the payments as required by no later than the times
and dates required under Section 2 of this Agreement is also of the essence.
8. EFFECT OF BREACH/REMEDIES.
-------------------------
(a) By Buyer: If any payment or other condition hereof is not made,
--------
tendered or performed by Buyer as herein provided, Seller's sole remedy shall
be, upon written notice to Buyer, to declare this Agreement null and void and of
no further force or effect, in which event (i) Seller and Buyer shall be
released form all obligations hereunder and (ii) Seller, as its sole and
exclusive remedy, shall have sole right and title to (A) the Nonrefundable
Deposit and (B) any portion of the Additional Deposit, the First Closing Date
Payment, the Second Extended Closing Date Payment, and/or the Third Extended
Closing Date Payment amounts, which Seller has actually received from Buyer as
of the date Seller declares this Agreement to be null and void, as liquidated
damages, and not as a penalty, in full and complete accord, satisfaction,
release, discharge and settlement of all of Buyer's duties and obligations
arising under this Agreement without any further liability or rights hereunder
or other remedies accruing to Seller (it being understood that Buyer shall have
no obligation to make the Additional Deposit, or the First, Second or Third
Extended Closing Date Payments), all for Buyer's failure to perform this
Agreement; Seller and Buyer agree that the liquidated damages provided for
herein are fair and reasonable, inasmuch as the exact damages incurred by Seller
as a result of Buyer's breach
-8-
<PAGE>
would be difficult to ascertain.
(b) By Seller: In the event or a material breach of default of
---------
Seller, Buyer shall have the right, but not the obligation, to seek performance
of this Agreement. Notwithstanding the foregoing, in the event there is a
material breach of a material representation or warranty by Seller at Closing,
Buyer shall the right, but not the obligation, to seek money damages - but not
consequential or punitive damages - arising out of such material breach of a
material representation or warranty by Seller at Closing.
(c) No Other Remedies: Neither Seller nor Buyer shall have any
-----------------
remedies upon a breach or default of this Agreement other than as specifically
set forth in this Section 8 or as specifically set forth elsewhere in this
Agreement.
9. TITLE AND POSSESSION AT CLOSING. Simultaneous with payment of the
-------------------------------
Purchase Price at Closing, Seller shall deliver (i) title to the Premises to
Buyer by a special warranty deed duly executed and acknowledged by Seller and
(ii) possession of the Premises to Buyer free and clear of all tenants or
persons who may be in possession of or otherwise have rights in the Premises.
10. NO BROKERS. Seller and Buyer represent to each other that no broker or
----------
finder has been involved in any portion of this purchase and sale and each shall
indemnify and hold the other harmless from and against any and all liability
arising from any such claim by a broker or finder.
11. CONFIDENTIALITY. Seller and Buyer hereby acknowledge and agree that
---------------
neither shall, without the prior written consent of the other, make any news or
press release, public announcement, denial or confirmation with respect to any
part of the subject matter of this Agreement, including, without limitation, any
advertisement, publication or news or press release
-9-
<PAGE>
regarding the fact that Seller has entered into an agreement with Buyer,
notwithstanding the foregoing, and provided Buyer is not otherwise in default
under this Agreement, Buyer may publish the fact that Buyer has acquired the
right to purchase the Premises so long as Buyer does not disclose any other
matter set forth in this Agreement.
12. SOLICITATION. Seller and Buyer agree that Seller may actively solicit
------------
any offers to purchase the Premises while the terms of this Agreement are in
effect, provided (i) Seller notifies such prospective purchaser of the
existence, but not the content, of this Agreement and (ii) any agreement between
Seller and such prospective purchaser shall be subordinate to this Agreement.
13. ASSIGNMENT. Neither Seller not Buyer shall assign this Agreement
----------
without the prior written approval of the non-assigning party, which approval
shall not be unreasonably withheld or unduly delayed. Seller hereby consents to
an assignment by Buyer of its rights under this Agreement to ICB, LLC;
notwithstanding the foregoing consent to assignment, Buyer shall nevertheless
remain liable for compliance with and satisfaction of any and all terms and
conditions of this Agreement required to be complied with to satisfied by Buyer
and any such assignment shall have no effect on Buyer's duties,
responsibilities, liabilities and obligations under this Agreement.
Notwithstanding the foregoing, Seller shall have the right to assign this
Agreement to any affiliate of Seller as a result of a corporate merger between
Seller and such affiliate. Any assignment in violation of this Section 13 shall
be null and void ab initio and of no further force or effect.
14. RELATIONSHIP AND AUTHORITY. Neither this Agreement, nor the
--------------------------
transactions contemplated hereby shall be construed or deemed to establish any
agency relationship between Seller and Buyer.
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<PAGE>
15. NOTICES. Any and all notices required by this Agreement shall be
-------
either hand-delivered, mailed via certified mail return receipt requested, or
sent via telecopier addresses to:
To Seller: David A. Mitchell
---------
Vice President
Caesars World Gaming Development Corporation
3800 Howard Hughes Parkway - 16th Floor
Las Vegas, Nevada 89109
Telecopier No. 702-731-3762
With copies to: Roberto Rivera-Soto, Esquire
--------------
Senior Vice President, General Counsel & Secretary
Caesars World, Inc.
3800 Howard Hughes Parkway - 16th Floor
Las Vegas, Nevada 89109
Telecopier No. 702-731-3789
-and-
James L. Cunningham, Esquire
Sherman & Howard, L.L.C.
First Interstate Tower North
633 Seventeenth Street - Suite 3000
Denver, Colorado 80202
Telecopier No. 303-298-0940
To Buyer: John M. Gallaway
--------
President & Chief Operating Officer
Casino America Inc.
711 Washington Loop
Biloxi, Mississippi 39530
Telecopier No. 601-436-4072
With copy to: Allan B. Solomon, Esquire
------------
Executive Vice President & General Counsel
Casino America, Inc.
2200 Corporate Boulevard N.W. - Suite 310
Boca Raton, Florida 33431
Telecopier No. 561-995-6665
All notices hand-delivered shall be deemed delivered as of the business day on
which the notice was actually delivered to the addressee. All notices mailed
shall be deemed delivered as of three
-11-
<PAGE>
(3) business days next after the date postmarked. All notices sent via
telecopier shall be deemed delivered as of the business day on which the
transmission is confirmed. Any changes in any of the addresses listed herein
shall be made by notice as provided in this Section 15.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Colorado without reference to any
conflict of laws principles.
17. BEST EVIDENCE. This Agreement shall be executed in original or "Xerox"
-------------
or photostatic copies and each copy bearing original signatures of the parties
hereto in ink shall be deemed an original. This Agreement may be executed in
counterparts and telecopies, and each counterpart and/or telecopy bearing
signatures shall be deemed and original.
18. AMENDMENT OR MODIFICATION. This Agreement may not be amended or
-------------------------
modified except by a writing signed by all parties hereto.
19. INTERPRETATION. The preamble recitals of this Agreement are
--------------
incorporated into and made a part of this Agreement; titles of Sections are for
convenience only and are not to be considered a part of this Agreement. All
references to the singular shall include the plural and all references to gender
shall, as appropriate, include other genders.
20. SEVERABILITY. In the event any one or more provisions of this
------------
Agreement is declared null and void or otherwise unenforceable as provided in
this Agreement, the remainder of this Agreement shall survive, unless such
survival vitiates the intent of the parties hereto.
21. DISPUTE RESOLUTION. Any and all claims, disputes or controversies
------------------
arising between the parties hereto regarding any of the terms or conditions of
this Agreement or the breach thereof, on the written demand of either of the
parties hereto, shall be submitted to and be determined by the Courts of the
State of Colorado sitting in Gilpin County. In addition to any
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<PAGE>
other relief afforded, the prevailing party in any litigation under this
Agreement shall be entitled to recover its reasonable attorneys' fees and costs
incurred in connection with such litigation.
22. NO RECORDATION. Neither Seller nor Buyer shall record this Agreement
--------------
or a memorandum of this Agreement or any other document memorializing or
referencing this Agreement placed of record without the prior written consent of
the other party; and attempted recordation of this Agreement shall be a default
of this Agreement and shall be void ab initio.
23. WAIVER. None of the terms of this Agreement including this Section
------
23, or any term, right or remedy hereunder, shall be deemed waived unless such
waiver is in writing and signed by the party to be charged therewith, and in no
event by reason of any failure to assert or delay in asserting any such term,
right or remedy or similar term, right or remedy hereunder.
24. WARRANTIES AND REPRESENTATIONS.
------------------------------
(a) By Seller: Effective as of the date of this Agreement and at
---------
Closing, Seller hereby represents and warrants to Buyer that:
(i) Seller makes no warranty or representation concerning any
environmental matters affecting or with respect to the Premises, Seller
specifically disclaims any warranty or representation concerning any
environmental matters affecting or with respect to the Premises, and Buyer is
hereby placed on inquiry concerning any environmental matters affecting or with
respect to the Premises;
(ii) to the best of Seller's knowledge, information and belief,
Seller has not received, and therefore makes no warranty or representation and
specifically disclaims any warranty or representation concerning, any notice
from any governmental authority concerning removal of any toxic or hazardous
waste, material or substance from the Premises or of any violation of
environmental protection laws with respect to the Premises and Buyer is hereby
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<PAGE>
placed on inquiry notice concerning any notice from any governmental authority
concerning removal of any toxic or hazardous waste, material or substance from
the Premises or of any violation of environmental protection laws with respect
to the Premises;
(iii) except as otherwise disclaimed in (i) and (ii), above,
Seller has no actual knowledge of any pending or threatened judicial,
administrative or other governmental action, or any pending or threatened action
by adjacent landowners, or any natural or artificial conditions upon the
Premises or any other significant adverse factor or condition relating to the
Premises;
(iv) except as otherwise disclaimed in (i) and (ii), above,
Seller has no actual knowledge of any violations of any statute, law, ordinance,
rule or regulation with respect to the use, maintenance or operation of the
premises;
(v) Seller has no actual knowledge of any condemnation
proceedings pending or threatened against the Premises, and Seller has received
no notice, oral or written, of the desire of any public authority or public or
quasi-public utility to take or use the Premises or any part thereof, nor has
Seller received any other demand, statement of deficiency or other notice from
any authority, utility or any private party with respect to the Premises;
(vi) Seller is not a "foreign person" as defined in Section 897
of the Internal Revenue Code of 1986, as amended, and Seller will deliver to
Buyer at Closing an affidavit under penalties of perjury, and in the form and
substance necessary to satisfy the requirements of the Internal Revenue Service
relating to the withholding of a portion of the Purchase Price, stating Seller's
United States taxpayer number;
(vii) except as otherwise set forth in Exhibits "A", "B", "C",
and "D" to this Agreement, Seller has no actual knowledge of any mortgages,
liens, rights, restrictions,
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<PAGE>
agreements, covenants, easements or other encumbrances affecting the Premises;
(viii) Seller has no actual knowledge of any other currently valid
agreements governing the transfer of title to or disposition of the Premises
which are superior to this Agreement;
(ix) Seller has no actual knowledge of any leases which may affect or
otherwise encumber the Premises at or after Closing;
(x) Seller has full right, power and authority to enter into and
perform this Agreement;
(xi) this Agreement, and the other agreements and instruments
contemplated hereby, constitute legal, valid and binding obligations of Seller,
enforceable in accordance with their respective terms;
(xii) neither the execution, delivery or performance of this Agreement
will conflict with or result in a breach of any of the terms, conditions or
provisions of any judgement, order, injunction, decree or ruling of any court to
which Seller or the Premises is subject or any agreement or instrument to which
Seller is a party or by which Seller or the Premises is bound, or constitute a
default thereunder, and,
(xiii) except as otherwise provided Section 26 of this Agreement, no
consent, approval or authorization of any governmental authority or private
party or other person or entity is required in connection with the execution,
delivery and performance of this Agreement by Seller.
(xiv) SPECIAL TAXING DISTRICTS MAY BE SUBJECT TO GENERAL OBLIGATION
INDEBTEDNESS THAT IS PAID BY REVENUES PRODUCED FROM ANNUAL TAX LEVIES ON THE
TAXABLE PROPERTY WITHIN
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<PAGE>
SUCH DISTRICTS. PROPERTY OWNERS IN SUCH DISTRICTS MAY BE PLACED AT RISK FOR
INCREASED MILL LEVIES AND EXCESSIVE TAX BURDENS TO SUPPORT THE SERVICING OF SUCH
DEBT WHERE CIRCUMSTANCES ARISING RESULTING IN THE INABILITY OF SUCH A DISTRICT
TO DISCHARGE SUCH INDEBTEDNESS WITHOUT AN INCREASE IN MILL LEVIES. BUYER SHOULD
INVESTIGATE THE DEBT FINANCING REQUIREMENTS OF THE AUTHORIZED GENERAL OBLIGATION
INDEBTEDNESS OF SUCH DISTRICT, EXISTING MILL LEVIES OF SUCH DISTRICT SERVICING
SUCH INDEBTEDNESS, AND THE POTENTIAL FOR AN INCREASE IN SUCH MILL LEVIES.
(xv) Seller has made no improvements to the Premises and has
taken no action with respect to the Premises or title to the Premises during the
pendency of this Agreement.
(xvi) the Premises comprises all the realty Seller or its
affiliates acquired for use in connection with a proposed joint venture with
Nevada Gold & Casinos, Inc. in Black Hawk, Colorado.
(b) By Buyer: Effective as of the date of this Agreement and at
--------
Closing, Buyer hereby represents and warrants to Seller that:
(i) Buyer has full right, power and authority to enter into
and perform this Agreement;
(ii) this Agreement, and the other agreements and
instruments contemplated hereby, constitute legal, valid and binding obligations
of Buyer, enforceable in accordance with their respective terms;
-16-
<PAGE>
(iii) neither the execution, delivery or performance of this
Agreement will conflict with or result in a breach of any of the terms,
conditions or provisions of any judgment, order, injunction, decree or ruling
of any court to which Buyer is subject or any agreement or instrument to which
Buyer is a party or by which Buyer is bound, or constitute a default thereunder,
and,
(iv) no consent, approval or authorization of any governmental
authority or private party or other person or entity is required in connection
with the execution, delivery and performance of this Agreement by Buyer.
25. NO MERGER. For a period not to exceed twelve (12) consecutive months
---------
from Closing, all warranties, representations, covenants and agreements made by
the parties under this Agreements shall be continuing, shall survive Closing and
shall not merge into the deed.
26. COMPLIANCE COMMITTEE INQUIRY. Buyer acknowledges that, as a result of
----------------------------
Seller or Seller's affiliates being licensed or qualified as a licensed casino
owner/operator in various jurisdictions, Seller is required to conduct
appropriate due diligence inquires concerning any material transaction in which
it engages and that the transactions envisioned by this Agreement fall within
the class of transactions which require that each conduct such due diligence
inquires regarding the other. Based on the foregoing, Buyer agrees that, upon
Seller's request, Buyer shall make such disclosures as are necessary or
desirable for Seller to conduct such inquiries of Buyer as Seller deems
appropriate to conduct the required due diligence inquiries to determine Buyer's
suitability pursuant to the standards set forth in the Nevada Gaming Control
Act, N.R.S. 463-170(2) and (3). Buyer further agrees that, should the results of
such due diligence inquiry be unsatisfactory to Seller, Seller shall have the
right to demand that Buyer cure such items disclosed in the due diligence
inquiry which Seller deems unsatisfactory
-17-
<PAGE>
and, failing such cure and within a reasonable period of time after demand
therefor, Seller shall have the right to terminate this Agreement without any
liability to it; any cure attempted by Buyer hereunder must (i) be immediately
undertaken by Buyer, and (ii) be pursued with dispatch and diligence.
27. COOPERATION AND ACCESS. Seller and Buyer agree that each shall
----------------------
cooperate with the other during the pendency of this Agreement. Seller agrees
that Buyer and Buyer's agents and contractors shall, upon reasonable prior
written notice and at reasonable times, be permitted access to enter upon the
Premises for the purpose of performing such inspections as Buyer may, in the
course of its own diligence, perform on the Premises. Seller agrees to provide
Buyer copies of any notices respecting the Premises received by Seller from any
governmental authority during the pendency of this Agreement. Upon execution and
delivery of this Agreement, Seller shall make available to Buyer all of Seller's
files and documents concerning the Premises including, but not limited to,
environmental and zoning or planning matters, plans, applications, requests for
approvals, tests, reports, analyses or other matters pertaining to the Premises
in the possession of Seller or its representatives. Seller shall cooperate with
Buyer in the conduct of Buyer's inquiries and in the pursuit of any applications
for permits or approvals sought by Buyer in connection with the Premises,
provided, however, such requests by Buyer for cooperation from Seller shall at
all times and in all respects be reasonable and compliance with such requests by
Seller shall be at no cost to Seller. Upon termination of this Agreement or at
Closing, whichever occurs first, Buyer shall immediately return to Seller all
material Seller has provided to Buyer pursuant to this Section 27, together with
a written representation by Buyer that Buyer's return of such material is
complete and Buyer has not retained, and has not suffered others to retain,
either originals or copies of any
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<PAGE>
such material.
28. BINDING EFFECT. Without waiver of the restrictions of Section 13 of
--------------
this Agreement, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and/or assigns.
30. PAROL. This Agreement constitutes the entire agreement and
-----
understanding of the parties hereto with respect to the subject matter hereof,
and this Agreement supersedes any prior understandings, agreements or
undertakings.
IN WITNESS WHEREOF AND INTENDING TO BE LEGALLY BOUND THEREBY, the parties
hereto have duly executed and delivered this Agreement as of the day and year
first above written.
ROMAN ENTERTAINMENT CORPORATION
OF COLORADO
By: /s/ Peter G. Boynton
------------------------------------
Peter G. Boynton, President
CASINO AMERICA, INC.
By: /s/ Allan B. Solomon
------------------------------------
Allan B. Solomon, Executive Vice
President
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<PAGE>
==================================================
PURCHASE AND SALE AGREEMENT
("AGREEMENT")
-by and between-
ROMAN ENTERTAINMENT CORPORATION
OF COLORADO
("SELLER")
-and-
CASINO AMERICA, INC
("BUYER")
==================================================
EXHIBIT "A"
THE WOODALL PARCEL DEED
==================================================
<PAGE>
[COPY TO COME]
<PAGE>
==================================================
PURCHASE AND SALE AGREEMENT
("AGREEMENT")
-by and between-
ROMAN ENTERTAINMENT CORPORATION
OF COLORADO
("SELLER")
-and-
CASINO AMERICA, INC
("BUYER")
==================================================
EXHIBIT "B"
THE WEAVER PARCEL DEED
==================================================
<PAGE>
SPECIAL WARRANTY DEED
---------------------
THIS DEED, made this 16 day of January, 1996, between NEVADA GOLD &
CASINOS, INC., A NEVADA CORPORATION, ("Grantor"); and ROMAN ENTERTAINMENT
CORPORATION OF COLORADO, A COLORADO CORPORATION, whose legal address is 3570 Las
Vegas Blvd., Las Vegas, Nevada 89109.
WITNESSETH, that the Grantor, for and in consideration of the sum of
NINE HUNDRED THOUSAND DOLLARS and No/100 ($900,000.00), the receipt and
sufficiency of which is hereby acknowledged, has granted, bargained and sold,
and by these presents does grant, bargain, sell and confirm, unto the Grantee,
its successors and assigns forever, all of the real property, together with
improvements, if any, situated, lying and being in the County of Gilpin, State
of Colorado, described as follows:
LOTS 9 AND 10,
BLOCK 51
CITY OF BLACK HAWK
EXCEPT ANY PORTION THEREOF LYING WITHIN MAIN
STREET AS IT PRESENTLY EXISTS OR MAY BE CLAIMED
BY THE CITY OF BLACK HAWK, AND EXCEPT ANY
LAND, IF ANY, CONVEYED BY BOUNDARY AGREEMENT
RECORDED AUGUST 9, 1993 IN BOOK 548 AT PAGE 98,
AND EXCEPT ANY MINE OF GOLD, SILVER, CINNABAR
OR COPPER OR TO ANY VALID MINING CLAIM OR
POSSESSION HELD UNDER EXISTING LAWS, AS SHOWN
IN UNITED STATE PATENTS RECORDED MAY 13, 1874 IN
BOOK 56 AT PAGE 555 AND JULY 21, 1877 IN BOOK 62 AT
PAGE 456,
COUNTY OF GILPIN
STATE OF COLORADO
(The "Property"), subject to the matters set forth on Exhibit "A" attached
--------
hereto and incorporated herein by this reference.
TOGETHER with all and singular the hereditaments and appurtenances
thereto belonging, or in anywise appertaining, and the reversion and reversions,
remainder and remainders, rents, issues and profits thereof, and all the estate,
right, title, interest, claim and demand whatsoever of the Grantor, either in
law or equity, of, and to the above bargained premises, with the hereditaments
and appurtenances;
TO HAVE AND TO HOLD the said premises above bargained and described
with the appurtenances, unto the Grantee, its successors and assigns forever.
The Grantor, for it and its successors and assigns does covenant and agree that
it shall and will WARRANT AND FOREVER
GILIP COUNTY
State Documentary Fee
$ none
------------------
<PAGE>
DEFEND the above-bargained premises in the quiet and peaceable possession of the
Grantee, its successors and assigns, against all and every person or persons
claiming the whole or any part thereof, by, through or under the Grantor.
IN WITNESS WHEREOF, the Grantor has executed this deed on the day and
year first set forth above.
NEVADA GOLD & CASINO, INC., a
Nevada corporation
By: /s/ David K. McCaleb
--------------------------------
Secretary
STATE OF TEXAS )
)ss.
COUNTY OF HARRIS )
The foregoing instrument was acknowledged before me this 15 day of
January, 1996, by David K. McCaleb as Secretary of Nevada Gold & Casinos, Inc.,
a Nevada corporation.
My commission expires: 7-21-98
-----------
Witness my hand and official seal.
[SEAL APPEARS HERE] /s/ [SIGNATURE ILLEGIBLE]
--------------------------------
Notary Public
<PAGE>
EXHIBIT "A" TO SPECIAL WARRANTY DEED
EXCEPTIONS TO TITLE
-------------------
1. Taxes for the current year, a lien but not yet due or payable.
2. Easements, restrictions, covenants and rights-of-way of record, if any,
except those created by Grantor.
3. Any facts, rights, interests, or claims which are not shown by the public
records, but which could be ascertained by an inspection of the land or by
making inquiry of persons in possession thereof.
4. Easements, or claims of easements, not shown by the public records.
5. Discrepancies, conflicts in boundary lines, shortage in area, or
encroachments and any facts which a correct survey and inspection of the land
would disclose, and which are not shown by the public records.
6. Any lien, or right to a lien, for services, labor or material heretofore or
hereafter furnished, imposed by law and not shown by the public records, except
those created by Grantor.
7. Any water rights or claims or title to water, in, or under the land.
8. Unpatented mining claims; reservations or exceptions in patents or in Acts
authorizing the issuance thereof.
9. Unpatented mining claims; reservations or exceptions in patents or in acts
authorizing the issuance thereof, including, but not limited to reservations
contained in the patents to the City of Black Hawk, recorded May 13, 1874 in
Book 56 at Page 555 and July 21, 1877 in Book 62 at Page 456.
10. Easement and Right of Way for main street purposes as reserved by
instrument recorded February 2, 1981 in Book 334 at Page 353.
11. The rights, if any, of others to use or maintain public or private roads or
highways ???? over or across the land.
12. Terms, agreements, provisions, conditions and obligations as contained in
Boundary Agreement by and Between Byron C. Weaver and the City of Black Hawk
recorded August 9, 1993 in Book 548 at Page 98.
13. Claims arising from Civil Action Case No. 95 CV 103 in the District Court
of Gilpin County, entitled Nevada Gold & Casinos, Inc. Plaintiff(s) vs Byron C.
----------------------------------------------------
Weaver Defendant(s) including without limitation, the Notice of Lis ?????
- -------------------
recorded December 12, 1995 in Book 592 at Page 021.
14. Terms, agreements, provisions, conditions and obligations as contained in
Option to Purchase Vacant Land recorded December 22, 1995 in Book 591 at Page
446.
-3-
<PAGE>
EXHIBIT "A" TO SPECIAL WARRANTY DEED
EXCEPTIONS TO TITLE
-------------------
1. Taxes for the current year, a lien but not yet due or payable.
2. Easements, restrictions, covenants and rights-of-way of record, if any,
except those created by Grantor.
3. Any facts, rights, interests, or claims which are not shown by the public
records, but which could be ascertained by an inspection of the land or by
making inquiry of persons in possession thereof.
4. Easements, or claims of easements, not shown by the public records.
5. Discrepancies, conflicts in boundary lines, shortage in area, or
encroachments and any facts which a correct survey and inspection of the land
would disclose, and which are not shown by the public records.
6. Any lien, or right to a lien, for services, labor or material heretofore or
hereafter furnished, imposed by law and not shown by the public records, except
those created by Grantor.
7. Any water rights or claims or title to water, in, or under the land.
8. Unpatented mining claims; reservations or exceptions in patents or in Acts
authorizing the issuance thereof.
9. Unpatented mining claims; reservations or exceptions in patents or in acts
authorizing the issuance thereof, including, but not limited to reservations
contained in the patents to the City of Black Hawk, recorded May 13, 1874 in
Book 56 at Page 555 and July 21, 1877 in Book 62 at Page 456.
10. Easement and Right of Way for main street purposes as reserved by
instrument recorded February 2, 1981 in Book 334 at Page 353.
11. The rights, if any, of others to use or maintain public or private roads or
highways ????? over or across the land.
12. Terms, agreements, provisions, conditions and obligations as contained in
Boundary Agreement by and Between Byron C. Weaver and the City of Black Hawk
recorded August 9, 1993 in Book 548 at Page 98.
13. Claims arising from Civil Action Case No. 95 CV 103 in the District Court
of Gilpin County, entitled Nevada Gold & Casinos, Inc. Plaintiff(s) vs Byron C.
----------------------------------------------------
Weaver Defendant(s) including without limitation, the Notice of Lis ?????
- -------------------
recorded December 12, 1995 in Book 592 at Page 021.
14. Terms, agreements, provisions, conditions and obligations as contained in
Option to Purchase Vacant Land recorded December 22, 1995 in Book 591 at Page
446.
-3-
<PAGE>
==========================================
PURCHASE AND SALE AGREEMENT
("AGREEMENT")
-by and between-
ROMAN ENTERTAINMENT CORPORATION
OF COLORADO
("SELLER")
-and-
CASINO AMERICA, INC.
("BUYER")
============================================
EXHIBIT "C"
THE WOODALL PARCEL TITLE INSURANCE POLICY
============================================
<PAGE>
POLICY OF TITLE INSURANCE
[LOGO]
[CERTIFICATE OF FIRST AMERICAN TITLE INSURANCE COMPANY APPEARS HERE]
SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED
IN SCHEDULE B AND THE CONDITIONS AND STIPULATIONS, FIRST AMERICAN TITLE
INSURANCE COMPANY, a California corporation, herein called the Company, insures,
as of Date of Policy shown in Schedule A, against loss or damage, not exceeding
the Amount of Insurance stated in Schedule A, sustained or incurred by the
insured by reason of:
1. Title to the estate or interest described in Schedule A being vested
other than as stated therein;
2. Any defect in or lien or encumbrance on the title;
3. Unmarketability of the title;
4. Lack of a right of access to and from the land.
The Company will also pay the costs, attorneys' fees and expenses incurred in
defense of the title, as insured, but only to the extent provided in the
Conditions and Stipulations.
First American Title Insurance Company
BY /s/ Parker S. Kennedy PRESIDENT
ATTEST /s/ [SIGNATURE ILLEGIBLE] SECRETARY
<PAGE>
[COPY TO COME]
<PAGE>
[COPY TO COME]
<PAGE>
ENDORSEMENT
Attached to Policy No. J 638673
issued by
FIRST AMERICAN TITLE INSURANCE COMPANY
The Company hereby insures the insured against loss which the Insured shall
sustain by reason of physical but not aesthetic damage to improvements
existing on the land at Date of Policy or constructed thereon thereafter
resulting from the exercise subsequent to the Date of Policy of any rights to
use the surface of the land under the mineral interest referred to in Exception
No. 1 of Schedule B ("the mineral rights"), subject, however, to the following
terms and conditions:
1. The insured shall notify the Company promptly in writing in case
knowledge shall come to an insured hereunder of any actual or
threatened exercise of the mineral rights.
2. The Company shall have the right, at its costs, to take any action
which in its opinion may be necessary or desirable in order for the
Company to avoid or minimize the extent of its liability under this
endorsement, including but not limited to any or all of the following:
(a) In the Company's own right, or in the name of the Insured for the
Company's benefit, to institute, prosecute and pursue to final
determination any proceedings at law or in equity, or before any
municipal, administrative, or regulatory tribunal or board.
(b) in the Company's own right, or in the name of the insured for the
Company's benefit, to compel the giving of security bond or
undertaking by the person or persons from whom the Insured is
entitled by law to such security, bond or undertaking, and in the
same amount or amounts to which the insured would have been so
entitled had this endorsement not been issued; and
(c) to retain or be paid out of any such security, bond or
undertaking, or out of any compensation or funds recovered by the
Company or the insured, such amount as will reimburse the Company
for all payments made to the insured by the Company by reason of
the insurance afforded by this endorsement, together with all
costs and expenses incurred by the Company in connection
therewith, including attorney's fees.
3. No rights, benefits or defenses are intended to or shall be deemed to
flow or be made available to any person or entity other than the
insured by reason of the insurance afforded by this endorsement, and
the insured agrees that all of the insured's rights and remedies
against third parties relating to the subject matter of this
endorsement shall be deemed to have remained intact, in the same
manner as if this endorsement had not been issued.
This endorsement is made a part of said policy and is subject to the
Schedules, Conditions and Stipulations therein, except as modified by the
provisions hereof.
FIRST AMERICAN TITLE INSURANCE COMPANY
By [SIGNATURE ILLEGIBLE] PRESIDENT [STAMPS APPEARS HERE]
BY [SIGNATURE ILLEGIBLE] ASSISTANT SECRETARY
<PAGE>
ENDORSEMENT
Attached to Policy No. J 638673
------------
Issued by
First American Title Insurance Company
The Company hereby insures the insured against loss or damage which the
insured shall sustain by reason of the enforcement or attempted enforcement
thereof against the land in connection with Item 4, 5, and 6 of Section Two of
Schedule B, Section 2.
Provided there is no claim which may be compensable under the provisions of
this endorsement that is known to the insured or to the Company and provided
that the applicable premium is paid for such future coverage at the time it is
requested; the Company hereby agrees to extend the insurance provided by this
endorsement to a mortgagee of the named insured or a purchaser from the named
insured.
This endorsement is made a part of the policy and is subject to all of the
terms and provisions thereof and of any prior endorsements thereto. Except to
the extent stated, it neither modifies any of the terms and provisions of the
policy and any prior endorsements, nor does it extend the effective date of the
policy and any prior endorsements, nor does it increase the face amount thereof.
Date: November 7, 1995
First American Title Insurance Company
By: [SIGNATURE ILLEGIBLE]
-----------------------------------
Authorized Signatory
Colorado Form No. 110.2 (4/94)(Modified)
Order No. FG999384.C-3
EXHIBIT A
<PAGE>
SCHEDULE A
Order No. FG999384.C-3 Policy No. J 638673
Amount of Insurance $4,200,000.00 PREMIUM: $7,251.00
Date of Policy NOVEMBER 7, 1995 at 4:30 P.M.
1. Name of Insured:
ROMAN ENTERTAINMENT CORPORATION OF COLORADO, A COLORADO CORPORATION
2. The estate of interest in the land which is covered by this Policy is:
FEE SIMPLE
3. Title to the estate or interest in the land is vested in:
ROMAN ENTERTAINMENT CORPORATION OF COLORADO, A COLORADO CORPORATION
4. The land referred to in this Policy is described as follows:
LOTS 11 - 21, BLOCK 51, AND
LOTS 1 - 18, BLOCK 52
CITY OF BLACK HAWK
EXCEPT ANY MINE OF GOLD, SILVER, CINNABAR OR COPPER OR TO ANY VALID MINING
CLAIM OR POSSESSION HELD UNDER EXISTING LAWS, AS EXCEPTED IN UNITED STATES
PATENTS RECORDED MAY 13, 1874, IN BOOK 56 AT PAGE 555, AND JULY 21, 1877,
IN BOOK 62 AT PAGE 456;
AND EXCEPT RIGHT OF WAY FOR MAIN STREET "AS IT NOW EXISTS," AS EXCEPTED IN
DEED RECORDED FEBRUARY 2, 1981, IN BOOK 334 AT PAGE 353.
COUNTY OF GILPIN
STATE OF COLORADO
THIS POLICY IS ISSUED IN LIEU OF AND REPLACES FIRST AMERICAN TITLE
INSURANCE COMPANY POLICY NO. J 426949, WHICH IS HEREBY CANCELLED
Issued on: MAY 29, 1997
Issued at: CLEAR CREEK-GILPIN ABSTRACT & TITLE CORP.
619 FIFTH ST. P.O. BOX 545 GEORGETOWN, CO 80444
(303) 569-2391 DENVER METRO: (303) 623-4869 FAX: (303) 569-2670
This Policy is valid only if Schedule B is attached
<PAGE>
Order No. FG999384.C-3 Policy No. J 638673
SCHEDULE B
This policy does not insure against loss or damage (and the Company will not
pay costs, attorneys' fees or expenses) which arise by reason of:
Section One:
1. Taxes or assessments not certified to the Treasurer's Office.
2. Any facts, rights, interests, or claims which are not shown by the public
records but which could be ascertained by an inspection of said land or by
making inquiry of persons in possession thereof.
3. Easements, or claims of easements, not shown by the public records.
4. Discrepancies, conflicts in boundary lines, shortage in area,
encroachments, and any facts which a correct survey would disclose, and
which are not shown by the public records.
5. Any lien, or right to a lien, for services, labor, or material heretofore
or hereafter furnished, imposed by law and not shown by the public
records.
6. Any and all unpaid taxes, assessments and unredeemed tax sales.
7. Any water rights or claims or title to water, in, or under the land.
8. Unpatented mining claims; reservations or exceptions in patents or in Acts
authorizing the issuance thereof.
Section Two:
EXCEPTIONS 2, 3, 4 AND 5 OF SECTION ONE OF SCHEDULE B, ARE HEREBY DELETED.
1. UNPATENTED MINING CLAIMS; RESERVATIONS OR EXCEPTIONS IN PATENTS OR IN ACTS
AUTHORIZING THE ISSUANCE THEREOF, INCLUDING, BUT NOT LIMITED TO
RESERVATIONS CONTAINED IN THE PATENTS TO THE CITY OF BLACK HAWK, RECORDED
MAY 13, 1874 IN BOOK 56 AT PAGE 555 AND JULY 21, 1877 IN BOOK 62 AT PAGE
456, AS FOLLOWS: "PROVIDING THAT NO TITLE SHALL BE HEREBY ACQUIRED TO ANY
MINE OF GOLD, SILVER, CINNABAR OR COPPER OR TO ANY VALID MINING CLAIM OR
POSSESSION HELD UNDER EXISTING LAWS."
2. RESERVATION OF RIGHTS OF WAY FOR STREETS, ALLEYS AND ROADS AND FOR WATER
PIPES, AS RESERVED IN DEED RECORDED IN BOOK 206 AT PAGE 218.
3. ANY RIGHT, CLAIM OR INTEREST IN OR TO LOTS 12, 13, AND 14, BLOCK 51, CITY
OF BLACK HAWK, OR ANY PERSON OF ENTITY CLAIMING BY, THROUGH, OR UNDER
LEMUEL N. BRADLEY AND/OR JAMES B. BRADLEY.
4. ANY RIGHT, CLAIM OR INTEREST IN OR TO LOTS 16 AND 17, BLOCK 51, CITY OF
BLACK HAWK, OR ANY PERSON OR ENTITY CLAIMING BY, THROUGH, OR UNDER E. M.
BALDWIN..
5. ANY RIGHT, CLAIM OR INTEREST IN OR TO LOTS 16, 17, 18, 19, 20, AND 21,
BLOCK 51, CITY OF BLACK HAWK, OR ANY PERSON OR ENTITY CLAIMING BY, THROUGH,
OR UNDER R. MILTON CORNELIUS AND/ OR FRANK WEAVER AND/OR HENRY J. CALVIRD.
6. TERMS, AGREEMENTS, PROVISIONS, CONDITIONS AND OBLIGATIONS AS CONTAINED IN
BOUNDARY AGREEMENT RECORDED NOVEMBER 2, 1995 IN BOOK 589 AT PAGE 240.
Schedule B of this policy consists of 1 page
<PAGE>
[LOGO]
[CERTIFICATE OF FIRST AMERICAN TITLE INSURANCE COMPANY APPEARS HERE]
POLICY
OF
TITLE
INSURANCE
<PAGE>
==========================================
PURCHASE AND SALE AGREEMENT
("AGREEMENT")
-by and between-
ROMAN ENTERTAINMENT CORPORATION
OF COLORADO
("SELLER")
-and-
CASINO AMERICA, INC.
("BUYER")
============================================
EXHIBIT "D"
THE WEAVER PARCEL TITLE INSURANCE POLICY
============================================
<PAGE>
POLICY OF TITLE INSURANCE
[LOGO]
[CERTIFICATE OF FIRST AMERICAN TITLE INSURANCE COMPANY APPEARS HERE]
SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED
IN SCHEDULE B AND THE CONDITIONS AND STIPULATIONS, FIRST AMERICAN TITLE
INSURANCE COMPANY, a California corporation, herein called the Company, insures,
as of Date of Policy shown in Schedule A, against loss or damage, not exceeding
the Amount of Insurance stated in Schedule A, sustained or incurred by the
insured by reason of:
1. Title to the estate or interest described in Schedule A being vested
other than as stated therein;
2. Any defect in or lien or encumbrance on the title;
3. Unmarketability of the title;
4. Lack of a night of access to and from the land.
The Company will also pay the costs, attorneys' fees and expenses incurred in
defense of the title, as insured, but only to the extent provided in the
Conditions and Stipulations.
First American Title Insurance Company
BY /s/ Parker S. Kennedy PRESIDENT
ATTEST /s/ [SIGNATURE ILLEGIBLE] SECRETARY
<PAGE>
[COPY TO COME]
<PAGE>
[COPY TO COME]
<PAGE>
ENDORSEMENT 100.31
Order No. FG999872.C-2
Attached to Policy No. J 426966
Issued By
FIRST AMERICAN TITLE INSURANCE COMPANY
The Company hereby insures the insured against loss which the insured shall
sustain by reason of physical, but not aesthetic, damage to improvements
existing on the land at Date of Policy or constructed thereon thereafter,
resulting from the exercise subsequent to the Date of Policy of any rights to
use the surface of the land under the mineral interest referred to in
Exception(s) No. 1 of Schedule B Section Two ("the mineral rights"), subject,
however, to the following terms and conditions:
1. The insured shall notify the Company promptly in writing in case knowledge
shall come to an insured hereunder of any actual or threatened exercise of
the mineral rights.
2. The Company shall have the right, at its cost, to take any action which in
its opinion may be necessary or desirable in order for the Company to avoid
or minimize the extent of its liability under this endorsement, including,
but not limited to, any or all of the following:
(a) In the Company's own right, or in the name of the insured for the
Company's benefit to institute, prosecute and pursue to final
determination any proceedings at law or in equity, or before any
municipal, administrative, or regulatory tribunal or boars:
(b) In the Company's own right, or in the name of the insured for the
Company's benefit, to compel the giving of security, bond or
undertaking by the person or persons from whom the insured is entitled
by law to such security, bond or undertaking, and in the same amount
or amounts to which the insured of such borrower would have been so
entitled had this endorsement not been issued: and
(c) To retain or be paid out of any such security, bond or undertaking, or
out of any compensation or funds recovered by the Company or by the
insured, such amount as will reimburse the Company for all payments
made to the insured by the Company by reason of the insurance afforded
by this endorsement, together with all costs and expenses incurred by
the Company in connection therewith, including attorney's fees.
3. No rights, benefits or defenses are intended to or shall be deemed to flow
or be made available to any person or entity other than the insured by
reason of the insurance afforded by this endorsement, and the insured
agrees that all of the insured's rights and remedies against third parties
relating to the subject matter of this endorsement shall be deemed to have
remained intact, in the same manner as if this endorsement had not been
issued.
This endorsement is made a part of the policy and is subject to all of the terms
and provisions thereof and of any prior endorsements thereto. Except to the
extent expressly stated, it neither modifies any of the terms and provisions of
the policy and any prior endorsements, nor does it extend the effective date of
the policy and any prior endorsements, not does it increase the face amount
thereof.
Dated: JANUARY 18, 1996 FIRST AMERICAN TITLE INSURANCE COMPANY
CLEAR CREEK - GILPIN ABSTRACT & TITLE
By: /s/ Karen Hager
-----------------------------------
Authorized Signatory
Colorado Form No. 100.31 (4/94)
<PAGE>
SCHEDULE A
Order No. FG999872.C-2 Policy No. J 426966
Amount of Insurance $900,000.00 PREMIUM: $2,148.00
Date of Policy JANUARY 18, 1996 at 4:30 P.M.
1. Name of Insured:
ROMAN ENTERTAINMENT CORPORATION OF COLORADO, A COLORADO CORPORATION
2. The estate or interest in the land which is covered by this Policy is:
FEE SIMPLE
3. Title to the estate or interest in the land is vested in:
ROMAN ENTERTAINMENT CORPORATION OF COLORADO, A COLORADO CORPORATION
4. The land referred to in this Policy is described as follows:
AS SET FORTH ON SCHEDULE A
Issued on: FEBRUARY 26, 1996
Issued at: CLEAR CREEK-GILPIN ABSTRACT & TITLE CORP.
619 FIFTH ST. P.O. BOX 545 GEORGETOWN, CO 80444
(303) 569-2391 DENVER METRO: (303) 623-4869 FAX: (303) 569-2670
This Policy is valid only if Schedule B is attached
<PAGE>
Order Number FG999872.C-2 Policy Number J 426966
SCHEDULE A
The land referred to in Schedule A is situated in the State of Colorado, County
of GILPIN and is described as follows:
LOTS 9 AND 10,
BLOCK 51,
CITY OF BLACK HAWK,
EXCEPT ANY PORTION THEREOF LYING WITHIN MAIN STREET AS IT PRESENTLY EXISTS OR
MAY BE CLAIMED BY THE CITY OF BLACK HAWK,
AND EXCEPT ANY LAND, IF ANY, CONVEYED BY BOUNDARY AGREEMENT RECORDED AUGUST 9,
1993 IN BOOK 548 AT PAGE 98,
AND EXCEPT ANY MINE OF GOLD, SILVER, CINNABAR COPPER OR TO ANY VALID MINING
CLAIM OR POSSESSION HELD UNDER EXISTING LAWS, AS SHOWN IN UNITED STATES PATENTS
RECORDED MAY 13, 1874 IN BOOK 56 AT PAGE 555 AND JULY 21, 1877 IN BOOK 62 AT
PAGE 456,
COUNTY OF GILPIN, STATE OF COLORADO.
<PAGE>
Order No. FG999872.C-2 Policy No. J 426966
SCHEDULE B
This policy does not insure against loss or damage (and the Company will not pay
costs, attorneys' fees or expenses) which arise by reason of:
Section One:
1. Taxes or assessments not certified to the Treasurer's Office.
2. Any facts, rights, interests, or claims which are not shown by the public
records but which could be ascertained by an inspection of said land or by
making inquiry of persons in possession thereof.
3. Easements, or claims of easements, not shown by the public records.
4. Discrepancies, conflicts in boundary lines, shortages in area,
encroachments, and any facts which a correct survey would disclose, and
which are not shown by the public records.
5. Any lien, or right to a lien, for services, labor, or material heretofore
or hereafter furnished, imposed by law and not shown by the public records.
6. Any and all unpaid taxes, assessments and unredeemed tax sales.
7. Any water rights or claims or title to water, in, or under the land.
8. Unpatented mining claims; reservations or exceptions in patents or in Acts
authorizing the issuance thereof.
Section Two:
1. UNPATENTED MINING CLAIMS; RESERVATIONS OR EXCEPTIONS IN PATENTS OR IN ACTS
AUTHORIZING THE ISSUANCE THEREOF, INCLUDING, BUT NOT LIMITED TO
RESERVATIONS CONTAINED IN THE PATENTS TO THE CITY OF BLACK HAWK, RECORDED
MAY 13, 1874 IN BOOK 56 AT PAGE 555 AND JULY 21, 1877 IN BOOK 62 AT PAGE
456, AS FOLLOWS: "PROVIDING THAT NO TITLE SHALL BE HEREBY ACQUIRED TO ANY
MINE OF GOLD, SILVER, CINNABAR OR COPPER OR TO ANY VALID MINING CLAIM OR
POSSESSION HELD UNDER EXISTING LAWS."
2. EASEMENT AND RIGHT OF WAY FOR MAIN STREET PURPOSES AS RESERVED BY
INSTRUMENT RECORDED FEBRUARY 2, 1981 IN BOOK 334 AT PAGE 353.
3. THE RIGHTS, IF ANY, OF OTHERS TO USE OR MAINTAIN PUBLIC OR PRIVATE ROADS OR
HIGHWAYS UPON, OVER, OR ACROSS THE LAND.
4. TERMS, AGREEMENTS, PROVISIONS, CONDITIONS AND OBLIGATIONS AS CONTAINED IN
BOUNDARY AGREEMENT BY AND BETWEEN BYRON C. WEAVER AND THE CITY OF BLACK
HAWK RECORDED AUGUST 9, 1993 IN BOOK 548 AT PAGE 98.
5. TERMS, AGREEMENTS, PROVISIONS, CONDITIONS AND OBLIGATIONS AS CONTAINED IN
OPTION TO PURCHASE VACANT LAND RECORDED DECEMBER 22, 1995, IN BOOK 591 AT
PAGE 446.
6. LIS PENDENS AS DISCLOSED IN CIVIL ACTION NO. 95 CV 103 IN THE DISTRICT
COURT OF GILPIN COUNTY, ENTITLED NEVADA GOLD & CASINOS, INC.,, PLAINTIFF(S)
VS. BYRON C. WEAVER, DEFENDANT(S).
NOTICE OF LIS PENDENS RECORDED DECEMBER 12, 1995, IN BOOK 592 AT PAGE 021.
<PAGE>
==========================================
PURCHASE AND SALE AGREEMENT
("AGREEMENT")
-by and between-
ROMAN ENTERTAINMENT CORPORATION
OF COLORADO
("SELLER")
-and-
CASINO AMERICA, INC.
("BUYER")
============================================
EXHIBIT "E"
RELEASE
-FROM-
ROMAN ENTERTAINMENT CORPORATION OF COLORADO, ET AL
-TO-
NEVADA GOLD AND CASINO, LTD, ET AL.
============================================
<PAGE>
RELEASE
-------
THIS RELEASE, dated as of _________________, 1997, is given by the Releasor,
ROMAN ENTERTAINMENT CORPORATION OF COLORADO, ROMAN HOLDING CORPORATION OF
COLORADO, THEIR RESPECTIVE SUBSIDIARIES AND AFFILIATES, AND THEIR RESPECTIVE
OFFICERS, DIRECTORS, AGENTS, SERVANTS, WORKMEN AND EMPLOYEES, c/o Roberto A.
Rivera-Soto, Esquire, Caesars World, Inc., 3800 Howard Hughes Parkway - 16th
Floor, Las Vegas, Nevada 89109, referred to as "I", to NEVADA GOLD & CASINOS,
LTD., COLORADO GOLD, LTD, THEIR RESPECTIVE SUBSIDIARIES AND AFFILIATES, AND
THEIR RESPECTIVE OFFICERS, DIRECTORS, AGENTS, SERVANTS, WORKMEN AND EMPLOYEES,
3040 Post Oak Boulevard - Suite 675, Houston, Texas 77056, referred to as "You."
1. RELEASE. I release and give up any and all claims and rights which I may
-------
have against You. This releases all claims, including those of which I am not
presently aware and those not mentioned in this Release. This Release applies to
claims resulting from anything which has happened up to now. I specifically
release the following claims:
Any and all claims arising directly or indirectly from
that certain Operating Agreement of Caesars Black Hawk,
L.L.C. dated as of February 26, 1996, or in the
purchase and/or sale of any realty located in City of
Black Hawk, County of Gilpin and State of Colorado from
or to any person or entity.
2. PAYMENT. I have been paid a total of, or have been provided with, Ten
-------
Dollars and Zero Cents ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, in full payment or
consideration for making this Release. I agree that I will not seek anything
further including any other payment from You.
3. WHO IS BOUND. I am bound by this Release. Anyone who succeeds to my rights
------------
and responsibilities, such as my successors, assigns, heirs or executors, is
also bound by this Release. This Release is made for Your benefit and all who
succeed to Your rights and responsibilities, such as Your successors, assigns,
heirs, or executors.
4. SIGNATURES. I understand and agree to the terms of this Release.
----------
-Page 1 of Two-
<PAGE>
ATTEST: ROMAN ENTERTAINMENT CORPORATION
OF COLORADO
__________________________________ By:____________________________
Roberto A. Rivera-Soto, Secretary Peter G Boynton, President
ATTEST: ROMAN HOLDING CORPORATION
OF COLORADO
__________________________________ By:____________________________
Roberto A. Rivera-Soto, Secretary Peter G. Boynton, President
-Page 2 of Two-
<PAGE>
===================================
PURCHASE AND SALE AGREEMENT
("AGREEMENT")
-by and between-
ROMAN ENTERTAINMENT CORPORATION
OF COLORADO
("SELLER")
-and-
CASINO AMERICA, INC.
("BUYER")
=================================
EXHIBIT "F"
RELEASE
-FROM-
NEVADA GOLD AND CASINOS, LTD., ET AL.
-TO-
ROMAN ENTERTAINMENT CORPORATION OF COLORADO, ET AL
=================================
<PAGE>
RELEASE
=======
THIS RELEASE, dated as of ______________, 1997, is given by the Releasor, NEVADA
GOLD & CASINOS, LTD., COLORADO GOLD, LTD, THEIR RESPECTIVE SUBSIDIARIES AND
AFFILIATES, AND THEIR RESPECTIVE OFFICERS, DIRECTORS, AGENTS, SERVANTS, WORKMEN
AND EMPLOYEES, 3040 Post Oak Boulevard - Suite 675, Houston, Texas 77056,
referred to as "I", to ROMAN ENTERTAINMENT CORPORATION OF COLORADO, ROMAN
HOLDING CORPORATION OF COLORADO, THEIR RESPECTIVE SUBSIDIARIES AND AFFILIATES,
AND THEIR RESPECTIVE OFFICERS, DIRECTORS, AGENTS, SERVANTS, WORKMEN AND
EMPLOYEES, c/o Roberto A. Rivera-Soto, Esquire, Caesars World, Inc., 3800
Howard Hughes Parkway - 16th Floor, Las Vegas, Nevada 89109, referred to as
"You."
1. RELEASE. I release and give up any and all claims and rights which I may
-------
have against You. This releases all claims, including those of which I am not
presently aware and those not mentioned in this Release. This Release applies to
claims resulting from anything which has happened up to now. I specifically
release the following claims;
Any and all claims arising directly or indirectly from that certain
Operating Agreement of Caesars Black Hawk, L.L.C dated as of
February 26, 1996, or the purchase and/or sale of any realty located
in City of Black Hawk, County of Gilpin and State of Colorado
from or to any person or entity.
2. PAYMENT. I have been paid a total of, or have been provided with, Ten
-------
Dollars and Zero Cents ($10.00) and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, in full payment or
consideration for making this Release. I agree that I will not seek anything
further including any other payment from You.
3. WHO IS BOUND. I am bound by this Release. Anyone who succeeds to my rights
------------
and responsibilities, such as my successors, assigns, heirs or executors, is
also bound by this Release. This Release is made for Your benefit and all who
succeed to Your rights and responsibilities, such as Your successors, assigns,
heirs, or executors.
4. SIGNATURES. I understand and agree to the terms of this Release.
----------
-Page 1 of Two-
<PAGE>
ATTEST: NEVADA GOLD AND CASINOS, LTD.
____________________________ By:_____________________________
_______________, Secretary H,. Thomas Winn, President
ATTEST: COLORADO GOLD, LTD.
OF COLORADO
____________________________ By:_____________________________
______________, Secretary H,. Thomas Winn, President
-Page 2 of Two-
<PAGE>
EXHIBIT 21
----------
List of Subsidiaries
Isle of Capri Black Hawk Capital Corp., a Colorado corporation, is a wholly
owned subsidiary of Isle of Capri Black Hawk L.L.C.
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated October 14, 1997, in the Registration Statement
(Form S-4) and related Prospectus of Isle of Capri Black Hawk L.L.C. for the
registration of $75,000,000 of 13% First Mortgage Notes with Contingent
Interest filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Chicago, Illinois
October 16, 1997
