<PAGE>
As filed with the Securities and Exchange Commission on October 8, 1999
Registration No. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
--------------
Hollywood Casino Shreveport
(Exact Name of Co-Registrants as Specified in their Charters)
<TABLE>
<S> <C> <C>
Louisiana 7011 72-1225563
(State or (Primary Standard Industrial (I.R.S. Employer Identification No.)
Other Classification Code Number)
Jurisdiction
of
Incorporation
or
Organization)
</TABLE>
Shreveport Capital Corporation
and the Guarantors named in Footnote (1) below
(Exact Name of Co-Registrants as Specified in their Charters)
<TABLE>
<S> <C> <C>
Louisiana 7011 75-2830167
(State or (Primary Standard Industrial (I.R.S. Employer Identification No.)
Other Classification Code Number)
Jurisdiction
of
Incorporation
or
Organization)
</TABLE>
William D. Pratt
Two Galleria Tower, Suite 2200 Executive Vice President, Secretary
13455 Noel Road and General Counsel
Dallas, Texas 75240 Two Galleria Tower, Suite 2200
(972) 392-7777 13455 Noel Road
Dallas, Texas 75240
(Address, Including Zip Code, and (972) 392-7777
Telephone Number, including Area Code,
of Co-Registrants' Principal Executive (Name and Address, Including Zip Code,
Offices) and Telephone Number, Including Area
Code, of Agent For Service)
--------------
With a copy to:
Michael A. Saslaw, Esq.
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Telephone: (214) 746-7700
Facsimile: (214) 746-7777
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to the Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
<CAPTION>
Proposed
Maximum
Title of Each Class of Proposed Maximum Aggregate Amount of
Securities to be Amount to be Offering Offering Registration
Registered Registered Price Per Unit Price(2) Fee
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
13% First
Mortgage Notes due 2006
with Contingent
Interest.............. $150,000,000 Not applicable $150,000,000 $41,700
- --------------------------------------------------------------------------------------
Senior Subordinated
Guarantees(3) ...... -- -- -- --
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
(1) HWCC-Louisiana, Inc., a Louisiana corporation (I.R.S. Employer
Identification No. 75-2478868), HCS I, Inc., a Louisiana corporation
(I.R.S. Employer Identification No. 75-2830161) and HCS II, Inc., a
Louisiana corporation (I.R.S. Employer Identification No. 75-2830163).
(2) Estimated solely for the purpose of calculating the registration fee.
(3) The notes are guaranteed by the co-registrants. No separate consideration
will be paid in respect of the guarantees.
The co-registrants hereby amend this registration statement on such date or
dates as may be necessary to delay its effective date until the co-registrants
shall file a further amendment which specifically states that this
Registration Statement thereafter shall become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
Subject to Completion Dated October 8, 1999
[HOLLYWOOD CASINO SHREVEPORT LOGO APPEARS HERE]
Offer to Exchange All Outstanding
Original 13% First Mortgage Notes due 2006
with Contingent Interest
for
Registered 13% First Mortgage Notes due 2006
with Contingent Interest
of
Hollywood Casino Shreveport
and
Shreveport Capital Corporation
. The exchange offer will . You will not owe additional
expire at 5:00 p.m., New federal income taxes if you
York City time, on , exchange your original
1999, unless we extend this notes.
date.
. If you fail to tender your
. If you decide to original notes, you will
participate in this continue to hold
exchange offer, the unregistered securities and
registered notes you it may be difficult for you
receive will be the same as to transfer them.
your original notes, except
that, unlike your original
notes, you will be able to
offer and sell the
registered notes freely to
any potential buyer in the
United States.
. No public market currently
exists for the notes. We do
not intend to list the
notes on any securities
exchange and, therefore, no
active public market is
anticipated.
. We will not receive any
proceeds from the exchange
offer.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
We urge you to read the "Risk Factors" section of this prospectus beginning on
page 9, which describes information you should consider before participating in
the exchange offer.
----------------
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to buy these securities in any state where the offer or sale is not
permitted.
The date of this prospectus is , 1999.
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
Because it is a summary, it does not contain all the information you should
consider before exchanging your original notes. You should read the entire
prospectus carefully, including the text under the section entitled "Risk
Factors." Except where otherwise noted, (1) the terms "the partnership," "we,"
"us" and "our" refer only to Hollywood Casino Shreveport, (2) the term "the
issuers" refers to both Hollywood Casino Shreveport and Shreveport Capital
Corporation, (3) the term "Hollywood Casino" refers to Hollywood Casino
Corporation, our parent company, and (4) the term "the Shreveport market"
refers to riverboat gaming operations in both Shreveport and Bossier City,
Louisiana. Hollywood Casino's wholly owned subsidiary, HWCC-Louisiana, holds
its partnership interests in Hollywood Casino Shreveport through two wholly
owned subsidiaries, HCS I and HCS II.
The Shreveport Resort
We will construct and own a highly themed hotel and casino destination resort
in Shreveport, Louisiana, which is approximately 180 miles east of Dallas,
Texas. Our resort will enjoy high visibility and convenient access from
Interstate 20, the highway that connects the Shreveport market with the
attractive feeder markets of Dallas/Fort Worth and East Texas. The resort will
be operated by Hollywood Casino and will feature its unique Hollywood theme,
which has been successfully implemented at Hollywood Casino's other properties.
The Hollywood theme incorporates the excitement and glamour of the motion
picture industry by utilizing designs inspired by famous movies, displays of
motion picture memorabilia and movie-themed gaming, entertainment and dining
areas. We believe that we have designed a premier facility that will surpass
the scope and quality of the Shreveport market's existing facilities. Our
resort is designed to feature:
. the largest riverboat in the Shreveport market with approximately 1,370
slot machines and 75 table games;
. an approximately 170,000 square foot land-based pavilion with a
dramatic 60-foot high atrium;
. 85-foot wide seamless entrances from the pavilion to all three levels
of the riverboat, giving our casino a land-based feel;
. a luxurious 405-room, all suite, art deco style hotel;
. an approximately 42,000 square foot "New Orleans style" restaurant and
entertainment promenade that will be developed by a group that includes
the principal developer of Beale Street in Memphis, Tennessee;
. high quality dining and entertainment amenities, including Hollywood
Casino's Fairbanks(R) gourmet steakhouse, the Hollywood Epic Buffet(R),
a 1950s style diner, a highly themed entertainment showroom, two
premier bars, several meeting rooms and a premium players' club;
. headliner entertainment at the adjacent Shreveport Civic Theater, which
seats approximately 1,730 people; and
. three parking facilities containing approximately 2,000 spaces.
The budget for the Shreveport resort is $230.0 million, including project
costs, the first three payments of fixed interest on the notes, significant
construction contingencies and fees and expenses. Construction of the
Shreveport resort began in August 1999 and we intend to open the resort early
in the fourth quarter of 2000.
Hollywood Casino Corporation
Hollywood Casino, through its wholly owned subsidiaries, develops, owns and
operates highly themed casino entertainment facilities under the service mark
Hollywood Casino(R). Hollywood Casino currently owns and operates two highly
successful casinos, one in Aurora, Illinois and the other in Tunica County,
Mississippi. In 1998, both of Hollywood Casino's facilities generated gaming
revenues in excess of their "fair share" of the gaming revenues in their
respective markets. HWCC-Shreveport, Inc., a wholly owned subsidiary of
Hollywood Casino, will manage the Shreveport resort pursuant to a management
agreement.
1
<PAGE>
Recent Developments
In September 1999, the Louisiana Gaming Control Board renewed our gaming
license through October 2004. We also hired a general manager for the
Shreveport resort and commenced construction on the facility and the
riverboat's hull. We have substantially completed the site preparation work,
commenced construction of the foundation and have ordered key components that
will form the boat basin. As of September 30, 1999, we have spent approximately
$21.4 million of the $230.0 million budgeted for the product, including $5.0
million paid to the City of New Orleans in August 1999 in connection with the
relocation of the casino from New Orleans to Shreveport.
Address and Telephone Number
Until completion of the Shreveport resort, our principal executive offices
will be located at Two Galleria Tower, Suite 2200, 13455 Noel Road, Dallas,
Texas 75240, and our telephone number will be (972) 392-7777.
2
<PAGE>
The Exchange Offer
Securities to be On August 10, 1999, we issued $150.0 million
Exchanged............... aggregate principal amount of 13% first mortgage
notes in the original offering in a transaction
exempt from the registration requirements of the
Securities Act of 1933. The initial purchasers of
those notes subsequently resold the notes in
transactions exempt from the registration
requirements of the Securities Act. The terms of the
original notes and the registered notes will be the
same, except that, unlike the original notes, you
will be able to offer and sell the registered notes
freely to any potential buyer in the United States.
For more details, see the section entitled
"Description of the Registered Notes."
The Exchange Offer....... You must properly tender your original notes in
accordance with the procedures described on page 56
of this prospectus. We will exchange all original
notes that you properly tender and do not withdraw.
If we exchange your original notes, we will issue
registered notes promptly after the expiration date
of the exchange offer.
Registration Rights In connection with the original sale and issuance of
Agreement................ the notes, the issuers and the guarantors entered
into a registration rights agreement with the
initial purchasers requiring the issuers to make the
exchange offer. The registration rights agreement
further provides that the issuers, together with the
guarantors, must use their reasonable best efforts
to:
. file a registration statement with respect to
the exchange offer on or before October 9,
1999;
. cause the registration statement with respect
to the exchange offer to be declared
effective on or before January 7, 2000;
. consummate the exchange offer within 30
business days after the registration
statement with respect to the exchange offer
becomes effective; and
. file a shelf registration statement for the
resale of the original notes with respect to
any original notes for which we cannot effect
an exchange offer within the above time
period or if any holders of original notes
are legally prohibited from participating in
the exchange offer.
Ability to Resell Based on interpretations by the staff of the SEC set
Registered Notes........ forth in published no-action letters, we believe you
may offer for resale, resell and otherwise freely
transfer the registered notes without further
registering those notes or delivering a prospectus
to a buyer if:
. you acquire the registered notes in the
ordinary course of your business;
. you are not participating, do not intend to
participate and have no arrangement or
understanding with any person to participate
in the distribution of registered notes; and
. you are not related to us.
However, the SEC has not specifically considered
this exchange offer in the context of a no-action
letter and we cannot be sure that the staff of
3
<PAGE>
the SEC would make the same determination with
respect to the exchange offer as in other
circumstances. Furthermore, you must, unless you are
a broker-dealer, acknowledge that you are not
engaged in, and do not intend to engage in, a
distribution of your registered notes and have no
arrangement or understanding to participate in a
distribution of registered notes. If you are a
broker-dealer that receives registered notes for
your own account pursuant to the exchange offer you
must acknowledge that you will comply with the
prospectus delivery requirements of the Securities
Act in connection with any resale of your registered
notes. If you are a broker-dealer who acquired
original notes directly from us and not as a result
of market-making activities or other trading
activities, you may not rely on the SEC staff's
interpretations discussed above or participate in
the exchange offer and must comply with the
prospectus delivery requirements of the Securities
Act in order to resell the registered notes.
The exchange offer is not being made to:
. holders of original notes in any jurisdiction
in which the exchange offer or its acceptance
would not comply with the securities or blue
sky laws of that jurisdiction; and
. holders of original notes who we control.
No Minimum Required...... There is no minimum amount of original notes that
you must tender in the exchange offer.
Procedures for
Exchanging Your If you wish to exchange your original notes for
Original Notes.......... registered notes you must transmit to State Street
Bank and Trust Company, our exchange agent, on or
before the expiration date either:
. a properly completed and executed letter of
transmittal, which we have provided to you
with this prospectus, or a facsimile of the
letter of transmittal, together with your
original notes and any other documentation
requested by the letter of transmittal;
. a computer generated message, in which you
acknowledge and agree to be bound by the
terms of the letter of transmittal,
transmitted by means of the Depository Trust
Company's Automated Tender Offer Program
system; or
. a notice of guaranteed delivery, in
accordance with the procedures described
under the heading "Description of the
Exchange Offer--Guaranteed Delivery
Procedures."
By agreeing to be bound by the terms of the letter
of transmittal, you will be deemed to have made the
representations described on page 56 under the
heading "Description of the Exchange Offer--
Procedures for Tendering Your Notes."
Guaranteed Delivery If you wish to exchange your original notes for
Procedures.............. registered notes and time will not permit the
documents required by the letter of transmittal
4
<PAGE>
to reach the exchange agent before the expiration
date of the exchange offer, or you cannot complete
the procedure for book-entry transfer on a timely
basis, you must exchange your original notes
according to the guaranteed delivery procedures
described on page 58 under the heading "Description
of the Exchange Offer--Guaranteed Delivery
Procedures."
Special Procedures for
Beneficial Owners....... If you are a beneficial owner whose original notes
are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and
you wish to exchange your original notes for
registered notes, you should contact the registered
holder promptly and instruct the registered holder
to exchange the original notes for you. If you wish
to exchange your original notes for registered notes
on your own behalf, you must either make appropriate
arrangements to register ownership of the original
notes in your name or obtain a properly completed
bond power from the registered holder.
The transfer of registered ownership may take
considerable time and you may not be able to be
complete the transfer before the expiration date of
the exchange offer.
Expiration Date.......... The exchange offer will expire at 5:00 p.m., New
York City time, on , 1999 or such later date and
time to which it is extended.
Withdrawal Rights........ Unless we extend the date, you may withdraw your
tendered original notes at any time before 5:00
p.m., New York City time, on the expiration date of
the exchange offer.
Interest on the
Registered Notes and Interest on your registered notes will accrue from
the Original Notes...... the date of the original issuance of the original
notes or from the date of the last periodic payment
of interest on the original notes, whichever is
later. Interest will be paid on registered notes
issued in the exchange offer, not on original notes
that are tendered and accepted for exchange.
Exchange Agent........... State Street Bank and Trust Company is serving as
exchange agent in connection with the exchange
offer.
Material Federal Income
Tax Considerations...... The exchange of your original notes for registered
notes in connection with the exchange offer should
not constitute a sale or an exchange for federal
income tax purposes. See "United States Federal
Income Tax Considerations."
Effect of Not If you fail to tender your original notes, you will
Tendering............... continue to hold unregistered securities and it may
be difficult for you to transfer them.
Please review the information on page 53 under the heading "Description of
the Exchange Offer" for more detailed information concerning the exchange
offer.
5
<PAGE>
The Registered Notes
Securities Offered...... $150.0 million principal amount of 13% first mortgage
notes due 2006 with contingent interest.
The Issuers............. Hollywood Casino Shreveport, a Louisiana general
partnership, and Shreveport Capital Corporation, a
Louisiana corporation and wholly owned subsidiary of
Hollywood Casino Shreveport.
Shreveport Capital Corporation serves as co-issuer of
the notes in order to facilitate the offering of the
original notes and resale of the notes.
Maturity Date........... August 1, 2006.
Interest Payment February 1 and August 1 of each year, beginning on
Dates.................. February 1, 2000.
Fixed Interest.......... Fixed interest will be payable at an annual rate of
13%.
Contingent Interest..... Contingent interest will accrue on the registered
notes after the Shreveport resort begins operating.
Contingent interest will be payable on each interest
payment date after the Shreveport resort begins
operating. The amount of contingent interest will be
equal to 5% of our consolidated cash flow for the
applicable period up to a maximum of $100.0 million
for any four consecutive fiscal quarters. The payment
of any or all of an installment of contingent
interest may be deferred under circumstances
described in the section entitled "Description of the
Registered Notes--Principal, Maturity and Interest."
Guarantors.............. The registered notes will be guaranteed on a senior
secured basis by HWCC-Louisiana, HCS I, HCS II and
any material restricted subsidiaries that Hollywood
Casino Shreveport may form in the future.
Ranking................. The registered notes will be senior secured
obligations of the issuers. The registered notes will
rank equal in right of payment with all of the
issuers' existing and future senior indebtedness and
will rank senior in right of payment to all of the
issuers' existing and future subordinated
indebtedness. On the closing date of the original
offering, the issuers had $7.0 million of
indebtedness outstanding in addition to the
registered notes, $5.0 million of which was repaid
promptly after the closing of the original offering
and $2.0 million of which will be paid in
installments after we open the Shreveport resort.
Security................ The registered notes will be secured by:
. a first priority security interest in the net
proceeds of the original offering;
. a first priority security interest in
substantially all of the assets that will
comprise the Shreveport resort, other than
assets secured by up to $35.0 million in
furniture, fixtures and equipment financing;
. a first priority security interest in
substantially all of the issuers' other
assets, other than the equity escrow account;
. a collateral assignment of the issuers'
interests in the principal agreements pursuant
to which the Shreveport resort will be
constructed, operated and managed; and
6
<PAGE>
. a collateral assignment of certain licenses
and permits relating to the construction,
operation and management of the Shreveport
resort.
The guarantees will be secured by a first priority
security interest in substantially all of the
guarantors' assets, including a pledge of the capital
stock of HCS I and HCS II and the partnership
interests in Hollywood Casino Shreveport held by HCS
I and HCS II, but excluding $2.5 million being held
to fund HWCC-Louisiana's obligation to Sodak Gaming
in connection with the acquisition of Sodak
Louisiana.
We may incur up to $10.0 million of additional debt
for working capital and general purposes. This debt
may be secured by certain of our existing or future
assets.
Completion Capital Hollywood Casino will contribute to Hollywood Casino
Agreement.............. Shreveport up to $5.0 million in cash if at any time
there are insufficient funds available to enable the
Shreveport resort to be operating by April 30, 2001.
In addition, if the Shreveport resort is not
operating by April 30, 2001, Hollywood Casino will
contribute $5.0 million in cash less any amounts
previously contributed under the Completion Capital
Agreement.
Optional Redemption..... At any time on or after August 1, 2003, the issuers
may, at their option, redeem some or all of the
registered notes at the prices set forth under the
section entitled "Description of the Registered
Notes--Optional Redemption."
In addition, at any time on or prior to August 1,
2002, the issuers may redeem up to 35% of the
original aggregate principal amount of the registered
notes at the price set forth under the section
entitled "Description of the Registered Notes--
Optional Redemption" with the proceeds of certain
equity offerings of Hollywood Casino that are
contributed to Hollywood Casino Shreveport; provided,
however, that at least 65% of the original aggregate
principal amount of the registered notes remains
outstanding immediately after any redemption.
Gaming Redemption....... The notes will be subject to mandatory disposition
and redemption requirements following certain
determinations by any gaming authority.
Change of Control....... If a change of control occurs, the issuers must offer
to repurchase the registered notes at the price set
forth under the section entitled "Description of the
Registered Notes--Repurchase at the Option of
Holders."
Asset Sales and Events If Hollywood Casino Shreveport sells certain assets
of Loss................ or experiences certain events of loss and it does not
apply the proceeds as designated, the issuers will be
required to offer to repurchase the registered notes
at the prices set forth under the section entitled
"Description of the Registered Notes--Repurchase at
the Option of Holders."
Basic Covenants of the
Indenture..............
The issuers will issue the registered notes under an
indenture that will, among other things, restrict the
ability of Hollywood Casino Shreveport to:
. borrow money;
. pay distributions on its equity interests or
prepay debt;
7
<PAGE>
. make investments;
. use its assets as security in other
transactions; and
. sell assets or enter into mergers or
consolidations.
In addition, the indenture will restrict the ability
of HWCC-Louisiana, HCS I, HCS II and Shreveport
Capital to acquire additional assets, become liable
for additional obligations or engage in any
significant business activities.
Hollywood Casino Shreveport will be permitted to pay
dividends or distributions with up to 50% of the
funds remaining in the cash collateral accounts at
the time construction of the Shreveport resort is
completed, less amounts paid to holders in connection
with an optional offer to repurchase registered notes
made within nine months of completing construction.
Cash Collateral and
Disbursement
Agreement..............
All of the $145.7 million of the net proceeds of the
original offering has been deposited in one of the
accounts described below. These accounts will be
security for the issuers' obligations under the
registered notes. The funds in the accounts will be
disbursed in accordance with the terms of the Cash
Collateral and Disbursement Agreement.
Construction
Disbursement
Account............ $113.4 million of the net proceeds of the original
offering were deposited in the construction
disbursement account. These funds will be used for
the development, construction, equipping and opening
of the Shreveport resort.
Interest Reserve $27.3 million of the net proceeds of the original
Account............ offering were deposited in the interest reserve
account. These funds will be used to purchase
government securities in an amount sufficient to pay
the first three payments of fixed interest on the
registered notes.
Completion Reserve
Account............
$5.0 million of the net proceeds of the original
offering were deposited in the completion reserve
account. These funds will be used to complete the
Shreveport resort if there are insufficient funds in
the construction disbursement account.
Form of Registered The registered notes will be represented by one or
Notes.................. more permanent global notes in definitive, fully
registered form. The global notes will be registered
in the name of a nominee of The Depository Trust
Company and will be deposited with State Street Bank
and Trust Company, as custodian for The Depository
Trust Company's nominee.
For more details, see the discussion under the
section entitled "Description of the Registered
Notes--Book-Entry; Delivery and Form."
Use of Proceeds......... We will not receive any cash proceeds from the
issuance of the registered notes in connection with
the exchange offer.
Risk Factors
We urge you to carefully review the risk factors for a discussion of factors
you should consider before exchanging your original notes for registered notes.
8
<PAGE>
RISK FACTORS
We urge you to carefully consider the following factors, as well as the
other matters described in this prospectus, before exchanging your original
notes for registered notes.
Leverage--We have a substantial amount of debt, which could materially
adversely affect our financial condition, results of operations and prospects
and prevent us from fulfilling our obligations under the registered notes.
We currently have a large amount of indebtedness. The indenture governing
the registered notes will permit us to incur additional debt in particular
circumstances, including up to $35.0 million to finance the purchase of
furniture, fixtures and equipment and up to $10.0 million for working capital
and general purposes. After we commence operations at the Shreveport resort,
the indenture will permit us to incur additional indebtedness if we satisfy
required debt coverage tests. If new debt is added to our current debt levels,
the related risks could intensify.
This large amount of indebtedness could, for example:
. make it more difficult for us to satisfy our obligations under the
registered notes or other indebtedness and, if we fail to comply
with the requirements of the indebtedness, could result in an event
of default;
. require us to dedicate a substantial portion of our cash flow from
operations to required payments on indebtedness, thereby reducing
the availability of cash flow for working capital, capital
expenditures and other general business activities;
. limit our ability to obtain additional financing in the future for
working capital, capital expenditures and other general corporate
activities;
. limit our flexibility in planning for, or reacting to, changes in
our business and the industry in which we operate;
. detract from our ability to successfully withstand a downturn in our
business or the economy generally; and
. place us at a competitive disadvantage against other less leveraged
competitors.
The occurrence of any one of these events could have a material adverse
effect on our business, financial condition, results of operations, prospects
and ability to satisfy our obligations under the notes. For more information
on the terms of the notes, see the discussion under the section entitled
"Description of the Registered Notes."
Construction Uncertainties--The construction of the Shreveport resort involves
many uncertainties that could affect the final cost and time required to
complete the project.
Construction of the Shreveport resort commenced in August 1999 and we intend
to open the resort early in the fourth quarter of 2000. Construction of the
Shreveport resort involves significant risks, including the following, which
could affect the final cost and time of completion of the project:
. adverse weather or water conditions, especially during the period
when the components of the riverboat will be transported up the Red
River on barges;
. fire, flood or other natural disasters;
. shortages of materials and skilled labor;
. labor disputes, including work stoppages involving contractors,
subcontractors or others that we will rely on to construct the
Shreveport resort;
. engineering problems;
9
<PAGE>
. delay in obtaining governmental permits and approvals, including
approval of plans, specifications and construction by the U.S. Army
Corps of Engineers, the United States Coast Guard, the Louisiana
Gaming Control Board and other state and local authorities;
. environmental issues; and
. geological, construction, demolition, excavation, regulatory or
equipment problems.
The independent construction consultant will monitor the construction
process and verify that there are sufficient funds to complete the
construction of each component of the project within our budget. However, the
independent construction consultant will not audit or otherwise verify that
either our original schedule or budget are sufficient to complete construction
of the Shreveport resort. Construction could be delayed and additional
construction expenses could be incurred in the event the independent
construction consultant determines that there are insufficient funds to
complete each component of the project within the budget and decides to delay
or prohibit disbursement of funds. Moreover, if the independent construction
consultant fails to perform its responsibilities as required, funds could be
disbursed from the construction account without having satisfied all
applicable requirements. Any significant cost overruns or delays in completing
our Shreveport resort could have a material adverse effect on our business,
financial condition, results of operations and prospects and our ability to
service our obligations under the notes.
We have entered into a guaranteed maximum price contract for the
construction of the land-based resort facilities and have entered into a fixed
price contract for the construction of the riverboat. These contracts are
subject to modification based on the occurrence of particular events, such as
design change orders and costs associated with construction delays. We cannot
be sure that construction costs will not exceed budgeted amounts.
We have obtained a binding commitment to finance up to $30.0 million of
furniture, fixtures and equipment for the Shreveport resort. There can be no
assurance, however, that all of the conditions of that financing will be
satisfied and the funds will be made available. If we are not able to obtain
these funds, we will have to find alternative financing. There can be no
assurance that we will be able to secure such financing on favorable terms, or
at all, or that there will be no resulting delay in opening the Shreveport
resort. Our inability to obtain additional financing could prevent us from
completing and opening the Shreveport resort, which could have a material
adverse effect on our business, financial condition, results of operations and
prospects and our ability to service our obligations under the notes.
Ability to Service Debt--We may not be able to generate significant cash flow
to meet our debt service obligations. None of the guarantors or Shreveport
Capital will contribute to amounts required to be paid on the registered
notes.
Although sufficient proceeds from the original offering will be reserved to
pay the first three payments of fixed interest on the registered notes, there
can be no assurance that our future cash flow will be sufficient to meet the
remaining debt obligations and commitments under the notes. Our ability to
generate cash flow from operations to make scheduled payments on our debt
obligations as they become due will depend on our future financial
performance, which will be affected by a range of economic, competitive and
business factors. We cannot control many of these factors, such as general
economic and financial conditions in the gaming industry and the economy at
large or competitive initiatives of our competitors. If we do not generate
sufficient cash flow from operations, we may have to undertake alternative
financing plans, such as refinancing or restructuring our debt, selling
assets, reducing or delaying capital investments or seeking to raise
additional capital. We cannot assure you that any refinancing would be
possible, that any assets could be sold, or, if sold, of the timing of the
sales and the amount of proceeds realized from the sales, or that additional
financing could be obtained on acceptable terms, if at all. Our inability to
generate sufficient cash flow or refinance our indebtedness on commercially
reasonable terms would have a material adverse effect on our business,
financial condition, results of operations and prospects and our ability to
satisfy our obligations under the notes.
Shreveport Capital only served as a co-issuer of the notes in order to
facilitate the original offering. It will not have any material assets and its
only operations will be to serve as co-issuer of the notes. Therefore, you
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you should not expect Shreveport Capital to contribute to the amounts required
to be paid on the notes. HWCC-Louisiana, HCS I and HCS II are guaranteeing the
notes. HWCC-Louisiana will not have any operations other than serving as
guarantor of the notes and its only material assets will be the common stock
of HCS I and HCS II. HCS I's only asset will be its partnership interest in us
and its only operations will be to serve as our managing general partner and
to act as guarantor of the notes. HCS II's only asset will be its partnership
interest in us and its only operations will be to act as guarantor of the
notes. You should not expect any of these guarantors to contribute to the
payments on the notes.
Limits on Collateral--The trustee's ability to realize on the collateral
securing the notes may be limited.
Subject to permitted liens, the notes will be secured by substantially all
of our assets and the assets of the guarantors, including a pledge of the
capital stock of HCS I and HCS II and the guarantors' partnership interests in
us, a first priority security interest in the riverboat casino, a leasehold
mortgage on the real property on which the resort will be constructed and a
first priority security interest in the hotel, pavilion, parking facilities,
restaurant and entertainment promenade and other improvements to be
constructed on the real property. Certain of our licenses, such as gaming and
liquor licenses, may not legally be transferred or pledged as collateral to
secure the notes. In addition, the indenture will permit us to incur up to
$10.0 million of additional debt for working capital and general purposes.
This debt may be secured by any or all of our existing or future assets, other
than the amounts in the cash collateral accounts. The collateral will not
include furniture, fixtures and equipment acquired with up to $35.0 million of
furniture, fixture and equipment financing permitted under the indenture,
funds in the equity escrow account or the $2.5 million to fund HWCC-
Louisiana's obligation to Sodak Gaming in connection with the acquisition of
Sodak Louisiana.
The trustee's ability to foreclose on the collateral upon an event of
default and acceleration of the notes will be limited by the Louisiana
Riverboat Economic Development and Gaming Control Act, which generally
requires that persons who own or operate a riverboat casino, receive payments
under a casino management agreement or purchase, possess or sell gaming
equipment, hold a valid riverboat gaming license. No person may hold a
riverboat gaming license in Louisiana unless the person is found qualified or
suitable by the Louisiana Gaming Control Board. In order for the trustee to be
found qualified or suitable, the Louisiana Gaming Control Board would have
discretionary authority to require the trustee and any or all of the holders
of the notes to file applications and be investigated and found qualified or
suitable as an owner or operator of gaming establishments or supplier of
gaming equipment. If the trustee is unable or chooses not to qualify, be found
suitable or be licensed to own, operate or sell the assets, it will have to
retain an entity licensed to own, operate or sell the assets, which will also
be subject to approval by the Louisiana Gaming Control Board. In addition, in
any foreclosure, public or private sale or subsequent resale by the trustee,
licensing requirements under the Louisiana Riverboat Economic Development and
Gaming Control Act may limit the number of potential bidders and may delay any
sale, which could have an adverse effect on the sale price of the collateral.
Therefore, the economic benefits of realizing on the collateral may, without
appropriate approvals, be limited. For more information, see the discussion
under the section entitled "Business--Gaming Regulation."
There can be no assurance that upon an event of default and acceleration of
the notes the proceeds of any sale of collateral in whole under the indenture
and the related security documents would be sufficient to satisfy our
obligations under the notes. If the proceeds are insufficient, the deficiency
would represent an unsecured obligation and there can be no assurance that you
would recover the deficiency. The value of the collateral at any time will
depend on market and other economic conditions, including the availability of
suitable buyers for the collateral. For more information, see the discussion
under the section entitled "Description of the Registered Notes--Security."
In addition to being subject to gaming law restrictions, the trustee's
ability to foreclose upon and sell collateral will be subject to the
procedural restrictions of state real estate law and the Uniform Commercial
Code or, in the case of the gaming vessel, certain state ship mortgage and
federal admiralty law statutes. The right of the trustee to repossess and
dispose of the collateral upon an event of default and acceleration of the
notes is also likely to be significantly impaired by applicable bankruptcy law
if a bankruptcy proceeding were to be commenced by or against us prior to, or
possibly even after, the trustee has repossessed and disposed of the
collateral.
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Mechanics' and Maritime Liens--Parties who have provided services or supplies
in connection with the construction of our resort may have a lien on the
project senior to the lien of the mortgage securing the notes.
Louisiana law provides contractors, subcontractors, laborers, architects,
material suppliers and others with a lien on the property improved by their
services or supplies in order to secure their right to be paid. If these
parties are not paid in full, they may seek foreclosure on their liens. In
Louisiana, the priority of all mechanics' liens related to a particular
construction project relates back to the date on which work on the project
first commenced by any contractor. Pre-construction activities for the
development of the Shreveport resort began before the mortgage securing the
notes was recorded. These activities should not constitute work within the
meaning of Louisiana law, but if a court were to hold that work on the project
"commenced," within the meaning of Louisiana law, prior to the proper
recordation of the mortgage securing the notes, contractors, subcontractors,
laborers, architects, material suppliers and others providing goods or
services in connection with the construction of the Shreveport resort who
otherwise comply with the applicable requirements of Louisiana law might have
a lien on the project senior in priority to the lien on the mortgage securing
the notes until they are paid in full if such actions are ever deemed to give
rise to mechanics' liens under Louisiana law. We do not believe that work on
the project commenced within the meaning of applicable law prior to recording
the mortgage securing the notes. Further, Louisiana law affords a mechanism
whereby a mortgage holder can confirm and assure itself that its mortgage will
be superior to claims of contractors, subcontractors, suppliers and others
providing goods or services in connection with the project, provided the
mortgage is recorded before work commences. We intend to follow these
procedures.
The disbursement agreement also requires procedures intended to ensure the
proper payment to these parties. Additionally, as a condition to the
disbursement of funds for the construction of the resort, lien releases are
required from all contractors, subcontractors and suppliers who have provided
work, materials and services. Furthermore, prior to the consummation of the
original offering, we obtained a title insurance policy for the benefit of the
holders of the notes to insure the priority of the lien held by holders of the
notes and to insure against any loss occurring as a result of a mechanic's
lien. Nevertheless, in the event of a liquidation, proceeds from the sale of
collateral might be used to pay the holders of any mechanic's liens then in
existence before holders of the notes if work on the project commenced within
the meaning of Louisiana law prior to the record date of the mortgage.
With respect to any vessel, or interests therein, which serve as collateral
for the notes, parties providing construction related goods and services, as
well as tort and other claimants, could have priority over the lien of the
collateral documents encumbering such vessel, to the extent such parties
remain unpaid.
Leverage of Hollywood Casino--Due to its high degree of leverage, Hollywood
Casino may not be able to make the payment required under the completion
capital agreement. In the event of a bankruptcy proceeding against Hollywood
Casino, Hollywood Casino's creditors may seek recourse against our assets.
Hollywood Casino is highly leveraged. At June 30, 1999, Hollywood Casino had
total long-term indebtedness of $388.4 million and stockholders' deficit of
$20.3 million. On a pro forma basis for financing transactions completed in
May 1999, Hollywood Casino's earnings would have been insufficient to cover
fixed charges for the 12 months ended December 31, 1998, by $5.9 million. For
more information regarding consolidated selected financial information of
Hollywood Casino, see page S-1 of this prospectus.
Hollywood Casino will be obligated under the completion capital agreement to
contribute to us up to $5.0 million in cash if at any time there are
insufficient funds available to complete the development, construction,
equipping and opening of the Shreveport resort so that it is operating by
April 30, 2001. In addition, the completion capital agreement requires that
Hollywood Casino contribute up to $5.0 million in cash less any amounts
previously contributed under the completion capital agreement if the
Shreveport resort is not operating by April 30, 2001. Hollywood Casino is
subject to an indenture governing $360.0 million of its outstanding
indebtedness, which limits Hollywood Casino's ability to contribute equity or
otherwise advance funds to the issuers. Although Hollywood Casino is currently
permitted under that indenture to directly or indirectly invest in
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or advance certain funds to us for the construction of the Shreveport resort,
there can be no guarantee that Hollywood Casino will have the financial
resources or otherwise be able to perform its obligations under the completion
capital agreement or otherwise provide financial support to us if
unanticipated events occur.
Furthermore, Hollywood Casino and certain of its affiliates are involved in
activities that are related to our business and assets. In addition, we and
the guarantors have overlapping officers and directors with Hollywood Casino
and certain of its affiliates. In the event that Hollywood Casino or one of
these affiliates is the subject of a proceeding under the United States
Bankruptcy Code, the creditors of that entity or the trustee in bankruptcy may
argue that the assets and liabilities of the various affiliated entities,
including us, should be consolidated and our assets made available for
satisfaction of claims against the entity in bankruptcy. Although we believe
we are separate and distinct legal entities from Hollywood Casino and their
affiliates, we cannot guarantee that in the event of a bankruptcy case of
Hollywood Casino or one of its affiliates involved in activities related to
our business and assets, a bankruptcy court would not order consolidation of
our assets with those of the entity in bankruptcy. Prior to Hollywood Casino's
spin off of Greate Bay Casino Corporation to its stockholders on December 31,
1996, Hollywood Casino operated the Sands Hotel and Casino in Atlantic City
through its 80% ownership of Greate Bay. On January 5, 1998, the entities that
owned the Sands filed for protection under Chapter 11 of the United States
Bankruptcy Code.
No Recourse Against Hollywood Casino or Shreveport Paddlewheels--Neither
Hollywood Casino nor Shreveport Paddlewheels are obligated to make any
payments on the notes.
The completion capital agreement between Hollywood Casino and us is not a
guarantee of the notes. Furthermore, you should not expect Hollywood Casino,
Shreveport Paddlewheels or any of their respective affiliates, other than us
and the guarantors, to participate in servicing any of the payments due on the
notes. None of Hollywood Casino, Shreveport Paddlewheels or any of their
respective affiliates, other than us and the guarantors, has any obligation to
make any payments of any kind to the holders of the notes.
Adverse Tax Treatment--The notes will bear original issue discount and could
be classified as equity for federal income tax purposes which would adversely
affect the tax treatment of the interest payments.
The notes provide for the payment of both fixed interest and contingent
interest. Contingent interest will be calculated based on a percentage of our
cash flow. By reason of the application of certain Treasury Regulations
applicable to contingent payment debt obligations, the notes will be
considered to have been issued with original issue discount for federal income
tax purposes. As a result, a holder may be required to include amounts in
income for federal income tax purposes prior to the receipt of cash payments
attributable to such income. The notes and the indenture will contain terms
typically included in instruments evidencing indebtedness and are intended to
create a debtor-creditor relationship between us and the holders of the notes.
We will treat the notes as our indebtedness for federal income tax purposes.
However, this treatment is not binding on the Internal Revenue Service or any
court and we cannot guarantee that the Internal Revenue Service will not
successfully argue, or that a court will not hold, that the notes should be
treated as equity for federal income tax purposes. If any portion of the notes
is treated for federal income tax purposes as equity rather than indebtedness,
the interest on that portion of the notes would not be deductible for federal
income tax purposes. In addition, a portion of the deductions for original
issue discount on the notes may be disallowed, and the balance thereof may be
deferred until paid in cash, if the notes are treated as "applicable high
yield discount obligations" for federal income tax purposes. The disallowance
or deferral of interest deductions for any reason could have a material
adverse effect on our after-tax cash flow and the after-tax cash flow of
guarantors. In addition,
(1) if any portion of the notes is treated for federal income tax
purposes as equity of a corporate issuer (e.g., equity of us if we are a
"publicly traded partnership" for federal income tax purposes or of a
guarantor), the interest payments made on such portion will be taxable
to the recipient as dividends, rather than interest, to the extent of
such corporation's, or the publicly traded partnership's, current and
accumulated earnings and profits; and
(2) if any portion of the notes is treated as equity of us and we are
not a "publicly traded partnership" for federal income tax purposes,
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then, in lieu of recognizing interest income for federal income tax purposes,
the holders of such portion of the notes would be taxable on a share of our
income for federal income tax purposes. This could adversely affect the
timing, character and amounts includible in income of a holder of notes, and
may result in certain holders, such as tax-exempt holders or Non-U.S. Holders
(as defined below), having different tax results, or, possibly greater tax
liability, than described below.
Land Lease Risks--The termination of the land lease for the Shreveport resort
could have an adverse effect on the notes.
The land on which the Shreveport resort will be built is subject to a lease
with the City of Shreveport commencing on the date construction began on the
Shreveport resort and ending on the ten-year anniversary of the opening date
of the Shreveport resort, with options to renew the lease for eight additional
successive terms of five years each. The leasehold interest is collateral for
the notes. Our leasehold is subject and subordinate to the lessor's interest
in the real estate subject to the leasehold. The lease may be terminated by
the city as a result of, among other things, a default by us under the lease,
failure to commence construction by November 19, 1999 or failure to
substantially complete construction within the time period established by the
Louisiana Gaming Control Board. If the City of Shreveport terminates the
lease, we will lose possession of the land subject to the lease and the
improvements on the land, thereby extinguishing the trustee's security
interest in the lease and such improvements, as well as making it impossible
for us to operate the Shreveport resort. Moreover, the termination of the
lease for the Shreveport resort would require us to terminate or attempt to
relocate these operations, which would have a material adverse effect on our
business, financial condition, results of operations and prospects and our
ability to satisfy our obligations under the notes.
Risk of New Venture--We have no operating history and no history of earnings.
The venture is a start-up development business. We have no history of
operations, no history of earnings and no prior experience in operating in the
Shreveport market. As a new development, the Shreveport resort will be subject
to all of the difficulties associated with establishing a new business
enterprise, including the following:
. hiring and retaining skilled employees;
. licensing, permitting and operating problems;
. competing with established operators;
. unanticipated structural or engineering problems with the riverboat
casino, the basin or the land-based resort facilities; and
. operating a new venture in a jurisdiction where we have not
previously conducted business.
Under the terms of the management agreement, we will rely on members of
management of HWCC-Shreveport, all of whom, with the exception of Juris
Basens, are currently executive officers of Hollywood Casino, to operate the
Shreveport resort. Although these individuals have a significant amount of
experience in the gaming industry, they, with the exception of Juris Basens,
have not previously managed operations in the Shreveport market or in
Louisiana. There can be no assurance that HWCC-Shreveport will be able to
successfully operate the casino or that our operations will be profitable or
generate sufficient operating cash flow to enable us to satisfy our
obligations under the notes. Any failure to successfully operate the casino
could have a material adverse effect on our business, financial condition,
results of operations and prospects and our ability to satisfy our obligations
under the notes.
Dependence Upon Single Gaming Site--Economic and competitive conditions in
Shreveport, among others, could adversely affect the Shreveport resort.
We will be entirely dependent upon the operation of the Shreveport resort to
generate all of our future cash flow. Therefore, we will be subject to greater
risks than a geographically diversified gaming company. These greater risks
include those caused by:
. local economic and competitive conditions;
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. changes in local and state governmental laws and regulations;
. natural and other disasters;
. a decline in the number of residents near or visitors to the
Shreveport market; or
. a decrease in gaming activities in the Shreveport market.
Any of the factors outlined above could have a material adverse effect on
our business, financial condition, results of operations and prospects and our
ability to satisfy our obligations under the notes.
Completion of Restaurant and Entertainment Promenade--If the planned
restaurant and entertainment promenade is not completed or is significantly
delayed, operations at the Shreveport resort may be adversely affected.
A principal part of the Shreveport resort will be the extensive "New Orleans
style" outdoor restaurant and entertainment promenade that will contain
approximately 42,000 square feet of dining, entertainment and retail space.
This portion of the Shreveport resort will be adjacent to another 55,000
square feet of restaurant, retail and entertainment space. Our business plan
assumes that the restaurant and entertainment promenade and the adjacent
development will attract additional customers to the Shreveport resort.
However, we will neither develop the restaurant and entertainment promenade
nor will we develop or own the adjacent development, and the completion of the
Shreveport resort is not contingent on their completion. The developers'
ability to develop the restaurant and entertainment promenade and adjacent
development is subject to a number of contingencies and risks, including the
ability to obtain financing.
Although the developers have entered into letters of intent with several
bars and restaurants and certain undertakings to effect the development of the
restaurant and entertainment promenade and adjacent development, several of
these agreements and undertakings are conditioned on certain matters,
including that the developers obtain funding for the development of the
project. The developers' failure to develop the restaurant and entertainment
promenade or the adjacent development could delay the opening of the
restaurant and entertainment promenade, which could have a material adverse
effect on our business, financial condition, results of operations, and
prospects and our ability to satisfy our obligations under the notes, or
require us to seek alternative developers or develop the promenade ourself.
Competition--The Shreveport resort will compete with several other casinos in
the Shreveport market and other forms of gaming.
Upon completion of the Shreveport resort, we will compete directly with
Binion's Horseshoe, Harrah's, the Isle of Capri and Casino Magic in the
Shreveport market. Certain of these competitors have higher profile brand
names in the Shreveport market and greater financial resources than us. There
can be no assurance that we will be able to effectively compete against these
four established casinos, three of which have been in operation since 1994, or
that the Shreveport market is large enough to allow more than four casinos to
operate profitably. Furthermore, the Louisiana Gaming Control Board has
granted 14 of the 15 legislatively approved riverboat gaming licenses in
Louisiana. On July 20, 1999, the Louisiana Gaming Control Board announced that
it will be accepting bid proposals for the fifteenth license. The remaining
riverboat gaming license could ultimately be granted in, or one or more of the
current operators in other parts of Louisiana could relocate to, the
Shreveport market which would directly increase competition in the Shreveport
market.
The Louisiana Riverboat Economic Development and Gaming Control Act provides
that the designated gaming area shall not exceed the lesser of 60% percent of
the total square footage of the passenger access area of the vessel or 30,000
square feet at each casino. The facilities of three of the competitors in the
Shreveport market arguably contain less than the total amount of gaming space
permitted. If these competitors were to increase the size of their facilities,
they would be able to add more gaming positions, which would directly increase
competition in the Shreveport market.
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Also, there can be no assurance that we will be able to effectively compete
against any other future gaming operations that Louisiana or other authorities
may authorize in the gaming market in which the Shreveport casino will
operate. For example, in 1997, the Louisiana legislature adopted legislation
permitting up to 15,000 square feet of slot machine gaming at pari-mutuel
wagering facilities located in parishes in Louisiana that approve slot machine
gaming in a referendum election. Shortly thereafter, a referendum election was
held that approved slot machine gaming at Louisiana Downs, which is located in
Bossier City, approximately nine miles from the site of the Shreveport resort.
The Louisiana legislature recently passed legislation regarding the
imposition, collection and disposition of taxes on slot machines to be located
at Louisiana Downs.
Casino gaming is currently prohibited in several jurisdictions adjacent to
Louisiana. As a result, we anticipate that a significant portion of our
customers will be residents of these jurisdictions, primarily Texas. Although
casino gaming is currently not permitted in Texas and the Texas Attorney
General has issued an opinion that gaming in Texas would require an amendment
to the Texas Constitution, the Texas Legislature has considered proposals to
authorize casino gaming in the past. The legalization of casino gaming in
Texas, or in other nearby jurisdictions, would have a material adverse effect
on our business, financial condition, results of operations and prospects and
our ability to satisfy our obligations under the notes.
We will compete to a lesser extent with gaming operations in other
jurisdictions and with other forms of gaming, including lottery gaming, horse
and dog racing, as well as other forms of entertainment.
Reliance on Services under the Management Agreement and License Agreement and
Personnel of Hollywood Casino--We depend on the key personnel of Hollywood
Casino for our success and the loss of their services or increased demands on
their time could have a negative impact on us.
Hollywood Casino Personnel. HWCC-Shreveport, a wholly owned subsidiary of
Hollywood Casino, will operate the Shreveport resort under the terms of a
management agreement. The success of the Shreveport resort will be largely
dependent upon the efforts and skills of the executives of HWCC-Shreveport,
all of whom, with the exception of Juris Basens, are also currently executive
officers of Hollywood Casino. We have granted them significant independence in
operating matters, including day-to-day financial control and authority over
hiring and training personnel. The loss of any of these officers could have a
material adverse effect on us. There can be no assurance that HWCC-Shreveport
will be able to hire and retain suitable replacements in the event it loses
any of their services.
Also, certain executives of HWCC-Shreveport, all of whom, with the exception
of Juris Basens, are currently executives of Hollywood Casino, will be
simultaneously operating Hollywood Casino's other properties in Aurora,
Illinois and Tunica County, Mississippi. Although Hollywood Casino has
successfully operated its properties for a number of years, the addition of a
third property will place considerable demands on its management. While
Hollywood Casino will be dedicating significant time to the development and
operation of the Shreveport resort, it will be concurrently undertaking other
projects, such as potential construction of new facilities at its Aurora
casino. There can be no assurance that the time and attention of these
executives will not be diverted from time to time by the other operational and
managerial demands placed on them by Hollywood Casino.
Termination of Management Agreement and License Agreement. Either we or
HWCC-Shreveport may terminate the management agreement under certain specified
circumstances, including for breaches of the agreement, illegality, if a
gaming license were in jeopardy or if Hollywood Casino were to lose their
trademark. In addition, if we fail to furnish the funds required for HWCC-
Shreveport to properly manage the Shreveport resort or fail to compensate or
reimburse HWCC-Shreveport in accordance with the management agreement, HWCC-
Shreveport may
(1) advance the necessary funds in the form of a loan or
(2) terminate the management agreement.
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In addition, HWCC-Shreveport may terminate the management agreement in its
sole discretion if there is a voluntary or involuntary assignment, transfer or
disposition of our interest in the management agreement of the Shreveport
resort, including upon any foreclosure by the trustee, and
(1) the assignee, purchaser, or recipient has not agreed to be bound
by the management agreement or
(2) HWCC-Shreveport has not given permission.
We are required to notify HWCC-Shreveport at least 60 days prior to any such
contemplated assignment, transfer or disposition. HWCC-Shreveport may withhold
its permission if it has a good faith opinion that such action would
jeopardize, restrict, limit or create a right of cancellation of any approval,
consent or licensing of HWCC-Shreveport or its affiliates by any gaming
authorities. If HWCC-Shreveport terminates the management agreement for any of
the foregoing reasons and the cash flow for the Shreveport resort is in excess
of $1 for the immediately preceding fiscal quarter, we will be obligated to
pay HWCC-Shreveport an amount equal to two times the sum of the basic
management fee and incentive fee for the immediately preceding 12 months, or
preceding fiscal year, as the case may be, plus any other amounts owed to
HWCC-Shreveport.
Upon termination of the management agreement for any reason, the license
agreement shall also terminate and we will only be permitted to use the
Hollywood Casino trademarks for six months following such termination.
The termination of the management agreement and the loss of the right to use
the Hollywood Casino trademarks could have a material adverse effect on our
operations.
Difficulty in Attracting and Retaining Qualified Employees--We will face
difficulties in attracting and retaining qualified employees for the casino.
The operation of the Shreveport resort will require qualified executives,
managers and a number of skilled employees with gaming industry experience and
qualifications to obtain the requisite riverboat gaming licenses. Currently,
there is a shortage of skilled labor in the gaming industry in general. We
believe this shortage will make it increasingly difficult and expensive to
attract and retain qualified employees, a situation which will be more acute
in the Shreveport market where four other casinos are currently operating.
Moreover, in connection with obtaining Harrah's consent and agreement to
operating adjacent to its facility, we agreed that we would not hire any
Harrah's employees for 180 days after commencing casino operations.
Consequently, we may incur higher labor costs to attract a sufficient number
of qualified gaming employees from existing gaming operations in the
Shreveport market.
Regulatory Compliance--We and our affiliates must adhere to various
regulations and maintain the licenses to continue casino operations.
Hollywood Casino, HWCC-Shreveport, HWCC-Louisiana, HCS I, HCS II, Shreveport
Paddlewheels and Hollywood Casino Shreveport, as well as some of their
respective key employees and certain parties engaging in activities related to
the casino, including the disbursement agent, are required to obtain and hold
various licenses, permits and approvals in Louisiana. The failure to obtain or
retain any such license, permit or approval in Louisiana, such as the
riverboat gaming license, could have a material adverse effect on our ability
to operate the casino. Generally, regulatory authorities have broad discretion
in granting, conditioning, renewing, suspending and revoking licenses, permits
and approvals.
We and the guarantors are subject to a variety of regulations in Louisiana.
If current interpretations of gaming laws and regulations are modified, or if
additional gaming regulations are adopted, operational requirements, costs and
other restrictions could be imposed on us and the guarantors, any one or more
of which could have a material adverse effect on us. From time to time,
various proposals have been introduced in the Louisiana legislature that, if
enacted, would affect the tax, regulatory, operational or other aspects of the
gaming
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industry. There can be no assurance that such proposed legislation will not be
enacted and, if enacted, the effect that the legislation would have on our
business, financial condition, results of operations and prospects and our
ability to satisfy our obligations under the notes.
In some circumstances, the suspension or revocation of a gaming license in
one jurisdiction may trigger the suspension or revocation of a license or
affect eligibility for a license in another jurisdiction and we could
accordingly be adversely affected by regulatory actions in other jurisdictions
directed principally at Hollywood Casino or its subsidiaries or its employees.
If additional gaming regulations are adopted in Louisiana in the future, those
regulations could impose additional restrictions or costs that could have a
material adverse effect on our business, financial condition, results of
operations and prospects and our ability to satisfy our obligations under the
notes.
Gaming Taxes--Any increase in federal, Louisiana or Shreveport taxes could
have a negative impact on us.
From time to time, various legislators have proposed the imposition of a
federal tax on gross gaming revenues. In March 1996, tax legislation was
introduced in Congress which included a proposal to impose a 15% federal tax
on taxable gaming services, defined as gross gaming receipts less total gaming
payoffs. Although no action has been taken on this legislation, there can be
no assurance that this tax or any similar tax will not be imposed in the
future. In addition, we will be subject to an 18.5% tax on net gaming proceeds
and other fees in Louisiana, as well as normal federal and state income taxes,
and these taxes and fees are subject to increase at any time. The introduction
of new taxes or the increase in the rates of existing taxes could have a
material adverse effect on our business, financial condition, results of
operations and prospects and our ability to satisfy our obligations under the
notes.
Anti-Gaming Initiatives--Anti-gaming initiatives have been proposed in
Louisiana in the past.
The regulatory environment in Louisiana may change in the future and any
change could have a material adverse effect on our results of operations. In
1996, the State of Louisiana adopted a statute in connection with which votes
were held locally where gaming operations were conducted and which, had the
continuation of gaming been rejected by the voters, might have resulted in the
termination of operations at the end of their current license terms. All
parishes where riverboat gaming operations are currently conducted voted to
continue gaming, but there can be no guarantee that similar referenda might
not produce unfavorable results in the future. Proposals to amend or
supplement the Louisiana Riverboat Economic Development and Gaming Control Act
are frequently introduced in the Louisiana State legislature. In addition, the
State legislature, from time to time, considers proposals to repeal the act.
If such proposals were approved or if legislation were enacted prohibiting
gaming in Louisiana, it would have a material adverse effect on our business,
financial condition, results of operations and prospects and our ability to
satisfy our obligations under the notes.
Business Interruptions--We may temporarily lose the service of the casino.
Our profitability is dependent upon the continued operations of the
riverboat casino. Any temporary closure of the riverboat casino would
negatively impact our profitability. The riverboat casino could be lost from
service for a number of reasons, including casualty, forces of nature or
extended or extraordinary maintenance or inspection. The vessel will be
subject to U.S. Coast Guard regulations requiring periodic hull inspections
every three to five years, which could result in a temporary loss from service
of the vessel. Also, a flood or severe weather conditions could adversely
affect gaming operations. Moreover, floods or severe weather could cause
substantial damage to the area surrounding our facility which could
temporarily reduce access to the casino.
Upon completion of the Shreveport resort, we will maintain business
interruption insurance on our operations in amounts we consider adequate, but
there an be no assurance that we will be able to maintain this insurance in
the future in sufficient amounts on commercially reasonable terms, or at all.
An extended loss of service of the casino would have a material adverse effect
on our business, financial condition, results of operations and prospects and
our ability to meet our obligations under the notes.
18
<PAGE>
Gaming Redemptions--You may be required to dispose of your notes or redeem
your notes if any gaming authority finds you unsuitable to hold them.
Under particular circumstances, we have the right, at our option, to cause
you to dispose of your notes or to redeem your notes in order to comply with
gaming laws to which we are subject. For more information, see the discussion
under the section entitled "Description of the Registered Notes--Optional
Redemption."
Change of Control--We may not have the ability to raise the funds necessary to
finance the change of control offer required by the indenture.
If a change of control were to occur, we may be required to make an offer to
purchase all of the outstanding registered notes at a price equal to 101% of
their principal amount, plus accrued and unpaid interest and liquidated
damages, if any, to the date of purchase. There can be no assurance that we
would have enough funds to pay for all of the notes that are tendered under
the offer to purchase. If we were required to purchase the notes, they would
in all likelihood require third party financing. However, there can be no
assurance that we would be able to obtain such financing on acceptable terms,
if at all. The failure to comply with the indenture's requirements with
respect to change of control events will constitute an event of default under
the indenture. For more information, see the discussion under section entitled
"Description of the Registered Notes--Repurchase at the Option of Holders."
Fraudulent Conveyance--Federal and state statutes allow courts, under specific
circumstances, to void guarantees or other debt and require noteholders to
return payments received from guarantors or debtors.
Under applicable provisions of the United States Bankruptcy Code or
comparable provisions of state fraudulent transfer laws, guarantees or other
debt obligations could be voided, or claims in respect of guarantees or debt
obligations could be subordinated to all other debts of that guarantor or
debtor if, among other things, the guarantor or debtor, at the time it
incurred the indebtedness evidenced by its guarantees or debt obligations,
incurred the indebtedness with the intent to hinder, delay or defraud
creditors or received less than reasonably equivalent value or fair
consideration for the incurrence of the guarantees or debt and:
. was insolvent;
. rendered insolvent by reason of the incurrence;
. was engaged in a business or transaction for which the guarantor's or
debtor's remaining assets constituted unreasonably small capital; or
. intended to incur, or believed that it would incur, debts beyond its
ability to pay as they mature.
In this event, any payment by a guarantor or debtor in connection with the
guarantees or debt obligations could be voided and required to be returned to
the guarantor or debtor or to a fund for the benefit of the creditors of that
guarantor or debtor.
The measures of insolvency for purposes of these fraudulent transfer laws
vary depending upon the law applied to determine whether a fraudulent transfer
has occurred. Generally, however, a guarantor or debtor would be considered
insolvent if:
. the sum of its debts, including contingent liabilities, were greater
than the fair saleable value of all of its assets;
. the present fair saleable value of its assets were less than the
amount that would be required to pay the probable liability on its
existing debts, including contingent liabilities, as they become
absolute and mature; or
. it could not pay its debts as they came due.
On the basis of our and HWCC-Louisiana's historical information, ours and
the guarantors' equity capitalizations and other factors, we and the
guarantors believe that we will not be insolvent, will not have
19
<PAGE>
unreasonably small capital for the business in which we are engaged and will
not have incurred debts beyond our ability to pay as such debts mature. There
can be no assurance as to the standard a court would apply in making its
determination or that a court would agree with our and the guarantors'
conclusions.
Lack of Public Market--You cannot be sure that an active trading market will
develop for the registered notes.
The registered notes are a new issue of securities for which there is no
established market. The registered notes will not be listed on any securities
exchange, although the registered notes initially will be eligible for trading
in the PORTAL Market. If the registered 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,
our performance and other factors. The initial purchasers have advised us that
they intend to make a market in the registered notes, as permitted by
applicable laws and regulations; however, the initial purchasers are not
obligated to make a market in the registered notes, and they may discontinue
those market making activities at any time without notice. Therefore, there
can be no assurance that an active market for the registered notes will
develop or, if developed, that it will continue.
Year 2000 Issues--Any Year 2000 problems experienced by contractors,
subcontractors and suppliers may adversely affect the construction of the
Shreveport resort.
Since we do not expect to open the Shreveport resort until fall 2000, we do
not anticipate experiencing any Year 2000 problems directly from our own
computer or information technology systems. We currently rely on the computer
systems of Hollywood Casino for our administrative, financial and construction
management operations. These systems are expected to be fully Year 2000
compliant by the end of 1999. However, there can be no assurance that
Hollywood Casino will successfully assess and remediate these systems. We may,
however, be exposed to the Year 2000 problems of contractors, subcontractors
or suppliers if their systems are not compliant. There can be no guarantee
that the systems of these third parties will be timely converted or that any
representations made by them regarding their Year 2000 compliance are
accurate. If Year 2000 problems arise with Hollywood Casino or these third
parties, the time required to complete construction of the Shreveport resort
would likely be increased, even if the services of other parties can be
secured.
Failure to Exchange Original Notes--You may suffer adverse consequences if you
fail to exchange your original notes.
If you do not exchange your original notes for registered notes in
connection with the exchange offer, you will continue to be subject to the
provisions of the indenture regarding transfer and exchange of the original
notes and the restrictions on transfer of the original notes. In general, the
original notes may not be offered or sold, unless registered under the
Securities Act and applicable state securities laws. We do not currently
intend to register the original notes.
Forward-Looking Information--You should not place undue reliance on forward-
looking information.
This prospectus contains certain forward-looking statements about our
financial condition, results of operations and business within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act of 1934. You can find many of these statements by looking for words like
"believes," "expects," "anticipates," "estimates," "intends," "may," "will,"
"could," "pro forma," or
similar expressions used in this prospectus. These forward-looking statements
are subject to numerous assumptions, risks and uncertainties, including, among
other things, those discussed above.
All forward-looking statements speak only as of the date of this prospectus.
Because these statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by the forward-
looking statements. You are cautioned not to place undue reliance on these
statements, which speak only as of the date of this prospectus.
20
<PAGE>
We do not undertake any responsibility to release publicly any revisions to
these forward-looking statements to take into account events or circumstances
that occur after the date of this prospectus. Additionally, we do not
undertake any responsibility to update you on the occurrence of any
unanticipated events which may cause actual results to differ from those
expressed or implied by the forward-looking statements contained in this
prospectus.
21
<PAGE>
USE OF PROCEEDS
We will not receive any cash proceeds from the exchange of the original
notes for registered notes. In consideration for issuing the registered notes
as contemplated in this prospectus, we will receive in exchange original notes
in like principal amount, which will be cancelled and as such will not result
in any increase in our indebtedness.
The net proceeds from the offering of the original notes were $145.7
million. The net proceeds were deposited in the cash collateral accounts as
follows: (1) $113.4 million was deposited into a construction disbursement
account and will be used to partially fund the development, construction and
opening of the Shreveport resort; (2) $27.3 million was deposited into an
interest reserve account and will be used to purchase an amount of government
securities sufficient to pay the first three payments of fixed interest on the
notes; and (3) $5.0 million was deposited into a completion reserve account to
be held as a reserve in case there are insufficient funds in the construction
disbursement account to complete the Shreveport resort.
Hollywood Casino previously contributed an aggregate of $50.0 million in
equity to HWCC-Louisiana, which in turn contributed it indirectly to us for
the development and construction of the Shreveport resort. Approximately $5.3
million was spent on the project prior to the offering of the original notes
and the remaining $44.7 million was deposited in an equity escrow account. The
proceeds in the construction disbursement account will not be disbursed until
the entire $50.0 million equity contribution has been spent. The disbursement
of funds from the construction disbursement account will also be subject to
the satisfaction of other conditions contained in the disbursement agreement.
Pending their disbursement, the proceeds in the cash collateral accounts will
be invested in government securities. See the section entitled "Description of
the Registered Notes--Cash Collateral and Disbursement Agreement."
The following table sets forth the sources and uses of the proceeds from the
offering of the original notes (in millions):
<TABLE>
<CAPTION>
Sources
-------
<S> <C>
First Mortgage Notes.............. $150.0
Financing for furniture, fixtures
and equipment(1)................. 30.0
Equity contribution(2)............ 50.0
------
TOTAL........................... $230.0
======
</TABLE>
<TABLE>
<CAPTION>
Uses
----
<S> <C>
Construction costs............... $104.1
Furniture, fixtures and
equipment(1).................... 42.4
Design, engineering and project
management ..................... 9.1
Contingency/completion reserve
account(3)...................... 26.4
Working capital and preopening
expenses(4)..................... 11.0
Net interest expense(5).......... 24.9
License payment(6)............... 5.0
Estimated financing fees and
expenses........................ 7.1
------
TOTAL.......................... $230.0
======
</TABLE>
- --------
(1) We have a binding commitment from Bank of America NT&SA and BA Leasing &
Capital Corporation to obtain $30.0 million in financing for the
furniture, fixtures and equipment.
(2) Includes $44.7 million contributed at the closing of the original offering
by Hollywood Casino to HWCC-Louisiana and $5.3 million previously
contributed to finance pre-construction development expenses. HWCC-
Louisiana: (a) contributed $43.7 million to us through HCS I and HCS II;
and (b) loaned $1.0 million to Shreveport Paddlewheels to fund its equity
contribution to us. Hollywood Casino has also contributed an additional
$2.5 million to HWCC-Louisiana to pay Sodak Gaming six months after we
open the Shreveport resort, the remaining obligation owed to Sodak Gaming
in connection with HWCC-Louisiana's acquisition of Sodak Louisiana.
Excludes Hollywood Casino's agreement to contribute up to $5.0 million in
cash to us if at any time there are insufficient funds available to enable
the Shreveport resort to be operating by April 30, 2001. See "Description
of the Registered Notes--Completion Capital Agreement."
(3) Includes $5.0 million of the proceeds of the original offering that were
deposited into the completion reserve account.
22
<PAGE>
(4) Includes preopening costs, opening bankroll and general working capital.
(5) Includes pre-funding of three payments of fixed interest on the registered
notes and one quarterly interest payment on the furniture, fixtures and
equipment financing and is net of estimated interest income to be earned
on cash deposited in the cash collateral accounts.
(6) This amount represents a payment due to the City of New Orleans in
connection with the relocation of the riverboat gaming license from New
Orleans to Shreveport. Such payment was made in August 1999.
23
<PAGE>
CAPITALIZATION
The following table sets forth our cash position and capitalization as of
June 30, 1999 on an actual and pro forma basis. The pro forma cash position
and capitalization information gives effect to the completion of the original
offering, the contribution of an additional $45.0 million of partner
contributions to us and certain additional obligations which arose upon the
completion of the original offering. The information set forth below should be
read in conjunction with our financial statements, together with the related
notes to the financial statements, included elsewhere in this prospectus.
<TABLE>
<CAPTION>
As of June 30, 1999
---------------------
Actual Pro Forma
-------- -----------
(in thousands)
<S> <C> <C>
Cash and cash equivalents (including restricted cash)... $ 502 $184,790
======== ==========
Long-term debt(1)
First Mortgage Notes.................................. $ -- $150,000
Other non-current liability(2)........................ -- 1,692
-------- ----------
Total long-term debt.................................. -- 151,692
-------- ----------
Partners' capital--
Partners' capital contributions(3).................... 5,000 50,000
Accumulated deficit (as of the development stage)..... (66) (66)
-------- ----------
Total partners' capital............................. 4,934 49,934
-------- ----------
Total capitalization.............................. $ 4,934 $201,626
======== ==========
</TABLE>
- --------
(1) Does not give effect to approximately $30 million of furniture, fixtures
and equipment financing that we will incur during the construction of the
Shreveport resort. Also does not include the $5 million payment to the
City of New Orleans made in August 1999. Such amount has been shown as a
reduction of cash and cash equivalents.
(2) Consists of the $2.0 million contingent obligation to Hilton New Orleans
that was incurred in connection with the relocation of our license from
New Orleans to Shreveport, net of a discount of $308,000. This obligation
will be paid upon the earlier of the termination of construction of the
Shreveport resort or in monthly installments of $200,000 commencing with
the opening of the Shreveport resort.
(3) HWCC-Louisiana has loaned Shreveport Paddlewheels $1.0 million, which
Shreveport Paddlewheels contributed as $1.0 million in equity to us.
Shreveport Paddlewheels was credited for an additional $1.0 million
capital contribution in return for guarantees provided by New Orleans
Paddlewheels (see the discussion under the section entitled "Material
Contracts--Joint Venture Agreement of Hollywood Casino Shreveport").
24
<PAGE>
SELECTED FINANCIAL INFORMATION
The following selected financial information of Hollywood Casino Shreveport
for the period from September 22, 1998 through December 31, 1998 and of HWCC-
Louisiana, Inc. for each of the three years in the period ended December 31,
1998 are derived from the audited financial statements. The following selected
financial information of Hollywood Casino Shreveport for the six month period
ended June 30, 1999 and of HWCC-Louisiana, Inc. for the years 1995 and 1994,
and the following selected financial information of HWCC-Louisiana, Inc. for
the six month periods ended June 30, 1999 and 1998, are derived from their
unaudited financial statements and, in our opinion, include the normal
recurring entries necessary for a fair presentation of the information. On
April 23, 1999, HWCC-Louisiana acquired Sodak Louisiana and its interest in
what was then QNOV. Accordingly, for periods after April 23, 1999, HWCC-
Louisiana's balance sheet and statement of operations data is presented on a
consolidated basis including Sodak Louisiana and Hollywood Casino Shreveport.
Results of operations for the six month periods are not necessarily indicative
of the results that may be achieved for the year ended December 31, 1999.
Hollywood Casino Shreveport was reconstituted on September 22, 1998, and
since then has been actively pursuing the development of the Shreveport
resort. HWCC-Louisiana was formed in April 1993 and its operations have
related solely to acquiring a gaming license to develop and own a riverboat
casino in Louisiana. HWCC-Louisiana incurred costs associated with its
unsuccessful efforts to obtain licenses in Lake Charles and Bossier City,
Louisiana. Costs relating to the proposed Bossier City project amounted to
$25,000 during the first half of 1998 and $12,000 (net of a $15,000 gaming
license application refund), $558,000, $47,000 and $384,000, respectively,
during 1998, 1997, 1996 and 1995. HWCC-Louisiana's principal activities are to
act as a holding company.
The following financial information should be read in conjunction with the
text under the heading "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the issuers' financial statements and
unaudited quarterly financial statements and the notes relating to those
financial statements included in this prospectus.
HOLLYWOOD CASINO SHREVEPORT
<TABLE>
<CAPTION>
Period from
September 22, 1998
Six Months Ended through
June 30, December 31,
1999 1998
---------------- ------------------
<S> <C> <C>
Statement of Operations Data:
Preopening expenses......................... $ (76,000) $ (90,000)
Interest income............................. 45,000 55,000
---------- ----------
Net loss.................................... $ (31,000) $ (35,000)
========== ==========
<CAPTION>
As of June 30, As of December 31,
1999 1998
---------------- ------------------
<S> <C> <C>
Balance Sheet Data:
Total assets................................ $5,515,000 $5,691,000
Partners' capital........................... 4,934,000 4,965,000
</TABLE>
25
<PAGE>
HWCC-LOUISIANA, INC.
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
------------------ -------------------------------------------------
1999 (1) 1998 1998 1997 1996 1995 1994
-------- -------- -------- --------- -------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Development expenses......... $(94,000) $(41,000) $(39,000) $(644,000) $(47,000) $(384,000) $(1,000)
General and administrative
expenses.................... (4,000) -- -- -- -- -- --
Interest Income.............. 45,000 -- -- -- -- -- --
-------- -------- -------- --------- -------- --------- -------
Loss before taxes and other
items....................... (53,000) (41,000) (39,000) (644,000) (47,000) (384,000) (1,000)
Provision for taxes.......... -- -- -- -- -- -- --
Pre-acquisition losses....... 12,000 -- -- -- -- -- --
Equity in losses of Hollywood
Shreveport Casino........... -- -- (17,000) -- -- -- --
-------- -------- -------- --------- -------- --------- -------
Net loss..................... $(41,000) $(41,000) $(56,000) $(644,000) $(47,000) $(384,000) $(1,000)
======== ======== ======== ========= ======== ========= =======
</TABLE>
<TABLE>
<CAPTION>
As of As of December 31,
June 30, ----------------------------------------------------
1999 (1) 1998 1997 1996 1995 1994
---------- ---------- ----------- --------- --------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total assets............ $3,432,000 $2,705,000 $ 42,000 $ 47,000 $ 1,000 $ --
Shareholder's equity
(deficit).............. 2,728,000 1,369,000 (1,075,000) (431,000) (384,000) (1,000)
</TABLE>
- --------
(1) Consolidated to include the results of operations and balance sheet data of
Hollywood Casino Shreveport. Losses of Sodak Louisiana, L.L.C. from its
equity interest in Hollywood Casino Shreveport for the period prior to its
April 23, 1999 acquisition by HWCC-Louisiana, Inc. are presented as pre-
acquisition losses and reduce the consolidated net loss of HWCC-Louisiana,
Inc.
26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following should be read in conjunction with our financial statements
and the notes relating to those statements included in this prospectus.
History and Development Activities
Our predecessor was formed in 1992 as a joint venture between a predecessor
to Hilton New Orleans Corporation and New Orleans Paddlewheels Inc. under the
name "Queen of New Orleans at the Hilton Joint Venture." Neither of the
original members of our predecessor were affiliated with the issuers. Our
predecessor operated a riverboat casino in downtown New Orleans until October
1997, when it discontinued all gaming operations. Prior to discontinuing
operations, our predecessor obtained approval from the Louisiana Gaming
Control Board to relocate the riverboat license to downtown Shreveport and
entered into a Compromise Agreement with the City of New Orleans under which
the city would be paid a fee of $10.0 million in settlement of certain tax
claims. Following receipt of Louisiana Gaming Control Board approval to
relocate the license, New Orleans Paddlewheels and Hilton New Orleans began
negotiating to transfer their interests in our predecessor to HWCC-Louisiana,
Sodak Louisiana and Shreveport Paddlewheels, L.L.C., a subsidiary of New
Orleans Paddlewheels. Other than holding its riverboat gaming license, our
predecessor had no business operations and remained a dormant entity until
September 1998.
In September 1998, Shreveport Paddlewheels, Sodak Louisiana and HWCC-
Louisiana reconstituted our predecessor, Hilton New Orleans and New Orleans
Paddlewheels withdrew as partners and the name was changed to "QNOV." Each of
Sodak Louisiana and HWCC-Louisiana made capital contributions to us of $2.5
million consisting of a combination of cash and deemed contributions of
capital expenditures made in connection with the Shreveport resort prior to
such date. In connection with its exit from our predecessor, Hilton paid $5.0
million of the payment owed under the Compromise Agreement to the City of New
Orleans and HWCC-Louisiana agreed with the City of New Orleans that we would
pay the remaining $5.0 million upon obtaining financing for a new casino in
Shreveport. We also agreed to reimburse $2.0 million of the amount Hilton New
Orleans paid to the City of New Orleans commencing with the opening of the
Shreveport resort or if construction of the Shreveport resort is terminated.
Since September 1998, we have been in a development stage, engaged in and
arranging for the design, preliminary site work, construction and financing of
the new riverboat casino resort to operate in Shreveport.
HWCC-Louisiana was formed in April 1993 and its operations have related
solely to acquiring a gaming license to develop and own a riverboat casino in
Louisiana. Hollywood Casino and certain of its subsidiaries historically
provided services to HWCC-Louisiana and paid direct costs on behalf of HWCC-
Louisiana, primarily related to the unsuccessful efforts to obtain licenses in
Lake Charles and Bossier City, Louisiana. Since the last quarter of 1997,
HWCC-Louisiana's operations have related primarily to the design, preliminary
site work, construction and financing of the Shreveport resort. Until
September 1998, when HWCC-Louisiana acquired the partnership interest in QNOV,
HWCC-Louisiana either expensed or capitalized its historical development costs
as appropriate and recorded an intercompany liability to Hollywood Casino. In
April 1999, Hollywood Casino made a capital contribution to HWCC-Louisiana of
$1.4 million, the proceeds of which were used by HWCC-Louisiana to repay
approximately $1.4 million of the accumulated intercompany liability.
On March 31, 1999, HWCC-Louisiana entered into an agreement with Sodak
Gaming to acquire Sodak Louisiana and its partnership interest in QNOV for the
$2.5 million Sodak Louisiana had previously contributed to QNOV. HWCC-
Louisiana paid $1,000 on April 23, 1999 at the closing of the acquisition,
with the remainder to be paid six months after the opening of the Shreveport
resort. The acquisition has been accounted for under the purchase method of
accounting. Effective as of the April 23, 1999 closing, Sodak Louisiana became
a consolidated subsidiary of HWCC-Louisiana. In July 1999, Sodak Louisiana was
merged into HWCC-Louisiana and the name of QNOV was changed to Hollywood
Casino Shreveport.
27
<PAGE>
Also, in July 1999, HWCC-Louisiana formed two subsidiaries, HCS I and HCS
II, and contributed $1,000 of capital to each entity, along with 99% of its
interest in us to HCS I and its remaining 1% interest in us to HCS II.
Collectively, HCS I and HCS II will be allocated 100% of our profits and
losses. HCS I is our managing general partner. Shreveport Paddlewheels is our
third partner and its interest in us is a residual interest entitling it to
10% of the net proceeds of a sale or disposition of us by HCS I and HCS II
after payment of outstanding debt and the return of contributed capital. As a
result of our September 1998 reconstitution, Shreveport Paddlewheels is
entitled to receive a payment equal to approximately 1% of our net revenues.
In addition, under a marine services agreement, Shreveport Paddlewheels will
be entitled to receive a fee equal to $360,000 per year.
Additionally, in July 1999, we formed a new, wholly owned subsidiary,
Shreveport Capital. We contributed $1,000 of capital to Shreveport Capital.
Shreveport Capital was formed for the sole purpose of being a co-issuer with
respect to a planned project specific financing for the Shreveport resort.
Through June 30, 1999, Hollywood Casino Shreveport has expended
approximately $5.0 million in connection with the development of the
Shreveport resort.
Results of Operations
The inception date for Hollywood Casino Shreveport was September 22, 1998.
We have no present operating activities other than costs incurred in
developing the Shreveport resort.
Hollywood Casino Shreveport. We have incurred a total of $166,000 of
preopening costs in connection with the Shreveport resort, including $76,000
during the first half of 1999 and $90,000 during 1998. These costs primarily
relate to community relations activities and organizational costs. These costs
have been partially offset by interest income earned of $45,000 during the
first half of 1999 and $55,000 during 1998 on cash investments.
HWCC-Louisiana. HWCC-Louisiana is a guarantor of the notes. Prior to October
1997, HWCC-Louisiana engaged in development activities related to obtaining
gaming licenses in Lake Charles and Bossier City, Louisiana. Since October
1997, HWCC-Louisiana's operations have related primarily to the acquisition of
the partnership interests in Hollywood Casino Shreveport and winding up its
efforts in Bossier City, and in the future it will act solely as a holding
company. Therefore, a comparison of the results of operations for HWCC-
Louisiana with respect to development activities in connection with the
abandoned projects is not meaningful and is not presented. HWCC-Louisiana's
total expenses with respect to the abandoned projects were approximately $1.0
million through December 31, 1998.
Costs incurred by HWCC-Louisiana in connection with the Shreveport resort
amounted to $22,000 and $16,000, respectively, during the six month periods
ended June 30, 1999 and 1998 and $27,000 and $86,000, respectively, during
1998 and 1997. The 1999 six month period costs are exclusive of those we
incurred which are now included in HWCC-Louisiana's consolidated results of
operations. Such costs consist primarily of professional fees, travel and
reimbursements to Hollywood Casino and its subsidiaries for the use of their
personnel.
During the year ended December 31, 1998, HWCC-Louisiana recorded a loss of
$17,000 with respect to its equity interest in Hollywood Casino Shreveport,
representing one-half of the total losses experienced by Hollywood Casino
Shreveport for that period. As previously discussed, HWCC-Louisiana acquired
Sodak Louisiana's interest in us on April 23, 1999 and is now reflecting our
earnings and losses on a consolidated basis.
Liquidity and Capital Resources
As currently planned, the Shreveport resort will consist of a riverboat
casino with approximately 1,370 slot machines and 75 table games, a 405-room,
all suite, art deco style hotel, and approximately 42,000 square feet of
restaurant and entertainment facilities. Construction of the Shreveport resort
is expected to be completed early in the fourth quarter of 2000. We are using
the $150.0 million in proceeds from the August 1999 original offering of the
original notes, together with the $50.0 million of capital contributions to us
and $30.0 million in
28
<PAGE>
furniture, fixture and equipment financing to provide the estimated $230.0
million needed to develop, construct, equip and open the Shreveport resort
including financing costs and the $5.0 million payment made in August 1999 to
the City of New Orleans related to moving the license to Shreveport. On July
16, 1999, we entered into a binding commitment with Bank of America NT&SA and
BA Leasing & Capital Corporation to obtain the $30.0 million in financing for
certain furniture, fixtures and equipment.
The funds provided by these sources are expected to be sufficient to develop
and commence operations of the Shreveport resort and to provide a reserve for
the first three scheduled payments of fixed interest on the notes. The net
proceeds of the original offering were deposited into a construction
disbursement account, an interest reserve account and a completion reserve
account. The proceeds in the interest reserve account have been invested in
U.S. government securities that mature just prior to each payment date and the
remaining proceeds were invested in U.S. government securities. In addition,
Hollywood Casino has entered into a completion capital agreement providing for
the contribution of up to an additional $5.0 million in cash if at any time
there are insufficient funds available to enable the Shreveport resort to be
operating by April 30, 2001. In addition, if the Shreveport resort is not
operating by April 30, 2001, Hollywood Casino will contribute to us on that
date $5.0 million in additional equity less any amounts previously contributed
under the completion capital agreement.
We have entered into a ground lease with the city of Shreveport for the land
on which the Shreveport resort will be built which contains an initial term of
10 years with subsequent renewals for up to an additional 40 years. Payments
under the lease will begin when construction commences and will be $10,000 per
month during the construction period increasing to $450,000 per year upon
opening and continuing at that amount for the remainder of the initial ten-
year lease term. In addition to the base rent, we will pay rent equal to the
greater of (1) $500,000 per year or (2) the sum of 1% of adjusted gross
revenues of the Shreveport resort and the amount by which 50% of the net
income from the parking facilities exceeds a specified parking income credit.
In connection with receiving approval to move our site to Shreveport as
discussed above, HWCC-Louisiana and Sodak Louisiana entered into an agreement
with Hilton New Orleans providing that we would reimburse Hilton New Orleans
$2.0 million of the amount it paid to the City of New Orleans. The
reimbursement is to be paid upon the earlier of the termination of the
construction of the Shreveport resort or in monthly installments of $200,000
commencing with the opening of the Shreveport resort. We have not reflected
the resulting contingent liabilities of the $5.0 million we have paid to the
City of New Orleans or the $2.0 million we have agreed to pay Hilton New
Orleans on our financial statements at June 30, 1999 or December 31, 1998
because these obligations did not arise until we completed our financing. The
$5.0 million payment to the City of New Orleans was made in August 1999. The
remaining $2.0 million liability, net of a discount of $308,000, and the
associated project costs of $6.7 million were recorded upon the issuance of
the original notes.
The operations of the Shreveport resort will be managed by HWCC-Shreveport
under the terms of a management agreement. Under the terms of the management
agreement, we will pay HWCC-Shreveport basic and incentive management fees for
its services. The basic fee will equal approximately 2% of the Shreveport
resort's net revenues and the incentive fee will equal the sum of (1) 5% of
the Shreveport resort's earnings before interest, taxes, depreciation and
amortization as defined in the agreement ("EBITDA") between $25.0 million and
$35.0 million, (2) 7% of the Shreveport resort's EBITDA between $35.0 million
and $40.0 million, and (3) 10% of the Shreveport resort's EBITDA over $40.0
million. In addition, we will reimburse HWCC-Shreveport for expenses incurred
in connection with services provided under the management agreement.
HCS I and HCS II have assumed an obligation of HWCC-Louisiana to cause us to
pay Shreveport Paddlewheels an amount equal to approximately 1% of our net
revenues in exchange for the assignment by Shreveport Paddlewheels of its
joint venture interest in us to HWCC-Louisiana and Sodak Louisiana in
connection with the September 1998 reconstitution. We will also be obligated
to pay Shreveport Paddlewheels a $30,000 monthly fee for marine services and
to reimburse Shreveport Paddlewheels for its direct expenses, if any, incurred
with respect to those services.
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Third parties could assert obligations against us for liabilities that have
arisen or that might arise against our predecessors or the partners of our
predecessors with respect to any period prior to September 22, 1998.
Management believes that in the event such a claim arises, it would be
adequately covered under either existing indemnification agreements with the
former partners or insurance policies maintained by the predecessors or their
partners.
We have also entered into an agreement to sub-lease the retail portion of
the Shreveport resort to Red River Entertainment. We expect to receive rental
payments under the sub-lease of approximately $250,000 annually, plus an
amount equal to the sum of (1) 50% of the retail facility's first $550,000 of
net cash flow, (2) 25% of the next $65,000 of the retail facility's net cash
flow and (3) 40% of the retail facility's annual net cash flow above $615,000.
Seasonality
We have no operating history. We anticipate that activity at the Shreveport
resort may be modestly seasonal, with stronger results expected during the
third fiscal quarter. In addition, our operations may be impacted by adverse
weather conditions. Accordingly, our results of operations may fluctuate from
quarter to quarter and the results for any fiscal quarter may not be
indicative of results for future fiscal quarters.
Year 2000 Issues
Since we do not expect to open the Shreveport resort until fall 2000, we do
not anticipate experiencing any Year 2000 problems directly from our own
computer or information technology systems. We currently rely on the computer
systems of Hollywood Casino for our administrative, financial and construction
management operations. These systems are expected to be fully Year 2000
compliant by the end of 1999. However, there can be no assurance that
Hollywood Casino will successfully assess and remediate these systems. We may,
however, be exposed to the Year 2000 problems of contractors, subcontractors
or suppliers if their systems are not compliant. There can be no guarantee
that the systems of these third parties will be timely converted or that any
representations made by them regarding their Year 2000 compliance are
accurate. If Year 2000 problems arise with Hollywood Casino or these third
parties, the time required to complete construction of the Shreveport resort
would likely be increased, even if the services of other parties can be
secured.
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BUSINESS
General
Hollywood Casino Shreveport is a Louisiana general partnership formed to
construct and own a highly themed hotel and casino destination resort in
Shreveport, Louisiana, approximately 180 miles east of Dallas, Texas. The
resort will feature the largest riverboat in the Shreveport market, an
extensive land-based pavilion and an all-suite hotel. Our Shreveport resort
will also feature a newly constructed restaurant and entertainment promenade
and three parking facilities containing approximately 2,000 parking spaces. We
believe we have designed a premier facility that surpasses the scope and
quality of all of the Shreveport market's existing riverboat facilities. Our
resort will be located adjacent to Harrah's casino and will form the only
casino "cluster" in the Shreveport market, allowing patrons to park once and
easily walk between the two facilities. Our resort will enjoy high visibility
and convenient access from Interstate 20, the highway that connects
Shreveport/Bossier City to the attractive feeder markets of Dallas/Fort Worth
and East Texas. Construction of the Shreveport resort began in August 1999 and
we intend to open the resort early in the fourth quarter of 2000.
Hollywood Casino will operate the Shreveport resort, which will feature the
unique Hollywood theme that has been successfully implemented at Hollywood
Casino's other properties. The Hollywood theme incorporates the excitement and
glamour of the motion picture industry by incorporating designs inspired by
famous movies, displays of motion picture memorabilia and movie-themed gaming,
entertainment and dining areas.
The Shreveport Resort
The Pavilion
Our approximately 170,000 square foot pavilion will be the centerpiece of
our integrated resort, providing easy access to the hotel, casino and numerous
entertainment amenities. Patrons will enter our resort either through an
elegant porte cochere or a movie-themed walkway connecting our land-based
pavilion to our parking garage. Our elaborate pavilion will feature a dramatic
60-foot high atrium, will be lavishly appointed with marble, chandeliers and
columns and will enable our patrons to see the casino floor from almost
anywhere in the pavilion. Escalators located in the center of the atrium will
provide convenient access to all three levels of the casino.
Our facility will provide patrons with a wide range of restaurant and
entertainment alternatives. Our pavilion will house three restaurants, a
highly themed entertainment lounge and a premium players' club. The Fairbanks
steakhouse will feature a Mediterranean style dining room with vaulted
ceilings and will seat approximately 150 people. The "Gold Room," an elegant
and private dining room within Fairbanks, will offer the ultimate in guest
service for our premium players. The Hollywood Epic Buffet, which will seat
approximately 340 people, will be modeled after memorable Hollywood movie
sets, which we intend to change frequently in order to maintain an exciting
and original dining environment for our patrons. The Hollywood DinerSM, which
will seat approximately 225 people, will feature a stained wood and ceramic
tile setting surrounded by movie memorabilia from the 1940s, 1950s and 1960s.
The entertainment lounge, which will seat approximately 160 people, will
feature a tropical themed entertainment showroom complete with palm trees and
decorative painted ceilings. Our premium players' club, the Director's ClubSM,
will seat approximately 50 people in an intimate art deco setting among walls
lined with autographed photographs of movie stars.
In addition to the restaurants and lounges, the pavilion will include a deli
and ice cream shop, VIP check-in, premium quality bar, several meeting rooms
and the Hollywood Casino Studio Store(R), a highly themed retail shopping
facility that will sell movies on video tape and other media, soundtracks and
logo merchandise from major motion picture studios.
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The Riverboat Casino
Our resort will feature the largest riverboat in the market with
approximately 1,370 slot machines and 75 table games on three levels. Our
riverboat casino will be attached to our pavilion by 85-foot wide seamless
entrances and will feature up to 20-foot high ceilings on all three levels,
enabling us to provide our patrons with the feel of a "land-based" casino. The
interior of our casino will blend the Hollywood theme with the exciting
atmosphere of a modern casino, complete with memorable movie props,
distinctive signage, state-of-the-art gaming equipment and Las Vegas style
gaming displays.
Our riverboat casino will float in a concrete and steel basin that will
raise the riverboat nearly 20 feet above the river. The basin will virtually
eliminate variation in the water height surrounding the riverboat and will
allow the casino to be permanently moored to our land-based pavilion. Our
computerized pumping system is designed to regulate the water level of the
basin to a variance of no more than three inches.
Art Deco Style Hotel
Our all suite, art deco style hotel will offer luxurious suites through its
approximately 380 single room suites and 25 multiple room suites. The single
room suites will be elegantly furnished and will be approximately 510 square
feet in size, containing a spacious living area, a writing desk and an
oversized marble bath, with a separate bathtub and shower. Master suites will
be approximately 1,000 square feet in size and will include all of the
amenities of our single room suites, plus a living room, wet bar, powder room
and separate his and her bathrooms. The two presidential suites will be
approximately 2,000 square feet in size and will include all of the amenities
of the master suites, plus a second bedroom, a dining room and separate his
and her closets.
The Restaurant and Entertainment Promenade
Our resort will feature an extensive restaurant and entertainment
development that will be designed as a "New Orleans style" outdoor walking
promenade. The development will be located across the street from our
pavilion, adjacent to our parking garage. It will contain approximately 42,000
square feet of dining and live entertainment space and will feature nationally
and regionally renowned establishments. Our restaurant and entertainment
promenade will be developed by Red River Entertainment, which includes the
principal developer of Beale Street in Memphis, Tennessee. Additionally, an
affiliate of Red River Entertainment has announced plans to develop
approximately 55,000 square feet of additional restaurant, retail and
entertainment space adjacent to the promenade. We believe the overall
restaurant, retail and entertainment development, which will total nearly
100,000 square feet, will be the premier non-gaming entertainment venue in the
Shreveport market and will attract additional visitors to our casino.
Parking
We will offer a choice of three parking facilities, which will include two
parking lots and an eight-story parking garage connected directly to our land-
based pavilion. We will provide parking spaces for approximately 2,000 cars,
including valet parking for approximately 420 cars. All of our parking
facilities will be located within one block of our facility, providing
customers with convenient access to our resort.
Marketing Strategy
We and Hollywood Casino will use the same marketing strategy for the
Shreveport resort that Hollywood Casino has effectively utilized to open and
operate its existing facilities in Aurora, Illinois and Tunica County,
Mississippi. The successful implementation of Hollywood Casino's marketing
strategies has been an important factor in both the Aurora and the Tunica
casinos capturing gaming revenues in excess of their "fair share" of the
gaming revenues in each of their respective markets.
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One of the principal elements of our strategy is to develop the premier
gaming and entertainment facility in the Shreveport market. In order to fully
capitalize on the potential of the Shreveport market, we intend to develop a
resort that:
. incorporates the largest riverboat in the market;
. has the greatest number of slot machines and table games in the
market;
. has a seamless entry from the land-based pavilion to the gaming
vessel giving our riverboat casino a "land-based" feel;
. utilizes Hollywood Casino's unique and proven theme;
. delivers superior dining and entertainment amenities; and
. generates additional appeal through our restaurant and entertainment
facilities.
We believe that the combination of our superior quality facility and the
execution of Hollywood Casino's proven marketing strategies will enable the
Shreveport resort to become one of the leading riverboat casinos in the
Shreveport market. Our marketing programs will consist of a variety of highly
targeted advertising, direct mail and promotional programs designed to attract
both initial and repeat customers to our Shreveport resort. Principal elements
of our marketing strategy include the following:
Maximizing the Number of Initial Visitors to our Resort. We will be
conducting an extensive preopening campaign to market our facility to
potential customers. We will advertise through a variety of media, including
television commercials, print advertising and billboards. The goal of this
advertising program is to increase the awareness of residents in the
Dallas/Fort Worth and East Texas markets of our high quality Shreveport
resort. As part of this advertising campaign, we will begin aggressively
soliciting hotel reservations approximately six months in advance of the
opening of our facility. We will also conduct a highly targeted direct mail
program by sending promotional material regarding our Shreveport resort to
potential customers. Our market research will identify residents in the
Dallas/Fort Worth and East Texas markets who have the demographic profile to
become valuable customers. We will have a casino-marketing representative in
Dallas dedicated to generating high-end business for our Shreveport casino. We
have already identified several experienced potential candidates for this
position.
During the 12 months ended May 31, 1999, approximately 12 million people
visited the Shreveport market. We believe that the superior quality of our
gaming and entertainment product, combined with our extensive preopening
marketing campaign, will draw a significant number of these potential
customers to our Shreveport facility.
Turn Initial Visitors into High Value Customers. Once patrons visit our
facility, we intend to provide them with a superior gaming, lodging and
entertainment experience in order to transform these visitors into repeat
customers. In addition to providing our customers with a superior product, we
intend to utilize a player's card program and casino information technology to
create highly focused marketing programs for our customers. Hollywood Casino
has extensive experience utilizing sophisticated casino information
technology, and we will be utilizing the same proprietary system that
Hollywood Casino successfully employs at its existing properties.
We intend to implement an aggressive program to solicit visitors to join our
player's card program. All of our hotel guests will be immediately entered
into our player's card program, and promotional booths located throughout the
resort will offer promotional rewards for patrons that sign up for our
player's card. The computer technology we will utilize will also include a
"hot player's system," whereby the computer system will immediately send a
casino host to an active customer who is not a member of our player's card
program. The casino hosts will provide these active customers with various
complementaries based upon their level of play and will enroll these customers
in our player's card program. Once a customer joins our player's card program,
they will be entered into our computer data base system.
We will use a sophisticated casino technology system to create extensive
player incentive, promotion and reward programs for members of our player's
card program who have been identified as high value customers. This computer
technology will include table game and slot machine monitoring systems that
will enable our
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casino to track and rate patron play through the use of our player's card.
When patrons use the casino player's card at slot machines or table games, the
information will be immediately available to our management, allowing us to
implement marketing programs that recognize and reward patrons during their
visits to the casino. Such promotions and complementaries will include free or
discounted food and beverages, hotel accommodations, special player events,
admissions to headliner entertainment, retail merchandise and sweepstake
giveaways.
The online nature of the computer monitoring system will provide management
with the unique opportunity to immediately reward our active customers with
promotions and complementaries during that customer's "same-visit" to our
facility. We will also utilize our extensive data base system to monitor an
ongoing direct mail program to encourage repeat visitations by our high value
customers. The sophisticated computer technology will enable us to target
specific direct mail promotions to each of our customers based upon their
level of play.
The Shreveport Market
We believe the Shreveport market is one of the most attractive emerging
gaming jurisdictions in the United States. The Shreveport market is currently
the eighth largest gaming market in the United States and the largest in
Louisiana. Since the commencement of riverboat gaming in the Shreveport market
in 1994, gaming revenues have experienced steady and significant growth. In
1998, gaming revenues in the Shreveport market increased 13.7% to
approximately $600 million. The Shreveport market is the only riverboat gaming
market in Louisiana that currently permits continuous dockside gaming without
requiring cruising or simulated cruising schedules, which will allow our
casino to operate 24 hours a day with uninterrupted access. Louisiana is a
limited riverboat license jurisdiction and currently only four riverboat
casinos operate in the Shreveport market.
There are approximately 7.1 million adults residing within an approximately
200-mile radius of Shreveport. The interstate highway system connecting
Shreveport with Dallas/Fort Worth and East Texas provides the Shreveport
market with the ability to draw customers from an extended area. Dallas is
located approximately 180 miles west of Shreveport and can be reached by car
in less than three hours. In addition, the Shreveport Regional Airport
currently has 41 in-bound flights per day from various locations, including 14
from Dallas and eight from Houston with flight times under 60 minutes. The
Shreveport Regional Airport is in the process of completing an approximately
$25 million expansion and renovation project, which will include a new
terminal and additional parking facilities.
We believe that the Shreveport market has not reached its full potential due
to its limited supply of gaming capacity and high quality amenities. We
believe the Shreveport market has the potential to grow significantly as
additional gaming capacity, high quality hotel accommodations and
entertainment amenities are added. We believe these additions will enable the
Shreveport market to increase its penetration of its principal feeder markets
and will broaden the appeal of the Shreveport market to higher income
customers and patrons desiring overnight accommodations. All of the existing
four operators in the Shreveport market have completed or are in the process
of completing improvements to their facilities, including adding hotel rooms.
We believe that by opening the premier hotel, gaming and entertainment
facility in the market, we will further accelerate the development of the
Shreveport market. In comparison to the other emerging gaming markets listed
in the chart below, the Shreveport market has the second highest win per
gaming position but the fewest gaming positions relative to its adult
population. Accordingly, we believe that the Shreveport market is capacity
constrained and that the existing operators have penetrated only a limited
portion of the large adult population surrounding the Shreveport market.
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<TABLE>
<CAPTION>
Principal Market Total 1998 Total Population Win Per
Population Gaming Win Gaming Per Gaming Gaming
Gaming Market (in millions)(1) (in millions) Positions Position Position
- ------------------ ---------------- ------------- --------- ---------- --------
<S> <C> <C> <C> <C> <C>
Connecticut(2).... 11.1 $1,457 11,594 961 $125,701
Chicago........... 8.4 1,515 14,865 567 101,917
Shreveport........ 7.1 599 5,680 1,258 105,440
Pro Forma(3)..... 7.1 -- 7,495 947 --
Cincinnati........ 5.2 428 4,479 1,155 95,557
Tunica............ 4.9 1,059 19,451 251 54,445
St. Louis......... 2.7 538 9,885 277 54,426
Kansas City....... 1.9 458 9,500 196 48,211
</TABLE>
- --------
Sources: Urban Systems, Inc., state gaming records and SEC filings by
operators in the listed markets. Population statistics and gaming
positions are as of December 31, 1998.
(1) Represents the adult population located within a specific distance from
each gaming market. The distances vary based upon the proximity of a
particular gaming market to its principal customer base. We have defined
the principal customer base for the Connecticut, Chicago, Cincinnati, St.
Louis and Kansas City markets to be within a 100 mile radius, and the
principal customer base for the Shreveport and Tunica markets to be within
a 200 mile radius.
(2) Includes estimates for table game revenues and the number of table games
for one of the two Connecticut casinos.
(3) Gives pro forma effect to the anticipated gaming positions of our
Shreveport resort as if it had been open as of December 31, 1998.
Competition
Upon opening our Shreveport resort, we will compete directly with Binion's
Horseshoe, Harrah's, the Isle of Capri and Casino Magic in the Shreveport
market. The Louisiana Gaming Control Board has granted approval to applicants
for 14 of the 15 legislatively approved riverboat gaming licenses. On July 20,
1999, the Louisiana Gaming Control Board announced that it will be accepting
bid proposals for the fifteenth license. If the fifteenth and final riverboat
gaming license is granted, it may be located in the Shreveport market, which
will increase competition in the market and could negatively impact the
Shreveport resort. Also, while we do not believe we face significant
competition from casinos outside of the Shreveport market, the Shreveport
resort will compete indirectly with four existing riverboats in the Lake
Charles, Louisiana area, a land-based casino owned by the Coushatta Native
American tribe between Lafayette and Baton Rouge, Louisiana and two riverboats
in Baton Rouge.
The Louisiana Riverboat Economic Development and Gaming Control Act provides
that the designated gaming area shall not exceed the lesser of 60% of the
total square footage of the passenger access area of the vessel or 30,000
square feet at each casino. The total amount of gaming space in a casino is
determined by measuring the area inside the interior walls of the riverboat
and excluding any space in which gaming activities may not be conducted, such
as bathrooms, stairwells, cage and beverage areas and emergency evacuation
routes. The facilities of three of our competitors in the Shreveport market
arguably contain less than the total amount of gaming space permitted. If
these competitors were to increase the size of their facilities, they would be
able to add more gaming positions, which would directly increase competition
in our market.
Also, we cannot be sure that we will be able to effectively compete against
any other future gaming operations that Louisiana or other authorities may
authorize in the gaming market in which our Shreveport resort will operate.
For example, in 1997, the Louisiana legislature adopted legislation permitting
up to 15,000 square feet of slot machine gaming at pari-mutuel wagering
facilities located in parishes in Louisiana that approve slot machine gaming
in a referendum election. Shortly thereafter, a referendum election was held
that approved slot machine gaming at Louisiana Downs, which is located in
Bossier City, approximately nine miles from the site of the Shreveport resort.
The Louisiana legislature recently passed legislation regarding the
imposition, collection and disposition of taxes on slot machines to be located
at Louisiana Downs.
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Casino gaming is currently prohibited in several jurisdictions adjacent to
Louisiana. As a result, we anticipate that a significant portion of our
customers will be residents of these jurisdictions, primarily Texas. Although
casino gaming is currently not permitted in Texas and the Texas Attorney
General has issued an opinion that gaming in Texas would require an amendment
to the Texas Constitution, the Texas Legislature has considered proposals to
authorize casino gaming in the past. The legalization of casino gaming in
Texas, or in other nearby jurisdictions, would have a material adverse effect
on our business, financial condition, results of operations and prospects and
the Issuers' ability to satisfy their obligations under the notes.
We will compete to a lesser extent with gaming operations in other
jurisdictions and with other forms of gaming, including lottery gaming, horse
and dog racing, as well as other forms of entertainment.
The Design Process
We have been planning the Shreveport resort since 1997. Hollywood Casino's
experienced design, development and construction staff, together with a number
of outside construction, design and architectural firms, have completed
extensive and detailed engineering and architectural plans for the development
of the Shreveport resort.
Our extensive design and engineering team includes:
. Pre-construction design and architectural services by Broadmoor
Design. Broadmoor Design's parent, Broadmoor, is based in New
Orleans, Louisiana, and has provided construction services,
architectural design, and design/build services since 1973.
Broadmoor has been involved in the design and construction of
riverboat casino projects for Harrah's, Hilton, Hyatt and Circus-
Circus.
. Riverboat casino design by Rodney E. Lay & Associates. Rodney Lay is
located in Jacksonville, Florida, and has provided full service ship
designs since 1959. Rodney Lay has designed 24 notable riverboat and
dockside casinos such as Hollywood Tunica, Empress I, II and III,
Trump Casino, Showboat Mardi Gras, Alton Belle Casino II, Argosy III
and IV and Players I and II.
. Riverboat basin design by Brown Cunningham Gannuch. BCG is located
in Louisiana, and has over 20 years of experience in providing
professional engineering, architectural, design, surveying and
construction management services primarily on municipal
infrastructure projects. BCG has extensive experience in the
inspection of U.S. Army Corps of Engineers navigation and flood
protection projects.
. Interior design by Wilson & Associates, Inc. Wilson & Associates is
an international interior architectural design firm specializing in
commercial projects such as hotels, restaurants, casinos and
executive offices. Over the past 20 years, Wilson has completed
hundreds of design projects, including assignments for the Atlantis
Hotel & Casino, Beau Rivage Hotel & Casino, Caesars Palace Las
Vegas, Caesars Atlantic City and The Palace of the Lost City.
. Parking design by International Parking Design. IPD is an
experienced architectural firm specializing in parking design and
engineering and parking consulting services. IPD has been the prime
architect for over 200 parking structures and parking consultant on
an additional 3,000 projects.
We engaged Broadmoor in October 1997 to perform pre-construction services.
Broadmoor has worked closely with our design team to ensure that the design
concepts can be built in accordance with our construction budget and
anticipated schedule. We have invested approximately $5.3 million in this
thorough design process, and have substantially completed detailed plans for
the construction of every significant element of the Shreveport resort.
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The Construction Process
We have entered into a guaranteed maximum price contract with Broadmoor
Anderson for $68.7 million for the construction of the land-based facilities
at our Shreveport resort. Broadmoor Anderson is a joint venture between
Broadmoor and Roy Anderson Corp., both of which have extensive construction
experience and have completed numerous gaming projects. As required by the
contract, Broadmoor Anderson provided to us a payment and performance bond for
the entire contract price. In addition, we have signed a fixed price contract
with Leevac Shipyards, Inc. for $34.4 million for the construction of the
riverboat casino. As required by the contract, Leevac provided to us a payment
and performance bond for the entire contract price. Since 1991, Leevac has
constructed nine riverboat casinos, including the Horseshoe Casino in Bossier
City and the Ameristar Casino in Council Bluffs.
We have retained First American Title Insurance Company to act as a
disbursement agent to ensure that the funds contributed to construct our
resort are disbursed in accordance with the terms of a disbursement agreement.
In addition, we have engaged CCM Consulting Group to serve as independent
construction consultant on behalf of the holders of the notes. The
disbursement agreement contains conditions for and sequencing of funding
construction costs and procedures for approving construction change orders and
amendments to the construction budget and schedule. The conditions under the
disbursement agreement generally provide that funds will be disbursed to us
only if we and CCM certify to the disbursement agent that there are sufficient
available funds to complete the resort in accordance with our budget.
Gaming Regulation
Louisiana
The ownership and operation of a riverboat gaming vessel is subject to the
Louisiana Riverboat Economic Development and Gaming Control Act. As of May 1,
1996, gaming activities are regulated by the Louisiana Gaming Control Board.
The Louisiana Gaming Control Board is responsible for issuing the riverboat
gaming license and enforcing the laws, rules and regulations relative to
riverboat gaming activities. The Louisiana Gaming Control Board is empowered
to issue up to 15 riverboat gaming licenses to conduct gaming activities on a
riverboat of new construction in accordance with applicable law. However, no
more than six riverboat gaming licenses may be granted to riverboats operating
from any one parish. Shreveport and Bossier City are located in two adjacent
parishes. On July 20, 1999, the Louisiana Gaming Control Board announced that
it will be accepting bid proposals for the fifteenth license.
The laws and regulations of Louisiana seek to prevent unsavory or unsuitable
persons from having any direct or indirect involvement with gaming at any time
or in any capacity; establish and maintain responsible accounting practices
and procedures; maintain effective control over the financial practices of
riverboat gaming licensees, including establishing procedures for reliable
record keeping and making periodic reports to the Louisiana Gaming Control
Board; prevent cheating and fraudulent practices; provide a source of state
and local revenues through fees; and ensure that riverboat gaming licensees,
to the extent practicable, employ and contract with Louisiana residents, women
and minorities.
The Louisiana Riverboat Economic Development and Gaming Control Act
specifies certain restrictions and conditions relating to the operation of
riverboat gaming, including but not limited to the following:
. in parishes bordering the Red River, such as our property in
Shreveport, gaming may be conducted dockside; however, in all other
authorized locations gaming is not permitted while a riverboat is
docked, other than for forty-five minutes between excursions, unless
dangerous weather or water conditions exist as certified by the
riverboat's master;
. each round trip riverboat cruise may not be less than three nor more
than eight hours in duration, subject to specified exceptions;
. agents of the Louisiana Gaming Control Board are permitted on board
at any time during gaming operations;
. gaming devices, equipment and supplies may be purchased or leased
only from permitted suppliers;
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. gaming may only take place in the designated gaming area while the
riverboat is upon a designated river or waterway;
. gaming equipment may not be possessed, maintained, or exhibited by
any person on a riverboat except in the specifically designated
gaming area, or a secure area used for inspection, repair, or
storage of such equipment;
. wagers may be received only from a person present on a licensed
riverboat;
. persons under 21 are not permitted on gaming vessels;
. except for slot machine play, wagers may be made only with tokens,
chips, or electronic cards purchased from the licensee aboard a
riverboat;
. licensees may only use docking facilities and routes for which they
are licensed and may only board and discharge passengers at the
riverboat's licensed berth;
. licensees must have adequate protection and indemnity insurance;
. licensees must have all necessary federal and state licenses,
certificates and other regulatory approvals prior to operating a
riverboat; and
. gaming may only be conducted in accordance with the terms of the
riverboat gaming license, the Louisiana Riverboat Economic
Development and Gaming Control Act and the rules and regulations
adopted by the Louisiana Gaming Control Board.
No person may receive any percentage of the profits from our operations in
Louisiana without first being found suitable. In September 1998, we, our
officers, key personnel, partners and persons holding a 5% or greater interest
in us were found suitable by the Louisiana Gaming Control Board and our
license was renewed in September 1999. A riverboat gaming license is deemed to
be a privilege under Louisiana law and as such may be denied, revoked,
suspended, conditioned or limited at any time by the Louisiana Gaming Control
Board. In issuing a riverboat gaming license, the Louisiana Gaming Control
Board must find that the applicant is a person of good character, honesty and
integrity and that the applicant is a person whose prior activities, criminal
record, if any, reputation, habits and associations do not pose a threat to
the public interest of the State of Louisiana or to the effective regulation
and control of gaming, or create or enhance the dangers of unsuitable, unfair
or illegal practices, methods, and activities in the conduct of gaming or the
carrying on of business and financial arrangements in connection therewith.
The Louisiana Gaming Control Board will not grant any riverboat gaming
licenses unless it finds that:
. the applicant is capable of conducting gaming operations, which
means that the applicant can demonstrate the capability, either
through training, education, business experience, or a combination
of the above, to operate a gaming casino;
. the proposed financing of the riverboat and the gaming operations is
adequate for the nature of the proposed operation and from a source
suitable and acceptable to the Louisiana Gaming Control Board;
. the applicant demonstrates a proven ability to operate a vessel of
comparable size, capacity and complexity to a riverboat in its
application for a riverboat gaming license so as to ensure the
safety of its passengers;
. the applicant designates the docking facilities to be used by the
riverboat;
. the applicant shows adequate financial ability to construct and
maintain a riverboat;
. the applicant submits a detailed plan of design of the riverboat in
its application for a riverboat gaming license;
. the applicant has a good faith plan to recruit, train and upgrade
minorities in all employment classifications; and
. the applicant is of good moral character.
The Louisiana Gaming Control Board may not award a riverboat gaming license
to any applicant who fails to provide information and documentation to reveal
any fact material to qualifications or who supplies information which is
untrue or misleading as to a material fact pertaining to the qualification
criteria; who has
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been convicted of or pled nolo contendere to an offense punishable by
imprisonment of more than one year; who is currently being prosecuted for or
regarding whom charges are pending in any jurisdiction of an offense
punishable by more than one year imprisonment; or if any holder of 5% or more
in the profits and losses of the applicant has been convicted of or pled
guilty or nolo contendere to an offense which at the time of conviction is
punishable as a felony.
The transfer of a riverboat gaming license is prohibited. The sale,
assignment, transfer, pledge, or disposition of securities which represent 5%
or more of the total outstanding shares issued by a holder of a riverboat
gaming license is subject to prior Louisiana Gaming Control Board approval. A
security issued by a holder of a riverboat gaming license must generally
disclose these restrictions.
Section 2501 of the regulations enacted by the Louisiana State Police
Riverboat Gaming Division under the Louisiana Riverboat Economic Development
and Gaming Control Act requires prior written approval of the Louisiana Gaming
Control Board of all persons involved in the sale, purchase, assignment,
lease, grant or foreclosure of a security interest, hypothecation, transfer,
conveyance or acquisition of an ownership interest, other than in a
corporation, or economic interest of 5% or more in any licensee.
Section 2523 of the regulations requires notification to and prior approval
from the Louisiana Gaming Control Board of the application for, receipt,
acceptance or modification of a loan; use of any cash, property, credit, loan
or line of credit, or guarantee or granting of other forms of security for a
loan by a licensee or person acting on a licensee's behalf.
Exceptions to prior written approval apply to, among others, any transaction
for less than $2.5 million in which all of the lending institutions are
federally regulated, or if the transaction involves publicly registered debt
and securities sold pursuant to a firm underwriting agreement.
The failure of a licensee to comply with the requirements set forth above
may result in the suspension or revocation of that licensee's riverboat gaming
license. Additionally, if the Louisiana Gaming Control Board finds that the
individual owner or holder of a security of a corporate licensee or
intermediary company or any person with an economic interest in a licensee is
not qualified under the Louisiana Riverboat Economic Development and Gaming
Control Act, the Louisiana Gaming Control Board may require, under penalty of
suspension or revocation of the riverboat gaming license, that the person not
receive dividends or interest on securities of the corporation; exercise
directly or indirectly a right conferred by securities of the corporation;
receive remuneration or economic benefit from the licensee; or continue in an
ownership or economic interest in the licensee.
A licensee must periodically report the following information to the
Louisiana Gaming Control Board, which is not confidential and is to be
available for public inspection: the licensee's net gaming proceeds from all
authorized games; the amount of net gaming proceeds tax paid; and all
quarterly and annual financial statements presenting historical data that are
submitted to the Louisiana Gaming Control Board, including annual financial
statements that have been audited by an independent certified public
accountant.
The Louisiana Gaming Control Board has adopted rules governing the method
for approval of the area of operations and the rules and odds of authorized
games and devices permitted, and prescribing grounds and procedures for the
revocation, limitation or suspension of licenses and permits.
On April 19, 1996, the Louisiana legislature adopted legislation requiring
statewide local elections on a parish-by-parish basis to determine whether to
prohibit or continue to permit licensed riverboat gaming, licensed video poker
gaming, and licensed land-based gaming in Louisiana parishes. The applicable
local election took place on November 5, 1996, and the voters in the parishes
in which riverboats are currently located voted to continue licensed riverboat
gaming. However, it is noteworthy that the current legislation does not
provide for any moratorium on future local elections on gaming.
As a result of the Justice Department's recent indictment of former
Louisiana Governor Edwin Edwards and certain other persons, on charges
relating to, among other things, riverboat gaming licenses in Louisiana, the
Louisiana regulators are applying greater scrutiny to the suitability and
business practices of the licensee.
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Federal
In 1997, the U.S. Congress created the National Gambling Impact Study
Commission to conduct a comprehensive study of all matters relating to the
economic and social impact of gaming in the United States. In accordance with
the legislation creating the commission, the commission recently released a
report on its findings and issued its recommendations for the future of gaming
in the United States. Overall, the commission determined that, with only a few
exceptions such as Internet gambling, gaming is an issue to be settled at
state and local levels rather than by the federal government. Over the course
of its two year study, the commission discovered a lack of information
regarding the costs and benefits of gaming. Consequently, the commission
recommended a pause in the expansion of gaming operations to provide time to
develop impartial, objective research on the impact of gaming.
Non-Gaming Regulation
We are subject to certain federal, state and local safety and health laws,
regulations and ordinances that apply to non-gaming businesses generally, such
as the Clean Air Act, Clean Water Act, Occupational Safety and Health Act,
Resource Conservation Recovery Act and the Comprehensive Environmental
Response, Compensation and Liability Act. We have not made, and do not
anticipate making, material expenditures with respect to the environmental
laws and regulations. However, the coverage and attendant compliance costs
associated with the laws, regulations and ordinances may result in future
additional costs to our operations. For example, in 1990 the U.S. Congress
enacted the Oil Pollution Act to consolidate and rationalize mechanisms under
various oil spill response laws. The Department of Transportation has proposed
regulations requiring owners and operators of certain vessels to establish
through the U.S. Coast Guard evidence of financial responsibility in the
amount of $5.5 million for clean-up of oil pollution. This requirement would
be satisfied by either proof of adequate insurance, including self-insurance,
or the posting of a surety bond or guaranty.
The riverboats operated by us must comply with U.S. Coast Guard requirements
as to boat design, on-board facilities, equipment, personnel and safety. Each
of them must hold a Certificate of Inspection or must be approved by the
American Bureau of Shipping for stabilization and flotation, and may also be
subject to local zoning and building codes. The U.S. Coast Guard requirements
establish design standards, set limits on the operation of the vessels and
require individual licensing of all personnel involved with the operation of
the vessels. Loss of a vessel's Certificate of Inspection or American Bureau
of Shipping approval would preclude its use as a floating casino.
All of our shipboard employees, even those who have nothing to do with the
marine operations of the vessel, like dealers, waiters and security personnel,
may be subject to the Jones Act which, among other things, exempts those
employees from state limits on workers' compensation awards.
History and Corporate Organization
In 1992, a predecessor to Hilton New Orleans and New Orleans Paddlewheels
formed the Queen of New Orleans at the Hilton Joint Venture, or QNOV. QNOV
owned and operated a riverboat casino adjacent to the Hilton Hotel in downtown
New Orleans. In October 1996, QNOV sought and obtained approval from the
Louisiana Gaming Control Board to relocate its riverboat gaming license to
Shreveport. In October 1997, the owners of QNOV ceased operations in New
Orleans. Other than holding its riverboat gaming license, QNOV had no business
operations and remained a dormant entity until September, 1998, when
Shreveport Paddlewheels, Sodak Louisiana and HWCC-Louisiana reconstituted QNOV
and Hilton New Orleans and New Orleans Paddlewheels withdrew as partners. In
April 1999, HWCC-Louisiana acquired Sodak Louisiana for $2.5 million, which
will be payable six months after the Shreveport resort opens. In July 1999,
Sodak Louisiana was merged into HWCC-Louisiana and the name of QNOV was
changed to Hollywood Casino Shreveport.
Also, in July 1999, HWCC-Louisiana formed two subsidiaries, HCS I and HCS
II, and contributed 99% of its interest in us to HCS I and its remaining 1%
interest in us to HCS II. Collectively, HCS I and HCS II will be allocated
100% of our profits and losses. HCS I is our managing general partner.
Shreveport Paddlewheels is our
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third partner and its interest in us is a residual interest entitling it to
10% of the net proceeds of a sale or disposition of us by HCS I and HCS II
after payment of outstanding debt and the return of contributed capital. As a
result of our September 1998 reconstitution, Shreveport Paddlewheels is
entitled to receive an amount equal to approximately 1% of our net revenues.
In addition, under a marine services agreement, Shreveport Paddlewheels is
entitled to receive a fee equal to $360,000 per year. Concurrently with the
closing of the offering of the original notes, Hollywood Casino contributed
$44.7 million of capital to HWCC-Louisiana of which $43.7 million was
indirectly contributed to us and $1.0 million was loaned to Shreveport
Paddlewheels to finance its $1.0 million contribution to us. That loan is
secured by a pledge of Shreveport Paddlewheels' interests in us and a
collateral assignment of the agreement providing for the payment to Shreveport
Paddlewheels of approximately 1% of our net revenues. As of the closing of the
original offering, Shreveport Paddlewheels contributed $2.0 million of capital
to us, of which $1.0 million was loaned by HWCC-Louisiana to Shreveport
Paddlewheels and the other $1.0 million represented a credit in consideration
of certain guarantees provided by affiliates of Shreveport Paddlewheels.
The Shreveport resort will be operated by Hollywood Casino, through its
wholly owned subsidiary HWCC-Shreveport, in connection with a management
agreement we entered into with HWCC-Shreveport. The management agreement
provides that we will pay a management fee to HWCC-Shreveport of 2% of net
revenues plus an increasing percentage (5-10%) of the Shreveport resort's
EBITDA above $25.0 million. For a more detailed description of the management
agreement, see the discussion under the section entitled "Material Contracts--
Management Agreement."
The following chart sets forth the organizational structure of Hollywood
Casino and its subsidiaries involved in the ownership, development and
operation of the Shreveport resort:
[CHART APPEARS HERE]
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Trademarks
Under a trademark license agreement, we will use the service mark "Hollywood
Casino," which is registered by Hollywood Casino with the United States Patent
and Trademark Office, and other "Hollywood-formative" marks, which are either
registered or are the subject of pending registration applications with the
United States Patent and Trademark Office. The terms of this agreement are
described under the section entitled "Material Contracts--Trademark License
Agreement." Hollywood Casino considers its rights to the "Hollywood Casino"
service mark to be well established and to have significant competitive value
to its business. The loss of its right to use the "Hollywood Casino" service
mark or to prevent others from using the same or a deceptively similar mark
could have a material adverse effect on us and Hollywood Casino.
Planet Hollywood International, Inc. and Planet Hollywood (Region IV), Inc.
filed in 1996 a complaint in the United State District Court for the Northern
District of Illinois, Eastern Division, against Hollywood Casino and certain
of its subsidiaries and affiliates. In its complaint, Planet Hollywood
alleged, among other things, that Hollywood Casino had, in operating the
Hollywood Casino concept, infringed on their trademark, service mark and trade
dress and had engaged in unfair competition and deceptive trade practices.
Hollywood Casino filed counterclaims alleging, among other things, that Planet
Hollywood had, through its planned use of its mark in connection with casino
services, infringed on Hollywood Casino's service marks and trade dress and
had engaged in unfair competition. The trial commenced on July 19, 1999 and
was completed on July 26, 1999. Hollywood Casino is awaiting the judge's
ruling in this case.
Property
We lease the land on which our Shreveport resort will be located from the
City of Shreveport under a ground lease initially ending on the tenth
anniversary of the opening date of our resort, with options to renew the lease
for eight additional successive terms of five years each. Rent due under the
ground lease will become payable on the date construction commences. The terms
of the lease are described under the section entitled "Material Contracts--
Lease with the City of Shreveport."
Employees
At September 15, 1999, we had two employees, including Juris Basens. Upon
the opening of our Shreveport resort, we expect to employ approximately 1,700
persons.
Legal Proceedings
The issuers are not involved in any material litigation. However, claims and
legal actions may arise in connection with the construction of the Shreveport
resort and in the ordinary course of business.
Third parties could assert obligations against us for liabilities that have
arisen or that might arise against our predecessors or the partners of our
predecessors with respect to any period prior to September 22, 1998.
Management believes that in the event such a claim arises, it would be
adequately covered under either existing indemnification agreements with the
former partners or insurance policies maintained by our predecessors or their
partners.
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MATERIAL CONTRACTS
Land-Based Facilities Construction Contract
We have entered into a guaranteed maximum price contract with Broadmoor
Anderson for $68.7 million for the construction of the land-based facilities
at our Shreveport resort. The guaranteed maximum price may be adjusted in the
event certain changes are made to the construction plans or specifications.
Broadmoor Anderson is a joint venture between Broadmoor and Roy Anderson
Corp., both of which have extensive construction experience and have completed
numerous gaming projects. As required by the contract, Broadmoor Anderson
provided a payment and performance bond for the entire contract price. If
Broadmoor Anderson fails to substantially complete construction of the land-
based facilities by a certain date, Broadmoor Anderson will pay us $35,000 for
each and every day that substantial completion of construction is not
achieved, up to a maximum amount of $1.0 million. We may terminate the
contract at any time, without cause. In such event, we will pay Broadmoor
Anderson for all work completed prior to our termination of the contract,
costs incurred by reason of the termination and reasonable overhead and profit
on the work not completed.
Vessel Construction Contract
We have entered into a vessel construction contract with Leevac Shipyards,
Inc., under which Leevac will construct the vessel that will be used at our
Shreveport resort. We will pay Leevac $34.4 million, subject to adjustment for
any construction modifications or force majeure events, payable in an initial
down payment of 10% of the contract price and in subsequent installments upon
completion of various stages of work on the vessel. As required by the
contract, Leevac provided a payment and performance bond for the entire
contract price. If Leevac fails to deliver and complete construction of the
vessel on certain agreed dates, Leevac will pay us $50,000 per day for each
and every day the delivery of the vessel is late, up to a maximum of $600,000.
We may terminate the contract at any time without cause by giving seven days'
prior written notice to Leevac. In such event, we will pay Leevac for all work
completed prior to our termination of the contract.
Joint Venture Agreement of Hollywood Casino Shreveport
HCS I, HCS II and Shreveport Paddlewheels have entered into a Third Amended
and Restated Joint Venture Agreement of Hollywood Casino Shreveport, formerly
known as the Queen of New Orleans at the Hilton Joint Venture and QNOV. In the
joint venture agreement, the parties agreed to develop, construct, own and
operate a riverboat gaming casino and hotel and agreed that HCS I shall have
sole and exclusive control of our business.
HWCC-Louisiana and Sodak Louisiana, a former partner in QNOV, each
previously contributed $2.5 million of capital to us. Shreveport Paddlewheels
contributed an additional $1.0 million to us when we received our initial
funding for the construction and development of the Shreveport resort. As the
agreement requires, HWCC-Louisiana loaned Shreveport Paddlewheels the $1.0
million for its contribution, which is secured by a pledge of Shreveport
Paddlewheels' partnership interest and a collateral assignment of the
agreement providing for the payment to Shreveport Paddlewheels of
approximately 1% of our net revenues. Also, Shreveport Paddlewheels has been
credited with another $1.0 million capital contribution to us in recognition
of guarantees provided by New Orleans Paddlewheels. As a result, Shreveport
Paddlewheels will be entitled to the return of $2.0 million of capital on any
sale of our partnership, but will not be entitled to any profits or losses
from our operations. The joint venture agreement also provides a mechanism to
admit other parties to our partnership.
We are required to make tax distributions to HCS I and HCS II at least once
a year. In addition, our profits and losses are to be allocated 99% to HCS I
and 1% to HCS II. After commencement of operations, and upon a sale or other
disposition of our partnership (including upon a sale by the trustee following
any foreclosure), (1) HCS I, HCS II and Shreveport Paddlewheels will be
entitled to residual interests equal to 89.1%, 0.9% and 10%, respectively, of
the net proceeds of such sale or disposition after payment of outstanding debt
and the return of contributed capital and (2) Shreveport Paddlewheels is
entitled to receive an additional amount representing the appraised value of
its future fees under the marine services agreement.
Assignment of Joint Venture Interest
HWCC-Louisiana, Sodak Louisiana, New Orleans Paddlewheels and Shreveport
Paddlewheels have entered into an Amended and Restated Assignment of Joint
Venture Interest pursuant to which New Orleans
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Paddlewheels and Shreveport Paddlewheels have assigned their interests in us
to HWCC-Louisiana and Sodak Louisiana. Under the agreement, Shreveport
Paddlewheels is entitled to receive an amount equal to approximately 1% of the
net revenues of Hollywood Casino Shreveport, until Shreveport Paddlewheels no
longer holds its residual interest. HCS I and HCS II have assumed HWCC-
Louisiana's obligations under this agreement.
Management Agreement
We have entered into a management agreement with HWCC-Shreveport, a direct
subsidiary of Hollywood Casino, which will result in the executives of
Hollywood Casino effectively operating and managing the Shreveport resort.
Each of the executive officers of HWCC-Shreveport, with the exception of Juris
Basens, is currently an executive officer of Hollywood Casino. Under the terms
of the management agreement, HWCC-Shreveport will have uninterrupted control
of the operations of the Shreveport resort during the term of the management
agreement, including, but not limited to, setting various rates and prices,
issuing casino credit, granting complementaries, hiring personnel and
selecting marketing and promotional campaigns.
Management Fees. We will pay HWCC-Shreveport a basic and an incentive
management fee for its services. The basic management fee will be equal to 2%
of the net revenues from casino operations, hotel operations and all other
facilities and amenities at the Shreveport resort managed by HWCC-Shreveport,
less particular items specified in the management agreement. The incentive fee
will be equal to the sum of:
. 5% of EBITDA in excess of $25 million and up to $35 million;
. 7% of EBITDA in excess of $35 million and up to $40 million; and
. 10% of EBITDA in excess of $40 million.
For purposes of calculating the incentive fee, "EBITDA" is reduced by the
basic management fee but not the marine services fee or the approximately 1%
of our net revenues payable to Shreveport Paddlewheels.
The payment of management fees to the manager of the Shreveport resort will
be subordinated to all payments on the notes. In addition, management fees may
not be paid if there is a default under the notes or if we fail to meet
certain financial tests. We will also reimburse HWCC-Shreveport for its
expenses incurred in connection with the services provided under the
management agreement.
Term. The term of the management agreement began in September 1998, when the
Louisiana Gaming Control Board approved the development of the Shreveport
resort, and will continue until we no longer hold a riverboat gaming license
in Louisiana, subject to earlier termination as provided by the terms of the
management agreement.
Termination. Each party has the right to terminate the management agreement
if (1) the other party materially breaches the agreement, (2) any statute,
regulation, rule or ruling renders the conduct of gaming in the United States
or at the Shreveport resort illegal, (3) the Louisiana Gaming Control Board
deems HWCC- Shreveport unsuitable or (4) the U.S. Patent and Trademark Office
rescinds the "Hollywood Casino" trademark. In addition, each party has the
right to terminate the management agreement if, in its good faith judgment,
certain facts occur which would jeopardize any gaming license or application
for a gaming license of such terminating party or its affiliates anywhere in
the United States. In this case, the non-terminating party may purchase all of
the terminating party's (or its affiliate's) interest in us at a mutually
agreed upon purchase price.
We may terminate the management agreement if, after completion of the first
full year after opening, for any two consecutive fiscal years the operating
cash flow margin is less than 75% of the operating cash flow margin of our
competitors.
If we fail to furnish the funds required for HWCC-Shreveport to properly
manage the Shreveport resort or fail to compensate or reimburse HWCC-
Shreveport in accordance with the management agreement, HWCC-Shreveport may
(1) advance the necessary funds in the form of a loan or (2) terminate the
management agreement. In addition, HWCC-Shreveport may terminate the
management agreement, in its sole discretion, if there is a voluntary or
involuntary assignment, transfer or disposition of our interest in the
management
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agreement of the Shreveport resort and (1) the assignee, purchaser, or
recipient has not agreed to be bound by the management agreement or (2) HWCC-
Shreveport has not given permission. We are required to notify HWCC-Shreveport
at least 60 days prior to any such contemplated assignment, transfer or
disposition. HWCC-Shreveport may withhold its permission if it has good faith
opinion that such action would jeopardize, restrict, limit or create a right
of cancellation of any approval, consent or licensing of HWCC-Shreveport or
its affiliates by any gaming authorities. If HWCC-Shreveport terminates the
management agreement due to any of the foregoing reasons, and the cash flow
for the Shreveport resort is in excess of $1 for the immediately preceding
fiscal quarter, we will be obligated to pay HWCC-Shreveport an amount equal to
two times the sum of the basic management fee and incentive fee for the
immediately preceding twelve months, plus any other amounts owed to HWCC-
Shreveport.
Technical Services Agreement
In connection with the management agreement, we have also entered into a
technical services agreement with HWCC-Shreveport, under which HWCC-Shreveport
is currently performing various advisory services in connection with the
design and construction of the Shreveport resort and will continue to do so
until it is substantially completed. As remuneration, we will reimburse HWCC-
Shreveport on a monthly basis for all expenses incurred in connection with its
services.
Lease with the City of Shreveport
We have entered into a lease with the City of Shreveport for the land on
which our Shreveport resort will be constructed. The initial term of the lease
will begin on the day that construction of our resort begins and end ten years
after the date the resort opens. We have options to renew the lease on the
same terms for eight successive terms of five years each. Thereafter, we will
have the option to extend the lease under the then prevailing market rates and
terms for ground leases in the Shreveport/Bossier City area to owners and
operators of riverboat casinos.
The City of Shreveport may terminate the lease as a result of, among other
things, a default by us under the lease or failure to substantially complete
construction within the time period established by the Louisiana Gaming
Control Board. We have the right to terminate the lease at any time if
operation of the Shreveport resort becomes uneconomic.
Rental payments under the lease will be $10,000 per month during the
construction period increasing to $450,000 per year upon opening and
continuing at that amount for the remainder of the initial lease term. During
the first five-year renewal term, the annual rental payment will be $402,500.
Subsequent renewal period rental payments will increase by 15% during each of
the next four five-year renewal terms with no further increases. In addition
to the base rent, we will pay monthly percentage rent of not less than
$500,000 per year, equal to 1% of monthly adjusted gross revenues and the
amount, if any, by which the monthly parking facilities' net income exceeds
the parking income credit, as all such terms are defined in the lease.
Retail Lease
In connection with the ground lease, we have entered into a retail space
lease with Red River Entertainment under which we have leased approximately
42,000 square feet of retail space to Red River Entertainment. The initial
term of the lease is the same period as our lease with the City of Shreveport.
Red River Entertainment will pay $6 per square foot annually, payable monthly.
In addition, Red River Entertainment will pay us a percentage rent equal to
the sum of:
. 50% of the net cash flow generated by the retail space which does
not exceed $550,000 per year;
. 25% of the net cash flow generated by the retail space in excess of
$550,000 and which does not exceed $615,000 during the year; and
. 40% of the net cash flow generated by the retail space in excess of
$615,000 in that year.
Trademark License Agreement
We have entered into a trademark license agreement with Hollywood Casino,
under which Hollywood Casino granted a license to us to use certain trademarks
of Hollywood Casino for an initial term of five years,
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with automatic renewals each year for an additional one year period. In
connection with the trademark license agreement, we may only use the
trademarks in Bossier and Caddo Parishes, Louisiana. We will pay royalties in
the amount of $100 per year to Hollywood Casino for the use of the license.
Upon termination of the management agreement for any reason, the license
agreement will also terminate and we will only be permitted to use the
Hollywood Casino trademarks for six months following such termination.
Tax Sharing Agreement
HWCC-Louisiana, HCS I and HCS II have entered into a tax sharing agreement
with Hollywood Casino. Hollywood Casino is the parent company of a group of
companies which includes HWCC-Louisiana, HCS I and HCS II and files
consolidated federal income tax returns. Under the terms of the tax sharing
agreement, each of HWCC-Louisiana, HCS I and HCS II will pay Hollywood Casino
an amount equal to its separate tax liability. The separate tax liability of
each of HWCC-Louisiana, HCS I and HCS II will be that amount of federal income
tax that it would owe if it filed a tax return independent of the Hollywood
Casino group of companies. If the calculation of the separate tax liability
for any year results in a net operating loss, Hollywood Casino will credit the
amount of the loss against any amount which HWCC-Louisiana, HCS I and HCS II
might otherwise have to pay Hollywood Casino in any future tax year or refund
HWCC-Louisiana, HCS I and HCS II amounts previously paid by HWCC-Louisiana,
HCS I and HCS II under the tax sharing agreement, provided that HWCC-
Louisiana, HCS I and HCS II remain a part of the Hollywood Casino group of
companies. The obligation of HWCC-Louisiana, HCS I and HCS II to make tax
payments under the tax sharing agreement continues regardless of whether there
has been a default in the payment of the notes.
In the event that HWCC-Louisiana, HCS I or HCS II are required to file a
consolidated, combined, unitary or similar tax return for state or local
income or franchise tax purposes, the tax sharing agreement will be amended so
as to apply the principles set forth therein to such tax return, and the
definition of "Tax Amount" in the indenture will include amounts sufficient to
permit HWCC-Louisiana, HCS I and HCS II to satisfy their respective
obligations under the tax sharing agreement as so amended.
Compromise Agreement; Side Agreement
Our predecessor entered into a compromise agreement with Hilton New Orleans
Corporation, New Orleans Paddlewheels and the City of New Orleans, in
connection with which such predecessor agreed to pay the City of New Orleans
$5.0 million upon receipt of the first proceeds of construction financing
representing approximately 70% of the total project cost for a Shreveport
Casino. In connection with the compromise agreement, HWCC-Louisiana and Sodak
Louisiana entered into a side agreement with our predecessor under which HWCC-
Louisiana and Sodak Louisiana agreed that we would comply with the obligation
to the City of New Orleans. HCS I and HCS II assumed this obligation of HWCC-
Louisiana and Sodak Louisiana. The $5.0 million payment to the City of New
Orleans was made in August 1999.
Loan and Settlement Agreement
In connection with the compromise agreement, New Orleans Paddlewheels,
Shreveport Paddlewheels, HWCC-Louisiana, Sodak Louisiana and Hilton New
Orleans have entered into a loan and settlement agreement. Under this
agreement, HWCC-Louisiana and Sodak Louisiana agreed that we would reimburse a
$2.0 million payment made by Hilton New Orleans to the City of New Orleans
upon the earlier of the termination of the construction of the Shreveport
resort or in ten monthly installments of $200,000 commencing with the opening
of the Shreveport resort. This obligation arose upon the completion of the
offering of the original notes and HCS I and HCS II assumed the obligations of
HWCC-Louisiana to cause us to pay the $2.0 million under the agreement.
Marine Services Agreement
We have entered into a marine services agreement with Shreveport
Paddlewheels, in connection with which Shreveport Paddlewheels will provide
consulting services concerning marine regulatory matters in connection with
the construction, development and operation of our riverboat casino. We will
pay Shreveport Paddlewheels a consulting fee of $30,000 per month plus
reasonable expenses, beginning on the opening date of our Shreveport resort.
The marine services agreement terminates immediately if neither Shreveport
Paddlewheels nor one of its affiliates owns an interest in the Shreveport
resort.
46
<PAGE>
MANAGEMENT
Each of HWCC-Louisiana and HWCC-Shreveport is a wholly owned subsidiary of
Hollywood Casino. Each of HCS I and HCS II is a wholly owned subsidiary of
HWCC-Louisiana. Shreveport Capital is our wholly owned subsidiary. Under the
joint venture agreement of Hollywood Casino Shreveport, HCS I has control of
our management. Under the management agreement, HWCC-Shreveport is responsible
for managing the operations of the Shreveport resort. The name, age and
respective positions of each of the executive officers and directors of HWCC-
Louisiana, HWCC-Shreveport, HCS I, HCS II and Shreveport Capital, each of
whom, except for Juris Basens, is currently an executive officer of Hollywood
Casino, is as follows:
<TABLE>
<CAPTION>
Name Age Positions
---- --- ---------
<C> <C> <S>
Jack E. Pratt........... 72 Chief Executive Officer and Chairman of the Board
of Directors of Hollywood Casino, HWCC-Louisiana,
HWCC-Shreveport, HCS I, HCS II and Shreveport
Capital
Edward T. Pratt, Jr. ... 76 Vice Chairman of the Board of Directors of HWCC-
Louisiana, HWCC-Shreveport, HCS I, HCS II and
Shreveport Capital; Vice President, Treasurer and
Vice Chairman of the Board of Directors of
Hollywood Casino
William D. Pratt........ 70 Executive Vice President, Secretary, General
Counsel and Director of Hollywood Casino, HWCC-
Louisiana, HWCC-Shreveport, HCS I, HCS II and
Shreveport Capital
Edward T. Pratt III..... 44 President of HWCC-Louisiana, HWCC-Shreveport, HCS
I, HCS II and Shreveport Capital; President,
Chief Operating Officer and Director of Hollywood
Casino
Paul C. Yates........... 37 Executive Vice President, Chief Financial Officer
and Assistant Secretary of Hollywood Casino and
Executive Vice President, Chief Financial
Officer, Treasurer and Assistant Secretary of
HWCC-Louisiana, HWCC-Shreveport, HCS I, HCS II
and Shreveport Capital
Charles F. LaFrano III.. 44 Vice President and Assistant Secretary of HWCC-
Louisiana, HWCC-Shreveport, HCS I, HCS II and
Shreveport Capital; Vice President of Finance and
Assistant Secretary of Hollywood Casino
Juris Basens............ 44 Vice President and General Manager of HCS I and
Vice President of HWCC-Shreveport
</TABLE>
Set forth below is a description of the backgrounds of the directors and
executive officers of HWCC-Louisiana, HWCC-Shreveport, HCS I, HCS II and
Shreveport Capital. Jack E. Pratt, Edward T. Pratt, Jr. and William D. Pratt
are brothers and Edward T. Pratt III is the son of Edward T. Pratt, Jr. There
is no other family relationship between any of the directors and any of the
executive officers or any of our subsidiaries or affiliates. The officers of
HWCC-Louisiana, HWCC-Shreveport, HCS I, HCS II and Shreveport Capital are
elected by their respective Board of Directors and hold office until their
respective successors are duly elected and qualified.
Jack E. Pratt has been Chief Executive Officer of HWCC-Louisiana and HWCC-
Shreveport since June 16, 1999 and of HCS I, HCS II and Shreveport Capital
since July 21, 1999. He also served as Chairman of the Board of Directors and
President of HWCC-Louisiana from April 1993 to June 15, 1999 and as Chairman
of the Board of Directors and President of HWCC-Shreveport from November 1997
to June 15, 1999. Mr. Pratt has been Chief Executive Officer and Chairman of
the Board of Hollywood Casino since 1993. From 1990 to May 1995, he also
served as President of Hollywood Casino. Mr. Pratt has served as a director of
Greate Bay Casino Corporation for more than 5 years. He also served as
Chairman of the Board of Directors and Chief Executive Officer of Greate Bay
for more than five years prior to his resignation from such positions on
January 2, 1998. Mr. Pratt served as Chairman of the Board of Directors and
Chief Executive Officer of GB Holdings, Inc. and Greate Bay Hotel and Casino,
Inc. and as Chairman of the Board of Directors, President and Chief Executive
Officer of GB Property Funding until his resignation from such positions on
January 2, 1998.
47
<PAGE>
On January 5, 1998, these Greate Bay subsidiaries filed petitions for relief
under Chapter 11 of the United States Bankruptcy Code. Mr. Pratt served until
his resignation from such positions in January 1998 as Chairman of the Board
of Directors and Chief Executive Officer of Pratt Casino Corporation, Chairman
of the Board of Directors, President and Chief Executive Officer of PRT
Funding Corp. and Chairman of the Board of Directors and President of New
Jersey Management, Inc. On May 25, 1999, Pratt Casino, PRT Funding and New
Jersey Management filed petitions for relief under Chapter 11 of the United
States Bankruptcy Code.
Edward T. Pratt, Jr. has been Vice Chairman of the Board of Directors of
HWCC-Louisiana and HWCC-Shreveport since June 16, 1999 and of HCS I, HCS II
and Shreveport Capital since July 21, 1999. He also served as Vice President,
Treasurer and a director of HWCC-Louisiana from April 1993 to June 15, 1999
and as Vice President, Treasurer and a director of HWCC-Shreveport from
November 1997 to June 15, 1999. Mr. Pratt has been Vice President, Treasurer
and Vice Chairman of the Board of Directors of Hollywood Casino since 1990 and
has served for more than five years as Treasurer and Vice Chairman of the
Board of Directors of Greate Bay. Mr. Pratt also served until his resignation
from such positions on January 2, 1998 as Vice Chairman of the Board of
Directors of GB Holdings and of GB Property Funding and as a director of Great
Bay Hotel and Casino. On January 5, 1998, these Greate subsidiaries filed
petitions for relief under Chapter 11 of the United States Bankruptcy Code.
Mr. Pratt has been Chief Financial Officer, Principal Accounting Officer and a
director of Pratt Casino, PRT Funding and New Jersey Management since January
2, 1998 and also served as Vice Chairman of the Board of Directors of Pratt
Casino and PRT Funding from September 1993 to January 1, 1998 and as Executive
Vice President, Treasurer and a director of New Jersey Management for more
than five years prior to January 1, 1998. On May 25, 1999, Pratt Casino, PRT
Funding and New Jersey Management filed petitions for relief under Chapter 11
of the United States Bankruptcy Code.
William D. Pratt has been Executive Vice President, Secretary, General
Counsel and a director of HWCC-Louisiana and HWCC-Shreveport since June 16,
1999 and of HCS I, HCS II and Shreveport Capital since July 21, 1999. He also
served as Vice President, Secretary and a director of HWCC-Louisiana from
April 1993 to June 15, 1998 and as Vice President, Secretary and a director of
HWCC-Shreveport from November 1997 to June 15, 1999. Mr. Pratt has served as
Executive Vice President, Secretary, General Counsel and a director of
Hollywood Casino since 1990 and has served as Executive Vice President,
Secretary, General Counsel and director of Greate Bay for more than five
years. Mr. Pratt also served until his resignation from such positions on
January 2, 1998 as Executive Vice President, General Counsel and Secretary of
GB Holdings and GB Property Funding and as a director of Greate Bay Hotel and
Casino. On January 5, 1998, these Greate Bay subsidiaries filed petitions for
relief under Chapter 11 of the United States Bankruptcy Code. Mr. Pratt also
served until his resignation from such positions in January 1998 as Executive
Vice President, Secretary, General Counsel and a director of Pratt Casino and
PRT Funding and as Vice President, Secretary and a director of New Jersey
Management. On May 25, 1999, Pratt Casino, PRT Funding and New Jersey
Management filed petitions for relief under Chapter 11 of the United States
Bankruptcy Code.
Edward T. Pratt III has been President of HWCC-Louisiana and HWCC-Shreveport
since June 16, 1999 and of HCS I, HCS II and Shreveport Capital since July 21,
1999. From October 1998 to June 15, 1999, he also served as Vice President of
HWCC-Louisiana and HWCC-Shreveport. Mr. Pratt has served on the Board of
Directors of Hollywood Casino since 1992. From 1992 to July 1993, he served as
Vice President, from July 1993 to May 1995, he served as Executive Vice
President, and in May 1995, Mr. Pratt was elected President and Chief
Operating Officer of Hollywood Casino. Mr. Pratt served as Executive Vice
President--Development and Corporate Affairs of Greate Bay for more than five
years until November 1995 when he was elected President and Chief Operating
Officer of Greate Bay. He also served until his resignation from such
positions on January 2, 1998 as President, Chief Operating Officer and a
director of GB Holdings and as Executive Vice President and a director of GB
Property Funding. On January 5, 1998, these Greate Bay subsidiaries filed
petitions for relief under Chapter 11 of the United States Bankruptcy Code.
Mr. Pratt has been Executive Vice President and Secretary of Pratt Casino, PRT
Funding and New Jersey Management since January 2, 1998 and also served as
President, Chief Operating Officer and a director of Pratt Casino and as
Executive Vice President and a director
48
<PAGE>
of PRT Funding from September 1993 to January 1, 1998. On May 25, 1999, Pratt
Casino, PRT Funding and New Jersey Management filed petitions for relief under
Chapter 11 of the United States Bankruptcy Code.
Paul C. Yates has been Executive Vice President, Chief Financial Officer and
Assistant Secretary of HWCC -Louisiana and HWCC-Shreveport since June 16, 1999
and Treasurer of HWCC-Louisiana and HWCC-Shreveport since July 21, 1999 and
has been Executive Vice President, Chief Financial Officer, Treasurer and
Assistant Secretary of HCS I, HCS II and Shreveport Capital since July 21,
1999. Mr. Yates has also served as Executive Vice President and Chief
Financial Officer of Hollywood Casino since May 1998. Prior to August 1997,
Mr. Yates served as a Managing Director of Bear, Stearns & Co. Inc., a leading
national investment banking firm, for a period of more than five years. Bear,
Stearns & Co. served as an underwriter with respect to Hollywood Casino's
October 1995 offering of its 12 3/4% Senior Secured Notes, Hollywood Casino's
May 1999 offering of its 11 1/4% Senior Secured Notes due 2007 and Floating
Rate Senior Secured Notes due 2006 and was an initial purchaser of the
original notes offered in the original offering.
Charles F. LaFrano III has been Vice President and Assistant Secretary of
HWCC-Louisiana and HWCC-Shreveport since October 1998 and of HCS I, HCS II and
Shreveport Capital since July 21, 1999. Mr. LaFrano has also served as Vice
President of Finance of Hollywood Casino since 1994 and has served as Vice
President of Greate Bay for more than five years. Mr. LaFrano served until his
resignation from such positions on January 2, 1998 as Vice President and
Assistant Secretary of GB Holdings and GB Property Funding. On January 5,
1998, these Greate Bay subsidiaries filed petitions for relief under Chapter
11 of the United States Bankruptcy Code. Mr. LaFrano served until his
resignation from such positions in January 1998 as Vice President and
Assistant Secretary of Pratt Casino and PRT Funding. On May 25, 1999, Pratt
Casino and PRT Funding filed petitions for relief under Chapter 11 of the
United States Bankruptcy Code.
Juris Basens has been Vice President and General Manager of HCS I and Vice
President of HWCC-Shreveport since September 1999. Prior to such time, Mr.
Basens served as Vice President and General Manager of Casino Magic in Bossier
City, Louisiana, for a period of approximately two years. Mr. Basens also
served as Vice President and Chief Operating Officer of Casino Magic Corp. for
approximately one year. Prior to July 1996, Mr. Basens served as Vice
President and Chief Operating Officer of Casino America, Inc.
Compensation of Executive Officers
Our executive officers did not receive any compensation from us during the
prior fiscal year. HWCC Development Corporation entered into an employment
agreement with Juris Basens which was subsequently assigned to us. Under the
employment agreement, Mr. Basens will serve as our Vice President and General
Manager until August 30, 2002. Mr. Basens will receive an annual base salary
of $225,000 and a minimum incentive bonus of $8,333 per month until December
31, 2000 and a minimum annual bonus of $150,000 for each calendar year
thereafter. Mr. Basens also received a one-time signing bonus of $75,000. Mr.
Basens will also be eligible to receive stock options pursuant to Hollywood
Casino's option plan.
Hollywood Casino's Design and Construction Team
Edward T. Pratt III is responsible for supervising the design, development,
construction and opening of the Shreveport resort. Mr. Pratt has over 20 years
of experience managing the construction of casino and hotel properties. Mr.
Pratt has been involved in numerous construction projects at Hollywood Casino
and its affiliates, including the dockside gaming facility and hotel tower in
Tunica County, Mississippi and the riverboat facility and entertainment
complex in Aurora, Illinois. Mr. Pratt has also been involved in the
construction of numerous hotel properties, including the Maxim's de Paris
Hotels in New York City (now the Peninsula Hotel) and Palm Springs, California
and the Sheraton Hotel in Orlando.
49
<PAGE>
Edwin C. Hanson III is the Vice President of Architecture and Construction
of HWCC Development Corporation, Hollywood Casino's development subsidiary,
and joined Hollywood Casino and its affiliates in March 1988. In this
capacity, Mr. Hanson is the principal employee responsible for supervising the
construction process, including developing initial plans and budgets, managing
the bidding process, selecting and hiring team consultants and contractors and
transferring projects to operations staff upon completion. Mr. Hanson has been
involved with numerous construction projects at Hollywood Casino and its
affiliates, including the construction of the dockside gaming facility and
hotel tower in Tunica County, Mississippi and the riverboat facility and
entertainment complex in Aurora, Illinois and renovations of the Sands Hotel
and Casino in Atlantic City, New Jersey. Prior to joining Hollywood Casino,
Mr. Hanson worked in the design and construction industry for nearly ten years
and was involved in a number of hotel and condominium projects, such as
Trump's Castle Hotel and Casino in Atlantic City.
Charles F. LaFrano III is primarily responsible for the financial management
and cost control of Hollywood Casino's construction and development projects,
including conceptual cost estimates and project and construction cost
accounting. Mr. LaFrano has been involved with previous construction projects
at Hollywood Casino and its affiliates, including the dockside gaming facility
and hotel tower in Tunica County, Mississippi and the riverboat facility and
entertainment complex in Aurora, Illinois.
Samuel G. Bocchicchio is the Vice President of Design and Development of
HWCC Development and joined Hollywood Casino and its affiliates in January
1983. In this capacity, Mr. Bocchicchio is primarily responsible for
incorporating the Hollywood theme into the designs and developments of
Hollywood Casino, as well as marketing materials, signage and other external
communications. Mr. Bocchicchio has been involved with designing the casino
and hotel facilities at all of Hollywood Casino's Tunica and Aurora
facilities, as well as the Sands Hotel and Casino in Atlantic City, New
Jersey.
P. Sean Lavelle is the Director of Design and Construction of HWCC
Development and joined Hollywood Casino and its affiliates in March 1999. In
this capacity, Mr. Lavelle is primarily responsible for developing the themed
identity program and managing the development process for new construction,
renovations and capital improvements for Hollywood Casino and its affiliates.
Mr. Lavelle also served as the Director of Design and Construction of
Hollywood Casino from 1992 to 1997 and was involved in the interior design of
the Aurora and Tunica County facilities. In addition, he served as Project
Manager of Hollywood Casino's affiliates from 1985 to 1989 and was involved in
the interior design of the Maxim's de Paris Hotel in New York City (now the
Peninsula Hotel). Prior to joining Hollywood Casino, Mr. Lavelle was
responsible for developing and managing a variety of projects, including
capital improvements for 27 properties owned by Richfield Hospitality
Services, Inc. in 1997 and 1998 and the Grand Wailea Resort and Spa in Wailea,
Maui from 1989 to 1991.
David Evans is the Director of Purchasing for HWCC Development and joined
Hollywood Casino and its affiliates in 1985. Mr. Evans is primarily
responsible for managing and implementing all construction and development
related purchasing contracts. In this capacity, Mr. Evans was involved in the
construction of the dockside gaming facility and hotel tower in Tunica County,
Mississippi and the riverboat facility in Aurora, Illinois and certain
renovations of the Sands Hotel and Casino in Atlantic City, New Jersey and in
San Juan, Puerto Rico and the Maxim's de Paris Hotel in New York City (now the
Peninsula Hotel). Prior to joining Hollywood Casino, Mr. Evans held similar
positions with Trammell Crow's development subsidiaries from 1974 to 1982 and
was involved in many projects including the Anatole Hotel in Dallas, Texas.
Mr. Evans has been responsible for purchasing furniture, fixtures and
equipment for numerous casino and hotel properties.
50
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the common stock of Hollywood Casino by (1) each person who is
known by Hollywood Casino to own beneficially more than 5% of its common
stock, (2) each of Hollywood Casino's directors and named executive officers
and (3) all of Hollywood Casino's current directors and named executive
officers as a group. Hollywood Casino owns beneficially and of record all of
the issued and outstanding equity of HWCC-Shreveport, HWCC-Louisiana, HCS I
and HCS II and the partnership interests (subject to Shreveport Paddlewheels'
residual interest) in Hollywood Casino Shreveport.
<TABLE>
<CAPTION>
Shares of
Common Stock Percentage of
Beneficial Owner Beneficially Owned(1) Outstanding Common Stock
- ---------------- --------------------- ------------------------
<S> <C> <C>
Jack E. Pratt.................. 8,669,377(2) 33.5%
Edward T. Pratt III............ 3,272,525(3) 12.7%
Edward T. Pratt, Jr............ 1,091,544 4.4%
William D. Pratt............... 1,354,447(4) 5.4%
Paul C. Yates.................. 180,000(5) *
Theodore H. Strauss............ 20,500(6) *
James A. Colquitt.............. 27,500(6) *
Oliver B. Revell III........... 15,000(6) *
All directors and officers as a
group (9 individuals)......... 14,661,893(7) 54.6%
</TABLE>
- --------
* Less than 1%
(1) Except as otherwise described, each individual has the sole power to vote
and dispose of the common stock beneficially owned by him.
(2) Mr. Pratt's address is Two Galleria Tower, Suite 2200, 13455 Noel Road,
Dallas, Texas 75240. Beneficial ownership is attributable to the
following: (a) C. A. Pratt Partners, Ltd., a Texas limited partnership of
which Jack E. Pratt is the General Partner, owns 1,642,001 shares, or
6.6%, of Hollywood Casino's outstanding stock, (b) the MEP Family
Partnership and the CLP Family Partnership, both Texas general
partnerships for which Mr. Pratt is the Managing General Partner, own
14,000 and 7,000 shares, respectively, both less than 1% of Hollywood
Casino's outstanding stock, (c) 1,079,632 shares, or 4.3%, of Hollywood
Casino's outstanding stock owned of record by adult children of Mr. Pratt
and subject to a proxy giving him the right to vote such shares and
prohibiting the transfer of such shares without his approval and (d)
975,134 shares, or 3.9%, of Hollywood Casino's outstanding common stock
held by Mr. Pratt as custodian for his minor children. Also includes
options to purchase 900,000 shares of Hollywood Casino's common stock
exercisable within 60 days of the date hereof under the Hollywood Casino
Corporation 1996 Long-Term Incentive Plan (the "1996 Plan").
(3) Mr. Pratt's address is Two Galleria Tower, Suite 2200, 13455 Noel Road,
Dallas, Texas 75240. Beneficial ownership is attributable to 1,438,812
shares, or 5.8%, of Hollywood Casino's common stock owned of record by
siblings of Mr. Pratt and subject to a proxy giving him the right to vote
such shares and prohibiting the transfer of such shares without his
approval. Also includes options to purchase 900,000 shares of Hollywood
Casino's common stock exercisable within 60 days of the date hereof under
the 1996 Plan.
(4) Beneficial ownership is attributable to the following: (a) 381,088 shares,
or 1.5%, of Hollywood Casino's outstanding stock owned of record by adult
children of Mr. Pratt and subject to a proxy giving him the right to vote
such shares and prohibiting the transfer of such shares without his
approval and (b) WDP Jr. Family Trust, for which Mr. Pratt is the Managing
Trustee, owns 200,294 shares, less than 1% of Hollywood Casino's
outstanding stock.
(5) Includes options to purchase 60,000 shares of Hollywood Casino's common
stock exercisable within 60 days of the date hereof under the 1996 Plan.
(6) Includes 17,500 shares of Hollywood Casino's common stock for each of Mr.
Strauss and Mr. Colquitt and 15,000 shares of Hollywood Casino's common
stock for Mr. Revell subject to options exercisable within 60 days of the
date hereof under the Hollywood Casino Corporation 1996 Non-Employee
Director Stock Plan.
(7) Includes 1,919,000 shares of Hollywood Casino's common stock subject to
options exercisable within 60 days of the date hereof.
51
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management Agreement
We have entered into a management agreement with HWCC-Shreveport. Under this
agreement, HWCC-Shreveport will manage the day-to-day operations of our
Shreveport resort. The terms of the management agreement are described in the
section entitled "Material Contracts--Management Agreement."
Technical Services Agreement
We have also entered into a technical services agreement with HWCC-
Shreveport to provide certain construction and project supervision services
prior to the opening of the Shreveport casino. The terms of the technical
services agreement are described in the section entitled "Material Contract--
Technical Services Agreement."
Tax Sharing Agreement
The guarantors have entered into a tax sharing agreement with Hollywood
Casino and its other domestic corporate subsidiaries. Under this agreement,
Hollywood Casino will file consolidated federal income tax returns that
include the guarantors as part of a group of companies and each of the
guarantors has agreed to pay Hollywood Casino for its portion of the group's
tax liability. The terms of the tax sharing agreement are described in the
section entitled "Material Contracts--Tax Sharing Agreement."
Trademark License Agreement
We have entered into a trademark license agreement with Hollywood Casino.
Under this agreement, we will have the right to use the "Hollywood" name and
certain other trademarks in connection with our Shreveport resort. The terms
of the trademark license agreement are described in the section entitled
"Material Contracts--Trademark License Agreement."
Marine Services Agreement
We have entered into an agreement with Shreveport Paddlewheels to provide
certain marine services. The terms of the marine services agreement are
described in the section entitled "Material Contracts--Technical Services
Agreement."
Assignment of Joint Venture Agreement
In connection with the assignment of all of New Orleans Paddlewheels' and a
portion of Shreveport Paddlewheels' interest in QNOV to HWCC-Louisiana and
Sodak Louisiana, we and those parties entered into an assignment agreement
that provides for, among other things, the payment to Shreveport Paddlewheels
of an amount equal to approximately 1% of our net revenues. The terms of the
assignment agreement are described in the section entitled "Material
Contracts--Assignment of Joint Venture Interest." HCS I and HCS II have
assumed HWCC-Louisiana's obligations under this agreement.
Loan and Settlement Agreement
In connection with the compromise agreement, New Orleans Paddlewheels,
Shreveport Paddlewheels, HWCC-Louisiana, Sodak Louisiana and Hilton New
Orleans have entered into a loan and settlement agreement. Under this
agreement, HWCC-Louisiana and Sodak Louisiana agreed that we would reimburse a
$2.0 million payment made by Hilton New Orleans to the City of New Orleans
upon the earlier of the termination of the construction of the Shreveport
resort or in ten monthly installments of $200,000, commencing with the opening
of the Shreveport resort. HCS I and HCS II have assumed HWCC-Louisiana's
obligations to cause us to pay the $2.0 million under this agreement.
52
<PAGE>
DESCRIPTION OF THE EXCHANGE OFFER
Purpose and Effect
On August 10, 1999, we sold the original notes to the initial purchasers. In
connection with the sale of the original notes, we entered a registration
rights agreement with the initial purchasers requiring us to register the
notes with the SEC and offer to exchange the registered notes for original
notes. A copy of the registration rights agreement has been filed as an
exhibit to the registration statement of which this prospectus is a part and
we urge you to read the text of the registration rights agreement. We
expressly qualify all of our discussions of the registration rights agreement
by the terms of the agreement itself. As a result of the timely filing and the
effectiveness of the registration statement, we will not owe liquidated
damages provided for in the registration rights agreement.
The registration rights agreement further provides that we will use our
reasonable best efforts to, among other things, cause to be filed with the SEC
this registration statement under the Securities Act with respect to an offer
to exchange your original notes for newly issued registered notes. Except as
discussed below, upon the completion of the exchange offer we will have no
further obligations to register your original notes. Any original notes not
tendered will continue to be subject to particular restrictions on transfer.
Accordingly, the liquidity of the market for the original notes could be
adversely affected upon consummation of the exchange offer.
In order to participate in the exchange offer, we require that you represent
to us that:
. you are acquiring the registered notes in the ordinary course of
your business;
. you are not engaging in, and do not intend to engage, in a
distribution of the registered notes;
. you do not have an arrangement or understanding with any person to
participate in the distribution of the registered notes;
. you are not our "affiliate," or an "affiliate" of the guarantors, as
that term is defined under Rule 405 of the Securities Act; and
. if you are a broker-dealer, you will receive registered notes for
your own account, your registered notes will be acquired as a result
of market-making activities or other trading activities, and you
acknowledge that you will deliver a prospectus in connection with
any resale of your registered notes.
You may be entitled to "shelf" registration rights. In accordance with the
registration rights agreement, we are required to file a shelf registration
statement covering your original notes for a continuous offering in accordance
with Rule 415 of the Securities Act if:
. we determine that we are not permitted to effect the exchange offer
because of any change in law or applicable interpretations of the
staff of the SEC; or
. any holder of Transfer Restricted Securities notifies us within 20
business days following the date the exchange offer is consummated
that:
(1) it is prohibited by law or SEC policy from participating in the
exchange offer; or
(2) it may not resell the registered notes acquired by it in the
exchange offer to the public without delivering a prospectus and
that this prospectus is not appropriate or available for such
resales; or
(3) it is a broker-dealer and owns original notes acquired directly
from us or any of our affiliates; or
. we do not consummate the exchange offer within 30 business days
after the exchange offer becomes effective.
53
<PAGE>
For purposes of the foregoing, "Transfer Restricted Securities" means each
original note until the earliest to occur of:
. the date on which the original note has been exchanged in the
exchange offer for a registered note which is entitled to be resold
to the public without complying with the prospectus delivery
requirements of the Securities Act,
. the date on which the original note has been disposed of in
accordance with a Shelf Registration Statement and the purchasers
thereof have been issued a registered note, or
. the date on which the registered note is distributed to the public
pursuant to Rule 144 under the Securities Act and each registered
note held by a broker-dealer until the date on which the registered
note is disposed of by a broker-dealer pursuant to the "Plan of
Distribution" contemplated by this registration statement, including
the delivery of the prospectus contained herein.
In the event that we are obligated to file a shelf registration statement,
we will be required to keep the shelf registration statement effective until
. Other than as described above, you will not have the right to
participate in the shelf registration or require that we register your
original notes in accordance with the Securities Act.
Based on interpretations of the SEC's staff set forth in no-action letters
issued to third parties unrelated to us and the guarantors, we believe that,
with the exceptions set forth below, your registered notes issued in
connection with the exchange offer in exchange for your original notes may be
offered for resale, resold, and otherwise transferred by you without
compliance with the registration and prospectus delivery requirements of the
Securities Act if:
. the registered notes acquired in connection with the exchange offer
are being obtained in the ordinary course of your business;
. you are not engaging in and do not intend to engage in a
distribution of the registered notes;
. you do not have an arrangement or understanding with any person to
participate in a distribution of the registered notes; and
. you are not our "affiliate," as defined in Rule 405 under the
Securities Act, or an "affiliate" of the guarantors.
If you tender in the exchange offer for the purpose of participating in a
distribution of the registered notes, you cannot rely on this interpretation
by the SEC's staff and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with your secondary
resale transaction. If you are a broker-dealer that receives registered notes
for your own account in exchange for your original notes, where such original
notes were acquired by you as a result of market-making activities or other
trading activities, you must acknowledge that you will deliver a prospectus in
connection with any resale of your registered notes. See the discussion under
the section entitled "Plan of Distribution." If you are a broker-dealer who
acquired original notes directly from us and not as a result of market-making
activities or other trading activities, you may not rely on the SEC's
interpretations discussed above or participate in the exchange offer and must
comply with the prospectus delivery requirements of the Securities Act in
order to sell your original notes.
Consequences of Failure to Exchange
Following the completion of the exchange offer, except as provided above and
in the registration rights agreement we refer to, you will not have any
further registration rights and your original notes will continue to be
subject to certain restrictions on transfer. Accordingly, if you do not
participate in the exchange offer, your ability to sell your original notes
could be adversely affected. You may suffer adverse consequences if you fail
54
<PAGE>
to exchange your original notes. See the discussion under the section entitled
"Risk Factors--Failure to Exchange Original Notes."
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept any validly tendered original
notes which are not withdrawn prior to 5:00 p.m., New York City time, on the
expiration date of the exchange offer. We will issue $1,000 principal amount
of registered notes in exchange for each $1,000 principal amount of your
original notes. You may tender some or all of your notes in the exchange
offer. However, you may tender your original notes only in integral multiples
of $1,000 in principal amount.
The form and terms of the registered notes will be the same as the form and
terms of your original notes except that:
. interest on the registered notes will accrue from the last interest
payment date on which interest was paid on your original notes, or,
if no interest was paid, from the date of the original issuance of
your original notes; and
. the registered notes have been registered under the Securities Act
and will not bear a legend restricting their transfer.
This prospectus, together with the letter of transmittal you received with
this prospectus, is being sent to the Depository Trust Company's (DTC) nominee
and to others believed to have beneficial interests in the original notes. You
do not have any appraisal or dissenters' rights under the General Corporation
Law of the State of Delaware or under the indenture governing your original
notes. We intend to conduct the exchange offer in accordance with the
requirements of the Securities Act and the rules and regulations of the SEC
under the Securities Act.
We will have accepted your validly tendered original notes when we have
given oral or written notice to the exchange agent. The exchange agent will
act as agent for the tendering holders for the purpose of receiving the
registered notes from us. If the exchange agent does not accept any tendered
original notes for exchange because of an invalid tender or for any other
valid reason, the exchange agent will return the certificates, without
expense, to the tendering holder as promptly as practicable after the
expiration date of the exchange offer.
If you participate in the exchange offer, you will not be required to pay
brokerage commissions, fees, or, subject to the instructions in the letter of
transmittal, transfer taxes in connection with the exchange of your original
notes for registered notes. We will pay all charges and expenses, other than
particular applicable taxes you may incur in connection with the exchange
offer.
Expiration Date; Extensions; Amendments
The exchange offer will expire at 5:00 p.m., New York City time, on ,
1999, unless we, in our sole discretion, extend it. In any event, we will hold
the exchange offer open for at least 20 business days. If we decide to extend
the exchange offer, we will notify the exchange agent and each registered
holder by oral or written notice before 9:00 a.m., New York City time, on the
next business day after the previously scheduled expiration date.
We reserve the right, in our sole discretion:
. to delay accepting your original notes;
. to extend the exchange offer;
. to terminate the exchange offer if any of the conditions were not
satisfied by giving oral or written notice of delay, extension or
termination to the exchange agent; or
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. to amend the terms of the exchange offer in any manner.
In the event that we make a material or fundamental change to the terms of
the exchange offer, we will file a post effective amendment to the
registration statement of which this prospectus is a part.
Procedures for Tendering Your Notes
Only you may tender your original notes in the exchange offer. Except as
stated under the heading "--Book Entry Transfer," to tender in the exchange
offer, you must:
. complete, sign and date the enclosed letter of transmittal, or a
copy of it;
. have the signature on the letter of transmittal guaranteed, if
required by the letter of transmittal; and
. mail, fax or otherwise deliver the letter of transmittal or copy to
the exchange agent on or before the expiration date.
In addition, either:
. the exchange agent must receive certificates for your original notes
and the letter of transmittal on or before the expiration date;
. the exchange agent must receive a timely confirmation of a book-
entry transfer of your original notes, if that procedure is
available, into the account of the exchange agent at the DTC under
the procedure for book-entry transfer described below before the
expiration date of the exchange offer; or
. you must comply with the guaranteed delivery procedures described
below.
For your original notes to be tendered effectively, the exchange agent must
receive the letter of transmittal and other required documents at the address
set forth under "--Exchange Agent" before the expiration date of the exchange
offer at the address set forth under "--Exchange Agent."
If you do not withdraw your tender before the expiration date, it will
constitute an agreement between you and us in accordance with the terms and
conditions in this prospectus and in the letter of transmittal.
The method of delivery to the exchange agent of your original notes, your
letter of transmittal and all other required documents is at your election and
risk. Instead of delivery by mail, we recommend that you use an overnight or
hand delivery service. In all cases, you should allow sufficient time to
assure delivery to the exchange agent before the expiration date of the
exchange offer. Do not send either a letter of transmittal or your original
notes directly to us. You may request your broker, dealer, commercial bank,
trust company or nominee to make the exchange on your behalf.
Procedure if your Original Notes are not Registered in your Name
Any beneficial owner whose original notes are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee and who
wishes to tender the original notes in the exchange offer should contact the
registered holder promptly and instruct the registered holder to tender the
original notes on the beneficial owner's behalf. If the beneficial owner
wishes to tender on the owner's own behalf, the owner must, before completing
and executing a letter of transmittal and delivering the owner's original
notes, either make appropriate arrangements to register ownership of the
original notes in the beneficial owner's name or obtain a properly completed
bond power or other proper endorsement from the registered holder. We strongly
urge you to act immediately since the transfer of registered ownership may
take considerable time.
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Signature Requirements and Signature Guarantees
Unless you are a registered holder who requests that the registered notes be
mailed to you and issued in your name, or unless you are a member of, or
participant in, the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program, the Stock Exchange Medallion
Program, or an "Eligible Guarantor Institution" within the meaning of Rule
17Ad-15 under the Exchange Act, each an "Eligible Institution," you must
guarantee your signature on a letter of transmittal or a notice of withdrawal
by an Eligible Guarantor Institution.
If a trustee, executor, administrator, guardian, attorney-in-fact, officer
of a corporation, or other person acting in a fiduciary or representative
capacity signs the letter of transmittal or any notes or bond powers on your
behalf, that person must indicate their capacity when signing, and submit
satisfactory evidence to us with the letter of transmittal demonstrating their
authority to act on your behalf.
Conditions to the Exchange Offer
We will decide all questions as to the validity, form, eligibility,
acceptance, and withdrawal of tendered original notes and our determination
will be final and binding on you. We reserve the absolute right to reject any
and all original notes not properly tendered or the acceptance of which would
be unlawful in the opinion of our counsel. We also reserve the right to waive
any defects, irregularities, or conditions of tender as to particular original
notes. Our interpretation of the terms and conditions of the exchange offer,
including the instructions in a letter of transmittal, will be final and
binding on all parties. You must cure any defects or irregularities in
connection with tenders of original notes as we shall determine. Although we
intend to notify holders of defects or irregularities with respect to tenders
of original notes, we, the exchange agent, or any other person will not incur
any liability for failure to give this notification. Tenders of original notes
will not be deemed to have been made until any defects or irregularities have
been cured or waived. Any original notes received by the exchange agent that
are not properly tendered and as to which defects or irregularities have not
been cured or waived will be returned by the exchange agent to the tendering
holders, unless otherwise provided in the letter of transmittal, as soon as
practicable following the expiration date of the exchange offer.
We reserve the right to purchase or to make offers for any original notes
that remain outstanding after the expiration date of the exchange offer or to
terminate the exchange offer and, to the extent permitted by law, purchase
original notes in the open market, in privately negotiated transactions or
otherwise. The terms of any of these purchases or offers could differ from the
terms of the exchange offer.
These conditions are for our sole benefit and we may assert them at any time
or for any reason. We may waive in whole or in part at any time and from time
to time these conditions in our sole discretion. Our failure to exercise any
of our rights will not be a waiver of our rights and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to
time.
We will not accept for exchange any original notes tendered, and no
registered notes will be issued in exchange for any original notes, if at the
time any stop order is threatened or in effect with respect to the
registration statement or the qualification of the indenture relating to the
registered notes under the Trust Indenture Act. We are required to use every
reasonable effort to obtain the withdrawal of any stop order at the earliest
possible time.
In all cases, the issuance of registered notes will be made only after
timely receipt by the exchange agent of certificates for original notes or a
timely book-entry confirmation of the original notes into the exchange agent's
account at DTC's book-entry transfer facility, a properly completed and duly
executed letter of transmittal or, with respect to DTC and its participants,
electronic instructions of the holder agreeing to be bound by the letter of
transmittal, and any other required documents. If we do not accept any
tendered original notes for a valid reason or if you submit original notes for
a greater principal amount than you desire to exchange, we will return the
unaccepted or non-exchanged original notes to you at our expense. In the case
of original notes tendered by
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book-entry transfer into the exchange agent's account at DTC's book-entry
transfer facility under the book-entry transfer procedures described below,
the non-exchanged original notes will be credited to an account maintained
with the book-entry transfer facility. This will occur as promptly as
practicable after the expiration or termination of the exchange offer for the
original notes.
Notwithstanding any other provision of the exchange offer, we will not be
required to accept for exchange, or to issue registered notes in exchange for,
any original notes and may terminate or amend the exchange offer if at any
time before the acceptance of the original notes for exchange or the exchange
of the registered notes for the original notes, we determine that the exchange
offer violates applicable law, any applicable interpretation of the staff of
the SEC or any order of any governmental agency or court of competent
jurisdiction.
Book-Entry Transfer
The exchange agent will make requests to establish accounts at DTC's book-
entry transfer facility for purposes of the exchange offer within two business
days after the date of this prospectus. Any financial institution that is a
participant in the book-entry transfer facility's system may make book-entry
delivery of original notes being tendered by causing the book-entry transfer
facility to transfer the original notes into the exchange agent's account at
the book-entry transfer facility in accordance with the appropriate procedures
for transfer. However, although delivery of original notes may be effected
through book-entry transfer at the book-entry transfer facility, a letter of
transmittal or copy thereof, with any required signature guarantees and any
other required documents, must, except as provided in the following paragraph,
be transmitted to and received by the exchange agent on or before the
expiration date of the exchange offer or the guaranteed delivery procedures
below must be complied with.
DTC's Automated Tender Offer Program, referred to by us as ATOP, is the only
method of processing the exchange offer through DTC. To accept the exchange
offer through ATOP, participants in DTC must send electronic instructions to
DTC through DTC's communication system instead of sending a signed, hard copy
letter of transmittal. DTC is obligated to communicate those electronic
instructions to the exchange agent. To tender notes through ATOP, the
electronic instructions sent to DTC and transmitted by DTC to the exchange
agent must contain the participant's acknowledgment of its receipt of and
agreement to be bound by the letter of transmittal for the original notes.
Guaranteed Delivery Procedures
If a registered holder of original notes desires to tender any original
notes and the original notes are not immediately available, or time will not
permit the holder's original notes or other required documents to reach the
exchange agent before the expiration date of the exchange offer, or the
procedure for book-entry transfer cannot be completed on a timely basis, a
tender may be effected if:
. the tender is made through an Eligible Institution;
. before the expiration date of the exchange offer, the exchange agent
received from the Eligible Institution a properly completed and duly
executed letter of transmittal and notice of guaranteed delivery, in
form provided by us the notice of guaranteed delivery must state the
name and address of the holder of the original notes and the amount
of original notes tendered, that the tender is being made and
guaranteeing that within three New York Stock Exchange trading days
after the date of execution of the notice of guaranteed delivery,
the certificates for all physically tendered original notes, in
proper form for transfer, or a book-entry confirmation and any other
documents required by the letter of transmittal will be deposited by
the Eligible Institution with the exchange agent; and
. the certificates for all physically tendered original notes, in
proper form for transfer, or a book-entry confirmation and all other
documents required by the applicable letter of transmittal are
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received by the exchange agent within three New York Stock Exchange
trading days after the date of execution of the Notice of Guaranteed
Delivery.
Withdrawal Rights
You may withdraw your tender of original notes at any time before 5:00 p.m.,
New York City time, on the expiration date of the exchange offer.
For a withdrawal to be effective, a written or, for a DTC participant,
electronic ATOP transmission notice of withdrawal, must be received by the
exchange agent at its address provided in this prospectus before 5:00 p.m.,
New York City time, on the expiration date of the exchange offer.
The notice of withdrawal must:
. specify the name of the person who deposited the original notes to be
withdrawn;
. identify the original notes to be withdrawn, including the
certificate number or numbers and principal amount of the original
notes;
. be signed by the holder in the same manner as the original signature
on the letter of transmittal by which the original notes were
tendered or be accompanied by documents of transfer sufficient to
have the trustee of the original notes register the transfer of the
original notes into the name of the person withdrawing the tender;
and
. specify the name in which any original notes are to be registered, if
different from that of the holder who tendered the original notes.
We will determine all questions as to the validity, form and eligibility of
your notice and our determination will be final and binding on all parties.
Any original notes withdrawn will not be considered to have been validly
tendered. We will return any original notes which have been tendered but not
exchanged without cost to the holder as soon as practicable after withdrawal,
rejection of tender or termination of the exchange offer. Properly withdrawn
original notes may be retendered by following one of the above procedures
before the expiration date.
Exchange Agent
You should direct all executed letters of transmittal to State Street Bank
and Trust Company, the exchange agent for the exchange offer. Questions,
requests for assistance and requests for additional copies of the prospectus
or a letter of transmittal should be directed to the exchange agent addressed
as follows:
By Mail: Overnight Courier:
State Street Bank and Trust Company State Street Bank and Trust Company
Corporate Trust Department Corporate Trust Department
P.O. Box 778 2 Avenue de Lafayette
Boston, Massachusetts 02102 Fifth Floor, Corporate Trust Window
Attention: Mackenzie Elijah Boston, Massachusetts 02111-1724
Attention: Mackenzie Elijah
By Hand in New York (as Drop Agent)
State Street Bank and Trust Company By Hand in Boston:
61 Broadway State Street Bank and Trust Company
15th Floor, Corporate Trust Window 2 Avenue de Lafayette
New York, New York 10006 Fifth Floor, Corporate Trust Window
Boston, Massachusetts 02111-1724
Facsimile Transmission Number
(for Eligible Institutions Only) Confirm by telephone:
(617) 662-1452 (617) 662-1525
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Fees and Expenses
We currently do not intend to make any payments to brokers, dealers or others
to solicit acceptances of the exchange offer. The principal solicitation is
being made by mail. However, additional solicitations may be made in person or
by telephone by our officers and employees.
Our estimated cash expenses incurred in connection with the exchange offer
will be paid by us and are estimated to be $100,000 in the aggregate. This
amount includes fees and expenses of the trustee for the original and
registered notes, accounting, legal, printing and related fees and expenses.
Transfer Taxes
If you tender original notes for exchange you will not be obligated to pay
any transfer taxes. However, if you instruct us to register registered notes in
the name of, or request that your original notes not tendered or not accepted
in the exchange offer be returned to, a person other than you, you will be
responsible for the payment of any transfer tax owed.
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DESCRIPTION OF THE REGISTERED NOTES
You can find the definitions of certain terms used in this description under
the caption "Certain Definitions." In this description, (1) the word "issuers"
refers collectively to Hollywood Casino Shreveport and Shreveport Capital and
not to any of their respective subsidiaries and (2) the words "we," "us" and
"our" refer only to Hollywood Casino Shreveport and not to any of our
subsidiaries. Capitalized terms in this description are defined in this
section under the caption "Certain Definitions" below.
The issuers will issue the registered notes under an indenture among
themselves and State Street Bank and Trust Company, as trustee. The original
notes and the registered notes are collectively referrred to as the "notes."
The terms of the notes include those stated in the indenture and those made
part of the indenture by reference to the Trust Indenture Act of 1939. The
notes are secured obligations of the issuers. The collateral documents
referred to under the caption "Security" define the terms of the agreements
that will secure the registered notes.
Shreveport Capital is our wholly owned subsidiary and was incorporated
solely for the purpose of serving as a co-issuer of the notes in order to
facilitate the original offering and subsequent resales of the notes. We
believe that certain prospective purchasers of the notes may be restricted in
their ability to purchase debt securities of partnerships, such as us, unless
the debt securities are jointly issued by a corporation. Shreveport Capital
will not have any operations or any material assets and will not have any
revenues. As a result, prospective investors should not expect Shreveport
Capital to contribute to the amounts required to be paid on the notes.
The following description is a summary of the material provisions of the
indenture, the registration rights agreement and the collateral documents. It
does not restate any of those agreements in its entirety. We urge you to read
the indenture, the registration rights agreement and the collateral documents
because they, and not this description, define your rights as holders of the
notes. Copies of the indenture, the registration rights agreement and the
collateral documents are available as set forth in this prospectus under the
caption "Where You Can Find More Information."
Brief Description of the Notes and the Guarantees
The notes:
. are senior secured obligations of the issuers;
. are secured by a first priority security interest in substantially
all of the issuers' existing and future assets, other than amounts
in the Equity Escrow Account, up to $35.0 million of FF&E acquired,
leased or refinanced by us with FF&E Financing and certain licenses
which may not be pledged under applicable law;
. rank pari passu in right of payment to all of the issuers' existing
and future senior indebtedness;
. rank senior in right of payment to any of the issuers' existing and
future subordinated indebtedness; and
. are guaranteed by the Guarantors, as described below.
The notes are guaranteed by HWCC-Louisiana, HCS I and HCS II and will be
guaranteed by all of our future material Restricted Subsidiaries. We do not
currently have any Restricted Subsidiaries, other than Shreveport Capital.
Each guarantee:
. is a senior secured obligation of the respective Guarantor;
. is secured by a first priority security interest in all of the
Guarantors' existing and future assets, other than $2.5 million in
cash held by HWCC-Louisiana which will be used by HWCC-Louisiana to
fulfill its obligations under the Membership Interest Purchase
Agreement;
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. ranks pari passu in right of payment to all of the Guarantors'
existing and future senior indebtedness; and
. ranks senior in right of payment to any of the Guarantor's existing
and future subordinated indebtedness.
Principal, Maturity and Interest
The indenture provides for the issuance by the issuers of notes with a
maximum aggregate principal amount of $150.0 million. The issuers issued notes
in denominations of $1,000 and integral multiples of $1,000. The notes will
mature on August 1, 2006.
Fixed interest on the notes will accrue at the rate of 13% per annum and
will be payable semi-annually in arrears on each February 1 and August 1 (each
an "Interest Payment Date"), commencing on February 1, 2000, to the holders of
record of notes on the immediately preceding January 15 and July 15 (each a
"Record Date"), respectively. Fixed interest will accrue from the date of
original issuance of the notes or, if Fixed interest has already been paid,
from the date it was most recently paid. Fixed interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months.
In addition, the notes will accrue Contingent Interest after the Shreveport
Resort begins Operating. Contingent Interest will be calculated to accrue
(each an "Accrual Period") as follows:
(1) in the case of the First Accrual Period, from and including the date
on which the Shreveport resort begins Operating to, and including, the
earlier of:
(a) the end of the First Accrual 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, upon
acceleration, upon any mandatory or optional redemption or otherwise,
(2) in the case of each Semiannual Period following the First Accrual
Period from, but not including, the end of the First Accrual Period or the
end of the immediately preceding Semiannual Period, as applicable, to, and
including, the end of each such Semiannual Period if the corresponding
principal amount of the notes has not become due and payable.
(3) in the case of any Interim Period following the First Accrual Period
from, but not including, the end of the First Accrual Period or most recent
Semiannual Period, as applicable, to, and including, the date of payment if
the corresponding principal amount of the notes has become due and payable,
whether at stated maturity, upon acceleration, upon any mandatory or
optional redemption or otherwise.
Contingent Interest will be payable semiannually. On each Interest Payment
Date after the First Accrual Period, Contingent Interest with respect to the
Accrual Period completed immediately prior to that Interest Payment Date will
be payable to the holders of notes on the Record Date immediately preceding
the applicable Interest Payment Date, unless all or a portion of such
Contingent Interest is permitted to be deferred. The issuers may defer payment
of all or a portion of accrued Contingent Interest then otherwise due and
payable, and may continue to defer the payment of accrued Contingent Interest
which has already been deferred if, and only to the extent that:
(1) the payment of that portion of Contingent Interest on the applicable
Interest Payment Date will cause our Adjusted Fixed Charge Coverage Ratio
for our four consecutive fiscal quarters ending immediately prior to the
applicable Interest Payment Date to be less than 1.5 to 1.0, but may not
defer such portion, which, if paid, would not cause the Adjusted Fixed
Charge Coverage Ratio to be less than 1.5 to 1.0; and
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(2) the principal amount of the notes corresponding to that Contingent
Interest has not then matured and become due and payable, whether at stated
maturity, upon acceleration, upon any mandatory or optional redemption or
otherwise.
Contingent Interest that is deferred will become due and payable, in whole
or in part, upon the earlier of:
(1) the next succeeding Interest Payment Date on which all or a portion
of that Contingent Interest is not permitted to be deferred; and
(2) the maturity of the corresponding principal amount of the notes,
whether at stated maturity, upon acceleration, upon any mandatory or
optional redemption or otherwise.
No interest will accrue on deferred Contingent Interest.
No Recourse Against Shreveport Paddlewheels, L.L.C.
Neither Shreveport Paddlewheels, L.L.C. nor any of its affiliates, other
than us, will have any obligation to make any payments of any kind that become
due on the notes.
Methods of Receiving Payments on the Notes
If a holder of notes has given wire transfer instructions to the issuers,
the issuers will pay all principal, interest, premium and liquidated damages,
if any, on that holder's notes in accordance with those instructions. All
other payments on notes will be made at the office or agency of the paying
agent and registrar within the City and State of New York, unless the issuers
elect to make interest payments by check mailed to the holders of notes at
their addresses set forth in the register of holders.
Paying Agent and Registrar for the Notes
The trustee will initially act as paying agent and registrar. The issuers
may change the paying agent or registrar without prior notice to the holders
of notes, and either of the issuers may act as paying agent or registrar.
Transfer and Exchange
A holder of notes may transfer or exchange notes in accordance with the
indenture. The registrar and the trustee may require a holder of notes, among
other things, to furnish appropriate endorsements and transfer documents and
the issuers may require a holder of notes 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.
Guarantees
Each of HWCC-Louisiana, HCS I, HCS II and all of our future Restricted
Subsidiaries that at any time has Total Assets in excess of $2.5 million will
jointly and severally guarantee the issuers' obligations under the notes. The
obligations of each Guarantor under its Guarantee will be limited as necessary
to prevent that Guarantee from constituting a fraudulent conveyance under
applicable law. See "Risk Factors--Fraudulent Conveyance."
Security
The notes will be secured by a first priority security interest in
substantially all of the issuers' assets other than funds and securities in
the Equity Escrow Account, whether now owned or hereafter acquired, including,
without limitation, and subject to the liens permitted by the collateral
documents:
(1) a pledge of any funds and securities deposited and held in the Cash
Collateral Accounts until such time as such funds and securities are
disbursed in accordance with the terms of the Cash Collateral and
Disbursement Agreement;
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(2) a leasehold mortgage on all of the real property comprising the
Shreveport Resort, including all additions and improvements and component
parts related to it and issues and profits from it;
(3) a security interest in all furniture, fixtures and equipment which
are part of the Shreveport Resort, other than up to $35.0 million of FF&E
acquired, leased or refinanced through FF&E Financing;
(4) a first priority security interest in the riverboat which will be a
part of the Shreveport Resort;
(5) a first priority security interest in all of the issuers' accounts
receivable, general intangibles, inventory and other personal property not
contemplated by clause (3) above;
(6) a collateral assignment of our interests in the Completion Capital
Agreement, the License Agreement, the Management Agreement and the
principal agreements entered into by us in connection with the development,
construction, ownership or operation of the Shreveport Resort; and
(7) to the extent permitted by law, a pledge of all licenses and permits
relating to the Shreveport Resort.
The guarantees will be secured by a first priority security interest in
substantially all of the Guarantors' existing and future assets, including a
pledge of the capital stock of HCS I and HCS II and the partnership interests
in us held by HCS I and HCS II, but excluding the $2.5 million in cash that
HWCC-Louisiana will use to fund its remaining obligation to Sodak Gaming in
connection with the acquisition of Sodak Louisiana pursuant to the Membership
Interest Purchase Agreement.
The above mentioned liens and security interests may be subordinate or
junior to mechanics' liens which, under applicable Louisiana law, may have
priority over the leasehold mortgage on the Shreveport Resort and the security
interest in the riverboat that will be part of the Shreveport Resort. However,
we have obtained title insurance on all of the Shreveport Resort other than
the riverboat that will be a part of the Shreveport Resort in favor of the
trustee that ensures against losses from the enforcement of mechanics' liens.
In addition, secured lenders of indebtedness incurred to purchase FF&E may be
granted a security interest in the FF&E for the sole purpose of perfecting
such lenders' security interests in such FF&E. Furthermore, we may incur up to
$10.0 million in aggregate principal amount of Indebtedness for working
capital and other general corporate purposes that may be secured by a Pari
Passu Lien on the Pari Passu Collateral.
Subject to the terms of any intercreditor agreement relating to Pari Passu
Collateral, if an event of default occurs, the trustee may, in addition to any
rights and remedies available to it under the indenture and the collateral
documents, take such action as it deems advisable to protect and enforce its
rights in the collateral, including the institution of sale or foreclosure
proceedings. Subject to the terms of any intercreditor agreement relating to
Pari Passu Collateral, the proceeds received by the trustee from any sale or
foreclosure will be applied first to pay the expenses of the sale or
foreclosure and fees or any other amounts then payable to the trustee under
the indenture, and thereafter to pay amounts due and payable with respect to
the notes.
So long as no default or event of default shall have occurred and be
continuing, and subject to certain terms and conditions in the indenture and
the collateral documents, the issuers and their Subsidiaries and the
Guarantors will be entitled to receive the benefit of all cash dividends,
interest and other payments made upon or with respect to the collateral
pledged by them and to exercise any voting and other consensual rights
pertaining to the collateral pledged by them. Upon the occurrence and during
the continuance of a default or event of default:
(1) all rights of the issuers and their Subsidiaries and the Guarantors
to exercise such voting or other consensual rights shall cease, and all
such rights shall become vested in the trustee which, to the extent
permitted by law, will have the sole right to exercise such rights;
(2) all rights of the issuers and their Subsidiaries and the Guarantors
to receive all cash dividends, interest and other payments made upon or
with respect to the collateral will cease and such cash dividends, interest
and other payments will be paid to the trustee; and
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(3) the trustee may sell the collateral or any part thereof in accordance
with the terms of the collateral documents.
Subject to the terms of any intercreditor agreement relating to Pari Passu
Collateral, under the terms of the indenture and the collateral documents, the
trustee will determine the circumstances and manner in which the collateral
shall be disposed of, including, but not limited to, the determination of
whether to release all or any portion of the collateral from the Liens created
by the collateral documents and whether to foreclose on the collateral
following a default or event of default. Moreover, upon the full and final
payment and performance of all obligations of the issuers and the Guarantors
under the indenture and the notes, the collateral documents will terminate and
the collateral will be released. The proceeds of any sale of the 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.
Certain Gaming Law Limitations
The trustee's ability to foreclose upon the 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 license in the State of Louisiana unless the
person is found qualified or suitable by the relevant Gaming Authorities. 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 of the notes 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 a
filing fee and all costs of such investigation. If the trustee is unable or
chooses not to qualify, be found suitable or 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, which would also be subject to the approval of the
Louisiana Gaming Control Board. 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
collateral. Therefore, the practical value of realizing on the collateral may,
without the appropriate approvals, be limited.
Certain Bankruptcy Limitations
The right of the trustee to repossess and dispose of the 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 commenced by
or against either of the Issuers or a Guarantor prior to the trustee having
repossessed and disposed of the collateral. Under bankruptcy law, 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, bankruptcy law
permits the debtor to continue to retain and to use collateral, 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 credit 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 collateral. In addition, since the enforcement of the Lien of
the trustee in cash, deposit accounts and cash equivalents, other than the
Cash Collateral Accounts, may be limited in a bankruptcy proceeding, the
holders of the notes may not have any consent rights with respect to the use
of those funds by either of 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 or when the trustee could
repossess or dispose of the 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 collateral.
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Completion Capital Agreement
We and Hollywood Casino, HWCC-Louisiana, HCS I, HCS II have entered into a
Completion Capital Agreement (the "Completion Capital Agreement") that
provides that if:
(1) we have provided the trustee and the Independent Construction
Consultant with a written notice that there are not sufficient available
funds to complete the Shreveport Resort so that it will be Operating by
April 30, 2001;
(2) (a) the Independent Construction Consultant has provided the trustee
and us with a written notice that there will not be sufficient available
funds to complete the Shreveport Resort so that it will be Operating by
April 30, 2001 and (b) within 60 days of us receiving the notice, we have
not provided evidence satisfactory to the Independent Construction
Consultant that there will be sufficient additional funds to complete the
Shreveport Resort so that it will be Operating by April 30, 2001; or
(3) after having expended the funds in the Equity Escrow Account, no
disbursement has occurred pursuant to the Cash Collateral and Disbursement
Agreement for 90 consecutive days;
then Hollywood Casino will pay into the Construction Disbursement Account (a)
$5.0 million less any amounts previously paid into the Construction
Disbursement Account pursuant to this paragraph or (b) if the Independent
Construction Consultant provides to the trustee a certificate stating that the
amount necessary to cause the Shreveport Resort to be Operating by April 30,
2001 is less than the amount required under clause (a) above, such lesser
amount.
In addition, if the Shreveport Resort is not Operating by April 30, 2001,
Hollywood Casino will pay $5.0 million in cash, less any amounts previously
paid into the Construction Disbursement Account pursuant to the provisions of
the previous paragraph, into the Construction Disbursement Account.
Furthermore, Hollywood Casino will be required to pay $5.0 million in cash,
less any amounts previously paid into the Construction Disbursement Account
pursuant to the provisions of the previous paragraph, into the Construction
Disbursement Account upon:
(1) the commencement of a voluntary bankruptcy case by us on or prior
to April 30, 2001,
(2) the commencement of an involuntary bankruptcy case against us
which is not dismissed, bonded or discharged on or prior to the earlier
of (a) 60 days after the commencement and (b) April 30, 2001 or
(3) the entry of an order for relief against us on or prior to April
30, 2001, under any bankruptcy law in effect at any time. Hollywood
Casino has agreed that it will not assert any defenses or setoffs to
the payment of those amounts.
Optional Redemption
At any time prior to August 1, 2002, the issuers may on any one or more
occasions redeem up to 35% of the aggregate principal amount of notes issued
under the indenture at a redemption price of 113% of the principal amount
thereof, plus accrued and unpaid interest and liquidated damages, if any, to
the redemption date, with the net cash proceeds of a Qualified Equity
Offering; provided, however, that:
(1) at least 65% of the aggregate principal amount of notes originally
issued under the indenture remains outstanding immediately after the
occurrence of such redemption (excluding notes held by us and our
Subsidiaries); and
(2) the redemption must occur within 60 days of the date of the closing
of such Qualified Equity Offering.
Except pursuant to the preceding paragraph, the notes will not be redeemable
at the issuers' option prior to August 1, 2003.
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On or after August 1, 2003, the issuers may redeem all or a part of the
notes upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and liquidated damages, if any, thereon, to the
applicable redemption date, if redeemed during the twelve-month period
beginning on August 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003.............................. 106.50%
2004.............................. 103.25%
2005 and thereafter............... 100.00%
</TABLE>
Mandatory Disposition Pursuant to Gaming Laws
Each holder, by accepting a note, shall be deemed to have agreed that if any
Gaming Authority requires that a person who is a holder or the beneficial
owner of a note be licensed, qualified or found suitable under any applicable
Gaming Law, the holder or beneficial owner, as the case may be, will apply for
a license, qualification or finding of suitability within the time period
required by the Gaming Authority. If the holder or beneficial owner fails to
apply for such license, qualification or finding of suitability within the
required time period, the holder or beneficial owner, as the case may be, will
be required to dispose of its notes within the time specified by the Gaming
Authority and the issuers will have the right to redeem the notes of the
holder or beneficial owner, subject to approval of any applicable Gaming
Authority, at the least of:
(1) the principal amount of the notes;
(2) the amount that the holder or beneficial owner paid for the notes; or
(3) the fair market value of the notes.
Immediately upon the imposition of a requirement to dispose of notes by a
Gaming Authority, the holder or beneficial owner of the notes will, to the
extent required by applicable law, have no further right:
(1) to exercise, directly or indirectly, through any trustee or nominee
or any other person or entity, any right conferred by the notes; or
(2) to receive any interest, dividends, economic interests or any other
distributions or payments with respect to the notes or any remuneration in
any form with respect to the notes from the issuers or the trustee.
Any holder or beneficial owner of notes that is required to apply for a
license, qualification or finding of suitability must pay all fees and costs
of any investigation by the applicable Gaming Authorities. The issuers will
notify the trustee in writing of any redemption pursuant to this section as
soon as is practicable. The trustee will be required to report the names of
the record holders of the notes to any Gaming Authority when required by law.
Mandatory Redemption
The issuers are not required to make mandatory redemption or sinking fund
payments with respect to the notes.
Repurchase at the Option of Holders
Change of Control
If a Change of Control occurs, each holder of notes will have the right to
require the issuers to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of that holder's notes pursuant to an offer on the
terms set forth in the indenture (a "Change of Control Offer"). In the Change
of Control Offer, the issuers will offer payment (a "Change of Control
Payment") in cash equal to 101% of the aggregate principal amount of notes
repurchased plus accrued and unpaid interest and liquidated damages, if any,
thereon, to the date of purchase. Within ten days following any Change of
Control, the issuers will mail a notice to each holder of notes
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describing the transaction or transactions that constitute the Change of
Control and offering to repurchase notes on the date (the "Change of Control
Payment 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,
pursuant to the procedures required by the indenture and described in such
notice.
On the Change of Control Payment Date, the issuers will, to the extent
lawful:
(1) accept for payment all notes or portions thereof properly tendered
pursuant to the Change of Control Offer;
(2) 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
(3) 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, however, 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 provisions described above that require the issuers to make a Change of
Control Offer following a Change of Control will be applicable regardless of
whether 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 of notes to require that the
issuers repurchase or redeem notes in the event of a takeover,
recapitalization or similar transaction. No assurance can be given that the
issuers will have sufficient funds at the time of a Change of Control in order
to consummate a Change of Control Offer.
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 direct
or indirect sale, lease, transfer, conveyance or other disposition of "all or
substantially all" of the assets of Hollywood Casino and its Subsidiaries
taken as a whole. Although there is a limited 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 of notes
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
Hollywood Casino Corporation and its Subsidiaries taken as a whole to another
Person or group may be uncertain.
Asset Sales
We will not, and will not permit any of our Restricted Subsidiaries to,
consummate an Asset Sale unless:
(1) the Shreveport Resort is Operating;
(2) we (or the Restricted Subsidiary, as the case may be) receive
consideration at the time of such Asset Sale at least equal to the fair
market value of the assets or Equity Interests issued or sold or otherwise
disposed of;
(3) such fair market value is determined by our Board of Directors and
evidenced by a resolution of that Board of Directors set forth in an
Officers' Certificate delivered to the trustee; and
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(4) at least 75% of the consideration therefor received by us or the
Restricted Subsidiary is in the form of cash. For purposes of this
provision and not for purposes of the definition of "Net Proceeds" (except
to the extent set forth in that definition with respect to the conversion
of non-cash proceeds to cash), each of the following shall be deemed to be
cash:
(a) any liabilities (as shown on our or the Restricted Subsidiary's
most recent balance sheet) of us or any Restricted Subsidiary (other
than contingent liabilities and liabilities that are by their terms
subordinated to the notes or any Restricted Subsidiary's Guarantee)
that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases us or the Restricted
Subsidiary from further liability; and
(b) any securities, notes or other obligations received by us or any
Restricted Subsidiary from the transferee that are contemporaneously,
subject to ordinary settlement periods, converted by us or the
Restricted Subsidiary into cash, to the extent of the cash received in
that conversion.
Within 270 days after the receipt of any Net Proceeds from an Asset Sale, we
or the Restricted Subsidiary may apply such Net Proceeds to make a capital
expenditure, improve real property or acquire long-term assets that are used
or useful in a line of business permitted by the covenant entitled "--Line of
Business"; provided, however, that we or the Restricted Subsidiary, as the
case may be, grant to the trustee, on behalf of the holders of notes, and, if
the Asset Sale relates to Pari Passu Collateral, the holders of any
Indebtedness secured by the Pari Passu Collateral, a first priority perfected
security interest, subject to Permitted Liens, on any such property or assets
acquired or constructed with the Net Proceeds of any such Asset Sale on the
terms set forth in the indenture, the intercreditor agreement entered into by
us with respect to the Pari Passu Collateral in accordance with the indenture
and the collateral documents. Pending the final application of any such Net
Proceeds, we or the applicable Restricted Subsidiary may invest such Net
Proceeds in Cash Equivalents which will be held in an account in which the
trustee shall have a first priority perfected security interest, subject to
Permitted Liens, for the benefit of the holders of notes and, if the Asset
Sale relates to Pari Passu Collateral, the holders of any Indebtedness secured
by such Pari Passu Collateral on a pari passu basis with the notes.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." Within
ten days following the date that the aggregate amount of Excess Proceeds
exceeds $5.0 million, the issuers will make an offer (an "Asset Sale Offer")
to all holders of notes and all holders of other Indebtedness that is pari
passu with the notes and secured by Pari Passu Collateral containing
provisions similar to those set forth in the indenture with respect to offers
to purchase or redeem with the proceeds of sales of assets to purchase the
maximum principal amount of notes and such other Indebtedness that may be
purchased out of the Excess Proceeds, pro rata in proportion to the respective
principal amounts of the notes and such other Indebtedness. The offer price in
any Asset Sale Offer will be equal to 100% of principal amount plus accrued
and unpaid interest and liquidated damages, if any, to the date of purchase,
and will be payable in cash. If any Excess Proceeds remain after consummation
of an Asset Sale Offer, the issuers may use such Excess Proceeds for any
purpose not otherwise prohibited by the indenture and the collateral
documents. If the aggregate principal amount of notes and such other
Indebtedness tendered pursuant to such Asset Sale Offer exceeds the amount of
Excess Proceeds, the trustee shall select the notes and such other
Indebtedness to be purchased on a pro rata basis based on the principal amount
of notes and such other Indebtedness tendered. Upon completion of each Asset
Sale Offer, the amount of Excess Proceeds shall be reset at zero.
Events of Loss
Within 360 days after any Event of Loss with respect to any collateral with
a fair market value (or replacement cost, if greater) in excess of $1.0
million, we or our affected Restricted Subsidiary, 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 Shreveport Resort, with no
concurrent obligation to make any purchase of any notes; provided, however,
that:
(1) we deliver to the trustee within 60 days of such Event of Loss a
written opinion from a reputable contractor that the Shreveport Resort with
at least the Minimum Facilities can be rebuilt, repaired, replaced or
constructed and Operating within 360 days of the Event of Loss;
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(2) an Officers' Certificate certifying that we have available from Net
Loss Proceeds or other sources sufficient funds to complete the rebuilding,
repair, replacement or construction described in clause (1) above; and
(3) the Net Loss Proceeds are less than $75.0 million.
Any Net Loss Proceeds that are not reinvested or not permitted to be
reinvested as provided in the first sentence of this covenant will be deemed
"Excess Loss Proceeds." Within ten days following the date that the aggregate
amount of Excess Loss Proceeds exceeds $5.0 million, the Partnership will make
an offer (an "Event of Loss Offer") to all holders of notes and holders of
other Indebtedness that is pari passu with the notes and secured by Pari Passu
Collateral containing provisions similar to those set forth in the indenture
with respect to offers to purchase or redeem with the proceeds of Events of
Loss to purchase the maximum principal amount of notes and such other
Indebtedness that may be purchased out of the Excess Loss Proceeds, pro rata
in proportion to the respective principal amounts of the notes and such other
Indebtedness. The offer price in any Event of Loss Offer will be equal to 100%
of principal amount plus accrued and unpaid interest and liquidated damages,
if any, to the date of purchase, and will be payable in cash. If any Excess
Loss Proceeds remain after consummation of an Event of Loss Offer, the issuers
may use such Excess Loss Proceeds for any purpose not otherwise prohibited by
the indenture and the collateral documents. 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 and such other Indebtedness to be
purchased on a pro rata basis based on the principal amount of notes and such
other Indebtedness tendered. Upon completion of any such Event of Loss Offer,
the amount of Excess Loss Proceeds shall be reset at zero.
If, prior to the date on which the Shreveport Resort becomes Operating, the
Net Loss Proceeds to be used for rebuilding, repair, replacement or
construction of the Shreveport Resort exceed $5.0 million, then the Net Loss
Proceeds will be deposited into an account in which the trustee will be
granted a first priority perfected security interest, subject to Permitted
Liens; provided, however, that any such Net Loss Proceeds will be disbursed in
a manner consistent with the Plans and the revised budget for the Shreveport
Resort. Pending their final application, all Net Loss Proceeds will be
invested in Cash Equivalents held in an account in which the trustee has a
first priority perfected security interest, subject to Permitted Liens, for
the benefit of the holders of notes and, if the Event of Loss relates to Pari
Passu Collateral, the holders of any Indebtedness secured by such Pari Passu
Collateral on a pari passu basis with the notes. These pledged funds and
securities will be released to us to pay for or reimburse us for the actual
cost of a permitted use of Net Loss Proceeds as provided above, or the Event
of Loss Offer, pursuant to the terms of the collateral documents. We or the
applicable Restricted Subsidiary will grant to the trustee, on behalf of the
holders of notes and, if the Event of Loss relates to Pari Passu Collateral,
the holders of any Indebtedness secured by the Pari Passu Collateral, a first
priority perfected security interest, subject to Permitted Liens, on any
property or asset rebuilt, repaired, replaced or constructed with such Net
Loss Proceeds on the terms set forth in the indenture, the intercreditor
agreement entered into by us with respect to the Pari Passu Collateral in
accordance with the indenture and the collateral documents.
In the event of an Event of Loss pursuant to clause (3) of the definition of
"Event of Loss" with respect to any property or assets that have a fair market
value (or replacement cost, if greater) in excess of $5.0 million, we or the
affected Restricted Subsidiary, as the case may be, will be required to
receive consideration
(1) at least equal to the fair market value (evidenced by a resolution
of our Board of Directors set forth in an Officers' Certificate
delivered to the trustee) of the property or assets subject to the
Event of Loss and
(2) with respect to any "Event of Loss" of any portion of the hotel,
riverboat casino or parking structure and restaurant and entertainment
promenade that are a part of the Shreveport Resort, at least 90% of
which is in the form of Cash Equivalents.
Compliance with Securities Laws
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
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with each repurchase of notes pursuant to a Change of Control Offer, an Asset
Sale Offer, Event of Loss Offer and any offer made to the holders of notes
pursuant to clause (7) of the second paragraph under the covenant entitled
"Restricted Payments." To the extent that the provisions of any securities
laws or regulations conflict with the Change of Control, Asset Sales or Event
of Loss provisions of the indenture or the provisions of clause (7) of the
second paragraph under the covenant entitled "Restricted Payments," the
issuers will comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations under these provisions of
the indenture by virtue of such conflict.
Selection and Notice
If less than all of the notes are to be redeemed at any time, the trustee
will select notes for redemption as follows:
(1) if the notes are listed, in compliance with the requirements of the
principal national securities exchange on which the notes are listed; or
(2) 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.
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 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 that note shall state the portion of the principal amount thereof
to be redeemed. A new note in principal amount equal to the unredeemed portion
of the original note will be issued in the name of the holder thereof upon
cancellation of the original note. Notes called for redemption become due on
the date fixed for redemption. On and after the redemption date, interest
ceases to accrue on notes or portions of them called for redemption.
Certain Covenants
Restricted Payments
We will not, and will not permit any of our Restricted Subsidiaries to,
directly or indirectly:
(1) declare or pay any dividend or make any other payment or distribution
on account of our or any of our Restricted Subsidiaries' Equity Interests
(including, without limitation, any payment in connection with any merger
or consolidation involving us or any of our Restricted Subsidiaries) or to
the direct or indirect holders of our or any of our Restricted
Subsidiaries' Equity Interests in any capacity, other than dividends or
distributions payable in Equity Interests (other than Disqualified Stock)
or dividends or distributions payable to us or one of our Restricted
Subsidiaries;
(2) purchase, redeem or otherwise acquire or retire for value (including,
without limitation, in connection with any merger or consolidation
involving us) any of our Equity Interests or of any direct or indirect
parent of us;
(3) 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, except (a) a payment of interest
or principal at the Stated Maturity thereof and (b) a payment at any time
of interest or principal on Indebtedness permitted by clauses (8) or (10)
of the second paragraph under the covenant entitled "Incurrence of
Indebtedness and Issuance of Preferred Equity"; or
(4) make any Restricted Investment (all such payments and other actions
set forth in clauses (1) through (4) above being collectively referred to
as "Restricted Payments"),
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unless, at the time of and after giving effect to such Restricted Payment:
(1) the Shreveport Resort is Operating;
(2) no default or event of default shall have occurred and be continuing
or would occur as a consequence thereof; and
(3) we 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 applicable four-quarter period, have been 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 the covenant
entitled "--Incurrence of Indebtedness and Issuance of Preferred Equity;"
and
(4) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by us and our Restricted Subsidiaries after
the date of the indenture (excluding Restricted Payments permitted by
clauses (2) through (5) and (7) through (9) of the next succeeding
paragraph), is less than the sum, without duplication, of:
(a) 50% of our Consolidated Net Income for the period, taken as one
accounting period, from the date of the indenture to the end of our most
recently ended fiscal quarter for which internal financial statements
are available at the time of the Restricted Payment (or, if the
Consolidated Net Income for that period is a deficit, less 100% of such
deficit), plus
(b) 100% of the aggregate net cash proceeds we received since the date
of the indenture as a contribution to our common equity capital, other
than amounts contributed directly or indirectly by Hollywood Casino to
us which are deposited into the Equity Escrow Account and pursuant to
the Completion Capital Agreement, plus
(c) 50% of any cash dividends we received or any of our Restricted
Subsidiaries after the date of the indenture from one of our
Unrestricted Subsidiaries, to the extent such dividends were not
otherwise included in our Consolidated Net Income for that period, plus
(d) 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 sum of
(1) 50% of the cash proceeds with respect to such Restricted
Investment in excess of the aggregate amount invested in that
Restricted Investment, less the cost of disposition, if any, and
(2) the aggregate amount invested in that Restricted Investment;
plus
(e) to the extent that any Subsidiary that was designated as an
Unrestricted Subsidiary after the date of the indenture is redesignated
as a Restricted Subsidiary, the lesser of
(1) the amount of the Investment in the Subsidiary treated as a
Restricted Payment at and since the time that the Subsidiary was
designated as an Unrestricted Subsidiary, as determined by the last
paragraph of this covenant, and
(2) the fair market value of the Investment in the Subsidiary as of
the date that it is redesignated as a Restricted Subsidiary.
With respect to any payments made pursuant to (a) clauses (1) through (4),
(7) and (8) below, so long as no default has occurred and is continuing or
would be caused thereby, (b) clause (5) below, regardless of whether any
default or event of default has occurred and is continuing or would be caused
thereby and (c) clauses (6) and (9) below, so long as no default or event of
default in the payment when due of any principal, interest, premium or
liquidated damages on the notes shall have occurred or be continuing or would
be caused thereby, the preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at the date of declaration such payment would have
complied with the provisions of the indenture;
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(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any pari passu or subordinated Indebtedness of ours or any
of our Restricted Subsidiaries that is a Guarantor or of any of our Equity
Interests in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to one of our Subsidiaries) of,
our Equity Interests (other than Disqualified Stock); provided, however,
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 (4)(b) of the preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of pari
passu or subordinated Indebtedness of the Partnership or any of its
Restricted Subsidiaries that is a Guarantor with the net cash proceeds from
an incurrence of Permitted Refinancing Indebtedness;
(4) the payment to the Manager of:
(a) cost reimbursements in the amounts permitted by the Technical
Services Agreement and the Management Agreement and
(b) management fees in the amounts permitted by the Management
Agreement, the terms of the Manager Subordination Agreement and the
requirement that all such payments are made in compliance with the
covenant entitled "Restriction on Payment of Management Fees";
(5) the payment to (a) HCS I or HCS II of any amounts that they may be
required to pay to Paddlewheels pursuant to the Assignment Agreement and
(b) Paddlewheels of amounts required to be paid to it by us pursuant to the
terms of the Assignment Agreement and the Marine Services Agreement;
(6) any redemption required pursuant to the provisions of the indenture
described under the caption "--Mandatory Disposition Pursuant to Gaming
Laws" above;
(7) the payment of dividends or distributions by us (a) within nine
months after the Shreveport Resort begins Operating of an amount equal to
(i) 50% of the Remaining Construction Amounts, less (ii) the amount paid by
the Issuers to holders of notes pursuant to the Construction Repurchase
Offer; provided, however, that (A) no payment may be made pursuant to this
clause (7) prior to the time that the Construction Repurchase Offer has
been consummated and (B) the Construction Repurchase Offer may only be
commenced after the Shreveport Resort begins Operating and all Project
Costs have been invoiced and paid, other than those amounts required to be
retained pursuant to the Cash Collateral and Disbursement Agreement, and
(b) of amounts required to be paid pursuant to the terms of the License
Agreement;
(8) payments by us to any of our Affiliates with respect to
reimbursements for costs incurred by such Affiliates in connection with the
provision or procurement of goods or services by such Affiliates to us in
the ordinary course of business; and
(9) payments by us to HWCC-Louisiana, HCS I and HCS II in amounts equal
to the Tax Amount.
The amount of all Restricted Payments, other than cash, shall be the fair
market value on the date of the Restricted Payment of the assets or securities
proposed to be transferred or issued to or by us or the Restricted Subsidiary,
as the case may be, pursuant to the Restricted Payment. The fair market value
of any assets or securities that are required to be valued by this covenant
shall be determined by our Board of Directors whose resolution with respect
thereto shall be delivered to the trustee. Our Board of Directors'
determination must be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if the
fair market value exceeds $5.0 million. Not later than the date of making any
Restricted Payment, we will 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 "Restricted Payments" covenant
were computed, together with a copy of any fairness opinion or appraisal
required by the indenture.
Incurrence of Indebtedness and Issuance of Preferred Equity
We will not, and will not permit any of our Subsidiaries to, directly or
indirectly, create, incur, issue, assume, guarantee or otherwise become
directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness, including Acquired Debt, and we will
not issue any Disqualified Stock
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and will not permit any of our Subsidiaries to issue any shares of preferred
equity; provided, however, that, the issuers may incur Indebtedness, including
Acquired Debt, or issue Disqualified Stock, if:
(1) the Shreveport Resort is Operating; and
(2) the Fixed Charge Coverage Ratio for our 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 2.0
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 preferred equity or Disqualified Stock had been issued, as
the case may be, at the beginning of such four-quarter period.
The first paragraph of this covenant will not prohibit the incurrence of any
of the following items of Indebtedness so long as no default or event of
default has occurred and is continuing (collectively, "Permitted Debt"):
(1) the incurrence by us and our Restricted Subsidiaries of (a)
Indebtedness represented by the notes to be issued on the date of the
indenture and the notes to be issued in exchange for the notes pursuant to
the registration rights agreement and (b) their respective obligations
arising under the collateral documents to the extent such obligations would
represent Indebtedness;
(2) the incurrence by us or any of our Restricted Subsidiaries of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that was permitted by the indenture to be
incurred under the first paragraph of this covenant or clauses (1), (2),
(8) and (10) of this paragraph;
(3) the incurrence by us or any of our Restricted Subsidiaries of
intercompany Indebtedness between or among us and any of our Restricted
Subsidiaries as provided in the covenant entitled "Advances to Restricted
Subsidiaries"; provided, however, that:
(a) such Indebtedness must be expressly subordinated to the prior
payment in full in cash of all Obligations with respect to the notes;
and
(b) (i) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than us
or any of our Restricted Subsidiaries thereof or (ii) any sale or other
transfer of any such Indebtedness to a Person other than us or any of
our Restricted Subsidiaries shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by us or that Restricted
Subsidiary, as the case may be, that was not permitted by this
clause (3);
(4) the incurrence by us or any of our Restricted Subsidiaries 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;
(5) the Guarantee by us or any of our Restricted Subsidiaries of
Indebtedness permitted to be incurred by another provision of this
covenant;
(6) the incurrence by us or any of our Restricted Subsidiaries of
Indebtedness in respect of performance, surety or appeal bonds in the
ordinary course of business;
(7) the accrual of interest, the accretion or amortization of original
issue discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms and the payment of dividends on
Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock will not be deemed to be an incurrence of Indebtedness
or an issuance of Disqualified Stock for the purposes of this covenant;
provided, however, in each such case, that the amount thereof is included
in Fixed Charges of us or the applicable Restricted Subsidiary as accrued;
(8) the incurrence by us 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
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utilized for the purchase or lease of such FF&E and (c) the aggregate
principal amount of such Indebtedness, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness
incurred pursuant to this clause, does not exceed $35.0 million outstanding
at any time;
(9) the Guarantee by us of Indebtedness incurred by any minority or women
owned business enterprise that provides goods or services to us; provided,
however, that:
(a) the Indebtedness is directly related to the construction,
development or operation of the Shreveport Resort and
(b) the total amount of Guarantees for which we have become and may
become obligated pursuant to this clause may not exceed an aggregate of
$200,000;
(10) the incurrence by us or any of our Restricted Subsidiaries of
Indebtedness, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness incurred pursuant to this
clause, in an aggregate principal amount not to exceed $10.0 million at any
one time outstanding for working capital purposes and other general
purposes;
(11) the incurrence by us of Indebtedness to Hilton New Orleans
Corporation, a Louisiana corporation, pursuant to the terms of the Loan and
Settlement Agreement in an amount not to exceed $2.0 million; and
(12) the incurrence by us of Indebtedness to the City of New Orleans
pursuant to the Compromise Agreement in the amount of $5.0 million, which
was paid promptly after the issuance of the notes.
We will not incur any Indebtedness (including Permitted Debt) that is
contractually subordinated in right of payment to any other of our
Indebtedness unless that Indebtedness is also contractually subordinated in
right of payment to the notes on substantially identical terms; provided,
however, that none of our Indebtedness will be deemed to be contractually
subordinated in right of payment to any other of our Indebtedness solely by
virtue of being unsecured.
For purposes of determining compliance with this "Incurrence of Indebtedness
and Issuance of Preferred Equity" covenant, in the event that an item of
proposed Indebtedness meets the criteria of more than one of the categories of
Permitted Debt described in clauses (1) through (11) above, or is entitled to
be incurred pursuant to the first paragraph of this covenant, we will be
permitted to classify that item of Indebtedness on the date of its incurrence
in any manner that complies with this covenant.
If any Indebtedness that may be incurred under this covenant may be secured
by a Pari Passu Lien on the Pari Passu Collateral, upon the request of the
issuers, the trustee is authorized to enter into an intercreditor agreement
with the holder or holders of that Indebtedness (the "Pari Passu Debtholder")
in substantially the form attached as an exhibit to the indenture that
provides the following:
(a) the Lien of the trustee on the Pari Passu Collateral will be equal in
priority (regardless of the time or method of attachment or perfection) to
the Lien in favor of, or for the benefit of, the Pari Passu Debtholder for
the sum of:
(1) a principal amount of such Indebtedness not to exceed the
principal amount permitted by the indenture to be secured by a Pari
Passu Lien and
(2) any other Obligations in respect of the principal amount of
such Indebtedness;
(b) the intercreditor agreement is solely for the purpose of establishing
the relative interests of the Pari Passu Debtholder, the trustee and the
holders of notes and is not for the benefit of any other party;
(c) the holders, or the representatives thereof, of a majority in
interest of the aggregate principal amount of the notes (for such purposes,
the trustee acting pursuant to the indenture will represent the holders of
notes) and other Indebtedness secured by the Pari Passu Lien at the time
outstanding will have the sole right to take, enforce or exercise any right
or remedy to take or exercise any action or election or to refrain from
taking or exercising any action with respect to any of the Pari Passu
Collateral or the collateral documents relating to the Pari Passu
Collateral; provided, however, that the Pari Passu Debtholder may take or
exercise any action or election or refrain from taking or exercising any
action with respect to any
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collateral that is not Pari Passu Collateral or under any document that
does not apply to the Pari Passu Collateral; provided, further, that the
trustee will have no duty or obligation to any Pari Passu Debtholder in
taking or exercising any action or election or in refraining from taking or
exercising any action with respect to any of the Pari Passu Collateral or
the Collateral Documents;
(d) each of the trustee and the Pari Passu Debtholder agree that any
money or funds realized with respect to the Pari Passu Collateral in
connection with the enforcement or exercise of any right or remedy with
respect to any Pari Passu Collateral following the acceleration of the
notes will be distributed as follows: first, to the payment of all
reasonable expenses in connection with the collection, realization or
administration of such funds or the exercise of rights or remedies; second,
to each holder of Indebtedness secured by a Pari Passu Lien on the Pari
Passu Collateral, a proportion of such remaining money or funds in the same
proportion as the total outstanding obligations so secured held by such
holder bears to the total outstanding obligations so secured until all such
secured obligations have been paid in full; and third, us or to whoever may
be lawfully entitled to receive the same as a court of competent
jurisdiction may direct;
(e) the trustee and the Pari Passu Debtholder agree that any amounts in
the Cash Collateral Accounts and all current and future assets of HWCC-
Louisiana, HCS I and HCS II, including, without limitation, the shares of
HCS I and HCS II owned by HWCC-Louisiana and the interests in the
partnership owned by HCS I and HCS II, but excluding the $2.5 million in
cash to be used by HWCC-Louisiana to fund its obligations under the
Membership Interest Purchase Agreement, will be held for the sole benefit
of the holders of notes; and
(f) each of the trustee, the holders of notes and the Pari Passu
Debtholders will have the right to alter or amend their respective
agreements and documents with us in accordance with their terms and to
release any collateral from their respective Liens in accordance with the
terms of their respective agreements.
Liens
We will not, and will not permit any of our Subsidiaries to, directly or
indirectly, create, incur, assume or suffer to exist any Lien of any kind 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
We will not, and will not permit any of our Restricted Subsidiaries to,
directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock to
us or any of our Restricted Subsidiaries, or with respect to any other
interest or participation in, or measured by, its profits, or pay any
Indebtedness owed to us or any of our Restricted Subsidiaries;
(2) make loans or advances to us or any of our Restricted Subsidiaries;
or
(3) transfer any of its properties or assets to us or any of our
Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) the notes, the indenture, the Guarantees or the collateral documents;
(2) applicable law;
(3) customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practices;
(4) Permitted Refinancing Indebtedness; provided, however, that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive, taken as a whole, than
those contained in the agreements governing the Indebtedness being
refinanced;
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(5) the acquisition of the Capital Stock of any Person, or property or
assets of any Person by us or any Restricted Subsidiary, if the
encumbrances or restrictions (a) existed at the time of the acquisition and
were not incurred in contemplation thereof and (b) are not applicable to
any Person or the property or assets of any Person other than the Person
acquired or the property or assets of the Person acquired;
(6) purchase money obligations or capital lease obligations for FF&E
acquired with FF&E Financing that impose restrictions of the type described
in clause (3) of the first paragraph of this covenant on the FF&E so
acquired;
(7) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale or other disposition;
(8) Liens securing Indebtedness that limit the right of the debtor to
dispose of the assets subject to such Lien;
(9) provisions with respect to the disposition or distribution of assets
or property in joint venture agreements, asset sale agreements, stock sale
agreements and other similar agreements entered into in the ordinary course
of business; and
(10) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business.
Merger, Consolidation or Sale of Assets
Neither we nor any Guarantor may, directly or indirectly (1) consolidate or
merge with or into another Person (whether or not we or the Guarantor is the
surviving entity) or (2) sell, assign, transfer, convey or otherwise dispose
of all or substantially all of our and our Restricted Subsidiaries' properties
or assets, taken as a whole, in one or more related transactions, to another
Person; unless:
(1) either (a) we or the Guarantor, as applicable, is the surviving
entity or (b) the Person formed by or surviving any such consolidation or
merger (if other than us or the Guarantor) or to which such sale,
assignment, transfer, 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;
(2) the Person formed by or surviving any such consolidation or merger
(if other than us or the Guarantor) or the Person to which such sale,
assignment, transfer, conveyance or other disposition shall have been made
assumes all of our of the Guarantor's obligations, as applicable, under the
notes, the indenture, the registration rights agreement, the Guarantee and
the collateral documents pursuant to agreement reasonably satisfactory to
the trustee;
(3) immediately after such transaction no default or event of default
exists;
(4) such transaction would not result in the loss or suspension or
material impairment of any of our or any of our Restricted Subsidiaries'
Gaming Licenses unless a comparable replacement Gaming License is effective
prior to or simultaneously with such loss, suspension or material
impairment;
(5) in the event we consolidate or merge, we or the Person formed by or
surviving any such consolidation or merger (if other than us) or to which
such sale, assignment, transfer, conveyance or other disposition shall have
been made will, or, in the case of a consolidation or merger of a Guarantor
or the sale, assignment, transfer, conveyance or other disposition of the
property or assets of the Guarantor, we will, on the date of such
transaction after giving pro forma effect thereto and any related financing
transactions as if the same 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 the covenant entitled "--Incurrence of Indebtedness
and Issuance of Preferred Equity"; and
(6) 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, however, that such
holder or beneficial owner would not have been required to obtain a Gaming
License or
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be qualified or found suitable under the laws of any applicable gaming
jurisdiction in the absence of such transaction.
In addition, neither we nor any Guarantor may, directly or indirectly, lease
all or substantially all of our or its properties or assets, in one or more
related transactions, to any other Person. This "Merger, Consolidation or Sale
of Assets" covenant will not apply to a sale, assignment, transfer, conveyance
or other disposition of assets between or among us and any of our Restricted
Subsidiaries.
Notwithstanding the foregoing, we may reorganize as a corporation or other
business entity in accordance with the procedures established in the
indenture, provided that we have delivered to the trustee an opinion of
counsel in the United States reasonably acceptable to the trustee confirming
that the reorganization is not adverse to holder of the notes (it being
recognized that the reorganization will not be deemed adverse to the holders
of the notes solely because:
(1) of the accrual of deferred tax liabilities resulting from the
reorganization or
(2) the successor or surviving corporation is either subject to income
tax as a corporate entity or is considered to be an "includible
corporation" of an affiliated group of corporations within the meaning of
the Internal Revenue Code of 1986, as amended, or any similar state or
local law).
Transactions with Affiliates
We will not, and will not permit any of our Restricted 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,
an "Affiliate Transaction"), unless:
(1) the Affiliate Transaction is on terms that are no less favorable to
us or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by us or the Restricted Subsidiary
with an unrelated Person; and
(2) we deliver 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 our Board of Directors set forth in an
Officers' Certificate certifying that the Affiliate Transaction
complies with this covenant and that the Affiliate Transaction has been
approved unanimously by the Board of Directors; and
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$5.0 million, other than in connection with the Software Agreement, an
opinion as to the fairness to the holders of notes of such Affiliate
Transaction from a financial point of view issued by an accounting,
appraisal or investment banking firm of national standing.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) payments made pursuant to the Completion Capital Agreement,
Management Agreement, License Agreement, Tax Sharing Agreement, Technical
Services Agreement, Assignment Agreement and Marine Services Agreement;
(2) purchases of goods and services in the ordinary course of business;
(3) transactions between or among us and/or our Restricted Subsidiaries;
(4) Restricted Payments that are permitted by the covenant entitled
"Restricted Payments;"
(5) reasonable fees and compensation (including, without limitation,
bonuses, retirement plans and securities, stock options and stock ownership
plans) paid or issued to and indemnities provided on behalf of our or our
Restricted Subsidiaries, officers, directors, employees or consultants in
the ordinary course of business; and
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(6) any other transactions that do not involve, in the aggregate for all
such transactions, the payment of more than $250,000 in consideration in
any one calendar year.
Construction
We will construct the Shreveport Resort, including the furnishing, fixturing
and equipping thereof, with diligence and continuity in a good and workmanlike
manner substantially in accordance with the Plans.
Limitations on Use of Proceeds
We were required to deposit $113.4 million of the net proceeds of the
original offering into the Construction Disbursement Account, $5.0 million of
the net proceeds of the original offering into the Completion Reserve Account
and approximately $27.3 million of the net proceeds of the original offering
in the Interest Reserve Account. The funds in the Cash Collateral Accounts
will be invested solely in Government Securities; provided, however, that,
after the date of the indenture, funds in the Interest Reserve Account may be
invested in Pledged Securities so long as, on the date of any such
investments, such Pledged Securities have a value on such date which, in the
opinion of a nationally recognized firm of independent public accountants, is
at least equal to 125.0% of (1) the amount of the first three payments of
Fixed Interest that are unpaid or (2) the pro rata portion of those interest
payments equal to the percentage of the interest payments to be secured by the
Pledged Securities. All funds in the Cash Collateral Accounts will be
disbursed only in accordance with the Cash Collateral and Disbursement
Agreement.
Limitation on Status as Investment Company
The issuers and our Subsidiaries are prohibited 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.
Sale and Leaseback Transactions
We will not, and will not permit any of our Restricted Subsidiaries to,
enter into any sale and leaseback transaction; provided, however, that we may
enter into a sale and leaseback transaction if:
(1) we could have (a) incurred Indebtedness in an amount equal to the
Attributable Debt relating to such sale and leaseback transaction under
clause (2) of the first paragraph of the covenant entitled "--Incurrence of
Indebtedness and Issuance of Preferred Equity" and (b) incurred a Lien to
secure such Indebtedness pursuant to the covenant entitled "--Liens";
(2) the gross cash proceeds of the sale and leaseback transaction are at
least equal to the fair market value, as determined in good faith by our
Board of Directors 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
(3) the transfer of assets in such sale and leaseback transaction is
permitted by, and we apply the proceeds of such transaction in compliance
with, the covenant entitled "--Repurchase at the Option of Holders--Asset
Sales."
Additional Subsidiary Guarantees
If we or any of our Restricted Subsidiaries acquires or creates a Restricted
Subsidiary after the date of the indenture that at any time has Total Assets
of $2.5 million or more, then that newly acquired or created Restricted
Subsidiary must become a Guarantor and execute a supplemental indenture and
Collateral Documents pledging all of their assets and securing the Guarantee
and deliver an Opinion of Counsel to the trustee within ten Business Days of
the date on which it was acquired or created. Any Restricted Subsidiary that
becomes a Guarantor shall remain a Guarantor unless we designate that
Guarantor to be an Unrestricted Subsidiary in accordance with the indenture or
is otherwise released from its obligations as a Guarantor as provided in the
indenture.
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Designation of Restricted and Unrestricted Subsidiaries
Our Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the
aggregate fair market value of all of our and our Restricted Subsidiaries'
outstanding Investments in the Restricted Subsidiary so designated will be
deemed to be an Investment made as of the time of such designation and will
reduce the amount available for Restricted Payments under the first paragraph
of the covenant entitled "--Restricted Payments" or for future Investments
under one or more clauses of the definition of Permitted Investments, as we
shall determine. That designation will only be permitted if the Restricted
Payment would be permitted at that time and if the Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary. Our Board of
Directors may redesignate any Unrestricted Subsidiary to be a Restricted
Subsidiary if the redesignation would not cause a default.
Limitation on Issuances and Sales of Equity Interests in Subsidiaries
All of our Restricted Subsidiaries, other than Shreveport Capital, shall be
wholly owned by us, by one or more of our Restricted Subsidiaries or by us and
one or more of its Restricted Subsidiaries.
We will not, and will not permit any of our Restricted Subsidiaries to,
transfer, convey, sell, lease or otherwise dispose of any Equity Interests in
any of our Restricted Subsidiaries to any Person (other than us or one of our
Restricted Subsidiaries), unless:
(1) the transfer, conveyance, sale, lease or other disposition is of all
the Equity Interests in such Restricted Subsidiary; and
(2) the cash Net Proceeds from such transfer, conveyance, sale, lease or
other disposition are applied in accordance with the covenant entitled
"Repurchase at the Option of Holders--Asset Sales."
In addition, we will not permit any of our Restricted Subsidiaries to issue
any of its Equity Interests to any Person other than to us or one or more of
our Restricted Subsidiaries.
Line of Business
We will not, and will not permit any of our Subsidiaries to, engage in any
business or investment activities other than a Permitted Business. Neither we
nor any of our Subsidiaries may conduct a Permitted Business in any gaming
jurisdiction in which we 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, however, that the provisions described in this
sentence will not prohibit us or any of our Subsidiaries from conducting a
Permitted 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. We will not, and will
not permit any of our Subsidiaries to, engage in any business, development or
investment activity other than at or in conjunction with the Shreveport Resort
until the Shreveport Resort is Operating.
Advances to Restricted Subsidiaries
All advances, other than equity contributions, to Restricted Subsidiaries
made by us after the date of the indenture will be evidenced by intercompany
notes in our favor. These intercompany notes will be pledged pursuant to the
collateral documents to the trustee as collateral to secure the notes. Each
intercompany note will be payable upon demand and will bear interest at a rate
equal to the then current fair market interest rate.
Insurance
Until the notes have been paid in full, we will, and will cause our
Restricted Subsidiaries to, maintain insurance with 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
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similar businesses of similar size, including, without limitation, property
and casualty. Customary insurance coverage will be deemed to include, without
limitation, the following:
(1) 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;
(2) comprehensive general liability insurance with minimum limits of $1.0
million;
(3) 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;
(4) business interruption insurance at all times on and after the
Shreveport Resort is Operating; and
(5) property insurance protecting the property against losses or damages
as is customarily covered by an "all-risk" policy or a property policy
covering "special" causes of loss for a business of similar type and size;
provided, however, that such insurance will provide coverage of not less
than the lesser of (a) 120% of the outstanding principal amount of the
notes plus accrued and unpaid fixed interest and (b) 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, in each case,
with a deductible no greater than 2% of the insured value of the Shreveport
Resort 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 by this covenant (except worker's compensation) will
name us 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 us 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. We will deliver to the trustee on each anniversary
of the Closing Date a certificate of an insurance agent describing the
insurance policies obtained by us and our Restricted Subsidiaries, together
with an Officer's Certificate stating that such policies comply with this
covenant and the related applicable provisions of the collateral documents.
Amendments to Certain Agreements
Neither of the issuers nor any of our Restricted 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 any of the collateral
documents, Completion Capital Agreement, Management Agreement, License
Agreement, Tax Sharing Agreement, Technical Services Agreement, Assignment
Agreement, Marine Services Agreement, Side Agreement and Contribution and
Assumption Agreement; provided, however, that (1) any such agreement may be
amended or modified so long as the terms of such agreement as so amended or
modified are no less favorable to the holders of the notes than the terms of
such agreement as of the date of the indenture and (2) any of the collateral
documents may be amended, waived or modified as set forth below under the
caption "--Amendment, Supplement and Waiver."
Restriction on Payment of Management Fees
We will not, directly or indirectly, pay to the Manager or any of our
Affiliates any Management Fees, except pursuant to the Management Agreement in
accordance with the indenture. Amounts payable pursuant to the Management
Agreement may not be prepaid, and no payment of Management Fees, either
current or accrued, will be made:
(1) if at the time of payment of such Management Fee, a default or an
event of default shall have occurred and be continuing or shall occur as a
result thereof; or
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(2) to the extent such payment would cause our Fixed Charge Coverage
Ratio for the 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 to be less than 1.5 to
1 (calculated on a pro forma basis after adding back Management Fees that
were deducted from Consolidated Cash Flow during that period and deducting
from Consolidated Cash Flow Management Fees to be paid pursuant to this
provision); provided, however, that, with respect to periods following the
date the Shreveport Resort first becomes Operating and prior to the time
when internal financial statements are available for four full fiscal
quarters following the date the Shreveport Resort first becomes Operating,
such Fixed Charge Coverage Ratio will be calculated 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 Shreveport Resort 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 will be subordinate in right of payment to the right of the
holders of notes to receive payments pursuant to the notes.
Further Assurances
The issuers will, and will cause each of our Restricted 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 to:
(1) carry out more effectively the purposes of the collateral documents;
(2) subject to the Liens created by any of the collateral documents any
of the properties, rights or interests required to be encumbered thereby;
(3) perfect and maintain the validity, effectiveness and priority of any
of the collateral documents and the Liens intended to be created thereby;
and
(4) 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 under any other
instrument executed in connection therewith or granted to us under the
collateral documents or under any other instrument executed in connection
therewith.
Restrictions on Activities of HWCC-Louisiana, HCS I, HCS II and Shreveport
Capital
None of HWCC-Louisiana HCS I, HCS II or Shreveport Capital may:
(1) hold any material assets; provided, however, that (a) HWCC-Louisiana
may hold shares of HCS I and HCS II and the $2.5 million in cash that it
will use to fund its obligations under the Membership Interest Purchase
Agreement until such obligations are paid pursuant to the Membership
Interest Purchase Agreement and (b) HCS I and HCS II may each hold
interests in us;
(2) consolidate or merge with or into any other Person, other than as
permitted in the covenant entitled "Merger, Consolidation or Sale of
Assets";
(3) become liable or pay for any obligations; provided, however, that
each of them may become liable for or pay for (a) (i) its obligations under
the indenture, the notes, the Guarantees, the registration rights
agreement, the collateral documents and any performance, surety or appeal
bonds incurred in the ordinary course of business, (ii) any judgments and
(iii) its obligations under the Membership Interest Purchase Agreement, Tax
Sharing Agreement, Assignment Agreement, Compromise Agreement, Loan and
Settlement Agreement, Joint Venture Agreement, Side Agreement and
Contribution and Assumption Agreement and (b) Shreveport Capital may be a
co-obligor with respect to Indebtedness if we are also an
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obligor of such Indebtedness and the net proceeds thereof are received by
us or one or more of our Restricted Subsidiaries other than Shreveport
Capital; or
(4) engage in any significant business activities, other than those that
are reasonably necessary for HCS I to take in its capacity as our managing
general partner.
Payments for Consent
The issuers will not, and will not permit any of our Restricted Subsidiaries
to, directly or indirectly, pay or cause to be paid any consideration to or
for the benefit of any holder of notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of the indenture or the
notes unless such consideration is offered to be paid and is paid to all
holders of notes that consent, waive or agree to amend in the time frame set
forth in the solicitation documents relating to such consent, waiver or
agreement.
Reports
Whether or not required by the SEC, so long as any notes are outstanding,
the issuers and the Guarantors will furnish to the holders of notes, within 15
days following the time periods specified in the SEC's rules and regulations:
(1) all consolidated quarterly and annual financial information that
would be required to be contained in a filing with the SEC 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" and, with respect to the annual information only, a report on
the annual financial statements by the issuers' certified independent
accountants; and
(2) all current reports that would be required to be filed with the SEC
on Form 8-K if the issuers were required to file such reports.
If we have designated any of our Subsidiaries as Unrestricted Subsidiaries,
then the consolidated quarterly and annual financial information required by
the preceding paragraph will include a reasonably detailed presentation,
either on the face of the financial statements or in the footnotes thereto,
and in Management's Discussion and Analysis of Financial Condition and Results
of Operations, of the financial condition and results of operations of the
issuers and our Restricted Subsidiaries separate from the financial condition
and results of operations of our Unrestricted Subsidiaries as required by the
rules and regulations of the SEC.
In addition, following the consummation of the exchange offer contemplated
by the registration rights agreement, whether or not required by the SEC, the
issuers and Guarantors will file a copy of all of the information and reports
referred to in clauses (1) and (2) above with the SEC for public availability
within the time periods specified in the SEC's rules and regulations (unless
the SEC 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 of notes 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.
Cash Collateral and Disbursement Agreement
Pursuant to the Disbursement Agreement entered into among the issuers, First
American Title Insurance Company, as disbursement agent, and State Street Bank
and Trust Company, as trustee, the $145.7 million of net proceeds of the
original offering were placed into a construction disbursement account,
completion reserve account or interest reserve account and invested in
Government Securities. All funds and securities in each of these accounts will
be pledged as security for the repayment of the notes and will be distributed
by the disbursement agent pursuant to the Disbursement Agreement.
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Construction Disbursement Account
The issuers have deposited $113.4 million of the net proceeds of the
original offering into the construction disbursement account. The disbursement
agent will invest these funds in Government Securities which will be held in
the construction disbursement account until the funds are needed to pay for
the development, construction, equipping and opening of the Shreveport resort.
All of the funds and securities in the construction disbursement account will
be pledged to the trustee for the benefit of the noteholders. Subject to
certain exceptions set for the in the Cash Collateral and Disbursement
Agreement, the disbursement agent will authorize the disbursement of funds
from the construction disbursement account only upon the satisfaction of the
certain disbursement conditions set forth in the Cash Collateral and
Disbursement Agreement. These conditions include the requirement that we
deliver to the Disbursement Agent and the Independent Construction Consultant
a certificate certifying:
. the purposes to which the requested funds will be applied;
. that the construction performed to date is substantially in
accordance with the plans and the requested disbursement is
appropriate in light of the budget;
. that we do not have any reason to believe that construction will not
terminate on or prior to the operating deadline;
. that we do not have any knowledge, notice or claim of any mechanics'
liens either filed or threatened against the Shreveport Resort which
have not been insured or otherwise bonded over;
. that the budget sets forth the anticipated costs of completing the
Shreveport Resort, and that there are funds available to complete
the construction of each component of the Shreveport Resort within
the budget;
. that no event of default exists under the indenture and we are in
compliance in all material respects with each representation,
warranty and covenant contained therein;
. that no circumstances have occurred which would provide us with any
defenses against the obligations evidenced by the notes or permit us
to assert any right to set off any amounts against such obligations;
. that all equity contributions required to have been made under the
Cash Collateral and Disbursement Agreement on or before the date of
the requested funds have been made; and
. that all permits and approvals necessary as of the date of the
requested funds have been obtained and are in full force and effect.
In addition, before any funds may be disbursed, the disbursement agent will
be required to receive from the Independent Construction Consultant a
certification certifying that it has reviewed such disbursement request, has
visited the project site within the last month and concurs with certain of the
certifications made by us in the disbursement request. In addition, before any
funds will be disbursed, the Independent Construction Consultant must certify
that (1) the disbursement request is appropriate in light of the percentage of
construction completed and (2) there are sufficient available funds to
complete the construction of each component of the Shreveport Resort within
the budget therefor.
Interest Reserve Account
We deposited $27.3 million of the net proceeds of the original offering into
the interest reserve account. These funds will be sufficient to purchase
Government Securities which, upon receipt of scheduled interest and principal
payments, will provide for the payment in full of the first three payments of
fixed interest on the notes. All funds and securities in the interest reserve
account will be pledged to the trustee for the benefit of the noteholders.
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Completion Reserve Account
We deposited $5.0 million of the net proceeds of the original offering into
the completion reserve account. The Disbursement Agent will invest these funds
in Government Securities which will be held in the completion reserve account
until the funds are needed to pay for the development, construction, equipping
and opening of the Shreveport Resort. All funds and securities in the
completion reserve account will be pledged to the trustee for the benefit of
the holders of the notes. The Disbursement Agent will authorize the
disbursement of funds from the completion reserve account only upon the
satisfaction of the disbursement conditions set forth in the Cash Collateral
and Disbursement Agreement. Such conditions include that there are
insufficient funds in the construction disbursement account to make such
disbursement.
Excess Funds
If (1) any funds remain in the Construction Disbursement Account or the
Completion Reserve Account upon the completion of the Shreveport resort as
described in the Cash Collateral and Disbursement Agreement or (2) funds
remain in the interest reserve account after the third interest payment has
been made on the notes and, in each case, there is no event of default under
the indenture, the Disbursement Agent will disburse the remaining funds into
any account specified by us for use in any manner permitted by the indenture.
Events of Default and Remedies
Each of the following is an event of default under the indenture:
(1) default for 30 days in the payment when due of interest on, or
liquidated damages with respect to, the notes; provided, however, that
payments of Contingent Interest that are permitted to be deferred as
provided in the indenture will not become due for this purpose until such
payment is required to be made pursuant to the terms of the indenture;
(2) default in payment when due of the principal of, or premium, if any,
on the notes;
(3) (a) default in the payment of principal of, premium, if any, and
interest on notes required to be purchased with respect to a Change of
Control Offer, Asset Sale Offer or Event of Loss Offer, when due and
payable; and (b) failure to perform or comply with the provisions described
under (i) "--Certain Covenants--Merger, Consolidation or Sale of Assets" or
"--Limitation on Use of Proceeds" or (ii) "--Certain Covenants--Restricted
Payments," but only if the failure under this clause (ii) is caused by a
Restricted Payment described in the first set of clauses (1) through (3) of
the first paragraph of the covenant entitled "--Certain Covenants--
Restricted Payments;"
(4) failure by (a) either of the issuers or any of our Restricted
Subsidiaries for 60 days after notice thereof to comply with the any of the
other agreements in the indenture not set forth in clause (3) above or (b)
us for 30 days after notice thereof to comply with any of the agreements in
the Cash Collateral and Disbursement Agreement;
(5) 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 us or any of our Restricted Subsidiaries
(or the payment of which is guaranteed by us or any of our Restricted
Subsidiaries) whether such Indebtedness or guarantee now exists, or is
created after the date of the indenture, if that default:
(a) is caused by a failure to pay principal of, or interest or
premium, if any, 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;
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(6) failure by either of the issuers or any of our Restricted
Subsidiaries to pay final judgments aggregating in excess of $5.0 million,
which judgments are not paid, discharged or stayed for a period of 60 days;
(7) breach by either of the issuers or any Guarantor in any material
respect of any representation or warranty or agreement in any of the
collateral documents or in any certificates delivered in connection
therewith, the repudiation by any of them of any of its obligations under
any of the collateral documents, the unenforceability of the collateral
documents against any of them for any reason which continues for 30 days
after written notice from the trustee or holders of at least 25% in
outstanding principal amount of notes or the loss of the perfection or
priority of the Liens granted by any of them pursuant to the collateral
documents for any reason;
(8) except as permitted by the indenture, any Guarantee by a Guarantor
with Total Assets of $5.0 million or more shall be held in any judicial
proceeding to be unenforceable or invalid or shall cease for any reason to
be in full force and effect or any Guarantor with Total Assets of $5.0
million or more, or any Person acting on behalf of any such Guarantor,
shall deny or disaffirm its obligations under its Guarantee;
(9) certain events of bankruptcy or insolvency with respect to either of
the issuers or any of our Restricted Subsidiaries;
(10) default by Hollywood Casino in the performance of its obligations
set forth in, or repudiation of its obligations under, the Completion
Capital Agreement;
(11) if HWCC-Louisiana, HCS I, HCS II and us ever fail to own
collectively 100% of the issued and outstanding Equity Interests of
Shreveport Capital; or
(12) the failure of the Shreveport Resort to be Operating by the
Operating Deadline or any revocation, suspension or loss of any gaming
license which results in the cessation or suspension of business at the
Shreveport Resort for a period of more than 90 consecutive days; provided,
however, that, in any event, there shall not be an event of default under
this clause if the suspension of business results from an Event of Loss and
we are complying with the covenant entitled "Repurchase at the Option of
Holders--Event of Loss."
In the case of an event of default arising from certain events of bankruptcy
or insolvency with respect to either of the issuers or any of our Restricted
Subsidiaries that is a Significant Subsidiary or any group of our Restricted
Subsidiaries that, taken together, would constitute a Significant Subsidiary,
all outstanding notes will become due and payable immediately without further
action or notice. If any other 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 immediately.
Holders of notes 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 notes notice of any continuing default or event of default (except
a default or event of default relating to the payment of principal or interest
or liquidated damages) if it determines that withholding notice is in their
interest.
The holders of a majority in aggregate principal amount of the notes then
outstanding by notice to the trustee may on behalf of the holders of all of
the notes waive any existing default or event of default and its consequences
under the indenture, except a continuing default or event of default in the
payment of interest or liquidated damages on, or the principal of, the notes.
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. If an event of default occurs prior to
August 1, 2003, by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the issuers with the intention of
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avoiding the prohibition on redemption of the notes prior to August 1, 2003,
then the premium specified in the indenture shall also become immediately due
and payable to the extent permitted by law upon the acceleration of the notes.
The issuers are required to deliver to the trustee annually a statement
regarding compliance with the indenture. Upon becoming aware of any default or
event of default, the issuers are required to deliver to the trustee a
statement specifying such default or event of default.
No Personal Liability of Directors, Officers, Employees, Partners and
Stockholders
No director, officer, employee, partner, incorporator or stockholder of
either of the issuers or any Guarantor, as such, shall have any liability for
any obligations of either of the issuers or any of the Guarantors under the
notes, the indenture, the Guarantees, the collateral documents or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each holder of notes by accepting a note waives and releases all
such liability. The waiver and release are part of the consideration for
issuance of the notes. The waiver may not be effective to waive liabilities
under the federal securities laws.
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 and all
obligations of the Guarantors discharged with respect to their Guarantees
("Legal Defeasance") except for:
(1) the rights of holders of outstanding notes to receive payments in
respect of the principal of, or interest or premium and liquidated damages,
if any, on such notes when such payments are due from the trust referred to
below;
(2) 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;
(3) the rights, powers, trusts, duties and immunities of the trustee, and
the issuers' and the Guarantor's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the indenture.
In addition, the issuers may, at their option and at any time, elect to have
the obligations of the issuers and the Guarantors released with respect to
certain covenants that are described in the indenture ("Covenant Defeasance")
and thereafter any omission to comply with those covenants 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 addition, the Liens securing the Collateral will be
released upon Covenant Defeasance or Legal Defeasance.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the issuers must irrevocably deposit with the trustee, in trust, for
the benefit of the holders of notes, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, and fixed interest, the
maximum remaining amount payable as Contingent Interest, and premium 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;
(2) in the case of Legal Defeasance, the issuers shall have delivered to
the trustee an Opinion of Counsel 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 the indenture, there has
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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;
(3) in the case of Covenant Defeasance, the issuers shall have delivered
to the trustee an Opinion of Counsel 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;
(4) no default or event of default shall have occurred and be continuing
either: (a) on the date of such deposit (other than a default or event of
default resulting from the borrowing of funds to be applied to such
deposit) or (b) insofar as events of default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day
after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the indenture) to which either of the
issuers or any of our Restricted Subsidiaries is a party or by which either
of the issuers or any of our Restricted Subsidiaries is bound;
(6) the issuers must have delivered to the trustee an opinion of counsel
to the effect that, assuming no intervening bankruptcy of either of the
issuers or any Guarantor between the date of the deposit and the 91st day
following the deposit and assuming that no holder is an "insider" of either
of the issuers under applicable bankruptcy law, 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;
(7) 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 of notes over the other creditors of either of the
issuers with the intent of defeating, hindering, delaying or defrauding
creditors of either of the issuers or others; and
(8) the issuers must deliver to the trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent relating
to the Legal Defeasance or the Covenant Defeasance have been complied with.
Notwithstanding the above, the trustee shall pay us from time to time upon
our request any cash or Government Securities held by it as provided in the
third paragraph of this section 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 clause (1) of the third paragraph of this section), are in
excess of the amount thereof that would then be required to be deposited to
effect a Legal Defeasance or Covenant Defeasance.
Amendment, Supplement and Waiver
Except as provided in the next three succeeding paragraphs, the indenture,
the notes, the Guarantees or the collateral documents may be amended or
supplemented by the issuers, the Guarantors and the trustee 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, the notes,
the Guarantees 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, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for, notes).
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Without the consent of each holder affected, an amendment or waiver may not
(with respect to any notes held by a non-consenting holder):
(1) reduce the principal amount of notes whose holders must consent to an
amendment, supplement or waiver;
(2) 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 the caption
"--Repurchase at the Option of Holders");
(3) reduce the rate of or change the time for payment of interest on any
note;
(4) waive a default or event of default in the payment of principal of,
or interest or premium, or liquidated damages, if any, on the notes (except
a rescission of acceleration of the notes by the holders of at least a
majority in aggregate principal amount of the notes and a waiver of the
payment default that resulted from such acceleration);
(5) make any note payable in money other than that stated in the notes;
(6) make any change in the provisions of the indenture relating to
waivers of past defaults or the rights of holders of notes to receive
payments of principal of, or interest or premium or liquidated damages, if
any, on the notes;
(7) waive a redemption payment with respect to any note (other than a
payment required by one of the covenants described above under the caption
"--Repurchase at the Option of Holders");
(8) release any Guarantor from any of its obligations under its Guarantee
or the indenture, except in accordance with the terms of the indenture;
(9) release all or substantially all of the collateral from the Lien of
the indenture or the collateral documents (except in accordance with the
provisions thereof); or
(10) make any change in the preceding amendment and waiver provisions.
Any amendment to, or waiver of, the provisions of any of the collateral
documents relating to the covenant entitled "Liens" or the security provisions
of the indenture will require the consent of the holders of at least 85% in
principal amount of the notes then outstanding.
Notwithstanding the preceding, without the consent of any holder of notes,
the issuers, the Guarantors and the trustee may amend or supplement the
indenture, the notes, the Guarantees or the collateral documents:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated notes in addition to or in place of
certificated notes;
(3) to provide for the assumption of the either of the issuers'
obligations to holders of notes in the case of a merger or consolidation or
sale of all or substantially all of that issuers' assets;
(4) to make any change that would provide any additional rights or
benefits to the holders of notes or that does not adversely affect the
legal rights under the indenture of any such holder;
(5) to comply with requirements of the SEC in order to effect or maintain
the qualification of the indenture under the Trust Indenture Act; or
(6) to enter into additional or supplemental collateral documents or an
intercreditor agreement with a Pari Passu Debtholder.
Satisfaction and Discharge
The indenture will be discharged and will cease to be of further effect as
to all notes issued thereunder, when:
(1) either:
(a) all notes that have been authenticated (except lost, stolen or
destroyed notes that have been replaced or paid and notes for whose
payment money has theretofore been deposited in trust and thereafter
repaid to the issuers) have been delivered to the trustee for
cancellation; or
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(b) all notes that have not been delivered to the trustee for
cancellation have become due and payable by reason of the making of a
notice of redemption or otherwise or will become due and payable within
one year and the issuers or any Guarantor have irrevocably deposited or
caused to be deposited with the trustee as trust funds in trust solely
for the benefit of the holders of notes, cash in U.S. dollars, non-
callable Government Securities, or a combination thereof, in such
amounts as will be sufficient without consideration of any reinvestment
of interest, to pay and discharge the entire indebtedness on the notes
not delivered to the trustee for cancellation for principal, fixed
interest, the maximum amount payable as Contingent Interest and premium
and liquidated damages, if any, to the date of maturity or redemption;
(2) no default or event of default shall have occurred and be continuing
on the date of such deposit or shall occur as a result of such deposit and
such deposit will not result in a breach or violation of, or constitute a
default under, any other instrument to which either of the issuers or any
Guarantor is a party or by either of the issuers or any Guarantor is bound;
(3) the issuers and each Guarantor has paid or caused to be paid all sums
payable by them under the indenture; and
(4) the issuers have delivered irrevocable instructions to the trustee
under the indenture to apply the deposited money toward the payment of the
notes at maturity or the redemption date, as the case may be.
In addition, the issuers must deliver an Officers' Certificate and an
Opinion of Counsel to the trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.
Notwithstanding the above, the trustee shall pay us from time to time upon
our request any cash or Government Securities held by it as provided in this
section which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification delivered to the
trustee, are in excess of the amount thereof that would then be required to be
deposited to effect a Satisfaction and Discharge.
Concerning the Trustee
If the trustee becomes a creditor of either of the issuers or any Guarantor,
the indenture limits its right 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 SEC 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 and be continuing, the trustee will be required, in the exercise
of its power, to use the degree of care of a prudent man in the conduct of his
own affairs. Subject to such provisions, the trustee will be under no
obligation to exercise any of its rights or powers under the indenture at the
request of any holder of notes, 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 below, your notes will be issued in registered, global
form in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof.
The notes will be represented by one or more notes in registered, global
form without interest coupons (the "Global Notes"). The Global Notes will be
deposited upon issuance with the trustee as custodian for The Depository Trust
Company ("DTC"), in New York, New York, and registered in the name of DTC or
its nominee, in each case for credit to an account of a direct or indirect
participant in DTC as described below.
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The following description of the operations and procedures of DTC are
provided solely as a matter of convenience. These operations and procedures
are solely within the control of DTC and are subject to changes by them. We
take no responsibility for these operations and procedures and urges investors
to contact the DTC or its participants directly to discuss these matters.
DTC has advised us that DTC is a limited-purpose trust company created to
hold securities for its participating organizations (collectively, the
"Participants") and to facilitate the clearance and settlement of transactions
in those securities between Participants through electronic book-entry changes
in accounts of its Participants. The Participants include securities brokers
and dealers (including the initial purchasers), banks, trust companies,
clearing corporations and certain other organizations. Access to DTC's system
is also available to other entities such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own
securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interests in, and transfers of ownership
interests in, each security held by or on behalf of DTC are recorded on the
records of the Participants and Indirect Participants.
DTC has also advised us that, pursuant to procedures established by it:
(1) upon deposit of the Global Notes, DTC will credit the accounts of
Participants designated by the initial purchasers with portions of the
principal amount of the Global Notes; and
(2) ownership of these interests in the Global Notes will be shown on,
and the transfer of ownership thereof will be effected only through,
records maintained by DTC (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to other owners of
beneficial interest in the Global Notes).
Investors in the Global Notes who are Participants in DTC's system may hold
their interests therein directly through DTC. Investors in the Global Notes
who are not Participants may hold their interests therein indirectly through
organizations which are Participants in such system. All interests in a Global
Note may be subject to the procedures and requirements of DTC. The laws of
some states require that certain Persons take physical delivery in definitive
form of securities that they own. Consequently, the ability to transfer
beneficial interests in a Global Note to such persons will be limited to that
extent. Because DTC can act only on behalf of Participants, which in turn act
on behalf of Indirect Participants, the ability of a person having beneficial
interests in a Global Note to pledge such interests to persons that do not
participate in the DTC system, or otherwise take actions in respect of such
interests, may be affected by the lack of a physical certificate evidencing
such interests.
Except as described below, owners of interest in the Global Notes will not
have notes registered in their names, will not receive physical delivery of
notes in certificated form and will not be considered the registered owners or
"holders" thereof under the indenture for any purpose.
Payments in respect of the principal of, and interest and premium and
liquidated damages, if any, on a Global Note registered in the name of DTC or
its nominee will be payable to DTC in its capacity as the registered holder
under the indenture. Under the terms of the indenture, the Company and the
trustee will treat the persons in whose names the new notes, including the
Global Notes, are registered as the owners thereof for the purpose of
receiving payments and for all other purposes. Consequently, neither the
Company, the trustee nor any agent of the Company or the trustee has or will
have any responsibility or liability for:
(1) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interest in the Global Notes or for maintaining, supervising or
reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the
Global Notes; or
(2) any other matter relating to the actions and practices of DTC or any
of its Participants or Indirect Participants.
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DTC has advised us that its current practice, upon receipt of any payment in
respect of securities such as the registered notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date unless DTC has reason to believe it will not
receive payment on such payment date. Each relevant Participant is credited
with an amount proportionate to its beneficial ownership of an interest in the
principal amount of the relevant security as shown on the records of DTC.
Payments by the Participants and the Indirect Participants to the beneficial
owners of new notes will be governed by standing instructions and customary
practices and will be the responsibility of the Participants or the Indirect
Participants and will not be the responsibility of DTC, the trustee or us.
Neither we nor the trustee will be liable for any delay by DTC or any of its
Participants in identifying the beneficial owners of the registered notes, and
we and the trustee may conclusively rely on and will be protected in relying
on instructions from DTC or its nominee for all purposes.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds.
DTC has advised us that it will take any action permitted to be taken by a
holder of registered notes only at the direction of one or more Participants
to whose account DTC has credited the interests in the Global Notes and only
in respect of such portion of the aggregate principal amount of the notes as
to which such Participant or Participants has or have given such direction.
However, if there is an event of default under the registered notes, DTC
reserves the right to exchange the Global Notes for legended registered notes
in certificated form, and to distribute such registered notes to its
Participants.
Although DTC has agreed to the foregoing procedures to facilitate transfers
of interests in the Global Notes among participants in DTC, it is under no
obligation to perform or to continue to perform such procedures, and may
discontinue such procedures at any time. Neither we nor the trustee nor any of
their respective agents will have any responsibility for the performance by
DTC or its respective participants or indirect participants of its respective
obligations under the rules and procedures governing its operations.
Transfers of Interests in Global Notes for Certificated Notes
An entire Global Note may be exchanged for definitive registered notes in
registered, certificated form without interest coupons ("Certificated Notes")
if:
(1) DTC (a) notifies the issuers that it is unwilling or unable to
continue as Depositary for the Global Notes and the issuers thereupon fail
to appoint a successor Depositary within 120 days or (b) has ceased to be a
clearing agency registered under the Exchange Act,
(2) the issuers, at their option, notify the trustee in writing that it
elects to cause the issuance of Certificated Notes or
(3) there shall have occurred and be continuing a default or an event of
default with respect to the registered notes. In any such case, the issuers
will notify the trustee in writing that, upon surrender by the Direct and
Indirect Participants of their interest in such Global Note, Certificated
Notes will be issued to each person that such Direct and Indirect
Participants and the DTC identify as being the beneficial owner of the
related notes.
In addition, beneficial interests in Global Notes held by any Direct or
Indirect Participant may be exchanged for Certificated Notes upon request to
DTC, by such Direct Participant (for itself or on behalf of an Indirect
Participant), to the trustee in accordance with customary DTC procedures.
Certificated Notes delivered in exchange for any beneficial interest in any
Global Note will be registered in the names, and issued in any approved
denominations, requested by DTC on behalf of such Direct or Indirect
Participants in accordance with DTC's customary procedures.
Neither the issuers nor the trustee will be liable for any delay by the
holder of any Global Note or DTC 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 holder of the Global Note or
DTC for all purposes.
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Same Day Settlement and Payment
The indenture will require that payments in respect of the notes represented
by the Global Notes (including principal, premium, if any, interest and
liquidated damages, if any) be made by wire transfer of immediately available
same day funds to the accounts specified by the holder of interests in such
Global Note. With respect to Certificated Notes, issuers will make all
payments of principal, premium, if any, interest and liquidated damages, if
any, by wire transfer of immediately available same day funds to the accounts
specified by the holders thereof or, if no such account is specified, by
mailing a check to each such holder's registered address. The registered notes
represented by the Global Notes are expected to be eligible to trade in the
PORTAL market and to trade in DTC's Same-Day Funds Settlement System, and any
permitted secondary market trading activity in such registered notes will,
therefore, be required by DTC to be settled in immediately available funds.
The issuers expect that secondary trading in the Certificated Notes will also
be settled in immediately available funds.
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:
(1) 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, whether or not such Indebtedness is incurred in connection with, or
in contemplation of, such other Person merging with or into, or becoming a
Subsidiary of, such specified Person; and
(2) 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
Restricted Subsidiaries for such period to Adjusted Fixed Charges of such
Person and its Restricted 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 Restricted Subsidiaries for such
period, plus any Contingent Interest to the extent paid in 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; provided, however, that Paddlewheels shall
not be deemed to be our "Affiliate." For purposes of this definition,
"control," as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise; provided, however, that beneficial
ownership of 10% or more of the voting securities of a Person shall be deemed
to be control. For purposes of this definition, the terms "controlling,"
"controlled by" and "under common control with" shall have correlative
meanings.
"Assignment Agreement" means the Amended and Restated Assignment of Joint
Venture Interest dated as of September 22, 1998, among Sodak Louisiana,
L.L.C., a Louisiana limited liability company, HWCC-Louisiana, Paddlewheels
and New Orleans Paddlewheels, Inc., a Louisiana corporation, as in effect on
the date of the indenture or as amended or modified pursuant to the provisions
of the covenant entitled "Amendment to Certain Agreements."
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights; provided that the sale, conveyance or other disposition of all or
substantially all of our assets and Restricted Subsidiaries taken as a
whole will be governed by the provisions of the indenture described above
under the caption
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"--Repurchase at the Option of Holders--Change of Control" and the
provisions described above under the caption "--Certain Covenants--Merger,
Consolidation or Sale of Assets" and not by the provisions of the Asset
Sale covenant; and
(2) the issuance of Equity Interests by any of our Restricted
Subsidiaries or the sale of Equity Interests by us in any of our
Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:
(1) any single transaction or series of related transactions that
involves assets having a fair market value of less than $1.0 million;
(2) a transfer of assets between or among us and our Restricted
Subsidiaries;
(3) an issuance of Equity Interests by one of our Restricted Subsidiaries
to us or to another Restricted Subsidiary;
(4) the sale or lease of equipment, inventory, accounts receivable or
other assets in the ordinary course of business;
(5) the sale or other disposition of cash or Cash Equivalents; and
(6) a Restricted Payment or Permitted Investment that is permitted by the
covenant entitled "Certain Covenants--Restricted Payments."
"Attributable Debt" in respect of a sale and leaseback transaction means, at
the time of determination, the present value 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. Such
present value shall be calculated using a discount rate equal to the rate of
interest implicit in such transaction, determined in accordance with GAAP.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial
ownership of all securities that such "person" has the right to acquire by
conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition. The terms "Beneficially Owns" and "Beneficially Owned" shall have a
corresponding meaning.
"Board of Directors" means:
(1) with respect to a corporation, the Board of Directors of the
corporation;
(2) with respect to a partnership, the Board of Directors of the managing
general partner of the partnership; and
(3) with respect to any other Person, the board or committee of such
Person serving a similar function.
"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 that time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated)
of corporate stock;
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(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
(4) 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 Construction
Disbursement Account, the Completion Reserve Account, the Interest Reserve
Account and the Segregated Account.
"Cash Collateral and Disbursement Agreement" means the Cash Collateral and
Disbursement Agreement dated the date of the indenture, among the issuers, the
trustee and the Disbursement Agent in connection with the Shreveport Resort.
"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality thereof (provided
that the full faith and credit of the United States is pledged in support
thereof) having maturities of not more than six months from the date of
acquisition;
(3) 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 $500.0 million and a Thomson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Rating Services and in each
case maturing within six months after the date of acquisition; and
(6) money market funds at least 95% of the assets of which constitute
Cash Equivalents of the kinds described in clauses (1) through (5) of this
definition.
"Change of Control" means the occurrence of any of the following:
(1) the direct or indirect sale, 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 Hollywood Casino and its Subsidiaries taken as a whole;
(2) the liquidation or dissolution of, or the adoption of a plan relating
to the liquidation or dissolution of, either of the Issuers or Hollywood
Casino or any successor thereto;
(3) Hollywood Casino 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
any of the Principals, 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 30% or more of the total
voting power entitled to vote in the election of the Board of Directors of
Hollywood Casino or such other Person surviving the transaction and, at
such time, the Principals collectively shall fail to beneficially own,
directly or indirectly, securities representing greater than the combined
voting power of Hollywood Casino's or such other Person's Voting Stock as
is beneficially owned by such person or group;
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(4) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Hollywood Casino's Board of
Directors (together with any new directors whose election or appointment by
such board or whose nomination for election by the stockholders of
Hollywood Casino was approved by a vote of a majority of the directors then
still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved)
ceasing for any reason to constitute a majority of the Hollywood Casino's
Board of Directors then in office;
(5) Hollywood Casino consolidates with, or merges with or into, any
Person, or any Person consolidates with, or merges with or into, Hollywood
Casino, in any such event pursuant to a transaction in which any of the
outstanding Voting Stock of Hollywood Casino is converted into or exchanged
for cash, securities or other property, other than any such transaction
where the Voting Stock of Hollywood Casino outstanding immediately prior to
such transaction is converted into or exchanged for Voting Stock (other
than Disqualified Stock) of the surviving or transferee Person constituting
a majority of the outstanding shares of such Voting Stock of such surviving
or transferee Person immediately after giving effect to such issuance;
(6) the first day on which Hollywood Casino ceases to Beneficially Own
100% of our outstanding Equity Interests', other than our Equity Interests
owned by Paddlewheels on the date of the indenture; or
(7) the termination or repudiation by the Manager of the Management
Agreement.
"Completion Capital Agreement" means the Completion Capital Agreement dated
as of the date of the indenture, among Hollywood Casino, HWCC-Louisiana, HCS
I, HCS II and us, as in effect on the date of the indenture or as amended or
modified pursuant to the provisions of the covenant entitled "Amendments to
Certain Agreements."
"Completion Reserve Account" means the completion reserve 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 $5.0
million of the proceeds of the original offering were deposited.
"Compromise Agreement" means the Compromise Agreement dated as of September
15, 1998, among QNOV, Hilton New Orleans Corporation, New Orleans
Paddlewheels, Inc., the City of New Orleans and Hilton Hotels Corporation.
"Consolidated Cash Flow" means, with respect to any specified Person for any
period, the Consolidated Net Income of such Person for such period plus:
(1) an amount equal to any extraordinary loss plus any net loss realized
by such Person or any of its Restricted Subsidiaries in connection with an
Asset Sale, to the extent such losses were deducted in computing such
Consolidated Net Income; plus
(2) provision for taxes based on income or profits or the Tax Amount of
such Person and its Restricted Subsidiaries for such period, to the extent
that such provision for taxes or Tax Amount was deducted in computing such
Consolidated Net Income; plus
(3) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance
costs and 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 of the effect of all payments made or received pursuant
to Hedging Obligations), to the extent that any such expense was deducted
in computing such Consolidated Net Income; plus
(4) any pre-opening expenses to the extent that such preopening expenses
were deducted in computing Consolidated Net Income on a consolidated basis
and determined in accordance with GAAP; plus
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(5) depreciation, amortization (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses that
were paid in a prior period) and other non-cash expenses (excluding any
such non-cash expense to the extent that it represents an accrual of or
reserve for cash expenses in any future period or amortization of a prepaid
cash expense, other than pre-opening expenses, that was paid in a prior
period) of such Person and its Restricted Subsidiaries for such period to
the extent that such depreciation, amortization and other non-cash expenses
were deducted in computing such Consolidated Net Income; minus
(6) non-cash items increasing such Consolidated Net Income for such
period, other than the accrual of revenue in the ordinary course of
business, in each case, on a consolidated basis and determined in
accordance with GAAP.
Notwithstanding the preceding, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash
expenses of, and of our Restricted Subsidiaries shall be added to Consolidated
Net Income to compute our Consolidated Cash Flow only to the extent that a
corresponding amount would be permitted at the date of determination to be
dividended to us by such Restricted 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 Restricted Subsidiary or its equityholders.
"Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided, however, that:
(1) the Net Income 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
specified Person or a Restricted Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior 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 that
Restricted Subsidiary or its stockholders;
(3) 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;
(4) the cumulative effect of a change in accounting principles shall be
excluded;
(5) the Net Income of any Unrestricted Subsidiary shall be excluded,
whether or not distributed to the specified Person or one of its Restricted
Subsidiaries; and
(6) for purposes of calculating our Consolidated Net Income and our
Restricted Subsidiaries for any period, Net Income will be reduced by the
amount of any Paddlewheels Revenue Participation payable with respect to
such period.
"Construction Disbursement Account" means the construction disbursement
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 $113.4 million of the net proceeds of the original offering were
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 Shreveport Resort, as such schedules are delivered to the
Disbursement Agent on the date of the indenture and as amended from time to
time in accordance with the terms of the Cash Collateral and Disbursement
Agreement.
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"Construction Repurchase Offer" means an offer by the issuers at their sole
discretion to all holders of notes to purchase the maximum principal amount of
notes that may be purchased with 50% of the Remaining Construction Amounts;
provided, however, that:
(1) the price for any notes to be purchased pursuant to such offer will
be paid in cash and will be equal to the sum of (a) 100% of the principal
amount thereof, (b) accrued and unpaid interest on such notes and
(c) accrued liquidated damages on such notes, if any;
(2) such offer will be conducted in the manner described under
"Compliance with Securities Laws;" and
(3) if the principal amount of notes tendered in such offer exceed the
offer amount, the trustee shall select the notes to be purchased in the
manner described under "--Selection and Notice."
"Contingent Interest" means:
(1) for the purpose of the First Accrual Period and any Semiannual
Period, the product of 5% multiplied by our Consolidated Cash Flow for such
First Accrual Period or Semiannual Period, as applicable;
(2) for the purpose of any Interim Period occurring after the date that
internal financial statements for the prior two fiscal quarters are
available, the product of (a) 5% multiplied by our Consolidated Cash Flow
for those two fiscal quarters and (b) a fraction, the numerator of which is
the number of days from the end of the most recent Semiannual Period to the
date of payment and the denominator of which is 180;
(3) for the purpose of an Accrual Period that ends prior to the
completion of the First Accrual Period or for any Interim Period occurring
prior to the date that internal financial statements for the immediately
preceding two fiscal quarters are available, the product of (1) 5%
multiplied by our Consolidated Cash Flow for all completed calendar months
during such period for which financial statements are available and (2) a
fraction, the numerator of which is the number of days from the date the
Shreveport resort begins Operating to the date of payment and the
denominator of which is the aggregate number of days for all completed
months included in such period;
in each case, multiplied by a fraction, the numerator of which is the
principal amount of notes outstanding on the close of business on that Record
Date and the denominator of which is $150.0 million; provided, however, that
Contingent Interest that accrues in respect of any four consecutive fiscal
quarters (excluding any Contingent Interest deferred from prior periods) shall
not exceed the product of (a) 5% multiplied by $100.0 million and (b) a
fraction, the numerator of which is such principal amount of outstanding notes
and the denominator of which is $150.0 million.
"Contribution and Assumption Agreement" means the Contribution and
Assumption Agreement dated as of July 21, 1999, among HWCC-Louisiana, HCS I,
HCS II and Paddlewheels, as in effect on the date of the indenture or as
amended or modified pursuant to the provisions of the covenant entitled
"Amendments to Certain Agreements."
"Disbursement Agent" means First American Title Insurance Company.
"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, in each case at the option of the holder thereof), 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. Notwithstanding the preceding
sentence, any Capital Stock that would constitute Disqualified Stock solely
because the holders thereof have the right to require us to repurchase such
Capital Stock upon the occurrence of a change of control or an asset sale
shall not constitute Disqualified Stock if the terms of such Capital Stock
provide that we may not repurchase or redeem any such Capital Stock pursuant
to such provisions unless such repurchase or redemption complies with the
covenant entitled "--Certain Covenants--Restricted Payments."
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"Eligible Institution" means a domestic commercial banking institution that
has combined capital and surplus of not less than $500 million or its
equivalent in foreign currency, whose debt is rated "A" or higher according to
S&P or Moody's at the time any investment or rollover therein is made.
"Equity Escrow Account" means the account into which $44.7 million in cash
was deposited on the date of the indenture representing equity contributions
made to us by HCS I, HCS II and Paddlewheels.
"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 asset, any (1) loss, destruction
or damage of such asset, (2) condemnation, seizure or taking by exercise of
the power of eminent domain or otherwise of such property or asset, or
confiscation of such asset or the requisition of the use of such asset or (3)
settlement in lieu of clause (2) above.
"FF&E" means furniture, fixtures or equipment used in the ordinary course of
our businesses and our Restricted Subsidiaries.
"FF&E Financing" means the incurrence of Indebtedness, the proceeds of which
are utilized solely to finance the acquisition of (or entry into a capital
lease by us or a Restricted Subsidiary with respect to) FF&E.
"Final Plans" with respect to any particular work or improvement means Plans
which (1) have received final approval from all governmental authorities
required to approve such Plans prior to completion of the work or improvements
and (2) contain sufficient specificity to permit the completion of the work or
improvement.
"First Accrual Period" means the period beginning on the date the Shreveport
Resort begins Operating through and including the next June 30 or December 31,
as applicable.
"Fixed Charge Coverage Ratio" means with respect to any specified Person for
any period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person
for such period. In the event that the specified Person or any of its
Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases or
redeems any Indebtedness (other than ordinary working capital borrowings) or
issues, repurchases or redeems preferred equity subsequent to the commencement
of the period for which the Fixed Charge Coverage Ratio is being calculated
and on or 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, repayment, repurchase or redemption of
Indebtedness, or such issuance, repurchase or redemption of preferred equity,
and the use of the proceeds therefrom as if the same had occurred at the
beginning of the applicable four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) acquisitions that have been made by the specified Person or any of
its Restricted 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 given pro forma effect as if they had
occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated on a
pro forma basis in accordance with Regulation S-X under the Securities Act,
but without giving effect to clause (3) of the proviso set forth in the
definition of Consolidated Net Income;
(2) 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
(3) 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
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to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the specified Person or any of its Restricted
Subsidiaries following the Calculation Date.
"Fixed Charges" means, with respect to any specified Person for any period,
the sum, without duplication, of:
(1) the consolidated interest expense (excluding Contingent Interest, if
any, paid or accrued) of such Person and its Restricted Subsidiaries for
such period, whether paid or accrued, including, without limitation,
amortization of debt issuance costs and 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 of the effect
of all payments made or received pursuant to Hedging Obligations; plus
(2) the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period; plus
(3) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured
by a Lien on assets of such Person or one of its Restricted Subsidiaries,
whether or not such Guarantee or Lien is called upon; plus
(4) the product of (a) all dividends, whether paid or accrued and whether
or not in cash, on any series of preferred equity of such Person or any of
its Restricted Subsidiaries, other than dividends on Equity Interests
payable solely in Equity Interests of the Partnership (other than
Disqualified Stock) or to the Partnership or a Restricted Subsidiary of the
Partnership, 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 (or, in the case of a Person
that is a partnership or limited liability company, the combined federal,
state and local income tax rate that was or would have been used to
calculate the Tax Amount 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 government, any foreign government, any state, province or city
or other political subdivision or otherwise, whether now or hereafter in
existence, or any officer or official thereof, including, without limitation,
the Louisiana Gaming Control Board, with authority to regulate any gaming
operation (or proposed gaming operation) owned, managed or operated by either
of the Issuers, Hollywood Casino, the Manager or any of their respective
Subsidiaries.
"Gaming Facility" means any building, riverboat, barge or other structure
used or expected to be used to enclose space in which a gaming operation is
conducted and either is wholly or partially owned, directly or indirectly, by
us or any of our Restricted Subsidiaries or any portion or aspect of which is
managed or used, or expected to be managed or used, by us or any of our
Restricted Subsidiaries.
"Gaming Law" means the gaming laws of any jurisdiction or jurisdictions to
which either of the issuers or any of our 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 necessary on the date of the indenture or at any
time thereafter to own, lease, operate or otherwise conduct the business of
either of the issuers or any of our Restricted Subsidiaries.
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"Government Securities" means securities that are:
(1) direct obligations of the United States of America for the timely
payment of which its full faith and credit is pledged; or
(2) 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 also includes 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,
however, that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the Government
Security or the specific payment of principal of or interest on the Government
Security evidenced by such depository receipt.
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Guarantor" means HWCC-Louisiana, HCS I, HCS II and any of our Restricted
Subsidiaries that executes a Guarantee in accordance with the provisions of
the indenture.
"HCS I" means HCS I, Inc., a Louisiana corporation.
"HCS II" means HCS II, Inc., a Louisiana corporation.
"Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates.
"Hollywood Casino" means Hollywood Casino Corporation, a Delaware
corporation.
"Indebtedness" means, with respect to any specified Person, any indebtedness
of such Person, whether or not contingent, in respect of:
(1) borrowed money;
(2) obligations evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof);
(3) banker's acceptances;
(4) Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any
property, except any such balance that constitutes an accrued expense or
trade payable;
(6) any Hedging Obligations;
(7) all Indebtedness of others secured by a Lien on any asset of the
specified Person (whether or not such Indebtedness is assumed by the
specified Person); provided, however, that the amount of such Indebtedness
shall be limited to the lesser of the fair market value of the assets or
property to which such Lien attaches and the amount of the Indebtedness so
incurred; and
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(8) to the extent not otherwise included, the Guarantee by the specified
Person of any indebtedness of any other Person;
and any and all deferrals, renewals, extensions, refinancings and refundings
(whether direct or indirect) thereof and any amendments, modifications or
supplements thereto, if and to the extent any of the preceding items (other
than letters of credit and Hedging Obligations) would appear as a liability
upon a balance sheet of the specified Person prepared in accordance with GAAP.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount; and
(2) the principal amount thereof, together with any interest thereon that
is more than 30 days past due, in the case of any other Indebtedness.
"Independent Construction Consultant" means the independent construction
consultant retained in connection with the construction of the Shreveport
Resort, or any successor independent construction consultant appointed by the
trustee pursuant to the terms of the Cash Collateral and Disbursement
Agreement.
"Intercompany Notes" means the intercompany notes issued by our Restricted
Subsidiaries in favor of us or a Guarantor to evidence advances by us or that
Guarantor.
"Interim Period" means any period, other than the First Accrual Period, that
begins on any January 1 and ends before the next June 30 and any period that
begins on any July 1 and ends before the next December 31.
"Interest Reserve Account" means the interest reserve 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 $27.3
million of the proceeds of the original offering were deposited.
"Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the
forms of loans (including Guarantees or other obligations), advances or
capital contributions (excluding commission, travel and similar advances to
officers and employees made in the ordinary course of business), 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. If we or any
of our Restricted Subsidiaries sells or otherwise disposes of any Equity
Interests of any of our direct or indirect Restricted Subsidiaries such that,
after giving effect to any such sale or disposition, such Person is no longer
our Restricted Subsidiary, we 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 Restricted Subsidiary not sold or disposed of in an
amount determined as provided in the final paragraph of the covenant entitled
"--Certain Covenants--Restricted Payments." The acquisition by us or any of
our Restricted Subsidiaries of a Person that holds an Investment in a third
Person shall be deemed to be an Investment by us or such Restricted Subsidiary
in such third Person in an amount equal to the fair market value of the
Investment held by the acquired Person in such third Person in an amount
determined as provided in the final paragraph of the covenant entitled
"Certain Covenants--Restricted Payments."
"Joint Venture Agreement" means the Third Amended and Restated Joint Venture
Agreement of Hollywood Casino Shreveport dated as of July 21, 1999, among
Paddlewheels, HCS I and HCS II, as in effect on the date of the indenture.
"License Agreement" means the License Agreement dated as of the date of the
indenture, between Hollywood Casino Corporation and us, as in effect on the
date of the indenture or as amended or modified pursuant to the provisions of
the covenant entitled "Amendments to Certain Agreements."
"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
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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.
"Loan and Settlement Agreement" means the Loan and Settlement Agreement
dated as of January 16, 1998, among New Orleans Paddlewheels, Inc.,
Paddlewheels, HWCC-Louisiana, Sodak Louisiana, L.L.C. and Hilton New Orleans
Corporation, as in effect on the date of the indenture.
"Management Agreement" means the Management Services Agreement dated as of
September 22, 1998, between us and the Manager relating to the management of
the Shreveport Resort, as in effect on the date of the indenture or as amended
or modified pursuant to the provisions of the covenant entitled "Amendments to
Certain Agreements."
"Management Fees" means any fees payable to the Manager pursuant to the
Management Agreement.
"Manager" means HWCC-Shreveport, Inc., a Louisiana corporation.
"Manager Subordination Agreement" means the Manager Subordination Agreement
dated as of the date of the indenture, among us, the Manager and the trustee.
"Marine Services Agreement" means the Marine Services Agreement dated as of
September 22, 1998, between us and Paddlewheels, as in effect on the date of
the indenture or as amended or modified pursuant to the provisions of the
covenant entitled "Amendments to Certain Agreements."
"Membership Interest Purchase Agreement" means the Purchase Agreement dated
as of March 31, 1999, among HWCC-Louisiana, Sodak Gaming and Sodak Louisiana,
L.L.C., as in effect on the date of the indenture.
"Minimum Facilities" means, with respect to the Shreveport Resort, a
riverboat casino which has in operation at least 1,600 gaming positions, a
hotel which has at least 350 hotel rooms, two restaurants with seating for at
least 500 people, two bars, an entertainment lounge and parking for at least
1,800 vehicles.
"Net Income" means, with respect to any specified Person:
(1) the net income (loss) of such Person, determined in accordance with
GAAP and before any reduction in respect of preferred equity dividends or
distributions, excluding, however:
(a) any gain (but not loss), together with any related provision for
taxes or Tax Amount on such gain (but not loss), realized in connection
with: (I) any Asset Sale (including, without limitation, dispositions
pursuant to sale and leaseback transactions); or (II) the disposition
of any securities by such Person or any of its Restricted Subsidiaries
or the extinguishment of any Indebtedness of such Person or any of its
Restricted Subsidiaries; and
(b) any extraordinary gain (but not loss), together with any related
provision for taxes or Tax Amount on such extraordinary gain (but not
loss); less
(2) in the case of any Person that is a partnership or limited liability
company, the Tax Amount of such Person for such period.
"Net Loss Proceeds" means the aggregate cash proceeds received by us or any
of our Restricted 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 or the portion of the Tax Amount attributable to such
Event of Loss paid or payable as a result thereof.
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"Net Proceeds" means the aggregate cash proceeds received by us or any of
our 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, sales commissions, relocation expenses incurred as a
result thereof and taxes or the portion of the Tax Amount attributable to such
Asset Sale paid or payable as a result thereof, in each case, after taking
into account any available tax credits or deductions and any tax sharing
arrangements, and 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 Asset Sale and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither we nor any of our Restricted Subsidiaries:
(a) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness)
(b) are directly or indirectly liable as a guarantor or otherwise or
(c) constitutes the lender;
(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder of
any other Indebtedness (other than the notes) of us or any of our
Restricted Subsidiaries to declare a default on such other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity; and
(3) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of us or any of our Restricted
Subsidiaries.
"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 Shreveport Resort, the first time
that:
(1) all Gaming Licenses have been granted and have not been revoked or
suspended;
(2) 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 Shreveport Resort have been discharged or,
if payment is not yet due or if such payment is contested in good faith by
us, sufficient funds remain in the Construction Disbursement Account to
discharge such Liens and we have taken any action (including the
institution of legal proceedings) necessary to prevent the sale of any or
all of the Shreveport Resort or the real property on which the Shreveport
Resort will be constructed;
(3) the Independent Construction Consultant shall deliver a certificate
to the trustee certifying that the Shreveport Resort is substantially
complete in all material respects in accordance with the Final Plans with
respect to the Minimum Facilities;
(4) the Shreveport Resort is in a condition (including installation of
furnishings, fixtures and equipment) to receive customers in the ordinary
course of business;
(5) the Minimum Facilities are open to the general public and operating
in accordance with applicable law; and
(6) a permanent or temporary certificate of occupancy has been issued for
the Shreveport Resort by the appropriate governmental authorities.
"Operating Deadline" means April 30, 2001.
"Paddlewheels" means Shreveport Paddlewheels, L.L.C., a Louisiana limited
liability company.
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"Paddlewheels Revenue Participation" means the amount payable by us to
Paddlewheels equal to 1% of the Complex Net Revenues (as defined in the
Assignment Agreement) pursuant to the terms of the Assignment Agreement.
"Pari Passu Collateral" means the collateral owned by us, excluding the
funds held in the Cash Collateral Accounts.
"Pari Passu Lien" means a Lien on the Pari Passu Collateral that ranks pari
passu with the Lien of the trustee for the ratable benefit of the holders of
notes pursuant to the intercreditor agreement in substantially the form
attached as an exhibit to the indenture.
"Permitted Business" means the gaming business and other businesses
necessary for, incident to, connected with, arising out of, or developed or
operated to permit or facilitate the conduct or pursuit of the gaming business
(including developing and operating lodging facilities, restaurants, sports or
entertainment facilities, transportation services or other related activities
or enterprises and any additions or improvements thereto) and potential
opportunities in the gaming business.
"Permitted Investments" means:
(1) any Investment in us or in any of our Restricted Subsidiaries;
(2) any Investment in Cash Equivalents, Government Securities or Pledged
Securities;
(3) any Investment by us or any of our Restricted Subsidiaries in a
Person, if as a result of such Investment:
(a) such Person becomes our Restricted Subsidiary; 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, us or any of our Restricted Subsidiaries;
(4) any 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 entitled "Repurchase at the Option of
Holders--Asset Sales";
(5) any acquisition of assets solely in exchange for the issuance of our
Equity Interests (other than Disqualified Stock);
(6) Hedging Obligations;
(7) one or more Investments by us in any entities the sole purpose of
which is to develop, construct and/or operate golf courses; provided,
however, that:
(a) the aggregate amount of all such Investments does not exceed $3.0
million and
(b) the development, construction and operation of such golf course
would satisfy the provisions of the covenant entitled "Line of
Business";
(8) any Investment by us or any of our Restricted Subsidiaries in persons
required in order to secure liquor and/or other licenses or permits under
applicable law incident to the operation by us or any of our Restricted
Subsidiaries of a Permitted Business; provided, however, that the aggregate
amount of such Investment shall at no time exceed $100,000;
(9) any Investment made in settlement of gambling debts incurred by
patrons of any casino owned or operated by us or any of our Restricted
Subsidiaries which settlements have been entered into in the ordinary
course of business; and
(10) Investments not otherwise permitted by the foregoing clauses (1)
through (9) in an aggregate outstanding amount of not more than $250,000.
"Permitted Liens" means:
(1) Liens on the assets of the issuers and the Guarantors created by the
indenture and the collateral documents securing the notes and the
Guarantees;
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(2) Liens on property of a Person existing at the time such Person is
merged into or consolidated with us or any of our Restricted Subsidiaries;
provided, however, 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 us
or any of our Restricted Subsidiaries;
(3) Liens on property existing at the time of acquisition thereof by us
or any of our Restricted Subsidiaries; provided, however, that such Liens
were in existence prior to the contemplation of such acquisition;
(4) Liens existing on the date of the indenture;
(5) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) 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, however, that any reserve or other appropriate provision as shall
be required in conformity with GAAP shall have been made therefor;
(7) Liens on FF&E to secure Indebtedness permitted by clause (6) of the
second paragraph of the covenant entitled "--Incurrence of Indebtedness and
Issuances of Preferred Equity";
(8) Pari Passu Liens on the Pari Passu Collateral to secure Indebtedness
permitted by clause (8) of the second paragraph of the covenant entitled
"--Incurrence of Indebtedness and Issuances of Preferred Equity;"
(9) pledges or deposits in the ordinary course of business to secure
lease obligations or nondelinquent obligations under workers' compensation,
unemployment insurance or similar legislation;
(10) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with our or any of our Subsidiaries'
business or assets incurred in the ordinary course of business;
(11) ground leases in respect of real property on which facilities owned
or leased by us or any of our Restricted Subsidiaries is located;
(12) Liens on assets of Unrestricted Subsidiaries that secure Non-
recourse Debt of Unrestricted Subsidiaries;
(13) Liens arising from UCC financing statements regarding property
leased by us or any of our Restricted Subsidiaries;
(14) Liens incurred and pledges made in the ordinary course of business
in connection with workers" compensation, unemployment insurance and social
security benefits; and
(15) without limiting our ability or the ability of any of our
Subsidiaries to create, incur, assume or suffer to exist any Lien otherwise
permitted under any of the foregoing clauses, any extension, renewal or
replacement, in whole or in part, of any Lien described in the foregoing
clauses; provided, however, that any such extension, renewal or replacement
Lien is limited to the property or assets covered by the Lien extended,
renewed or replaced or substitute property or assets, the value of which is
(and, for property or assets having an aggregate fair market value of more
than $100,000, as determined by our Board of Directors to be) not
materially greater than the value of the property or assets for which the
substitute property or assets are substituted.
"Permitted Refinancing Indebtedness" means any Indebtedness of us or any of
our Restricted Subsidiaries issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of us or any of our Restricted Subsidiaries (other than
intercompany Indebtedness); provided, however, that:
(1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness so extended,
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<PAGE>
refinanced, renewed, replaced, defeased or refunded (plus all accrued
interest thereon and the amount of all expenses and premiums incurred in
connection therewith); provided, if such Indebtedness is secured by a Lien
described in clause (7) of the definition of "Permitted Liens," then the
principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness will not exceed the then current fair market value
of the asset so encumbered;
(2) 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;
(3) 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 of notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by the Partnership or by the
Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"Plans" means all drawings, plans and specifications, prepared by or on
behalf of us, as the same may be amended or supplemented from time to time as
specified in the Cash Collateral and Disbursement Agreement and, if required,
submitted to and approved by the appropriate regulatory authorities, which
describe and show the Shreveport Resort and the labor and materials necessary
for the construction thereof.
"Pledged Securities" means:
(1) Government Securities having a maturity date on or before the date on
which the payments of interest on the notes to which such Government
Securities are pledged occur;
(2) any certificate of deposit maturing not more than 270 days after the
date of acquisition issued by, or time deposit of, an Eligible Institution;
(3) commercial paper maturing not more than 270 days after the date of
acquisition issued by a corporation other than an Affiliate of ours with a
rating at the time any investment therein is made, of "A-1" or higher
according to Standard & Poor's Ratings Services or "P-1" or higher
according to Moody's Investors Service, Inc.;
(4) any banker's acceptances or money market deposit accounts issued or
offered by an Eligible Institution; and
(5) any fund investing exclusively in investments of the types described
in clauses (1) through (4) above; and
in the case of clauses (2) through (4) above, which have a maturity date on or
before the date on which the payments of interest on the notes to which such
securities are pledged occur.
"Principals" means:
(1) Jack Pratt, Edward T. Pratt, Jr., William D. Pratt, Crystal A. Pratt,
Marina A. Pratt and Edward T. Pratt, III, their respective estates and
members of the immediate family (including adopted children) of any of them
who acquire Voting Stock of Hollywood Casino from any such estates;
(2) C.A. Pratt Partners, Ltd., a Texas limited partnership; provided,
however, that, in each case, the majority of the voting equity interest of
the partnership is Beneficially Owned by a Person named in clause (1); and
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<PAGE>
(3) The WDP, Jr. Family Trust; provided, however, that a Person named in
clause (1) is:
(a) the Beneficial Owner of a majority of the Voting Stock of
Hollywood Casino held by such trust, or
(b) if the trust is irrevocable, the trustee of the irrevocable trust
is a Person named in clause (1).
"Qualified Equity Offering" means an offering of Hollywood Casino's common
stock which results in net proceeds to Hollywood Casino of at least $20.0
million, but only to the extent that the net proceeds of the offering are
contributed directly or indirectly as equity by Hollywood Casino to us.
"Remaining Construction Amounts" means an amount equal to the aggregate of
amounts remaining in the Construction Disbursement Account, the Completion
Reserve Account and the Segregated Account on the date the Shreveport Resort
becomes Operating, less the amount of the Remaining Costs.
"Remaining Costs" has the meaning ascribed thereto in the Cash Collateral
and Disbursement Agreement.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Segregated Account" has the meaning ascribed thereto in the Cash Collateral
and Disbursement Agreement.
"Semiannual Period" means each period that begins on January 1 and ends on
the next June 30 or each period that begins on July 1 and ends on the next
December 31.
"Shreveport Resort" means the project to develop, construct, equip and
operate a riverboat casino, hotel and related amenities in Shreveport,
Louisiana, as described in this Offering Memorandum.
"Side Agreement" means the Side Agreement dated as of January 16, 1998,
among Queen of New Orleans at the Hilton Joint Venture, HWCC-Louisiana and
Sodak Louisiana, L.L.C., as in effect on the date of the indenture or as
amended or modified pursuant to the provisions of the covenant entitled
"Amendments to Certain Agreements."
"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 Securities Act, as such Regulation is in effect on the date
hereof.
"Sodak Gaming" means Sodak Gaming, Inc., a South Dakota corporation.
"Software Agreement" means the Software License and Maintenance Agreement to
be entered into between us and Advanced Casino Systems Corporation.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the
date originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any specified Person:
(1) 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
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<PAGE>
(2) 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).
"Tax Amount" means payments by us to HCS I and HCS II in amounts sufficient
to permit HCS I and HCS II to fulfill the obligations with respect to all
taxes of HWCC-Louisiana, HCS I and HCS II; provided, however, that so long as
HWCC-Louisiana, HCS I and HCS II file a consolidated, combined, unitary or
similar federal, state or local income or franchise tax return with Hollywood
Casino, the payment by us with respect to such taxes shall be an amount
sufficient to permit HWCC-Louisiana, HCS I and HCS II to fulfill their
respective obligations under the Tax Sharing Agreement solely with respect to
their respective obligations thereunder that are attributable to our income.
"Tax Sharing Agreement" means the Tax Sharing Agreement dated the date of
the indenture, between Hollywood Casino and its domestic corporate
Subsidiaries, including HWCC-Louisiana, HCS I and HCS II as in effect on the
date of the indenture or as amended or modified pursuant to the provisions of
the covenant entitled "Amendments to Certain Agreements."
"Technical Services Agreement" means the Technical Services Agreement dated
as of September 22, 1998, between the Manager and us, as in effect on the date
of the indenture or as amended or modified pursuant to the provisions of the
covenant entitled "Amendments to Certain Agreements."
"Total Assets" means, with respect to any Person, the aggregate of all
assets of such Person and its subsidiaries as would be shown on the balance
sheet of such Person prepared in accordance with GAAP.
"Unrestricted Subsidiary" means any of our Subsidiaries other than
Shreveport Capital that is designated by our Board of Directors as an
Unrestricted Subsidiary pursuant to a resolution, but only to the extent that
such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or understanding
with us or any of our Restricted Subsidiaries unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to
us or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not our Affiliates;
(3) is a Person with respect to which neither we nor any of our
Restricted Subsidiaries has any direct or indirect obligation (a) to
subscribe for additional Equity Interests or (b) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results; and
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of us or any of our Restricted
Subsidiaries.
Any designation of our Subsidiaries as an Unrestricted Subsidiary shall be
evidenced to the trustee by filing with the trustee a certified copy of the
Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the preceding
conditions and was permitted by the covenant entitled "Certain Covenants--
Restricted Payments." If, at any time, any Unrestricted Subsidiary would fail
to meet the preceding requirements as an Unrestricted Subsidiary, it shall
thereafter cease to be an Unrestricted Subsidiary for purposes of the
indenture and any Indebtedness of such Subsidiary shall be deemed to be
incurred by one of our Restricted Subsidiaries as of such date and, if such
Indebtedness is not permitted to be incurred as of such date under the
covenant entitled "Incurrence of Indebtedness and Issuance of Preferred
Equity," we shall be in default of such covenant. Our Board of Directors may
at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided, however, that such designation shall be deemed to be an
incurrence of Indebtedness by any of our Restricted Subsidiaries of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (1) such Indebtedness is permitted under the
covenant entitled "--Incurrence of Indebtedness and Issuance of Preferred
Equity," calculated on a
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<PAGE>
pro forma basis as if such designation had occurred at the beginning of the
four-quarter reference period and (2) no default or event of default would be
in existence following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(1) 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
(2) the then outstanding principal amount of such Indebtedness.
110
<PAGE>
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of the material United States federal
income tax considerations relevant to the exchange of your original notes for
registered notes. This discussion is a summary for general information
purposes only, and does not consider all aspects of federal income taxation
that may be relevant to a particular investor in light of his, her or its
personal circumstances.
This discussion is based upon the United States federal tax law now in
effect, which is subject to change, possibly retroactively. The description
does not consider the effect of any applicable foreign, state, local or other
tax laws or estate or gift tax considerations.
You should consult your own tax advisors regarding the particular United
States federal tax consequences to you of exchanging your original notes for
registered notes, as well as any tax consequences that may arise under the
laws of any foreign, state, local or other taxing jurisdiction.
Exchange of Original Notes for Registered Notes
The exchange of your original notes for registered notes pursuant to the
exchange offer should not constitute a sale or an exchange for federal income
tax purposes. Accordingly, not only should the exchange offer have no federal
income tax consequences to you if you exchange your original notes for
registered notes (i.e., there should be no change in your tax basis, and your
holding period should carry over to the registered notes), but the federal
income tax consequences of holding and disposing of the registered notes
should also be the same as those that would apply to your original notes.
PLAN OF DISTRIBUTION
If you are a broker-dealer that receives registered notes for your own
account in exchange for your original notes pursuant to the exchange offer,
where your original notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, you must acknowledge
that you will deliver a prospectus in connection with any resale of your
registered notes. This prospectus, as it may be amended or supplemented from
time to time, may be used by you in connection with resales of registered
notes received in exchange for your original notes where your original notes
were acquired as a result of market-making activities or other trading
activities. We have agreed that, for a period of one year after the
consummation of the exchange offer, we will make this prospectus, as amended
or supplemented, available to you for use in connection with any such resale.
In addition, until , 1999, if you effect a transaction in the registered
notes you may be required to deliver a prospectus.
Neither we nor the guarantors will receive any proceeds from any sale of
registered notes by broker-dealers. If you are a broker-dealer, registered
notes you receive for your own account in connection with 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 registered 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. You may make resales 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 registered notes. If you are a broker-dealer that
resells registered notes that we received by you for your own account in
connection with the exchange offer and you participate in a distribution of
your registered notes, you may be deemed to be an "underwriter" within the
meaning of the Securities Act, and any profit on any resale of registered
notes and any commissions or concessions received by you may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that by acknowledging that you will deliver and by delivering a
prospectus, you will not be deemed to admit that you are an "underwriter"
within the meaning of the Securities Act.
For a period of one year after the registration statement is declared
effective, we will promptly send additional copies of this prospectus and any
amendment or supplement to this prospectus to you, if you are a
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<PAGE>
broker-dealer that requests these documents in the letter of transmittal or
otherwise. We have agreed to pay all expenses incident to the exchange offer,
including the expenses of one counsel for the holders of the notes, other than
commissions or concessions of any broker-dealers and will indemnify you,
including any broker-dealers, against certain liabilities, including certain
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the registered notes offered by this prospectus will be
passed upon for the issuers by Weil, Gotshal & Manges LLP, Dallas, Texas and
New York, New York.
EXPERTS
The financial statements of Hollywood Casino Shreveport as of December 31,
1998 and for the period from September 22, 1998 through December 31, 1998, and
HWCC-Louisiana, Inc. as of December 31, 1998 and 1997 and for each of the
three years in the period ended December 31, 1998, included in this prospectus
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their reports appearing herein, and are included in reliance upon the reports
of such firm given upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
The issuers and guarantors are not currently subject to the periodic
reporting and other information requirements of the Exchange Act. The issuers
and guarantors have agreed that, whether or not required to do so by the rules
and regulations of the SEC, so long as any registered notes remain
outstanding, they will furnish to the trustee and deliver or cause to be
delivered to holders of the registered notes, beginning with respect to the
fiscal quarter ending September 30, 1999, (1) all consolidated quarterly and
annual financial information that would be required to be contained in a
filing with the SEC on Forms 10-Q and 10-K if we were required to file such
forms and, with respect to the annual information only, a report thereon by
our certified independent accountants and (2) all reports that would be
required to be filed with the SEC on form 8-K if the issuers were required to
file such reports. From and after the time a registration statement with
respect to the registered notes is declared effective by the SEC, the issuers
will file such information with the SEC, provided the SEC will accept such
filing. Anyone who receives this prospectus may obtain a copy of the
indenture, each of the collateral documents and the registration rights
agreement without charge by writing to the issuers and the Guarantors, c/o
William D. Pratt, Executive Vice President, Secretary and General Counsel,
Hollywood Casino Shreveport, Two Galleria Tower, 13455 Noel Road, Suite 2200,
Dallas, Texas 75240.
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<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Hollywood Casino Shreveport:
Independent Auditors' Report............................................ F-2
Balance Sheets as of June 30, 1999 (unaudited) and as of December 31,
1998................................................................... F-3
Statements of Operations for the Six Months Ended June 30, 1999
(unaudited) and for the Period from September 22, 1998 Through December
31, 1998............................................................... F-4
Statement of Changes in Partners' Capital for the Period from September
22, 1998 Through December 31, 1998 and for the Six Months Ended June
30, 1999 (unaudited)................................................... F-5
Statements of Cash Flows for the Six Months Ended June 30, 1999
(unaudited) and for the Period from September 22, 1998 Through December
31, 1998............................................................... F-6
Notes to Financial Statements........................................... F-7
HWCC-Louisiana, Inc.:
Independent Auditors' Report ........................................... F-11
Balance Sheets as of June 30, 1999 (unaudited) and as of December 31,
1998 and 1997.......................................................... F-12
Statements of Operations for the Six Months Ended June 30, 1999 and 1998
(unaudited) and for the Years Ended December 31, 1999, 1998 and 1997... F-13
Statement of Changes in Shareholder's Equity (Deficit) for the Three
Years Ended December 31, 1998 and for the Six Months Ended June 30,
1999 (unaudited)....................................................... F-14
Statements of Cash Flows for the Six Months Ended June 30, 1999 and 1998
(unaudited) and for the Years Ended December 31, 1999, 1998 and 1997... F-15
Notes to Financial Statements........................................... F-16
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To Hollywood Casino Shreveport:
We have audited the accompanying balance sheet of Hollywood Casino
Shreveport (a development stage partnership) as of December 31, 1998, and the
related statements of operations, changes in partners' capital, and cash flows
for the period from September 22, 1998 through December 31, 1998. These
financial statements are the responsibility of the Partnership's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Hollywood Casino Shreveport as of December
31, 1998, and the results of its operations and its cash flows for the period
from September 22, 1998 to December 31, 1998, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
June 28, 1999
F-2
<PAGE>
HOLLYWOOD CASINO SHREVEPORT
(Formerly QNOV)
A Development Stage General Partnership
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- ------------
(Unaudited)
<S> <C> <C>
Assets:
Cash and cash equivalents............................ $ 502,000 $3,734,000
Deferred project costs............................... 5,013,000 1,957,000
---------- ----------
$5,515,000 $5,691,000
========== ==========
Liabilities and Partners' Capital:
Accounts payable..................................... $ 581,000 $ 726,000
---------- ----------
Commitments and Contingencies (Note 4)
Partners' Capital--
Partners' capital contributions...................... 5,000,000 5,000,000
Accumulated deficit during the development stage..... (66,000) (35,000)
---------- ----------
Total partners' capital.............................. 4,934,000 4,965,000
---------- ----------
$5,515,000 $5,691,000
========== ==========
</TABLE>
The accompanying footnotes to financial statements are an integral part of
these balance sheets.
F-3
<PAGE>
HOLLYWOOD CASINO SHREVEPORT
(Formerly QNOV)
A Development Stage General Partnership
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period from
Period from September 22,
September 22, 1998 Six Months 1998 through
through June 30, Ended June 30, December 31,
1999 1999 1998
------------------ -------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Interest income................. $ 100,000 $ 45,000 $ 55,000
Preopening costs................ (166,000) (76,000) (90,000)
--------- -------- --------
Net loss...................... $ (66,000) $(31,000) $(35,000)
========= ======== ========
</TABLE>
The accompanying footnotes to financial statements are an integral part of
these financial statements.
F-4
<PAGE>
HOLLYWOOD CASINO SHREVEPORT
(Formerly QNOV)
A Development Stage General Partnership
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
For the Period From September 22, 1998 Through December 31, 1998
and for the Six Months ended June 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Deficit Accumulated During
Partners' Capital Development Stage
----------------------------------- ------------------------------------
HWCC- Sodak HWCC- Sodak
Louisiana, Inc. Louisiana L.L.C.(2) Louisiana, Inc. Louisiana, L.L.C.(2)
--------------- ------------------- --------------- --------------------
<S> <C> <C> <C> <C>
Contributed capital..... $2,500,000 $2,500,000 $ -- $ --
Net loss................ -- -- (17,000) (18,000)
---------- ---------- -------- --------
Balances, December 31,
1998................... 2,500,000 2,500,000 (17,000) (18,000)
Net loss(1)............. -- -- (16,000) (15,000)
---------- ---------- -------- --------
Balances, June 30,
1999(1)................ $2,500,000 $2,500,000 $(33,000) $(33,000)
========== ========== ======== ========
</TABLE>
- --------
(1) Unaudited
(2) Sodak Louisiana, L.L.C. became a wholly owned subsidiary of HWCC-Louisiana,
Inc. on April 23, 1999.
The accompanying footnotes to financial statements are an integral part of
these financial statements.
F-5
<PAGE>
HOLLYWOOD CASINO SHREVEPORT
(Formerly QNOV)
A Development Stage General Partnership
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period from
Period from Six Months September 22,
September 22, 1998 Ended 1998 through
through June 30, June 30, December 31,
1999 1999 1998
------------------ ----------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Operating Activities:
Net loss........................ $ (66,000) $ (31,000) $ (35,000)
Adjustments to reconcile net
loss to cash provided by (used
in) operating activities:
Increase (decrease) in
accounts payable............. 581,000 (145,000) 726,000
----------- ----------- -----------
Cash provided by (used in)
operating activities....... 515,000 (176,000) 691,000
----------- ----------- -----------
Cash Used in Investing Activities:
Deferred project costs.......... (5,013,000) (3,056,000) (1,957,000)
----------- ----------- -----------
Cash Provided by Financing
Activities:
Capital contributions........... 5,000,000 -- 5,000,000
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents............. 502,000 (3,232,000) 3,734,000
Cash and cash equivalents at
beginning of period.............. -- 3,734,000 --
----------- ----------- -----------
Cash and cash equivalents at end
of period........................ $ 502,000 $ 502,000 $ 3,734,000
=========== =========== ===========
</TABLE>
The accompanying footnotes to financial statements are an integral part of
these financial statements.
F-6
<PAGE>
HOLLYWOOD CASINO SHREVEPORT
(Formerly QNOV)
A Development Stage General Partnership
NOTES TO FINANCIAL STATEMENTS
(1) Organization and Business
Hollywood Casino Shreveport ("HCS" and formerly QNOV) is a development stage
general partnership registered in the state of Louisiana. The original
partnership agreement was amended on September 22, 1998 to include as partners
in HCS the following companies: HWCC-Louisiana, Inc. ("HCL"), a Louisiana
corporation wholly owned by Hollywood Casino Corporation ("HCC"); Sodak
Louisiana, L.L.C. ("Sodak"), a Louisiana limited liability company; and
Shreveport Paddlewheels, L.L.C. ("Paddlewheels"), a Louisiana limited
liability company. The reconfigured partnership was formed for the purpose of
developing, owning and operating a riverboat gaming complex to be located in
Shreveport, Louisiana, approximately 180 miles east of Dallas, Texas.
The former partners of QNOV ceased operating a riverboat casino in New
Orleans in October 1997. Other than holding its riverboat gaming license, QNOV
had no business operations and remained a dormant entity until September 22,
1998, when the original partnership was reconstituted and the former partners
withdrew.
HCS is in the development stage as it currently has no operating activities
other than development, financing and construction activities with respect to
the Shreveport resort. As currently planned, the Shreveport resort will
consist of a three-level riverboat casino with approximately 1,370 slot
machines and 75 table games; a 405-room, all suite, art deco style hotel; and
approximately 42,000 square feet of retail, restaurant and entertainment
facilities.
Riverboat gaming operations in Louisiana are subject to regulatory control
by the Louisiana Gaming Control Board (the "LGCB"). HCS's current license to
operate the Shreveport resort expires on October 15, 1999. HCS has filed for
the statutory one year renewal of its owner's license and management
anticipates that such renewal will be approved by the LGCB during 1999. The
Louisiana State legislature recently passed legislation providing for an
increase in the renewal period from one year to five years. At this time,
management is uncertain as to what effect, if any, this action will have on
the October 1999 renewal deadline or on any future license renewals.
It was originally anticipated that HCS would develop the Shreveport resort
with each of HCL and Sodak having a 50% interest in the development and
subsequent operations. Paddlewheels was to have a residual interest after the
commencement of operations and in the event that the project was ever sold
amounting to 10% plus any capital contributions made by Paddlewheels to HCS.
On March 31, 1999, HCL entered into a definitive agreement with Sodak's parent
to acquire Sodak for the $2,500,000 Sodak had contributed to HCS, with $1,000
to be paid at closing and the remainder to be paid six months after the
opening of the Shreveport resort. The revised structure of the partnership was
approved by the LGCB on April 20, 1999. As a result of the acquisition, HCL
obtained an effective 100% ownership interest in HCS with Paddlewheels
retaining their residual interest (see Note 6). During July 1999, Sodak was
merged into HCL.
The total estimated cost of the Shreveport resort is $230,000,000. Equity
contributions from HCC have provided $50,000,000 of the funds necessary.
During August 1999, HCS successfully completed the issuance of $150,000,000 of
13% First Mortgage Notes with contingent interest (the "First Mortgage Notes")
due 2006 (see Note 6); it is expected that a commitment for $30,000,000 of
furniture, fixture and equipment financing will provide the remaining funds
for the project. Construction began in August 1999 with a planned opening date
early in the fourth quarter of 2000.
The accompanying financial statements include the operations and cash flows
of HCS for the period from September 22, 1998 and include only the obligations
incurred by HCS from that date forward.
The financial statements as of June 30, 1999, for the six months then ended
and for the period from September 22, 1998 through June 30, 1999 have been
prepared by HCS without audit. In the opinion of management, these financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position of HCS as of
June 30, 1999 and the results of its operations and changes in partners'
capital and cash flows for the six month period ended June 30, 1999 and for
the period from September 22, 1998 through June 30, 1999.
F-7
<PAGE>
HOLLYWOOD CASINO SHREVEPORT
(Formerly QNOV)
A Development Stage General Partnership
NOTES TO FINANCIAL STATEMENTS--(Continued)
(2) Summary of Significant Accounting Policies
The significant accounting policies followed in the preparation of the
accompanying financial statements of HCS are discussed below. The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that effect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Cash and cash equivalents--
Cash and cash equivalents are comprised of cash and investments with
original maturities of three months or less, such as commercial paper,
certificates of deposit and fixed repurchase agreements.
Deferred project costs--
Costs associated with the development and construction of the Shreveport
resort are being deferred. Construction costs, including the applicable
interest on construction financing, will be capitalized and, commencing with
the completion of the Shreveport resort, will be amortized over the estimated
useful lives of the resulting assets. Start up costs are accounted for under
the provisions of Statement of Position 98-5 issued by the American Institute
of Certified Public Accountants which requires that such costs be expensed as
incurred.
Income taxes--
HCS is a partnership and its tax attributes including income and expense
items are passed through to its partners. Accordingly, the accompanying
financial statements do not reflect state or federal income taxes.
(3) Transactions with Affiliates
The operations of the Shreveport resort will be managed by HWCC-Shreveport,
Inc., a wholly owned subsidiary of HCC, under the terms of a management
agreement. The management agreement became effective when the LGCB approved
the development of the Shreveport resort and will remain in effect as long as
HCS holds its license, unless the management agreement is terminated earlier
in accordance with its terms. Under the terms of the management agreement, HCS
will pay HWCC-Shreveport basic and incentive management fees for its services.
The basic fee will be equal to 2% of gross revenues, as defined in the
agreement, from the operation of the Shreveport resort. The incentive fee will
be equal to the sum of (i) 5% of earnings before interest, taxes, depreciation
and amortization ("EBITDA"), as defined in the agreement, in excess of
$25,000,000 and up to $35,000,000; (ii) 7% of EBITDA in excess of $35,000,000
and up to $40,000,000; and (iii) 10% of EBITDA over $40,000,000. In addition,
HCS will reimburse HWCC-Shreveport for expenses incurred in connection with
services provided under the management agreement.
HCS has also entered into a technical services agreement with HWCC-
Shreveport to provide certain construction and project supervision services
prior to the opening of the Shreveport resort. HCS will reimburse HWCC-
Shreveport for expenses incurred in connection with services provided under
the technical services agreement.
HCS has also entered into an agreement with Paddlewheels to provide certain
marine services. The Marine Services Agreement became effective on September
22, 1998 and, in addition to the reimbursement of Paddlewheels for its direct
expenses incurred, if any, HCS will pay a monthly fee of $30,000 effective
with the opening of the Shreveport resort.
F-8
<PAGE>
HOLLYWOOD CASINO SHREVEPORT
(Formerly QNOV)
A Development Stage General Partnership
NOTES TO FINANCIAL STATEMENTS--(Continued)
(4) Commitments
The former partners of QNOV previously conducted riverboat gaming operations
in New Orleans. In connection with the change in site to Shreveport, the
former partners entered into a Compromise Agreement with the City of New
Orleans under which the city would be paid $10,000,000. One of the former
partners paid $5,000,000 of the amount to the City of New Orleans. The current
partners of HCS agreed that HCS would pay the remaining $5,000,000 upon
securing financing to construct the Shreveport resort; such payment was made
in August 1999. In addition, the current partners of HCS agreed that HCS would
reimburse the former partner $2,000,000 of the amount it paid to the city;
such repayment is to be made upon the earlier of the termination of
construction of the Shreveport resort or in monthly installments of $200,000
commencing with the opening of the Shreveport resort. Because the $5,000,000
and the $2,000,000 did not become obligations until financing was secured,
these contingent liabilities in the aggregate of $7,000,000 were not reflected
on the accompanying balance sheets at June 30, 1999 and December 31, 1998. The
remaining $2,000,000 liability, net of a discount of $308,000, and the
associated project costs were recorded upon the issuance of the First Mortgage
Notes and payment of $5,000,000 to the City of New Orleans in August 1999.
Paddlewheels will receive, among other things, an amount equal to
approximately 1% of "complex net revenues" of the Shreveport resort, as
defined, which approximates net revenues, in exchange for the assignment by
Paddlewheels of its joint venture interest in HCS to HCL and Sodak.
In May 1999, HCS entered into a ground lease with the City of Shreveport for
the land on which the Shreveport resort will be built. The term of the lease
begins when construction commences and ends on the tenth anniversary of the
date the Shreveport resort opens. HCS has options to renew the lease on the
same terms for up to an additional forty years. The lease may be further
renewed after that time at prevailing rates and terms for similar leases. The
City of Shreveport may terminate the lease if construction has not begun by
November 19, 1999 and HCS may terminate the lease at any time if the operation
of the Shreveport resort becomes uneconomic. Rental payments under the lease
are $10,000 per month during the construction period increasing to $450,000
per year upon opening and continuing at that amount for the remainder of the
initial lease term. During the first five-year renewal term, the annual rental
payment will be $402,500. Subsequent renewal period rental payments will
increase by 15% during each of the next four five-year renewal terms with no
further increases. In addition to the base rent, HCS will pay monthly
percentage rent of not less than $500,000 per year equal to 1% of monthly
adjusted gross revenues and the amount, if any, by which monthly parking
facilities net income exceeds the parking income credit, as all such terms are
defined in the lease agreement.
Third parties could assert obligations against HCS for liabilities that have
arisen or that might arise against its predecessors or the partners of its
predecessors with respect to any period prior to September 22, 1998.
Management believes that in the event such a claim arises, it would be
adequately covered under either existing indemnification agreements with the
former partners or insurance policies maintained by HCS's predecessors or
their partners.
(5) Supplemental Cash Flow Information
HCS paid no interest or taxes during the period from September 22, 1998 to
December 31, 1998 or during the six month period ended June 30, 1999.
F-9
<PAGE>
HOLLYWOOD CASINO SHREVEPORT
(Formerly QNOV)
A Development Stage General Partnership
NOTES TO FINANCIAL STATEMENTS--(Continued)
(6) Subsequent Events (unaudited)
In July 1999, HCL formed two new, wholly owned subsidiaries, HCS I, Inc. and
HCS II, Inc., both Louisiana corporations. HCL contributed $1,000 of capital
to each entity, along with 99% of its interest in HCS to HCS I, Inc. and the
remaining 1% to HCS II, Inc. In addition, the HCS joint venture agreement was
amended and restated on July 21, 1999, to reflect, among other things, the
admission of HCS I, Inc. and HCS II, Inc. as partners of HCS and the
withdrawal of HCL as managing partner of HCS. As a result, HCS I, Inc. now has
an effective 99% interest in HCS and has become its managing general partner.
HCS II, Inc. now has an effective 1% interest in HCS. HCS I, Inc. and HCS II,
Inc. have assumed HCL's obligation to cause HCS to pay Paddlewheels the 1% of
"complex net revenues" (see Note 4). Paddlewheels retained its 10% residual
interest in HCS. The revised partnership structure was approved by the LGCB on
July 20, 1999. HCL contributed an additional $300,000 to HCS through HCS I,
Inc. and HCS II, Inc. in July 1999. Upon the issuance of the First Mortgage
Notes, HCL contributed an additional $43,700,000 to HCS through HCS I, Inc.
and HCS II, Inc. HCL also loaned $1,000,000 to Paddlewheels which Paddlewheels
contributed to HCS. The source of funds for HCL's capital contributions and
loan to Paddlewheels was capital contributions from HCC, its parent.
Additionally, in July 1999, HCS formed a new, wholly owned subsidiary,
Shreveport Capital Corporation, a Louisiana corporation. HCS contributed
$1,000 of capital to Shreveport Capital Corporation. Shreveport Capital
Corporation was formed for the sole purpose of being a co-issuer with respect
to the First Mortgage Notes.
In August 1999, HCS and Shreveport Capital Corporation issued the First
Mortgage Notes. Fixed interest on the First Mortgage Notes at the annual rate
of 13% will be paid on each February 1 and August 1, beginning February 1,
2000. In addition, contingent interest will accrue on the First Mortgage Notes
and will be payable on each interest date after the Shreveport resort begins
operations. The amount of contingent interest will be equal to 5% of the
consolidated cash flow of HCS for the applicable period subject to a maximum
contingent interest of $5,000,000 for any four consecutive fiscal quarters.
The First Mortgage Notes are secured by, among other things, (i) a first
priority security interest in the net proceeds from the issue of the First
Mortgage Notes; (ii) a first priority security interest in substantially all
of the assets that will comprise the Shreveport resort other than up to
$35,000,000 in assets secured by equipment financing; (iii) a collateral
assignment of the Shreveport resort's interest in the principal agreements
under which it will be constructed, operated and managed and (iv) a collateral
assignment of certain licenses and permits with respect to the construction,
operation and management of the Shreveport resort. In addition, the First
Mortgage Notes are guaranteed on a senior secured basis by HCL, HCS I, Inc.
and HCS II, Inc. (collectively, the "Guarantors"). Such guarantees are secured
by a first priority secured interest in substantially all of the Guarantors'
assets, including a pledge of the capital stock of HCS I, Inc. and HCS II,
Inc. and their partnership interests in HCS. The security interest does not
include $2,500,000 held by HCL to fund its acquisition of Sodak.
The First Mortgage Notes may be redeemed at any time on or after August 1,
2003 at 106.5% of the then outstanding principal amount, decreasing to 103.25%
and 100% on August 1, 2004 and 2005, respectively. HCS may also redeem up to
35% of the First Mortgage Notes at a redemption price of 113% plus accrued
interest at any time prior to August 1, 2002 with the net cash proceeds of an
equity offering by HCC resulting in at least $20,000,000, but only to the
extent that such proceeds are contributed by HCC as equity to HCS.
The indenture to the First Mortgage Notes contains various provisions
limiting the ability of HCS to borrow money, pay distributions on its equity
interests or prepay debt, make investments, create liens, sell its assets or
enter into mergers or consolidations. In addition, the indenture restricts the
ability of the Guarantors and Shreveport Capital Corporation to acquire
additional assets, become liable for additional obligations or engage in any
significant business activities.
F-10
<PAGE>
INDEPENDENT AUDITORS' REPORT
To HWCC-Louisiana, Inc.:
We have audited the accompanying balance sheets of HWCC-Louisiana, Inc. (the
"Company") as of December 31, 1998 and 1997, and the related statements of
operations, changes in shareholder's equity (deficit), and cash flows for each
of the three years in the period ended December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of HWCC-Louisiana, Inc. as of December 31,
1998 and 1997, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1998 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
June 28, 1999
F-11
<PAGE>
HWCC-LOUISIANA, INC.
(wholly owned by Hollywood Casino Corporation)
BALANCE SHEETS (NOTE 1)
<TABLE>
<CAPTION>
June 30, December 31, December 31,
1999 1998 1997
----------- ------------ ------------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash.................................. $ 528,000 $ 68,000 $ 1,000
Accounts receivable................... -- -- 40,000
----------- ----------- -----------
Total current assets................ 528,000 68,000 41,000
----------- ----------- -----------
Investment in Hollywood Casino
Shreveport (Note 1).................... -- 2,483,000 --
----------- ----------- -----------
Furniture and Equipment................. 1,000 1,000 1,000
----------- ----------- -----------
Deferred Project Costs.................. 2,903,000 153,000 --
----------- ----------- -----------
$ 3,432,000 $ 2,705,000 $ 42,000
=========== =========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
(DEFICIT)
Current Liabilities:
Accounts payable...................... $ 595,000 $ 15,000 $ --
Due to affiliates..................... 109,000 1,321,000 1,117,000
----------- ----------- -----------
Total current liabilities........... 704,000 1,336,000 1,117,000
----------- ----------- -----------
Commitments and Contingencies (Note 6)
Shareholder's Equity (Deficit):
Common stock, $1 par value per share,
1,000,000 shares authorized, 1,000
shares issued and outstanding........ 1,000 1,000 1,000
Additional paid-in capital............ 3,900,000 2,500,000 --
Accumulated deficit................... (1,173,000) (1,132,000) (1,076,000)
----------- ----------- -----------
2,728,000 1,369,000 (1,075,000)
----------- ----------- -----------
$ 3,432,000 $ 2,705,000 $ 42,000
=========== =========== ===========
</TABLE>
The accompanying footnotes to financial statements are an integral part of
these balance sheets.
F-12
<PAGE>
HWCC-LOUISIANA, INC.
(wholly owned by Hollywood Casino Corporation)
STATEMENTS OF OPERATIONS (NOTE 1)
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
----------------------- -----------------------------
1999 1998 1998 1997 1996
----------- ----------- -------- --------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Development expenses:
Travel................ $(20,000) $(11,000) $(31,000) $(109,000) $(28,000)
Consulting and other
professional
services............. (63,000) -- -- (205,000) (7,000)
Lobbying.............. -- (15,000) (15,000) (96,000) --
Write off deferred
project costs........ -- (10,000) (10,000) (139,000) --
Other, net of
reimbursements....... (11,000) (5,000) 17,000 (95,000) (12,000)
-------- -------- -------- --------- --------
Total development
expenses............. (94,000) (41,000) (39,000) (644,000) (47,000)
General and
administrative
expenses............... (4,000) -- -- -- --
Interest income......... 45,000 -- -- -- --
-------- -------- -------- --------- --------
Loss before taxes and
other items............ (53,000) (41,000) (39,000) (644,000) (47,000)
Income tax benefit...... -- -- -- -- --
-------- -------- -------- --------- --------
Loss before other
items.................. (53,000) (41,000) (39,000) (644,000) (47,000)
Pre-acquisition losses
(Note 1)............... 12,000 -- -- -- --
Equity in losses of
Hollywood Casino
Shreveport (Note 1).... -- -- (17,000) -- --
-------- -------- -------- --------- --------
Net loss............ $(41,000) $(41,000) $(56,000) $(644,000) $(47,000)
======== ======== ======== ========= ========
</TABLE>
The accompanying footnotes to financial statements are an
integral part of these financial statements
F-13
<PAGE>
HWCC-LOUISIANA, INC.
(wholly owned by Hollywood Casino Corporation)
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY (DEFICIT) (NOTE 1)
For the Three Years Ended December 31, 1998 and
For the Six Months Ended June 30, 1999 (unaudited)
<TABLE>
<CAPTION>
Common Stock
------------- Additional Accumulated
Shares Amount Paid-in Capital Deficit
------ ------ --------------- -----------
<S> <C> <C> <C> <C>
Balances, January 1, 1996........... 1,000 $1,000 $ -- $ (385,000)
Net loss.......................... -- -- -- (47,000)
----- ------ ---------- -----------
Balances, December 31, 1996......... 1,000 1,000 -- (432,000)
Net loss.......................... -- -- -- (644,000)
----- ------ ---------- -----------
Balances, December 31, 1997......... 1,000 1,000 -- (1,076,000)
Capital contribution.............. -- -- 2,500,000 --
Net loss.......................... -- -- -- (56,000)
----- ------ ---------- -----------
Balances, December 31, 1998......... 1,000 1,000 2,500,000 (1,132,000)
Capital contribution.............. -- -- 1,400,000 --
Net loss(1)....................... -- -- -- (41,000)
----- ------ ---------- -----------
Balances, June 30, 1999(1).......... 1,000 $1,000 $3,900,000 $(1,173,000)
===== ====== ========== ===========
</TABLE>
- --------
(1) Unaudited
The accompanying footnotes to financial statements are an integral part of
these financial statements.
F-14
<PAGE>
HWCC-LOUISIANA, INC.
(wholly owned by Hollywood Casino Corporation)
STATEMENTS OF CASH FLOWS (NOTE 1)
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
------------------------ --------------------------------
1999 1998 1998 1997 1996
----------- ----------- ----------- --------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Operating Activities:
Net loss.............. $ (41,000) $(41,000) $ (56,000) $(644,000) $(47,000)
Adjustments to
reconcile net loss to
cash provided by
operating activities:
Pre-acquisition
losses............. 12,000 -- -- -- --
Write off deferred
project costs...... -- 10,000 10,000 139,000 --
Equity in losses of
Hollywood Casino
Shreveport......... -- -- 17,000 -- --
Decrease (increase)
in accounts
receivable......... -- 40,000 40,000 5,000 (45,000)
(Decrease) increase
in due to
affiliate.......... (1,212,000) 195,000 204,000 639,000 93,000
Increase in accounts
payable............ 78,000 -- 15,000 -- --
----------- -------- ----------- --------- --------
Cash (used in)
provided by
operating
activities....... (1,163,000) 204,000 230,000 139,000 1,000
----------- -------- ----------- --------- --------
Cash Used in Investing
Activities:
Increase in cash from
acquisition (Note
1)................... 1,524,000 -- -- -- --
Investment in
Hollywood Casino
Shreveport........... -- -- (2,500,000) -- --
Purchase of furniture
and equipment........ -- -- -- (1,000) --
Deferred project
costs................ (1,301,000) (148,000) (163,000) (139,000) --
----------- -------- ----------- --------- --------
Cash provided by
(used in)
investing
activities....... 223,000 (148,000) (2,663,000) (140,000) --
----------- -------- ----------- --------- --------
Cash Provided by
Financing Activities:
Capital
contributions........ 1,400,000 -- 2,500,000 -- --
----------- -------- ----------- --------- --------
Net increase
(decrease) in cash... 460,000 56,000 67,000 (1,000) 1,000
Cash at beginning of
period............... 68,000 1,000 1,000 2,000 1,000
----------- -------- ----------- --------- --------
Cash at end of
period............... $ 528,000 $ 57,000 $ 68,000 $ 1,000 $ 2,000
=========== ======== =========== ========= ========
</TABLE>
The accompanying footnotes to financial statements are an integral part of
these financial statements.
F-15
<PAGE>
HWCC-LOUISIANA, INC.
(wholly owned by Hollywood Casino Corporation)
NOTES TO FINANCIAL STATEMENTS
(1) Organization, Business and Basis of Presentation
HWCC-Louisiana, Inc. ("HCL") is a Louisiana corporation and wholly owned
subsidiary of Hollywood Casino Corporation ("HCC"). HCL was formed in April
1993 for the purpose of obtaining a license to develop and own a riverboat
casino in Louisiana. HCL's initial efforts to obtain sites in Lake Charles and
Bossier City, Louisiana proved unsuccessful. In September 1998, HCL, Sodak
Louisiana, L.L.C. ("Sodak") and Shreveport Paddlewheels, L.L.C.
("Paddlewheels") reconstituted a general partnership which, while controlled
by its former partners, owned and operated a riverboat gaming facility in New
Orleans, Louisiana. The former partners ceased operating the riverboat casino
in October 1997. The former partners, an affiliate of Paddlewheels and an
unrelated third party, requested and obtained approval from the Louisiana
Gaming Control Board (the "LGCB") to move their licensed site to the City of
Shreveport, approximately 180 miles east of Dallas, Texas. Other than holding
its riverboat gaming license, the partnership had no business operations and
remained a dormant entity until September 22, 1998, when the former partners
withdrew and the partnership was reconstituted. HCL, Sodak and Paddlewheels
received assignments of interests from the former partners and obtained the
necessary approvals from the LGCB to proceed with the project in Shreveport.
In June 1999, HCL obtained approval to change the name of the partnership to
Hollywood Casino Shreveport ("HCS").
As currently planned, the Shreveport resort will consist of a three-level
riverboat casino with approximately 1,370 slot machines and 75 table games; a
405-room, all suite, art deco style hotel; and approximately 42,000 square
feet of retail, restaurant and entertainment facilities.
Riverboat gaming operations in Louisiana are subject to regulatory control
by the LGCB. HCS's current license to operate the Shreveport casino expires on
October 15, 1999. HCS has filed for the statutory one year renewal of its
owner's license and management anticipates that such renewal will be approved
by the LGCB during 1999. The Louisiana State legislature recently passed
legislation providing for an increase in the renewal period from one year to
five years. At this time, management is uncertain as to what effect, if any,
this action will have on the October 1999 renewal deadline or on any future
license renewals.
For the period from September 22, 1998 until April 23, 1999, HCL's
investment in HCS was accounted for under the equity method of accounting. It
was originally anticipated that HCS would develop the Shreveport resort with
each of HCL and Sodak having a 50% interest in the development and subsequent
operations. Paddlewheels was to have a residual interest after the
commencement of operations and in the event that the project was ever sold
amounting to 10% plus any capital contributions made by Paddlewheels to HCS or
otherwise credited to their account (see Note 6). On March 31, 1999, HCL
entered into a definitive agreement with Sodak's parent to acquire Sodak for
the $2,500,000 Sodak had contributed to HCS, with $1,000 to be paid at closing
and the remainder to be paid six months after the opening of the Shreveport
resort. The revised structure of the partnership was approved by the LGCB on
April 20, 1999. As a result, HCL now has an effective 100% ownership interest
in HCS with Paddlewheels retaining their 10% residual interest (see Note 8).
The acquisition has been accounted for under the purchase method of
accounting. Accordingly, effective as of the April 23, 1999 closing of HCL's
acquisition of Sodak, Sodak became a consolidated subsidiary of HCL. The
accompanying balance sheet as of June 30, 1999 reflects the April 23, 1999
acquisition of Sodak and the resulting consolidation of Sodak and HCS with
HCL. The accompanying statement of operations for the six month period ended
June 30, 1999 reflects the consolidated operations of HCL, Sodak and HCS for
the period from January 1, 1999 with the pre-acquisition losses of Sodak from
its investment in HCS reflected as a nonoperating item. Sodak had no
operations during the period presented.
The total estimated cost of the Shreveport resort is $230,000,000. Equity
contributions from HCC have provided $50,000,000 of the funds necessary.
During August 1999, HCS successfully completed the issuance of $150,000,000 of
13% First Mortgage Notes with contingent interest (the "First Mortgage Notes")
due 2006 (see Note 8); it is expected that a commitment for $30,000,000 of
furniture, fixture and equipment financing will provide the remaining funds
for the project. Construction began in August 1999 with a planned opening date
early in the fourth quarter of 2000.
F-16
<PAGE>
HWCC-LOUISIANA, INC.
(wholly owned by Hollywood Casino Corporation)
NOTES TO FINANCIAL STATEMENTS--(Continued)
The consolidated balance sheet as of June 30, 1999 and the statments of
operations for the six months ended June 30, 1999 and 1998 have been prepared
by HCL without audit. In the opinion of management, these financial statements
contain all adjustments (consisting of only normal recurring adjustments)
necessary to present fairly the consolidated financial position of HCL as of
June 30, 1999 and the results of its operations and cash flows for the six
month periods ended June 30, 1999 and 1998.
(2) Summary of Significant Accounting Policies
The significant accounting policies followed in the preparation of the
accompanying financial statements of HCL are discussed below. The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that effect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Furniture and equipment--
Furniture and equipment is currently in storage and, accordingly, is not
being depreciated. Once placed in service, it will be depreciated using the
straight line method over the estimated useful life of five years.
Deferred project costs--
Costs associated with the development and construction of the Shreveport
resort are being deferred. Construction costs, including the applicable
interest on construction financing, will be capitalized and, commencing with
the opening of the Shreveport resort, will be amortized over the estimated
useful lives of the resulting assets. Start up costs are accounted for under
the provisions of Statement of Position 98-5 issued by the American Institute
of Certified Public Accountants which requires that such costs be expensed as
incurred.
Income taxes--
HCL is included in the consolidated federal income tax return of HCC.
Pursuant to an agreement between HCL and HCC, HCL's provision for taxes is
based on the amount of tax that would be provided if a separate federal income
tax return were to be filed.
(3) Acquisition of Sodak Louisiana, L.L.C. (unaudited)
As discussed in Note 1, HCL acquired Sodak on April 23, 1999 for a cash
payment of $1,000 and contingent consideration of $2,499,000 to be paid six
months after the Shreveport resort opens. Until such time as the Shreveport
resort opens, the $2,499,000 difference between Sodak's basis in the assets
acquired and the $1,000 paid by HCL will be treated as an adjustment to reduce
the recorded amount of project costs to the amount paid with respect to such
costs. Sodak had no operating activities prior to the acquisition date other
than equity from its investment in HCS and its only asset was its investment
in HCS. When the Shreveport resort opens, the contingent consideration will be
recorded and project costs increased to reflect the additional cost incurred
by HCL. The following condensed pro forma consolidated statement of operations
of HCL for the year ended December 31, 1998 is presented to reflect the
activities of HCL and Sodak on a consolidated basis as if the acquisition of
Sodak had occurred on January 1, 1998.
F-17
<PAGE>
HWCC-LOUISIANA, INC.
(wholly owned by Hollywood Casino Corporation)
NOTES TO FINANCIAL STATEMENTS--(Continued)
Condensed Pro Forma Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Year Ended
December 31, 1998
-----------------
<S> <C>
Interest income............................................ $ 55,000
Preopening expenses........................................ (90,000)
Development expenses....................................... (39,000)
--------
Net loss................................................... $(74,000)
========
</TABLE>
During July 1999, Sodak was merged into HCL. As a result of the merger, HCL
and Paddlewheels became the only partners in HCS (see Note 8).
(4) Income Taxes
HCL's benefit for income taxes consists of the following:
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
------------------ ----------------------------
1999 1998 1998 1997 1996
-------- -------- ------- --------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Deferred (provision)
benefit:
Federal................ $ (1,000) $ (2,000) $ 8,000 $ 170,000 $ 7,000
State.................. (4,000) (2,000) 1,000 40,000 3,000
Change in valuation
allowance............... 5,000 4,000 (9,000) (210,000) (10,000)
-------- -------- ------- --------- --------
$ -- $ -- $ -- $ -- $ --
======== ======== ======= ========= ========
</TABLE>
F-18
<PAGE>
HWCC-LOUISIANA, INC.
(wholly owned by Hollywood Casino Corporation)
NOTES TO FINANCIAL STATEMENTS--(Continued)
A reconciliation between the calculated tax benefit on losses based on the
statutory rates in effect and the effective tax rates for the six month
periods ended June 30, 1999 and 1998 and for the years ended December 31,
1998, 1997 and 1996 follows:
<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
----------------- ----------------------------
1999 1998 1998 1997 1996
-------- ------- ------- --------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Calculated income tax
benefit at statutory
rate.................... $ 6,000 $ 6,000 $ 9,000 $ 219,000 $ 7,000
Change in valuation
allowance............... 5,000 4,000 (9,000) (210,000) (10,000)
Lobbying................. -- (2,000) -- (31,000) --
Other.................... (11,000) (8,000) -- 22,000 3,000
-------- ------- ------- --------- --------
Tax benefit as shown on
statement of
operations.............. $ -- $ -- $ -- $ -- $ --
======== ======= ======= ========= ========
</TABLE>
Deferred taxes result from differences in the timing of deductions taken
between tax and financial reporting purposes for the write off of deferred
project costs.
At June 30, 1999 and December 31, 1998, HCL had net operating loss
carryforwards ("NOL's") totaling approximately $869,000 and $837,000,
respectively, which do not begin to expire until 2012. Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", requires that the
benefit of such NOL's be recorded as an asset and, to the extent that
management can not assess that the utilization of all or a portion of such
deferred tax asset is more likely than not, a valuation allowance should be
recorded. Based on the losses incurred to date and the lack of any current
operating income, management has provided a valuation allowance for the entire
deferred tax asset for all periods presented.
The components of HCL's net deferred tax asset are as follows:
<TABLE>
<CAPTION>
December 31,
--------------------
June 30, 1999 1998 1997
------------- --------- ---------
(Unaudited)
<S> <C> <C> <C>
Deferred tax asset--
Net operating loss carryforward....... $ 350,000 $ 343,000 $ 263,000
Write off of deferred project costs... 37,000 49,000 121,000
--------- --------- ---------
Deferred tax asset...................... 387,000 392,000 384,000
Valuation allowance..................... (387,000) (392,000) (384,000)
--------- --------- ---------
$ -- $ -- $ --
========= ========= =========
</TABLE>
(5) Transactions with Affiliates
HCC and certain of its subsidiaries provide services to HCL and pay direct
costs on HCL's behalf. Services provided include personnel for project,
administrative and other purposes. HCL either expenses or capitalizes such
costs in accordance with its normal capitalization policies as described in
Note 2. Amounts payable to HCC and its subsidiaries for services and for the
payment of third party costs are included in due to affiliates on the
accompanying balance sheets. During April 1999, HCC made a capital
contribution to HCL of $1,400,000. Proceeds from the capital contribution were
used to repay HCC and its subsidiaries with respect to such advances.
The operations of the Shreveport resort will be managed by HWCC-Shreveport,
Inc., a wholly owned subsidiary of HCC, under the terms of a management
agreement. The management agreement became effective when the LGCB approved
the development of the Shreveport resort and will remain in effect for so long
as
F-19
<PAGE>
HWCC-LOUISIANA, INC.
(wholly owned by Hollywood Casino Corporation)
NOTES TO FINANCIAL STATEMENTS--(Continued)
HCS holds its license, unless the management agreement is terminated earlier
in accordance with its terms. Under the terms of the management agreement, HCS
will pay HWCC-Shreveport basic and incentive management fees for its services.
The basic fee will be equal to 2% of gross revenues, as defined in the
agreement, from the operation of the Shreveport resort. The incentive fee will
be equal to the sum of (i) 5% of earnings before interest, taxes, depreciation
and amortization ("EBITDA"), as defined in the agreement, in excess of
$25,000,000 and up to $35,000,000; (ii) 7% of EBITDA in excess of $35,000,000
and up to $40,000,000; and (iii) 10% of EBITDA over $40,000,000. In addition,
HCS will reimburse HWCC-Shreveport for expenses incurred in connection with
services provided under the management agreement.
HCS has also entered into a technical services agreement with HWCC-
Shreveport to provide certain construction and project supervision services
prior to the opening of the Shreveport resort. HCS will reimburse HWCC-
Shreveport for expenses incurred in connection with services provided under
the technical services agreement.
HCS has also entered into an agreement with Paddlewheels to provide certain
marine services. The Marine Services Agreement became effective on September
22, 1998 and, in addition to the reimbursement of Paddlewheels for its direct
expenses incurred, if any, HCS will pay a monthly fee of $30,000 effective
with the opening of the Shreveport resort.
(6) Commitments
As discussed in Note 1, the former partners of QNOV previously conducted
riverboat gaming operations in New Orleans. In connection with the change in
site to Shreveport, the former partners entered into a Compromise Agreement
with the City of New Orleans under which the city would be paid $10,000,000.
One of the former partners paid $5,000,000 of the amount to the City of New
Orleans. The current partners of HCS agreed that HCS would pay the remaining
$5,000,000 upon securing financing to construct the Shreveport resort; such
payment was made in August 1999. In addition, the current partners of HCS
agreed that HCS would reimburse the former partner for $2,000,000 of the
amount it paid to the city; the reimbursement is to be paid upon the earlier
of the termination of construction of the Shreveport resort or in monthly
installments of $200,000 commencing with the opening of the Shreveport resort.
Because the $5,000,000 and the $2,000,000 did not become obligations until
financing was secured, these contingent liabilities in the aggregate of
$7,000,000 were not reflected by HCS at June 30, 1999 or December 31, 1998.
The remaining $2,000,000 liability, net of a discount of $308,000, and the
associated project costs were recorded upon the issuance of the First Mortgage
Notes and payment of $5,000,000 to the City of New Orleans in August 1999.
HCL agreed that upon obtaining construction financing for the Shreveport
resort, it would loan $1,000,000 to Paddlewheels which Paddlewheels would use
to make a $1,000,000 capital contribution to HCS. HCL loaned the $1,000,000 to
Paddlewheels and Paddlewheels made its capital contribution to HCS in August
1999. The $1,000,000 will be reflected as minority interest in future
consolidated balance sheets of HCL. The loan to Paddlewheels accrues interest
at the rate of prime commencing with the opening of the Shreveport resort and
will be payable monthly. Because the loan does not bear interest prior to
completion of the Shreveport resort, HCL will record a discount on the note
which will be accreted during the construction period resulting in a note
recievable balance of $1,000,000 at the projected completion date. Principle
on the loan is payable on the tenth anniversary of the opening of the
Shreveport resort.
Paddlewheels was also given credit for an additional $1,000,000 capital
contribution at the time construction financing was obtained and the
$5,000,000 liability described in the first paragraph of this footnote was
paid. Such credit was in recognition of guarantees provided by an affiliate of
Paddlewheels necessary to obtain LGCB
F-20
<PAGE>
HWCC-LOUISIANA, INC.
(wholly owned by Hollywood Casino Corporation)
NOTES TO FINANCIAL STATEMENTS--(Continued)
approval for the Shreveport resort. The additional $1,000,000 credit to
Paddlewheel's capital account will result in an additional $1,000,000 minority
interest on HCL's consolidated balance sheet and will be treated as an
additional project cost.
Paddlewheels will also receive, among other things, an amount equal to 1% of
"complex net revenues" of the Shreveport resort, as defined, which
approximates net revenues, in exchange for the assignment by Paddlewheels and
its affiliates of their joint venture interest in HCS to HCL and Sodak.
In May 1999, HCS entered into a ground lease with the City of Shreveport for
the land on which the Shreveport resort will be built. The term of the lease
begins when construction commences and ends on the tenth anniversary of the
date the Shreveport resort opens. HCS has options to renew the lease on the
same terms for up to an additional forty years. The lease may be further
renewed after that time at prevailing rates and terms for similar leases. The
City of Shreveport may terminate the lease if construction has not begun by
November 19, 1999 and HCS may terminate the lease at any time if the operation
of the Shreveport resort becomes uneconomic. Rental payments under the lease
are $10,000 per month during the construction period increasing to $450,000
per year upon opening and continuing at that amount for the remainder of the
initial lease term. During the first five-year renewal term, the annual rental
payment will be $402,500. Subsequent renewal period rental payments will
increase by 15% during each of the next four five-year renewal terms with no
further increases. In addition to the base rent, HCS will pay monthly
percentage rent of not less than $500,000 per year equal to 1% of monthly
adjusted gross revenues and the amount, if any, by which monthly parking
facilities net income exceeds the parking income credit, as all such terms are
defined in the lease agreement.
Third parties could assert obligations against HCS for liabilities that have
arisen or that might arise against its predecessors or the partners of its
predecessors with respect to any period prior to September 22, 1998.
Management believes that in the event such a claim arises, it would be
adequately covered under either existing indemnification agreements with the
former partners or insurance policies maintained by HCS's predecessors or
their partners.
(7) Supplemental Cash Flow Information
HCL paid no interest or income taxes during the years ended December 31,
1998, 1997 or 1996 or during the six month periods ended June 30, 1999 or
1998.
In connection with the acquisition of Sodak, HCL assumed the following
liabilities:
<TABLE>
<S> <C>
Fair value of assets acquired.................................. $ 3,936,000
Cash acquired.................................................. 1,525,000
Elimination of HCL's investment in HCS......................... (2,471,000)
Contingent liability for purchase.............................. (2,499,000)
Pre-acquisition losses attributable to joint venture partner... 12,000
Cash paid for capital stock.................................... (1,000)
-----------
Liabilties assumed............................................. $ 502,000
===========
</TABLE>
(8) Subsequent Events (unaudited)
In July 1999, HCL formed two new, wholly owned subsidiaries, HCS I, Inc. and
HCS II, Inc., both Louisiana corporations. HCL contributed $1,000 of capital
to each entity along with 99% of its interest in HCS to HCS I, Inc. and the
remaining 1% of its interest to HCS II, Inc. In addition, the HCS joint
venture agreement
F-21
<PAGE>
HWCC-LOUISIANA, INC.
(wholly owned by Hollywood Casino Corporation)
NOTES TO FINANCIAL STATEMENTS--(Continued)
was amended and restated on July 21, 1999, to reflect, among other things, the
admission of HCS I, Inc. and HCS II, Inc. as partners of HCS and the
withdrawal of HCL as managing partner of HCS. As a result, HCS I, Inc. now has
an effective 99% interest in HCS, and has become its managing general partner.
HCS II, Inc. now has an effective 1% interest in HCS. HCS I, Inc. and HCS II,
Inc. have assumed HCL's obligation to cause HCS to pay Paddlewheels the 1% of
"complex net revenues" (see note 6). Paddlewheels retained its 10% residual
interest in HCS. The revised partnership structure was approved by the LGCB on
July 20, 1999.
Also in July 1999, HCC contributed an additional $300,000 to HCL which in
turn was contributed to HCS through HCS I, Inc. and HCS II, Inc.
Additionally, in July 1999, HCS formed a new, wholly owned subsidiary,
Shreveport Capital Corporation, a Louisiana corporation. HCS contributed
$1,000 of capital to Shreveport Capital Corporation. Shreveport Capital
Corporation was formed for the sole purpose of being a co-issuer with respect
to the First Mortgage Notes.
In August 1999, HCS and Shreveport Capital Corporation issued the First
Mortgage Notes. Fixed interest on the First Mortgage Notes at the annual rate
of 13% will be paid on each February 1 and August 1, beginning February 1,
2000. In addition, contingent interest will accrue on the First Mortgage Notes
and will be payable on each interest date after the Shreveport resort begins
operations. The amount of contingent interest will be equal to 5% of the
consolidated cash flow of HCS for the applicable period subject to a maximum
contingent interest of $5,000,000 for any four consecutive fiscal quarters.
The First Mortgage Notes are secured by, among other things, (i) a first
priority security interest in the net proceeds from the issue of the First
Mortgage Notes; (ii) a first priority security interest in substantially all
of the assets that will comprise the Shreveport resort other than up to
$35,000,000 in assets secured by equipment financing; (iii) a collateral
assignment of the Shreveport resort's interest in the principal agreements
under which it will be constructed, operated and managed and (iv) a collateral
assignment of certain licenses and permits with respect to the construction,
operation and management of the Shreveport resort. In addition, the First
Mortgage Notes are guaranteed on a senior secured basis by HCL, HCS I, Inc.
and HCS II, Inc. (collectively, the "Guarantors"). Such guarantees are secured
by a first priority secured interest in substantially all of the Guarantors'
assets, including a pledge of the capital stock of HCS I, Inc. and HCS II,
Inc. and their partnership interests in HCS. The security interest does not
include $2,500,000 held by HCL to fund its acquisition of Sodak.
The First Mortgage Notes may be redeemed at any time on or after August 1,
2003 at 106.5% of the then outstanding principal amount, decreasing to 103.25%
and 100% on August 1, 2004 and 2005, respectively. HCS may also redeem up to
35% of the First Mortgage Notes at a redemption price of 113% plus accrued
interest at any time prior to August 1, 2002 with the net cash proceeds of an
equity offering by HCC resulting in at least $20,000,000, but only to the
extent that such proceeds are contributed by HCC as equity to HCS.
The indenture to the First Mortgage Notes contains various provisions
limiting the ability of HCS to borrow money, pay distributions on its equity
interests or prepay debt, make investments, create liens, sell its assets or
enter into mergers or consolidations. In addition, the indenture restricts the
ability of the Guarantors and Shreveport Capital Corporation to acquire
additional assets, become liable for additional obligations or engage in any
significant business activities.
F-22
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
OF HOLLYWOOD CASINO CORPORATION
The following selected consolidated financial information of Hollywood
Casino Corporation for each of the five years in the period ended December 31,
1998 is derived from its audited, consolidated financial statements. The
financial information for 1996, 1995 and 1994 includes the operating results
of Greate Bay Casino Corporation. On December 31, 1996, Hollywood Casino
distributed its approximate 80% ownership interest in Greate Bay to its
stockholders. In 1998, our results of operations were negatively impacted by a
significant increase in gaming taxes imposed by the Illinois legislature.
Gaming taxes incurred by the Aurora casino increased by $11.6 million in 1998.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------
1998 1997(1) 1996 1995 1994
-------- -------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net revenues............ $268,760 $267,757 $530,580 $539,943 $464,384
-------- -------- -------- -------- --------
Expenses:
Departmental........... 197,836 185,753 426,769 396,157 338,776
General and
administrative........ 17,778 16,790 37,169 36,914 33,189
Management and
consulting fees....... 1,200 3,927 -- -- --
Depreciation and
amortization.......... 16,562 18,901 40,836 40,955 30,960
Amortization of
preopening costs...... -- -- -- -- 11,002
Development............ 779 1,480 1,065 6,765 5,154
-------- -------- -------- -------- --------
Total expenses........ 234,155 226,851 505,839 480,791 419,081
-------- -------- -------- -------- --------
Income from operations
before write down of
assets................. 34,605 40,906 24,741 59,152 45,303
Write down of assets.... -- (19,678) (22,141) -- --
-------- -------- -------- -------- --------
Income from operations.. 34,605 21,228 2,600 59,152 45,303
-------- -------- -------- -------- --------
Non-operating income
(expenses):
Interest income........ 2,844 1,896 3,101 3,708 4,227
Interest expense....... (30,260) (30,437) (59,090) (55,558) (46,233)
Tax settlement costs... (1,087) -- -- -- --
(Loss) gain on disposal
of assets............. (61) 552 (1,841) (514) (26)
-------- -------- -------- -------- --------
Total non-operating
expenses, net......... (28,564) (27,989) (57,830) (52,364) (42,032)
-------- -------- -------- -------- --------
Income (loss) before
income taxes,
extraordinary and other
items.................. 6,041 (6,761) (55,230) 6,788 3,271
Income tax provision.... (816) (5,359) (63) (268) (1,527)
-------- -------- -------- -------- --------
Income (loss) before
extraordinary and other
items.................. 5,225 (12,120) (55,293) 6,520 1,744
Minority interest in
earnings of Limited
Partnership............ (6,494) (5,012) -- -- --
-------- -------- -------- -------- --------
(Loss) income before
extraordinary items.... (1,269) (17,132) (55,293) 6,520 1,744
Extraordinary items:
Early extinguishment of
debt, net of related
tax benefits(2)....... (336) (215) -- (23,808) 126
-------- -------- -------- -------- --------
Net (loss) income....... $ (1,605) $(17,347) $(55,293) $(17,288) $ 1,870
======== ======== ======== ======== ========
Basic (loss) income per
common share(3):
(Loss) income before
extraordinary items... $ (.05) $ (.69) $ (2.24) $ .27 $ .07
Extraordinary items.... (.01) (.01) -- (.97) .01
-------- -------- -------- -------- --------
Net (loss) income...... $ (.06) $ (.70) $ (2.24) $ (.70) $ .08
======== ======== ======== ======== ========
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1998 1997(1) 1996 1995 1994
----- ------- ------ ----- ----
(in thousands)
<S> <C> <C> <C> <C> <C>
Diluted (loss) income per common share(3):
(Loss) income before extraordinary items.... $(.05) $(.69) $(2.24) $ .26 $.07
Extraordinary items......................... (.01) (.01) -- (.96) .01
----- ----- ------ ----- ----
Net (loss) income........................... $(.06) $(.70) $(2.24) $(.70) $.08
===== ===== ====== ===== ====
</TABLE>
<TABLE>
<CAPTION>
As of December 31,
---------------------------------------------
1998 1997(1) 1996(1) 1995 1994
-------- -------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total assets................... $270,740 $276,218 $308,158 $514,463 $464,135
Total debt, including capital
lease obligations............. 227,529 226,922 232,046 496,847 432,117
Shareholders' equity
(deficit)..................... 7,512 9,117 38,836 (57,233) (39,947)
</TABLE>
- --------
(1) Restated to reflect the modification of Hollywood Casino's income tax
treatment resulting from its distribution of the common stock of Greate
Bay.
(2) Includes the following items: (i) for 1998 and 1997, costs associated with
mandatory semi-annual offers to repurchase Hollywood Casino's 12 3/4%
Senior Secured Notes, net of related tax benefit, and (ii) for 1995, costs
associated with the October 1995 issuance of Hollywood Casino's 12 3/4%
Senior Secured Notes.
(3) During 1997, Hollywood Casino adopted the provisions of Financial
Accounting Standards No. 128, "Earnings per Share." The earnings per share
calculation has been restated for all prior periods presented.
S-2
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You must
not rely on any unauthorized information. This prospectus does not offer to
sell or buy any securities in any jurisdiction where it is unlawful. The
information in this prospectus is current as of the date hereof.
---------------------
TABLE OF CONTENTS
---------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 1
Risk Factors............................................................. 9
Use of Proceeds.......................................................... 22
Capitalization........................................................... 24
Selected Financial Information........................................... 25
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 27
Business................................................................. 31
Management............................................................... 47
Security Ownership of Certain Beneficial Owners and Management........... 51
Certain Relationships and Related Transactions........................... 52
Description of the Exchange Offer........................................ 53
Description of the Registered Notes...................................... 61
United States Federal Income Tax Considerations.......................... 111
Plan of Distribution..................................................... 111
Legal Matters............................................................ 112
Experts.................................................................. 112
Where You Can Find More Information...................................... 112
Index to Financial Statements............................................ F-1
Selected Consolidated Financial Information of Hollywood Casino
Corporation............................................................. S-1
</TABLE>
Until , 1999, all dealers effecting transactions in the registered notes,
whether or not participating in this distribution may be required to deliver a
prospectus. This is in addition to the obligation of dealers to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[HOLLYWOOD SHREVEPORT LOGO APPEARS HERE]
Hollywood Casino Shreveport
Shreveport Capital Corporation
Offer to Exchange all Outstanding
Original 13% First Mortgage Notes due 2006
for
Registered 13% First Mortgage Notes due 2006
-------------------------
PROSPECTUS
-------------------------
, 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. Indemnification of Directors and Officers.
Hollywood Casino Shreveport
Not applicable.
Shreveport Capital Corporation
Shreveport Capital Corporation ("Shreveport Capital") is incorporated under
the laws of the State of Louisiana. Section 83 of the Louisiana Business
Corporation Law (the "LBCL") provides that a Louisiana corporation may
indemnify any person against whom an action, suit or proceeding is brought or
threatened (by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or agent of another business,
corporation, partnership or other enterprise) against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred in connection with any such action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. In the case of actions by or in the right of the corporation,
the indemnity is limited to expenses (including attorneys' fees and amounts
paid in settlement not exceeding, in the judgment of the board of directors,
the estimated amount expenses of litigating the action to conclusion) actually
and reasonably incurred in connection with a defense or settlement; provided
that no indemnity may be made in respect of any matter in which the person
shall have been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable for willful or intentional
misconduct in performance of his duty to the corporation, unless and only to
the extent that the court determines upon application that such person is
fairly and reasonably entitled to such indemnity.
To the extent a person has been successful on the merits or otherwise in
defense of any action, suit or proceeding or in defense of any claim, issue or
matter therein, the statute provides that he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him
in connection therewith. Section 83 also provides for, among other things,
procedures for indemnification, advancement of expenses, non-exclusivity of
the provisions of Section 83 with respect to indemnification and advancement
of expenses, and insurance (including self-insurance) with respect to
liabilities incurred by directors, officers and others.
Section 24(C)(4) of the LBCL provides that a corporation may eliminate or
limit the liability of a director or officer to the corporation or its
shareholders for monetary damages for breach of fiduciary duty, except for
liability (i) for breach of any of the director's or officer'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) under Section 92(D) of the LBCL (relating to unlawful dividends and
unlawful stock repurchases and redemptions); and (iv) for any transaction from
which the director or officer derived an improper personal benefit.
Shreveport Capital's Articles of Incorporation and Bylaws provide for the
indemnification of directors and officers of Shreveport Capital to the fullest
extent permitted by law. In addition, the Bylaws provide for the
indemnification of expenses actually and reasonably incurred by (i) a director
or officer of any subsidiary of Shreveport Capital, (ii) a fiduciary with
respect to any employee benefit plan of Shreveport Capital, or (iii) a
director, officer, partner, employee or agent of another corporation,
partnership, joint venture, trust or other for-profit or non-profit entity or
enterprise, if such position is or was held at the request of Shreveport
Capital.
The above discussion of the Articles of Incorporation and Bylaws of
Shreveport Capital and of Sections 83 and 24(C)(4) of the LBCL is not intended
to be exhaustive and is qualified in its entirety by the Articles of
Incorporation and Bylaws of Shreveport Capital and the LBCL.
II-1
<PAGE>
HWCC-Louisiana, Inc.
The Bylaws of HWCC-Louisiana, Inc., a Louisiana corporation ("HWCC-
Louisiana"), provide for indemnification of directors and officers to the
fullest extent permitted by the LBCL, as it currently exists or may hereafter
be amended. In addition, the Bylaws provide for the indemnification of
expenses actually and reasonably incurred by a director, officer, partner,
employee or agent of another business, nonprofit or foreign corporation,
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, if such position is or was held at the
request of HWCC-Louisiana.
The above discussion of the Bylaws of HWCC-Louisiana and of Sections 83 and
24(C)(4) of the LBCL is not intended to be exhaustive and is qualified in its
entirety by the Bylaws of HWCC-Louisiana and the LBCL.
HCS I, Inc.
The Articles of Incorporation and Bylaws of HCS I, Inc., a Louisiana
corporation ("HCS I"), provide for the indemnification of directors and
officers of HCS I to the fullest extent permitted by law. In addition, the
Bylaws provide for the indemnification of expenses actually and reasonably
incurred by (i) a director or officer of any subsidiary of HCS I, (ii) a
fiduciary with respect to any employee benefit plan of HCS I, or (iii) a
director, officer, partner, employee or agent of another corporation,
partnership, joint venture, trust or other for-profit or non-profit entity or
enterprise, if such position is or was held at the request of HCS I.
The above discussion of the Articles of Incorporation and Bylaws of HCS I
and of Sections 83 and 24(C)(4) of the LBCL is not intended to be exhaustive
and is qualified in its entirety by the Articles of Incorporation and Bylaws
of HCS I and the LBCL.
HCS II, Inc.
The Articles of Incorporation and Bylaws of HCS II, Inc., a Louisiana
corporation ("HCS II"), provide for the indemnification of directors and
officers of HCS II to the fullest extent permitted by law. In addition, the
Bylaws provide for the indemnification of expenses actually and reasonably
incurred by (i) a director or officer of any subsidiary of HCS II, (ii) a
fiduciary with respect to any employee benefit plan of HCS II, or (iii) a
director, officer, partner, employee or agent of another corporation,
partnership, joint venture, trust or other for-profit or non-profit entity or
enterprise, if such position is or was held at the request of HCS II.
The above discussion of the Articles of Incorporation and Bylaws of HCS II
and of Sections 83 and 24(C)(4) of the LBCL is not intended to be exhaustive
and is qualified in its entirety by the Articles of Incorporation and Bylaws
of HCS II and the LBCL.
ITEM 21. Exhibits and Financial Statement Schedules.
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
3.1 --Third Amended and Restated Joint Venture Agreement of Hollywood
Casino Shreveport by and among Shreveport Paddlewheels, L.L.C.,
HCS I. Inc. and HCS II, Inc., dated as of July 21, 1999.*
3.2 --August 1999 Amendment to Third Amended and Restated Joint
Venture Agreement between Shreveport Paddlewheels, L.L.C., HCSI,
Inc. and HCS II, Inc.*
3.3 --Articles of Incorporation of Shreveport Capital Corporation.*
3.4 --Bylaws of Shreveport Capital Corporation.*
3.5 --Articles of Incorporation of HWCC-Louisiana, Inc., as amended.*
3.6 --Bylaws of Hollywood Casino--Lake Charles, Inc. (now known as
HWCC-Louisiana, Inc.).*
3.7 --Articles of Incorporation of HCS I, Inc.*
3.8 --Bylaws of HCS I, Inc.*
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
3.9 --Articles of Incorporation of HCS II, Inc.*
3.10 --Bylaws of HCS II, Inc.*
4.1 --Indenture among Hollywood Casino Shreveport and Shreveport
Capital Corporation as Co-Issuers, and HWCC-Louisiana, Inc., HCS
I, Inc. and HCS II, Inc., as Guarantors, and State Street Bank
and Trust Company, as Trustee, dated as of August 10, 1999.*
4.2 --Registration Rights Agreement, dated as of August 10, 1999, by
and among Hollywood Casino Shreveport, Shreveport Capital
Corporation, the Guarantors named therein and the Initial
Purchasers.*
4.3 --Collateral Assignment of Contracts and Documents dated August
10, 1999 between Hollywood Casino Shreveport and State Street
Bank and Trust Company, as Trustee.*
4.4 --Security Agreement dated August 10, 1999 between Hollywood
Casino Shreveport and State Street Bank and Trust Company, as
Trustee.*
4.5 --Partnership Interest Pledge Agreement dated August 10, 1999 made
by HCS I, Inc. in favor of State Street Bank and Trust Company,
as Trustee and Secured Party.*
4.6 --Cash Collateral and Disbursement Agreement dated August 10, 1999
between Hollywood Casino Shreveport, Shreveport Capital
Corporation, First American Title Insurance Company, as
Disbursement Agent and State Street Bank and Trust Company, as
Trustee.*
4.7 --Stock Pledge Agreement dated August 10, 1999 made by HWCC-
Louisiana, Inc. in favor of State Street Bank and Trust Company,
as Trustee.*
4.8 --Security Agreement dated August 10, 1999 made by Shreveport
Capital Corporation, HWCC-Louisiana, Inc., HCS I, Inc. and HCS
II, Inc. to State Street Bank and Trust Company, as Trustee and
Secured Party.*
4.9 --Security Agreement -- Vessel Construction dated August 10, 1999
between Hollywood Casino Shreveport and State Street Bank and
Trust Company, as Trustee.*
4.10 --Mortgage, Leasehold Mortgage and Assignment of Leases and Rents
made by Hollywood Casino Shreveport in favor of State Street Bank
and Trust Company, as Mortgagee, dated August 10, 1999.*
4.11 --Partnership Interest Pledge Agreement dated August 10, 1999 made
by HCS II, Inc. in favor of State Street Bank and Trust Company,
as Trustee and Secured Party.*
4.12 --First Amendment to Security Agreement dated August 10, 1999
between HWCC-Shreveport, Inc. and State Street Bank and Trust
Company, as Trustee.*
5.1 --Opinion of Weil, Gotshal & Manges LLP.+
10.1 --Membership Interest Purchase Agreement, dated as of March 31,
1999, by and among HWCC-Louisiana, Inc., Sodak Gaming, Inc. and
Sodak Louisiana, L.L.C.(1)
10.2 --Completion Capital Agreement, dated as of August 10, 1999, by
and among Hollywood Casino Shreveport, HWCC-Louisiana, Inc., HCS
I, Inc., HCS II, Inc. and Hollywood Casino Corporation.(2)
10.3 --Manager Subordination Agreement, dated as of August 10, 1999, by
and among State Street Bank and Trust Company, as trustee, HWCC-
Shreveport, Inc. and Hollywood Casino Shreveport.(2)
10.4 --Management Services Agreement, dated as of September 22, 1998,
by and between QNOV and HWCC-Shreveport, Inc.(3)
10.5 --Amendment to Management Services Agreement, dated as of August
2, 1999, by and between Hollywood Casino Shreveport (formerly
QNOV) and HWCC-Shreveport, Inc.(3)
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
10.6 --Technical Services Agreement, dated as of September 22, 1998, by and
between QNOV and HWCC--Shreveport, Inc.*
10.7 --Vessel Construction Contract, dated July 16, 1999, by and between
Leevac Shipyards, Inc. and Hollywood Casino Shreveport.*
10.8 --Employment Agreement, dated August 4, 1999, by and between HWCC
Development Corporation and Juris Basens.*
10.9 --Assignment and Assumption Agreement, dated September 1, 1999, by and
between HWCC Development Corporation and Hollywood Casino Shreveport.*
10.10 --Compromise Agreement, dated September 15, 1998, by and among Hilton
New Orleans Corporation, New Orleans Paddlewheels, Inc., Queen of New
Orleans at the Hilton Joint Venture and the City of New Orleans.*
10.11 --Loan and Settlement Agreement, dated January 16, 1998, by and among
New Orleans Paddlewheels, Inc., Shreveport Paddlewheels, L.L.C., HWCC--
Louisiana, Inc., Sodak Louisiana L.L.C. and Hilton New Orleans
Corporation.*
10.12 --Retail Space Lease, executed as of June 3, 1999 by and between QNOV
and Red River Entertainment Company, L.L.C.*
10.13 --Ground Lease, dated May 19, 1999, by and between the City of
Shreveport, Louisiana and QNOV.*
10.14 --License Agreement, dated August 10, 1999, by and between Hollywood
Casino Corporation and Hollywood Casino Shreveport.*
10.15 --Construction Agreement, dated July 30, 1999, by and between Hollywood
Casino Shreveport and Broadmoor Anderson.+
10.16 --Amended and Restated Federal Income Tax Sharing Agreement dated August
10, 1999 among Hollywood Casino Corporation, HWCC Development
Corporation, Hollywood Management, Inc., HWCC-Tunica, Inc., HWCC-Golf
Course Partners, Inc., Hollywood Casino-Aurora, Inc., HWCC-Shreveport,
Inc., HWCC-Argentina, Inc., HWCC-Louisiana, Inc., HWCC-Holdings, Inc.,
HWCC-Aurora Management, Inc., HWCC-Transportation, Inc., HCS I, Inc.
and HCS II, Inc.*
10.17 --Marine Services Agreement dated September 22, 1998 between QNOV and
Shreveport Paddlewheels, L.L.C.*
10.18 --Side Agreement dated January 16, 1998 between Queen of New Orleans at
the Hilton Joint Venture, HWCC-Louisiana, Inc. and Sodak Louisiana,
L.L.C.*
10.19 --Loan Agreement dated August 10, 1999 between Shreveport Paddlewheels,
L.L.C. and HWCC-Louisiana, Inc.*
10.20 --Promissory Note dated August 10, 1999 in the original principal amount
of $1,000,000 made by Shreveport Paddlewheels, L.L.C., as Borrower to
HWCC-Louisiana, Inc., as Lender.*
10.21 --Security Agreement dated August 10, 1999 made by Shreveport
Paddlewheels, L.L.C., as Debtor, in favor of HWCC-Louisiana, Inc., as
Secured Party.*
10.22 --Guaranty Agreement dated August 10, 1999 made by New Orleans
Paddlewheels, L.L.C. in favor of HWCC-Louisiana, Inc.*
10.23 --Amended and Restated Assignment of Joint Venture Agreement dated
September 22, 1998 between Sodak Louisiana, L.L.C., HWCC-Louisiana,
Inc., New Orleans Paddlewheels, Inc. and Shreveport Paddlewheels,
L.L.C.*
10.24 --Contribution and Assumption Agreement dated July 21, 1999 among HWCC-
Louisiana, Inc., HCS I, Inc., HCS II, Inc. and Shreveport Paddlwwheels,
L.L.C.*
21.1 --Subsidiaries of Hollywood Casino Shreveport.*
21.2 --Subsidiaries of HWCC-Louisiana, Inc.*
21.3 --Subsidiaries of HCS I, Inc.*
21.4 --Subsidiaries of HCS II, Inc.*
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
23.1 --Consent of Deloitte & Touche LLP.*
23.2 --Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5.1).
25.1 --Statement of Eligibility and Qualification of State Street Bank and
Trust Company, as trustee under the Indenture listed in Exhibit 4.1
hereto on Form T-1.*
99.1 --Form of Letter of Transmittal.*
99.2 --Form of Notice of Guaranteed Delivery.*
</TABLE>
- --------
* Filed herewith.
+ To be filed by amendment.
(1) Incorporated by reference to the exhibits filed in Hollywood Casino
Corporation's Annual Report on Form 10-K for the year ended December 31,
1998 as filed on April 15, 1999.
(2) Incorporated by reference to the exhibits filed in Form S-4 Registration
Statement (Registration 333-83081) for Hollywood Casino Corporation as
filed with the SEC on August 13, 1999.
(3) Incorporated by reference to the exhibits filed in Hollywood Casino
Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30,
1999 as filed with the SEC on August 16, 1999.
(b) Financial Statement Schedules:
All schedules have been omitted since the required information is either
not present or not in amounts sufficient to require submission of the
schedule, or because the information required is included in the
consolidated financial statements or notes thereof.
ITEM 22. Undertakings.
The undersigned registrant hereby undertakes:
(1) 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 receipt of such request, and to
send the incorporated documents by first class mail or 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.
(2) 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.
(3) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Co-Registrants' annual report pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(4) 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 provisions described under
Item 20 above, or otherwise, the Co-Registrants have 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
Co-Registrants of expense incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suite or proceeding) is asserted against the registrant 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 appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Co-
Registrant certifies that it has reasonable grounds to believe that it meets
all requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on October 8, 1999.
HOLLYWOOD CASINO SHREVEPORT
By: HCS I, INC.
/s/ Paul C. Yates
By: ______________________________
Paul C. Yates
Executive Vice President,
Chief Financial Officer,
Treasurer and Assistant
Secretary
POWER OF ATTORNEY
Know all those by these presents, that each person whose signature appears
below constitutes and appoints each of Edward T. Pratt III and Paul C. Yates,
or any of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full Power of Substitution and Resubstitution, for such person and
in his name, place and stead, in any and all capacities, in connection with
the Registration Statement on Form S-4 of Hollywood Casino Shreveport under
the Securities Act of 1933, including, the generality of the foregoing, to
sign the Registration Statement in the name and on behalf of Hollywood Casino
Shreveport, or on behalf of the undersigned as a director or officer of
Hollywood Casino Shreveport, and any and all amendments or supplements to the
Registration Statement, including any and all stickers and post-effective
amendments to the Registration Statement, and to sign any and all additional
Registration Statements relating to the same offering of Securities as the
Registration Statement that are filed pursuant to Rule 462 under the
Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission and any applicable securities exchange or securities self-
regulatory body, granting unto said attorneys-in-fact and agents, each acting
alone, full power and authority to do and perform each and every act and thing
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 attorneys-in-fact and agents, or their substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Jack E. Pratt Chief Executive Officer October 8, 1999
______________________________________ and Chairman of the Board
Jack E. Pratt of Directors
/s/ Edward T. Pratt, Jr. Vice Chairman of the Board October 8, 1999
______________________________________ of Directors
Edward T. Pratt, Jr.
/s/ William D. Pratt Executive Vice President, October 8, 1999
______________________________________ Secretary, General
William D. Pratt Counsel and Director
</TABLE>
II-6
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Edward T. Pratt III President October 8, 1999
______________________________________
Edward T. Pratt III
/s/ Paul C. Yates Executive Vice President, October 8, 1999
______________________________________ Chief Financial Officer,
Paul C. Yates Treasurer and Assistant
Secretary
/s/ Charles F. LaFrano III Vice President and October 8, 1999
______________________________________ Assistant Secretary
Charles F. LaFrano III
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Co-
Registrant certifies that it has reasonable grounds to believe that it meets
all requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas on October 8, 1999.
SHREVEPORT CAPITAL CORPORATION
/s/ Paul C. Yates
By: _________________________________
Paul C. Yates
Executive Vice President, Chief
Financial Officer, Treasurer and
Assistant Secretary
POWER OF ATTORNEY
Know all those by these presents, that each person whose signature appears
below constitutes and appoints each of Edward T. Pratt III and Paul C. Yates,
or any of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full Power of Substitution and Resubstitution, for such person and
in his name, place and stead, in any and all capacities, in connection with
the Registration Statement on Form S-4 of Shreveport Capital Corporation under
the Securities Act of 1933, including, the generality of the foregoing, to
sign the Registration Statement in the name and on behalf of Shreveport
Capital Corporation, or on behalf of the undersigned as a director or officer
of Shreveport Capital Corporation, and any and all amendments or supplements
to the Registration Statement, including any and all stickers or post-
effective amendments to the Registration Statement, and to sign any and all
additional Registration Statements relating to the same offering of Securities
as the Registration Statement that are filed pursuant to Rule 462 under the
Securities Act of 1933, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission and any applicable securities exchange or securities self-
regulatory body, granting unto said attorneys-in-fact and agents, each acting
alone, full 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 attorneys-in-fact and agents, or their substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Jack E. Pratt Chief Executive Officer October 8, 1999
______________________________________ and Chairman of the Board
Jack E. Pratt of Directors
/s/ Edward T. Pratt, Jr. Vice Chairman of the Board October 8, 1999
______________________________________ of Directors
Edward T. Pratt, Jr.
/s/ William D. Pratt Executive Vice President, October 8, 1999
______________________________________ Secretary, General
William D. Pratt Counsel and Director
/s/ Edward T. Pratt III President October 8, 1999
______________________________________
Edward T. Pratt III
/s/ Paul C. Yates Executive Vice President, October 8, 1999
______________________________________ Chief Financial Officer,
Paul C. Yates Treasurer and Assistant
Secretary
/s/ Charles F. LaFrano III Vice President and October 8, 1999
______________________________________ Assistant Secretary
Charles F. LaFrano III
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Co-
Registrant certifies that it has reasonable grounds to believe that it meets
all requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas on October 8, 1999.
HCS I, INC.
/s/ Paul C. Yates
By: _________________________________
Paul C. Yates
Executive Vice President, Chief
Financial Officer, Treasurer and
Assistant Secretary
POWER OF ATTORNEY
Know all those by these presents, that each person whose signature appears
below constitutes and appoints each of Edward T. Pratt III and Paul C. Yates,
or any of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full Power of Substitution and Resubstitution, for such person and
in his name, place and stead, in any and all capacities, in connection with
the Registration Statement on Form S-4 of HCS I, Inc. under the Securities Act
of 1933, including, the generality of the foregoing, to sign the Registration
Statement in the name and on behalf of HCS I, Inc., or on behalf of the
undersigned as a director or officer of HCS I, Inc., and any and all
amendments or supplements to the Registration Statement, including any and all
stickers and post-effective amendments to the Registration Statement, and to
sign any and all additional Registration Statements relating to the same
offering of Securities as the Registration Statement that are filed pursuant
to Rule 462 under the Securities Act of 1933, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing 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 attorneys-in-fact and
agents, or their substitutes or substitute, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Jack E. Pratt Chief Executive Officer October 8, 1999
______________________________________ and Chairman of the
Jack E. Pratt Board of Directors
/s/ Edward T. Pratt, Jr. Vice Chairman of the October 8, 1999
______________________________________ Board of Directors
Edward T. Pratt, Jr.
/s/ William D. Pratt Executive Vice President, October 8, 1999
______________________________________ Secretary, General
William D. Pratt Counsel and Director
/s/ Edward T. Pratt III President October 8, 1999
______________________________________
Edward T. Pratt III
/s/ Paul C. Yates Executive Vice President, October 8, 1999
______________________________________ Chief Financial Officer,
Paul C. Yates Treasurer and Assistant
Secretary
/s/ Charles F. LaFrano III Vice President and October 8, 1999
______________________________________ Assistant Secretary
Charles F. LaFrano III
</TABLE>
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Co-
Registrant certifies that it has reasonable grounds to believe that it meets
all requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas on October 8, 1999.
HCS II, INC.
/s/ Paul C. Yates
By: _________________________________
Paul C. Yates
Executive Vice President, Chief
Financial Officer, Treasurer and
Assistant Secretary
POWER OF ATTORNEY
Know all those by these presents, that each person whose signature appears
below constitutes and appoints each of Edward T. Pratt III and Paul C. Yates,
or any of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full Power of Substitution and Resubstitution, for such person and
in his name, place and stead, in any and all capacities, in connection with
the Registration Statement on Form S-4 of HCS II, Inc. under the Securities
Act of 1933, including, the generality of the foregoing, to sign the
Registration Statement in the name and on behalf of HCS II, Inc., or on behalf
of the undersigned as a director or officer of HCS II, Inc., and any and all
amendments or supplements to the Registration Statement, including any and all
stickers and post-effective amendments to the Registration Statement, and to
sign any and all additional Registration Statements relating to the same
offering of Securities as the Registration Statement that are filed pursuant
to Rule 462 under the Securities Act of 1933, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing 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 attorneys-in-fact and
agents, or their substitutes or substitute, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Jack E. Pratt Chief Executive Officer October 8, 1999
______________________________________ and Chairman of the
Jack E. Pratt Board of Directors
/s/ Edward T. Pratt, Jr. Vice Chairman of the October 8, 1999
______________________________________ Board of Directors
Edward T. Pratt, Jr.
/s/ William D. Pratt Executive Vice President, October 8, 1999
______________________________________ Secretary, General
William D. Pratt Counsel and Director
/s/ Edward T. Pratt III President October 8, 1999
______________________________________
Edward T. Pratt III
/s/ Paul C. Yates Executive Vice President, October 8, 1999
______________________________________ Chief Financial Officer,
Paul C. Yates Treasurer and Assistant
Secretary
/s/ Charles F. LaFrano III Vice President and October 8, 1999
______________________________________ Assistant Secretary
Charles F. LaFrano III
</TABLE>
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Co-
Registrant certifies that it has reasonable grounds to believe that it meets
all requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas on October 8, 1999.
HWCC-LOUISIANA, INC.
/s/ Paul C. Yates
By: _________________________________
Paul C. Yates
Executive Vice President, Chief
Financial Officer, Treasurer and
Assistant Secretary
POWER OF ATTORNEY
Know all those by these presents, that each person whose signature appears
below constitutes and appoints each of Edward T. Pratt III and Paul C. Yates,
or any of them, each acting alone, his true and lawful attorney-in-fact and
agent, with full Power of Substitution and Resubstitution, for such person and
in his name, place and stead, in any and all capacities, in connection with
the Registration Statement on Form S-4 of HWCC-Louisiana, Inc. under the
Securities Act of 1933, including, the generality of the foregoing, to sign
the Registration Statement in the name and on behalf of HWCC-Louisiana, Inc.,
or on behalf of the undersigned as a director or officer of HWCC-Lousiana,
Inc., and any and all amendments or supplements to the Registration Statement,
including any and all stickers and post-effective amendments to the
Registration Statement, and to sign any and all additional Registration
Statements relating to the same offering of Securities as the Registration
Statement that are filed pursuant to Rule 462 under the Securities Act of
1933, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission and any
applicable securities exchange or securities self-regulatory body, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform each and every act and thing 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 attorneys-in-fact and agents, or their substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Jack E. Pratt Chief Executive Officer October 8, 1999
______________________________________ and Chairman of the
Jack E. Pratt Board of Directors
/s/ Edward T. Pratt, Jr. Vice Chairman of the October 8, 1999
______________________________________ Board of Directors
Edward T. Pratt, Jr.
/s/ William D. Pratt Executive Vice President, October 8, 1999
______________________________________ Secretary, General
William D. Pratt Counsel and Director
/s/ Edward T. Pratt III President October 8, 1999
______________________________________
Edward T. Pratt III
/s/ Paul C. Yates Executive Vice President, October 8, 1999
______________________________________ Chief Financial Officer,
Paul C. Yates Treasurer and Assistant
Secretary
/s/ Charles F. LaFrano III Vice President and October 8, 1999
______________________________________ Assistant Secretary
Charles F. LaFrano III
</TABLE>
II-11
<PAGE>
EXHIBIT 3.1
THIRD
AMENDED AND RESTATED
JOINT VENTURE AGREEMENT
OF HOLLYWOOD CASINO SHREVEPORT
(FORMERLY KNOWN AS
THE "QUEEN OF NEW ORLEANS AT THE
HILTON JOINT VENTURE" AND "QNOV")
THIS THIRD AMENDED AND RESTATED JOINT VENTURE AGREEMENT is entered into as
of July 21, 1999, by and among Shreveport Paddlewheels, L.L.C. ("Paddlewheels"),
------------
HCS I, Inc. ("HCS I") and HCS II, Inc. ("HCS II"). Unless the context otherwise
----- ------
requires, terms which are capitalized and not otherwise defined shall have the
meanings set forth or cross-referenced in Article I of this Agreement.
PRELIMINARY STATEMENT
---------------------
A. Hilton Hotels Corporation ("Hilton") and New Orleans Paddlewheels, Inc.
------
("NOP") entered into a Basic Agreement, dated as of January 9, 1992, and Joint
---
Venture Agreement dated May 20, 1992, collectively setting forth the agreement
of such parties to operate, as joint venturers under the name "Queen of New
Orleans at the Hilton Joint Venture" (the "Original JV"), a riverboat casino
-----------
located in New Orleans, Louisiana.
B. On January 14, 1994, Hilton assigned its equity interest in the
Original JV to Hilton New Orleans Corporation ("HNOC").
----
C. On September 14, 1998, NOP assigned a one percent (1%) interest of NOP
in the Original JV to Paddlewheels.
D. On September 15, 1998, HNOC transferred its total equity interest in
the Original JV to NOP.
E. On September 22, 1998, each of NOP and Paddlewheels transferred certain
of its equity interest in the Original JV to Sodak Louisiana, L.L.C., a
Louisiana limited liability company ("Sodak") and HWCC-Louisiana, Inc. ("HWCC";
----- ----
and this transaction being the "Reorganization").
--------------
F. In connection with the Reorganization, Paddlewheels, Sodak and HWCC
entered into that certain Amended and Restated Joint Venture Agreement of QNOV
dated July 31, 1998 to be effective upon the Reorganization, as amended at the
time of the Reorganization on September 22, 1998 pursuant to that certain
September 1998 Amendment to the Amended and Restated Joint Venture Agreement of
QNOV (as amended, the "First Amended and Restated Agreement"). In the First
------------------------------------
Amended and Restated Agreement, the parties changed the name of the Original JV
from "Queen of New Orleans at the Hilton Joint Venture" to "QNOV".
G. Pursuant to the terms of that certain Membership Interest Purchase
Agreement dated March 31, 1999 among HWCC, Sodak Gaming, Inc., a South Dakota
corporation
<PAGE>
and former owner of Sodak (the "Seller"), and Sodak, the Seller sold all of its
------
membership interest in Sodak to HWCC on April 23, 1999 (the "Sodak Sale").
----------
H. Pursuant to that certain Agreement of Merger dated July 9, 1999,
Sodak merged with and into HWCC with HWCC as the survivor (the "Sodak Merger").
------------
I. Also on July 9, 1999, HWCC and Paddlewheels executed the Second
Amended and Restated Joint Venture Agreement (the "Second Amended and Restated
---------------------------
Agreement") to (i) reflect the Sodak Sale and the Sodak Merger and (ii) change
- ---------
the name of the Venture from "QNOV" to "Hollywood Casino Shreveport".
J. On July 21, 1999, HWCC (i) contributed ninety-nine percent (99%) of
its JV Interest in the Venture to HCS I, Inc., a wholly owned subsidiary of
HWCC, and HCS I assumed certain obligations of HWCC, and (ii) contributed the
remaining one percent (1%) of its JV Interest to HCS II, Inc., a wholly owned
subsidiary of HWCC, both contributions of which were acknowledged and approved
by Paddlewheels (the "HWCC Contribution").
-----------------
K. HCS I, HCS II and Paddlewheels desire to amend and restate the Second
Amended and Restated Agreement to (i) reflect the contribution of HWCC's JV
Interests to HCS I and HCS II and (ii) to make certain amendments deemed
necessary and advisable in connection with the financing of the Venture.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the Second Amended and Restated Joint Venture Agreement is
hereby amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
-----------
1.1 Definitions. The following terms shall have the respective meanings
-----------
indicated:
"Accountants" - shall mean independent certified public accountants of
-----------
recognized national standing.
"Act" - shall mean the Louisiana Gaming Control Act, La. R.S. 27:1 et.
---
seq., including the amendments thereto and regulations promulgated thereunder,
as may be in effect from time to time.
"Affected Venturer" shall have the meaning as defined in Section 11.2(a)
-----------------
below.
"Affiliate(s)" - shall mean with respect to any person or entity, any firm,
------------
corporation, partnership, limited liability company, association, trust or other
person or entity which, directly or indirectly, controls, is controlled by, or
is under common control with, the subject person or entity or such person or
entity owns directly or indirectly ten percent (10%) or more of any class of
equity securities of, or otherwise has a substantial
2
<PAGE>
beneficial interest in such entity. For purposes hereof, the term "control"
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of any such person or entity,
whether through the ownership of voting securities, by contract or otherwise.
Such term shall also include with respect to any person who is a spouse, child,
grandchild, sibling or parent of the owner of any Venturer, or any trust,
partnership or other entity beneficially owned by any of the foregoing,
individually or collectively.
"Agreement" - shall mean this Third Amended and Restated Joint Venture
---------
Agreement.
"Assignment Agreement" - shall mean that certain Amended and Restated
--------------------
Assignment of Joint Venture Interest dated September 22, 1998 among Sodak, HWCC,
NOP and Paddlewheels.
"Budget" - shall have the meaning as defined in Article VIII hereof.
------
"Business Days" - shall mean any day during which federally chartered banks
-------------
are not required to be closed under applicable federal or Louisiana law.
"Casino" - shall mean the premises of the Complex upon which gaming
------
activities will be conducted pursuant to the Act.
"Claim" - shall have the meaning as defined in Section 7.4(b) below.
-----
"Code" - shall mean the Internal Revenue Code of 1986, as amended.
----
"Commencement Date" - shall mean the opening date of the Project.
-----------------
"Complex" - shall mean, upon completion of the Project, collectively the
-------
Vessel, the Casino, the Hotel, and the land based facilities related thereto,
together with all related improvements, facilities and amenities used in
connection with the operation thereof.
"Complex Net Revenues" - shall have the same meaning as set forth in the
--------------------
Management Agreement.
"Contribution Date" - shall have the meaning as defined in Section 3.3(b)
-----------------
below.
"Debt Restriction" - shall have the same meaning as defined Section 6.1
----------------
below.
"Defaulting Venturer" - shall have the meaning as defined in Section 13.1
-------------------
below.
"Election Notice" - shall have the meaning as defined in Section 10.3(b)
---------------
below.
"First Amended and Restated Agreement" - shall have the meaning as defined
------------------------------------
in the recitals of this Agreement.
"First Option" - shall have the meaning as defined in Section 10.3(a).
------------
3
<PAGE>
"First Option Notice" - shall have the meaning as defined in Section
-------------------
10.3(a).
"Gaming Authorities" - shall mean any State of Louisiana gaming regulatory
------------------
authority authorized under the Act, including but not limited to, the Louisiana
Gaming Control Board and the Riverboat Gaming Enforcement Division of the
Louisiana State Police, and any other gaming regulatory authority with
jurisdiction over the Venture or any Venturer.
"HCC" - shall mean Hollywood Casino Corporation, a Delaware corporation.
---
"HCS I" - shall have the meaning as defined in the preamble to this
-----
Agreement.
"HCS II" - shall have the meaning as defined in the preamble to this
------
Agreement.
"Hilton" - shall have the meaning as defined in the recitals to this
------
Agreement.
"HNOC" shall have the meaning as defined in the recitals to this Agreement.
----
"HWCC" - shall have the meaning as defined in the recitals to this
----
Agreement.
"HWCC Contribution" - shall have the meaning as defined in the recitals to
-----------------
this Agreement.
"Hotel" - shall mean a hotel, which will contain no less than 300 rooms to
-----
be owned by the Venture and located at the Venture Site in Shreveport,
Louisiana.
"Indemnitee" - shall have the meaning as defined in Section 7.4(a) below.
----------
"JV Interest" - shall mean a unit representing a Venturer's equity interest
-----------
in the Venture.
"JV Value" - shall have the meaning as defined in Section 10.5(a)(i) below.
--------
"LGCB" - shall mean the State of Louisiana Gaming Control Board.
----
"Liquidating Venturer" - shall have the meaning as defined in Article XII
--------------------
hereof.
"Loan and Settlement Agreement" - shall have the meaning as defined in
-----------------------------
Section 3.2(b) below.
"Loan Commitments" - shall mean collectively the financing commitments that
----------------
the Venture intends to procure for construction, development and operation of
the Project upon terms acceptable to HCS I.
"Losses" - shall have the meaning as defined in Section 7.4(a) below.
------
"Management Agreement" - shall mean the Management Services Agreement
--------------------
between the Venture and the Operator dated as of September 22, 1998, together
with such amendments thereto as the parties thereto may mutually agree.
4
<PAGE>
"Management Agreement Value" - shall have the same meaning as defined in
--------------------------
Section 10.5(a)(i) below.
"Marine Agreement" - shall mean the Marine Services Agreement dated as of
----------------
September 22, 1998, between the Venture and Paddlewheels or an Affiliate
thereof.
"Master Agreement" - shall mean the Amended and Restated Master Agreement
----------------
dated as of July 31, 1998 by and among Sodak, HWCC, NOP and Paddlewheels.
"Net Realized Value" - shall have the meaning as defined in Section 10.5
------------------
below.
"NOP" - shall have the meaning as defined in the recitals to this
---
Agreement.
"Notice of Subsequent Capital Contribution" - shall have the meaning as
-----------------------------------------
defined in Section 3.3(b) below.
"Offer Price" - shall have the meaning as defined in Section 10.3(a) below.
-----------
"Offered JV Interest" - shall have the meaning as defined in Section
-------------------
10.3(a) below.
"Operator" - shall mean HWCC - Shreveport, Inc., a Louisiana corporation.
--------
"Optionor Venturer" - shall have the meaning as defined in Section 10.3(a)
-----------------
below.
"Original JV" - shall have the meaning as defined in the recitals of this
-----------
Agreement.
"Paddlewheels" - shall have the meaning as defined in the preamble of this
------------
Agreement.
"Profits and Losses" - shall have the meaning as defined in Section 5.2(a)
------------------
below.
"Project" - shall mean the planning, construction and operation of (i) the
-------
Vessel, (ii) landside improvements to facilitate the operation of the Complex
and (iii) the Hotel (collectively, the "Project"). The berth site for the
Vessel shall be located at the Venture Site.
"Purchase Price" - shall have the meaning as defined in Section 10.3(d)
--------------
below.
"Regulations" - shall mean permanent, temporary, or proposed income tax
-----------
regulations of the United States Department of Treasury promulgated under the
Code.
"Relative Ownership Ratio" - shall have the meaning as defined in Section
------------------------
5.1(b) below.
"Re-offer Notice" - shall have the meaning as defined in Section 10.3(f)
---------------
below.
5
<PAGE>
"Re-offer Price" - shall have the meaning as defined in Section 10.3(f)
--------------
below.
"Reorganization" shall have the meaning as defined in the recitals to this
--------------
Agreement.
"Residual Ownership Ratio" - shall have the meaning as defined in Section
------------------------
3.2(d) below.
"Second Amended and Restated Agreement" - shall have the meaning as defined
-------------------------------------
in the recitals to this Agreement.
"Second Option" - shall have the meaning as defined in Section 10.3(a)
-------------
below.
"Second Option Notice" - shall have the meaning as defined in Section
--------------------
10.3(a) below.
"Secured Party Transferee" - shall have the meaning as defined in Section
------------------------
10.2(a) below.
"Seller" - shall have the meaning as defined in the recitals to this
------
Agreement.
"Sodak" - shall have the meaning as defined in the recitals of this
-----
Agreement.
"Sodak Merger" - shall have the meaning as defined in the recitals of this
------------
Agreement.
"Sodak Sale" - shall have the meaning as defined in the recitals of this
----------
Agreement.
"Subsequent Capital Contribution" - shall have the meaning as defined in
-------------------------------
Section 3.3(a) below.
"Tax Matters Manager" - shall have the meaning as defined in Section 9.8
-------------------
below.
"Transfer" - shall have the meaning as defined in Section 10.1 below.
--------
"Unsuitable Venturer" - shall have the meaning as defined in Section 11.1
-------------------
below.
"Unsuitability Determination" - shall have the meaning as defined in
---------------------------
Section 11.1 below.
"Venture" - shall have the meaning as defined in Section 2.1 below.
-------
"Venture Creditor" - shall have the meaning as defined in Section 10.2(b)
----------------
below.
"Venture Site" - shall mean the berth site located at or adjacent to the
------------
Harrah's valet parking site in Shreveport, Louisiana as more expressly described
in "Exhibit A" attached hereto.
6
<PAGE>
"Venturer(s)" - shall mean the partners of the Venture, namely,
-----------
Paddlewheels, HCS I, HCS II, and such other entities which may hereafter become
Venturers and any person or entity admitted to the Venture as a partner pursuant
to the provisions of this Agreement, and any of the Venturers when the reference
is singular, and their respective successors in interest.
"Venturer Nonrecourse Debt" - shall have the meaning as defined in Section
-------------------------
5.2(b) below.
"Vessel" - shall mean a riverboat gaming vessel having approximately 30,000
------
square feet of net gaming space or such other amount of net gaming space as may
be permitted under applicable Louisiana law, which riverboat gaming vessel shall
be located at the Venture Site in Shreveport, Louisiana.
1.2 References. Except as otherwise specifically indicated, all
----------
references to Article, Section and Subsection numbers refer to Articles,
Sections and Subsections of this Agreement, and all references to Exhibits refer
to the Exhibits attached hereto. The words "herein", "hereof", "hereunder",
"hereinafter" and words of similar import refer to this Agreement as a whole and
not to any particular Section or Subsection hereof. For purpose of convenience,
the impersonal pronoun is sometimes used herein to refer to the Venturers.
ARTICLE II
FORMATION OF VENTURE
--------------------
2.1 Joint Venturers. The Venturers hereby agree to continue the
---------------
Original JV as a Louisiana general partnership (the "Venture"), for the limited
-------
purposes and pursuant to the terms and conditions set forth herein.
2.2 Name. From and after July 9, 1999, the name of the Venture shall be
----
"Hollywood Casino Shreveport."
2.3 Principal Office. The principal office of the Venture shall initially
----------------
be located at Two Galleria Tower, Suite 2200, 13455 Noel Road, Dallas, Texas
75240, and it is the current intention of the Venture to relocate its principal
office in or near Shreveport, Louisiana or such other place as HCS I may, from
time to time, determine.
2.4 Partnership Act; Ownership. Except as otherwise expressly stated
--------------------------
herein, the rights and obligations of the Venturers and the administration and
termination of the Venture shall be governed by this Agreement and the internal
laws (including partnership laws) of the State of Louisiana.
2.5 Purpose. The purpose of the Venture shall be to develop, construct,
-------
own and operate the Project, and the performance of all things necessary or
incidental to or in connection with the foregoing, in accordance with the terms
and conditions of this Agreement. The purposes of the Venture shall also
include the ownership of capital stock and membership, partnership or other
equity interests and securities. The purposes
7
<PAGE>
of the Venture shall not be modified in any manner, except in the manner set
forth in Article VII hereof.
2.6 No Individual Authority. Except as otherwise expressly provided in
-----------------------
this Agreement, no Venturer, acting alone, shall have any authority to act for,
or undertake or assume any obligations or responsibility, in the name of or on
behalf of, the other Venturers or the Venture.
2.7 No Restrictions. Nothing contained in this Agreement shall be
---------------
construed so as to limit, in any manner, a Venturer, or any Affiliate of such
Venturer, from owning, operating, financing, investing in, providing maritime
services to, or otherwise being affiliated with, any other venture or operation,
including any riverboat or gaming operation not owned or operated by the
Venture, wherever located.
2.8 Venturers Not Responsible for Other's Commitments. No Venturer shall
-------------------------------------------------
be responsible or liable for any indebtedness or obligation of another Venturer
incurred either before or after the execution of this Agreement, nor shall the
Venture be responsible or liable for any such indebtedness or obligation of a
Venturer, except for (i) indebtedness or obligations expressly incurred or
assumed by a Venturer pursuant to the terms of this Agreement or (ii) otherwise
as expressly mutually agreed upon by the parties.
2.9 Term. The Venture shall continue until the first to occur of the
----
following:
(a) the purchase by a Venturer of the JV Interests owned by all of
the other Venturers;
(b) the dissolution of the Venture as expressly provided in this
Agreement; or
(c) August 24, 2099.
ARTICLE III
CAPITAL CONTRIBUTIONS
---------------------
3.1 Transfers to Affiliates. Subject to the approval of the applicable
-----------------------
Gaming Authorities, at any time or from time to time during the term hereof, (a)
HCS I or HCS II may transfer to HCC or an Affiliate thereof, and (b)
Paddlewheels may transfer to an Affiliate thereof, all or any portion of their
respective JV Interests. The parties hereby consent to any such transfer and
waive any right or claim they have, may have had, will have, or may in the
future have to participate in such transfer.
3.2 Capital Contributions and Ownership Ratios.
------------------------------------------
(a) HWCC. Payments of $100,000 each made by Sodak and HWCC prior
----
to the date hereof together with payments of an additional $2,400,000 each
made by Sodak and HWCC on July 31, 1998, were deposited into a bank account
8
<PAGE>
established by the Operator, for withdrawal from such bank account in
accordance with and for the purposes set forth in the Technical Services
Agreement that is attached to the Master Agreement as Exhibit G. Such
contributions shall be deemed to be initial capital contributions to the
Venture made by such parties. As a result of the Sodak Sale and the HWCC
Contribution, these initial capital contributions to the Venture have been
credited 99% to HCS I and 1% to HCS II.
(b) Paddlewheels. (i) Paddlewheels acknowledges and agrees that, as
------------
consideration for its ownership interest in, and rights to receive payments
from, the Venture from and after the date hereof in accordance with the
terms of this Agreement, Paddlewheels shall make a $1 million cash
contribution concurrent with the date the Venture receives initial funding
under any Loan Commitment, and (ii) Paddlewheels further acknowledges and
agrees that NOP's agreement in the Master Agreement to fulfill its
obligations pursuant to Section 1(E) of the Loan and Settlement Agreement
dated January 16, 1998, by and between Paddlewheels, HNOC, NOP, Sodak and
HWCC (the "Loan and Settlement Agreement") constitutes additional
-----------------------------
consideration for Paddlewheels' ownership interest in and rights to receive
payments from the Venture pursuant hereto.
(c) Allocation of JV Interests. HCS I has been credited with 99/100
--------------------------
of a JV Interest for each dollar contributed by HWCC and Sodak as described
in Section 3.2(a), HCS II has been credited with 1/100 of a JV Interest for
each dollar contributed by HWCC and Sodak as described in Section 3.2(a)
and each of HCS I and HCS II shall be credited with one additional JV
Interest for each dollar contributed as a Subsequent Capital Contribution
in accordance with Section 3.3 below. Paddlewheels shall be credited with
one JV Interest for each dollar contributed by such party pursuant to
Section 3.2(b)(i) above and shall be credited, as of the date the Venture
receives initial funding under any Loan Commitment, with an additional $1
million of JV Interests in consideration for NOP's obligations as described
under Section 3.2(b)(ii) above.
(d) Residual Ownership Ratios. In consideration for the capital
-------------------------
contributions described in this Section 3.2 made by the Venturers, each
Venturer shall be deemed to have the following residual ownership ratio
(individually, a "Residual Ownership Ratio"):
------------------------
Residual
Ownership
Ratio
---------
Paddlewheels 10.0%
HCS I 89.1%
HCS II 0.9%
Paddlewheels' Residual Ownership Ratio shall not be subject to adjustment,
increase or diminution. The Residual Ownership Ratio of each Venturer (other
than
9
<PAGE>
Paddlewheels and any Affiliate thereof) shall be adjusted from time to time
as Subsequent Capital Contributions are made in accordance with this Article III
and shall be (x) the quotient equal to the number of outstanding JV Interests
held by such Venturer at such time, divided by the total number of outstanding
JV Interests held by all Venturers other than Paddlewheels at such time (y)
multiplied by 90.
3.3 Subsequent Capital Contributions.
--------------------------------
(a) The Venturers (except Paddlewheels and any Affiliate thereof)
from time to time may, but shall not be obligated to, make additional
capital contributions to the Venture ("Subsequent Capital Contributions")
--------------------------------
in cash as needed to meet the needs of the Venture. Paddlewheels and any
Affiliate thereof shall not be permitted or required to make Subsequent
Capital Contributions.
(b) HCS I shall authorize and approve Subsequent Capital
Contributions and shall give written notice (the "Notice of Subsequent
--------------------
Capital Contribution") to each Venturer (except Paddlewheels and any
--------------------
Affiliate thereof) of the decision of HCS I that Subsequent Capital
Contributions are necessary in connection with the Project. Such notices
will state (i) the total amount of additional capital required by the
Venture, (ii) the amount of additional capital that HCS I or any other
eligible Venturer is required to contribute, which shall be based on their
relative Subsequent Contribution Ownership Ratios as provided in Section
3.3(d) below, (iii) the use of proceeds of the requested Subsequent Capital
Contribution, including a reasonable itemization of such use, and (iv) the
date by which the contribution shall be made (the "Contribution Date"),
-----------------
which date shall not be less than 20 days after mailing of the Notice of
Subsequent Capital Contribution. In the event a Venturer elects not to
contribute its pro rata share of Subsequent Capital Contributions that is
authorized and approved by HCS I pursuant to this Section 3.3, then the
other contributing Venturers may elect to contribute such unpaid portion of
Subsequent Capital Contributions on a pro rata basis in accordance with
their Subsequent Contribution Ownership Ratio (which shall not include, for
purposes of calculating the foregoing, the JV Interests of the non-
contributing Venturer).
(c) Each Venturer that makes a Subsequent Capital Contribution
shall be credited with one additional JV Interest for each additional
dollar contributed by such party to the Venture.
(d) The allocation of any Subsequent Capital Contribution among the
contributing Venturers will be based on the "Subsequent Contribution
Ownership Ratio" for each contributing Venturer which shall be, for each
such contributing Venturer, (i) the quotient equal to the number of JV
Interests held by such contributing Venturer, divided by the total number
of outstanding JV Interests held by all Venturers (other than Paddlewheels
and any Affiliate thereof), (ii) multiplied by (100), immediately prior to
the issuance of the Notice of Subsequent Capital Contribution.
10
<PAGE>
3.4 No Right to Return of Contribution. Except as otherwise expressly
----------------------------------
provided in this Agreement, no Venturer shall have the right to withdraw or
receive any return of its initial or any Subsequent Capital Contribution. Under
circumstances requiring a return of any initial or Subsequent Capital
Contribution, no Venturer shall have the right to receive property other than
cash. No Venturer shall have any right to the withdrawal or to the return of any
initial or Subsequent Capital Contribution made by it to the Venture, except as
otherwise provided in this Agreement.
ARTICLE IV
LOANS
-----
The Venturers may be entitled, but are not obligated, to make loans to the
Venture from time to time, the terms and conditions of which (including, but not
limited to, any equity conversion provisions) shall be approved by HCS I, and
any such loans (prior to any applicable conversion thereof) shall not be treated
as Subsequent Capital Contributions to the Venture for any purpose hereunder,
nor entitle such Venturer to any increase in its share of the Profits and Losses
or cash distributions of the Venture, but the Venture shall be obligated to such
Venturer for the amount of any such loans pursuant to the terms thereof. All
scheduled principal and interest payments with respect to any loans from a
Venturer to the Venture pursuant to this Section shall be repaid prior to any
distributions to any Venturer pursuant to Section 5.1 below. No Venturer shall
be paid interest on any initial or Subsequent Capital Contribution to the
Venture.
ARTICLE V
DISTRIBUTIONS
-------------
From time to time, but in no event less frequently than once each calendar
year, HCS I shall determine the amount of distributions of Profits and Losses
that shall be made to the Venturers (other than Paddlewheels and any Affiliate
thereof) pursuant to Section 5.1 below.
5.1 (a) Priority of Distributions. All distributions (other than
-------------------------
distributions pursuant to Section 5.1(d) below) shall be made pro rata to
the Venturers (other than Paddlewheels and any Affiliate thereof) based on
their respective Relative Ownership Ratios (as defined in Section 5.1(b)
below), immediately prior to any such distribution.
(b) Definition of Relative Ownership Ratio. For purposes of this
--------------------------------------
Agreement, the term "Relative Ownership Ratio" shall mean for each Venturer
------------------------
(except Paddlewheels and any Affiliate thereof) a percentage equal to (i)
the quotient equal to the number of JV Interests held by such Venturer,
divided by the total number of outstanding JV Interests held by all
Venturers (excluding JV Interests held by Paddlewheels and any Affiliate
thereof), (ii) multiplied by 100.
11
<PAGE>
(c) Withholding. If required by the Code or by state or local law,
-----------
the Venture will withhold any required amount payable to a Venturer
pursuant to Article V for payment to the appropriate taxing authority. Each
Venturer agrees to timely file any agreement or return that is required by
any taxing authority in order to avoid any withholding obligation that
would otherwise be imposed on the Venture.
(d) Tax Distributions. The Venture shall distribute to each
-----------------
Venturer (excluding Paddlewheels and any Affiliate thereof) in the event
such persons are allocated any share of Venture taxable income from
operations (but not with respect to any other allocations of taxable income
or gain, including but not limited to, allocations of income and gains in
connection with a sale of assets by the Venture or a liquidation of the
Venture or in connection with any deemed capital contribution) pursuant to
the Code, Regulations or any formal action by the Internal Revenue Service
for each year, as additional equity distributions, amounts equal to the
amount by which (a) such Venturer's allocable share of Venture taxable
income multiplied by the highest marginal combined federal, state and local
income tax rate applicable to any Venturer that has been allocated a share
of Venture taxable income for such year exceeds (b) cash distributions
otherwise made to such Venturer with respect to such year, exclusive of any
amounts distributed to such Venturer to permit such Venturer to make
payments to Paddlewheels pursuant to the Assignment Agreement.
(e) Except as required in Sections 704(b) or (c) of the Code, all
items of income, gain, deduction, loss or credit shall be allocated among
the Venturers (other than Paddlewheels and any Affiliate thereof) pro rata
in accordance with their respective Relative Ownership Ratios.
5.2 Profits and Losses.
------------------
(a) Profits and Losses. "Profits and Losses" means, for each
------------------ ------------------
Venture fiscal year or other fiscal period, an amount equal to the
Venture's taxable income or loss for such year or period, as determined in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss or deduction required to be stated separately pursuant
to Section 703(a)(1) of the Code shall be included in Profits or Losses).
(b) Allocation of Losses. All Losses shall be allocated to the
--------------------
Venturers (other than Paddlewheels and any Affiliate thereof) in proportion
to such Venturers' Relative Ownership Ratios; provided, however, that any
Losses (or portion thereof) attributable to a loan made or guaranteed by a
Venturer, or Venturer nonrecourse debt within the meaning of Regulation
Section 1.704-2(b)(4) ("Venturer Nonrecourse Debt"), shall be allocated to
-------------------------
such Venturer in accordance with such Regulation.
(c) Allocation of Profits. Subject to the special allocation
---------------------
provisions set forth in Section 5.2(d) below, all Profits and Losses shall
be allocated to the
12
<PAGE>
Venturers (other than Paddlewheels and any Affiliate thereof) in
accordance with such Venturers' respective Relative Ownership Ratios.
(d) Special Allocation. In any period during which Paddlewheels
------------------
receives payment of any amount representing its share of Net Realized
Value, Paddlewheels shall be allocated taxable income or gain for such
period in an aggregate amount equal to such payment. Except as set forth in
the preceding sentence, no income, gains, Profits and Losses or tax credits
shall be allocated to Paddlewheels.
5.3 Transfer. If, after the date hereof, any JV Interest is transferred
--------
during any fiscal year of the Venture (whether by liquidation of a JV Interest,
transfer of all or part of a JV Interest or otherwise), the books of the Venture
will be deemed to be or will be closed as of the effective date of such
transfer. The Profits and Losses attributable to the period from the first day
of such fiscal year through the effective date of such transfer will be
allocated to the transferor, and the Profits and Losses attributable to the
period commencing on the effective date of such transfer will be allocated to
the transferee. In lieu of an interim closing of the books of the Venture and
with the agreement of the transferor and the transferee, the Venture may
allocate Profits and Losses for such fiscal year between the transferor and the
transferee based on a daily proration of items for such fiscal year or any other
reasonable method of allocation (including an allocation of extraordinary
Venture items, as determined by the Venture, based on when such items are
recognized for federal income tax purposes). This allocation provision is
subject to the provisions of Section 706(d) of the Code, relating to allocable
cash basis items.
5.4 Tax Credits. Any tax credit, and any tax credit recapture, will be
-----------
allocated to the Venturers (other than Paddlewheels and any Affiliate thereof)
in the same ratio that the federal income tax basis of the asset (to which such
tax credit relates) is allocated to the Venturers under the Regulations
promulgated under Section 46 of the Code, and if no basis is allocated, in the
same manner as Profits and Losses are allocated to the Venturers under Section
5.2 hereof.
5.5 Tax Information Notices. Each Venturer shall furnish the Tax Matters
-----------------------
Manager with such information (including information specified in Section
6230(e) of the Code) as the Tax Matters Manager may reasonably request to permit
the Tax Matters Manager to provide the Internal Revenue Service with sufficient
information to allow proper notice to the Venturers in accordance with Section
6223 of the Code. The Tax Matters Manager shall keep each Venturer informed of
those administrative and judicial proceedings for the adjustment of the Venture
level of Venture items required by Section 6223(g) of the Code and the
Regulations thereunder, and such other matters as the Tax Matters Manager, in
its sole discretion, deems appropriate.
5.6 Inconsistent Tax Treatment. Each Venturer shall notify the Tax
--------------------------
Matters Manager in the event its treatment of any Venture item on its federal
income tax return is inconsistent with the treatment of that item on any return
filed by or in any records of the Venture within thirty (30) days of the date
such Venturer's return is filed.
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5.7 Tax Proceedings. The Tax Matters Manager, in its sole discretion,
---------------
shall direct and oversee all proceedings, disputes and other similar matters
between the Venture and the Internal Revenue Service. Any Venturer who intends
to file a petition under Section 6226, 6228, or other sections of the Code with
respect to any Venture item, or other tax matters involving the Venture shall
give reasonable notice to each of the Venturers of such intention and the nature
of the contemplated proceedings. In the case where the Tax Matters Manager, on
behalf of the Venture, intends to file such petition, the Tax Matters Manager,
in its sole discretion, shall choose the forum in which such petition will be
filed. If any Venturer desires to seek review of any court decision rendered as
a result of a proceeding instituted under this Section, such Venturer shall so
notify each of the Venturers, and shall request the Tax Matters Manager to so
act. The Tax Matters Manager may, in its sole discretion, choose to pursue or
forego settlement, review, litigation or any other proceedings in connection
with any such proceeding, dispute or other similar matter with the Internal
Revenue Service.
5.8 Tax Settlements. The Tax Matters Manager shall have the authority to
---------------
bind any other Venturer to a settlement agreement regarding any proceeding
dispute or other matter by and between the Venture and the Internal Revenue
Service upon the written concurrence of any such Venturer who would be bound by
such agreement.
5.9 Expenditures, Fees and Indemnification. The Tax Matters Manager may
--------------------------------------
engage such legal counsel, certified public accountants, or others (including,
without limitation, experts) on behalf of the Venture as it may determine to be
necessary and appropriate. Any other Venturer may engage other legal counsel,
certified public accountants, or others on such other Venturer's own behalf and
at such other Venturer's sole cost and expense. Any reasonable item of expense,
including but not limited to fees and expenses for legal counsel, certified
public accountants, and others (including, without limitation, experts) that the
Tax Matters Manager incurs on behalf of the Venture in connection with any
audit, assessment, litigation, or other proceeding regarding any Venture item,
shall constitute expenses of the Venture. In the event that the Venture does
not have adequate cash or other assets to pay such items of expense, the Tax
Matters Manager shall not be obligated to make Capital Contributions or loans to
fund such expenses except as otherwise provided herein, and the Tax Matters
Manager shall be free to resign as the "tax matters partner" of the Venture
pursuant to Section 5.10 hereof.
5.10 Resignation of Tax Matters Manager. The Tax Matters Manager may
resign as Tax Matters Manager of the Venture at any time upon the filing of a
signed statement with the Internal Revenue Service in accordance with Temp.
Treas. Reg. (S) 301.623(a)(7)-1T(i) (or any successor provision thereto). The
successor Tax Matters Manager shall be determined pursuant to Temp. Treas. Reg.
(S) 301.6231(a)(7)-1T (or any successor provision thereto).
5.11 Survival of Tax Matters Manager Provisions. The provisions of this
------------------------------------------
Article including without limitation the obligation to pay fees and expenses
shall survive the termination of the Venture or the termination of any
Venturer's interest in the Venture and shall remain binding on the Venture for a
period of time necessary to resolve with the Internal Revenue Service, the
Department of the Treasury or any state taxing authority
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any and all matters regarding the federal or state income taxation of the
Venture for the applicable tax year(s).
ARTICLE VI
CASH PRIORITIES
---------------
6.1 Priority. The parties hereto agree and acknowledge that, subject to
--------
the payment subordination terms, restrictions and conditions set forth in any
credit facility or other applicable loan agreement or indenture entered into by
the Venture (a "Debt Restriction"), the Venture shall pay the following fees,
----------------
expenses and distributions in the following order of priority:
(i) First, the Venture shall pay the Operator the Basic
Management Fee (as defined in the Management Agreement), pursuant to
the terms and conditions of the Management Agreement.
(ii) Second, the Venture shall make equity distributions
pursuant to Section 5.1 above.
ARTICLE VII
MANAGEMENT AND OPERATION OF THE VENTURE
---------------------------------------
7.1 HCS I. The Venture shall be managed by HCS I, which shall oversee and
-----
supervise the operation of the Venture's business and make all decisions on
behalf of the Venture. HCS I shall have sole and exclusive control of the
business of the Venture and shall be authorized and empowered to determine all
questions relating to the conduct, operation and management of the business of
the Venture, and the determinations of HCS I shall be binding upon Venturers and
all other persons for all purposes.
7.2 Acts of HCS I; Minutes. Written records of the actions of HCS I, as
----------------------
the manager of the Venture, and all minutes of actions of the former "Management
Committee" of the Venture shall be kept with the other Venture records and shall
be available at any reasonable time for inspection by any Venturer.
7.3 Powers of HCS I. HCS I shall have all necessary powers to carry out
---------------
the purposes and conduct the business of the Venture. In addition to any other
rights and powers that HCS I may possess, HCS I, without the consent or approval
of any other Venturer shall have all specific rights and powers required or
appropriate to the management of the business of the Venture including, but not
limited to, approving the financing or refinancing of the Project or any portion
thereof and borrowing money in connection therewith (including executing and
delivering promissory notes, indentures, and other loan documents and
mortgaging, granting a security interest or otherwise encumbering all or any
portion of the real or immovable, personal or movable, tangible or corporeal,
intangible or incorporeal property of the Venture with any documents evidencing
such mortgage or security interest containing the usual and customary security
clauses, including without limitation a confession of judgment, waiver of
15
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appraisal and pact de non alienando), approving the construction and development
plans and budgets, approving any future Project expansion, and approving any
sale of all or part of the Project, and only HCS I shall have these rights and
powers. Notwithstanding the foregoing, HCS I may delegate any or all such
rights and powers to any other person or entity in writing. As a result, the
parties hereto acknowledge that HCS I has delegated to Operator certain powers
pursuant to the terms and conditions of and expressly described in the
Management Agreement. Subject to the requirements of Section 7.5 below, all
decisions made for or on behalf of the Venture by HCS I consistent with the
above provisions shall be binding upon the Venture.
7.4 Indemnification.
---------------
(a) To the fullest extent permitted by law, each Venturer
(including Paddlewheels and its Affiliates) (the "Indemnitee") shall be
----------
indemnified, held harmless and defended by the Venture from and against any
and all losses, claims, damages, liabilities, whether joint or several,
expenses (including legal fees and expenses), judgments, fines and other
amounts paid in settlement, incurred or suffered by such Indemnitee, as a
party or otherwise, in connection with any threatened, pending, or
completed claim, demand, action, suit or proceedings whether civil,
criminal, administrative or investigative, and whether formal or informal,
arising out of or in connection with the business or the operation of the
Venture and by reason of the Indemnitee's status with respect to the
Venture regardless of whether the Indemnitee continues to be a Venturer at
the time any such loss, claim, damage, liability or other expense is paid
or incurred (collectively, the "Losses" individually, a "Loss") if, with
----
respect to a claim for which an Indemnitee is seeking indemnification, (i)
the Indemnitee acted in good faith and in a manner it reasonable believed
to be in the best interests of the Venture and, with respect to any
criminal proceeding, had no reasonable cause to believe that its conduct
was unlawful, (ii) the Indemnitee's conduct did not constitute gross
negligence, willful misconduct or a material breach of the terms of this
Agreement and (iii) the Indemnitee's conduct did not constitute fraud or
breach of their fiduciary duty, if any, to the Venture. The termination of
any action, suit or proceeding by judgment, order, settlement or upon a
plea of nolo contendere, or its equivalent, shall not, of itself, create a
presumption that the Indemnitee did not act in the best interests of the
Venture.
(b) In the event that the Indemnitee is made a defendant in or
party to any action or proceeding, judicial or administrative, instituted
by any third party for the liability or the costs or expenses of which are
Losses (any such third party action or proceeding being referred to as a
"Claim"), the Indemnitee shall give the Venture prompt notice thereof. The
-----
failure to give such notice shall not affect any Indemnitee's ability to
seek indemnification from the Venture unless such failure has materially
and adversely affected the Venture's ability to defend successfully a
Claim. The Venture shall be entitled to contest and defend such Claim;
provided, that the Venture (i) has a reasonable basis for concluding that
such defense may be successful and (ii) diligently contests and defends
such Claim. Such contest and defense shall be conducted by attorneys
employed by the
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Venture. The notifying party shall be entitled at any time, at its
own cost and expense, to participate in such contest and defense and to be
represented by attorneys of its or their own choosing. If the Indemnitee
elects to participate in such defense, the Indemnitee shall cooperate with
the Venture in the conduct of such defense. Neither the Indemnitee nor the
Venture may concede, settle or compromise any Claim without the consent of
the other party, which consents will not be unreasonably withheld.
(c) The Venture, HCS I and HCS II, individually and collectively,
waive any and all claims and rights of contribution against Paddlewheels or
any Affiliate thereof in connection with, arising out of or related to any
Claims.
7.5 Negative Consent. Neither the Venture nor any Venturer without the
----------------
prior written consent of Paddlewheels shall approve any action that (a) amends,
modifies or otherwise changes (i) the method of calculation of Net Realized
Value pursuant to Section 10.5 below or (ii) Paddlewheels' right to receive 10%
of Net Realized Value pursuant to Section 10.5 below, or (b) transfers, all or a
portion of, the JV Interests held by HCS I or HCS II to an Affiliate thereof
unless such applicable Affiliate consents in writing to be bound by the terms of
Sections 6.1 and 10.2 hereof.
7.6 Bank Accounts. The Venture shall maintain bank accounts in such banks
-------------
as HCS I may designate exclusively for the deposit and disbursement of all funds
of the Venture. All funds of the Venture shall be promptly deposited in such
accounts. HCS I from time to time shall authorize the signatories for such
accounts.
7.7 Reimbursement for Costs and Expenses. HCS I shall determine the
------------------------------------
amounts, if any, that the Venture will reimburse a Venturer (or any Affiliate
thereof) for costs and expenses incurred by such Venturer or Affiliate on behalf
and for the benefit of the Venture; provided, however, that no overhead or
general administrative expenses of a Venturer or its Affiliates shall be
allocated to the operation of the Venture, and no salaries, fees, commissions or
other compensation shall be paid by the Venture to a Venturer or its Affiliates
or to any officer or employee of a Venturer or its Affiliates for any services
rendered to the Venture, except as may be provided in the Management Agreement
and the Marine Agreement or as may be approved in advance by HCS I.
7.8 Fidelity Bonds and Insurance. To the extent determined by HCS I, the
----------------------------
Venture shall obtain fidelity bonds with reputable surety or insurance companies
covering all persons having access to the Venture's funds, indemnifying the
Venture against loss resulting from fraud, theft, dishonesty and other wrongful
acts of such persons. The Venture shall carry or cause to be carried on its
behalf in insurance companies acceptable to HCS I all property, liability and
workmen's compensation insurance as shall be required under applicable loans,
leases, agreements and other instruments and statutes or as may otherwise be
required by HCS I.
7.9 Cooperation. The Venturers agree to use their best efforts and
-----------
cooperate with each other in carrying out the transactions contemplated by this
Agreement, including the following, provided that the cost thereof shall be
borne by the Venture:
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<PAGE>
(a) filing all required applications with the Gaming Authorities
for receipt on maintaining of a gaming license under the Act, and
maintaining compliance by the Venture with directives of the Gaming
Authorities and the provisions of the Act;
(b) filing materials with, or participating in, all attendant
investigations instituted by, a gaming regulatory authority of a State
other than Louisiana to which a Venturer is subject;
(c) developing the design of the Complex and supervising the
construction thereof;
(d) filing all required applications for the Vessel license, liquor
licenses and any other licenses or permits required for the operation of
the Complex;
(e) filing all tax returns and other governmental filings on behalf
of the Venture;
(f) securing all required insurance covering the Complex and the
operation thereof; and
(g) executing and delivering any other agreements, instruments,
documents or consents necessary for the financing, construction,
development and operation of the Complex, including but not limited to, the
Loan Commitments, loan documents, the Hotel and Vessel construction
agreements and any dock site licensing or leasing agreements.
ARTICLE VIII
BUDGETS AND CONTRIBUTIONS
-------------------------
HCS I shall furnish to each of the Venturers prior to the commencement of
each fiscal year a budget (the "Budget(s)") covering in reasonable detail the
---------
budget for such ensuing fiscal year. Each Budget shall show the additional cash
requirements of the Venture for the ensuing fiscal year, which shall be the
aggregate of all estimated expenditures to be made by the Venture during such
year, plus appropriate reserves for general maintenance and cash contingencies,
over the sum of the anticipated borrowings from the Loan Commitments and the
estimated cash on hand at the beginning of the year. Within a reasonable time
after the end of each calendar quarter, the Venture will furnish to each of the
Venturers any updates or revisions to operating forecasts.
18
<PAGE>
ARTICLE IX
BOOKS AND RECORDS;
AUDIT, TAXES, ETC.
------------------
9.1 Books; Statements. The Venture shall keep, or cause to be kept, books
-----------------
and accounts showing its assets and liabilities, operations, transactions and
financial condition. All financial statements shall present fairly the financial
position and results of the Venture and shall be prepared on an accrual basis in
accordance with generally accepted accounting principles consistently applied.
HCS I shall determine the methods to be used in the preparation of financial
statements and federal, state and municipal income and other tax returns for the
Venture in connection with all items of income and expense, including but not
limited to, valuation of assets, the methods of depreciation, elections, credits
and accounting procedures.
9.2 Reports and Statements. On and after the Commencement Date, the
----------------------
Venture shall furnish, or cause to be furnished, to each of the Venturers the
reports and statements required to be furnished by the Operator pursuant to the
terms and conditions of the Management Agreement.
9.3 Where Maintained. The books, accounts and records of the Venture
----------------
shall be at all times maintained at its principal office.
9.4 Audits. Any Venturer may, at its option and at its own expense,
------
conduct internal audits of the books, records and accounts of the Venture.
Audits may be conducted in a reasonable manner, at reasonable times during
normal business hours, that will not interfere or impair the day to day business
operations of the Venture and may be conducted by employees of any Venturer, or
of an Affiliate of any Venturer, or by independent auditors retained by a
Venturer at such Venturer's expense.
9.5 Objections to Statements. Each Venturer shall have the right to
------------------------
object to each report or statement provided to such Venturer pursuant to Section
9.2 hereof by giving notice in writing to HCS I within 45 days after such report
or statement is received by such Venturer, indicating in reasonable detail the
objections of such Venturer and the basis for such objections. The reports and
statements described in Section 9.2 and the contents thereof, in the absence of
fraud or willful misconduct by the other Venturers or by the Accountants
certifying the statements, shall be deemed conclusive and binding upon any
Venturer who fails to give such notice within such 45-day period. Settlement of
objections to any report or statement and disputes of any result of audits of
the Venture's books shall be resolved by HCS I.
9.6 Fiscal Year. The fiscal year of the Venture shall be the calendar
year.
9.7 Tax Returns. HCS I shall cause the Accountants to prepare and file
all state and federal tax returns on a timely basis. HCS I shall cause the
Venture's Accountants to prepare and submit to HCS I on or before August 15 of
each year for its approval all federal and state income tax returns of the
Venture. If HCS I shall
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<PAGE>
disapprove the Venture's tax returns as submitted by the Accountants, HCS I may
direct the Accountants to revise the tax returns and resubmit them to HCS I for
its approval. A statement of the allocation of Profits and Losses shown on the
annual income tax returns prepared by the Accountants shall be transmitted and
delivered to each Venturer within ten days of the receipt thereof by the
Venture.
9.8 Tax Information Submitted; Notices Sent. HCS I shall be the "tax
---------------------------------------
matters partner" as defined in Section 6231(a)(7) of the Code (the "Tax Matters
-----------
Manager"). The Tax Matters Manager shall perform all duties and functions within
- -------
the contemplation of Sections 6223, 6224, 6226, 6228 and 6230 of the Code in
connection with any administrative proceeding by the Internal Revenue Service
(or any taxing authority) or ensuing judicial proceeding by the Internal Revenue
Service (or any taxing authority) or ensuing judicial proceeding regarding a tax
return of the Venture. The Tax Matters Manager shall determine whether the
Venture should make any available tax election and, except for fraud or bad
faith in the making or failure to make such election, shall not be held
responsible or liable for the making of or failure to make such election. The
Tax Matters Manager shall consult with the Venturers concerning, and shall keep
the Venturers apprised of, matters within the scope of responsibility of the Tax
Matters Manager.
ARTICLE X
ASSIGNMENT BY ANY VENTURER OF ITS JV INTERESTS
----------------------------------------------
10.1 Restriction on Transfer.
-----------------------
(a) Except as expressly permitted in Section 3.1 above, 10.2 below
and, in any case, subject to the other provisions of this Article X and
Article XI, no Venturer shall sell, assign, transfer, convey, pledge,
hypothecate or otherwise dispose of all or any part of its JV Interests,
whether for consideration or not, and no purchaser or other transferee
thereof for value or otherwise shall have any rights in the Venture or,
have any rights as a Venturer with respect to all or any part of such JV
Interests attempted to be sold, assigned, transferred, conveyed, pledged,
hypothecated or otherwise disposed of, and any such attempted sale,
assignment, transfer, conveyance, pledge, hypothecation or other
disposition (a "Transfer") of all or any part of a Venturer's JV Interests
--------
shall be entirely null and void, unless all of the applicable provisions of
this Article X have been satisfied.
(b) The appropriate Venture records shall be noted to prevent the
Transfer of a Venturer's JV Interests otherwise than in accordance with
this Article X.
10.2 Certain Permitted Transfers.
---------------------------
(a) Subject to the other provisions of this Article X and this
Agreement, the Act or as otherwise agreed to by HCS I, the Transfer of all
or any part of the JV Interests of a Venturer shall be permitted in each of
the following
20
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limited circumstances: (i) where such Transfer is performed pursuant to the
requirements of Sections 10.3 and 10.4 hereof; (ii) where a Venturer
collaterally assigns, grants a security interest in, pledges, hypothecates
or otherwise encumbers its JV Interests in connection with financing the
Venture; or (iii) any Transfer resulting from the exercise by a secured
party of any rights granted to it in connection with a collateral
assignment, security interest, pledge or other encumbrance permitted under
clause (ii), including any Transfer to the secured party, its nominee or
any third party in a foreclosure sale (the recipient in any such Transfer
being hereinafter referred to as a "Secured Party Transferee"). In the
------------------------
event of a Transfer in accordance with Section 3.1 above by a Venturer to
one of its Affiliates, the transferee of the Venturer's JV Interests shall
assume in writing all of the obligations and liabilities of the Venturer
under this Agreement and succeed to all of the rights, obligations, and
privileges of the Venturer under this Agreement, the Marine Agreement and
the Assignment Agreement (only with respect to the Venture's obligations to
make payments of 1% of "Complex Net Revenues" (as defined in the Assignment
Agreement) to Paddlewheels or any Affiliate thereof pursuant to the
Assignment Agreement).
(b) The Venture agrees to provide to any holder of a security
interest in a Venturer's JV Interests (a "Venture Creditor") a copy of any
----------------
notice of default hereunder by such Venturer, and to accept performance by
any such Venture Creditor of any obligations under this Agreement in place
of such Venturer after any default by such Venturer in the performance of
its obligations under this Agreement, provided that a Venture Creditor
shall not be obligated to cure any such default by a Venturer. Subject to
any required approval by the applicable Gaming Authorities, the Venturers
each hereby consent to any Secured Party Transferee becoming a partner in
the Venture, and any such Secured Party Transferee shall be admitted as a
partner in the Venture without the need for any further approvals or
consents of the Venturers upon presentation to the Venture of the written
instrument by which such Secured Party and the Venturer's Transferees
acquired title to a Venturer's JV Interest. Each Venturer agrees that the
Venture shall have no liability for wrongfully admitting a Secured Party
Transferee as a Venturer of the Venture if the Venture and such other
Venturers rely in good faith upon the actions and requests of the Secured
Party Transferee.
10.3 Rights of First Refusal Arising from Desired Transfer.
-----------------------------------------------------
(a) Grant of Options. Subject to any express agreement by the
----------------
Venturers, if any Venturer (the "Optionor Venturer") desires to Transfer
-----------------
any or all of the JV Interests owned by it (other than pursuant to a
Transfer permitted under Section 3.1 or Section 10.2), such Venturer shall
give notice in writing (the "First Option Notice") to the Venture and the
-------------------
other Venturers setting forth such desire, the portion of the JV Interests
(the "Offered JV Interests") sought to be transferred, the price (the
--------------------
"Offer Price") at which the Optionor Venturer proposes to make such
-----------
transfer and the name of the proposed transferee. Upon receipt of the First
Option Notice, the Venture shall have the irrevocable right and option (the
"First Option") to purchase all or a portion of the Offered JV Interests.
------------
In the
21
<PAGE>
event that the Venture does not exercise the First Option with respect to
all of the Offered JV Interests within the time period specified in Section
10.3(b), such Optionor Venturer shall give notice in writing (the "Second
------
Option Notice"), within five days of its receipt of the earlier of the
-------------
Election Notice described in Section 10.3(b) or expiration of the 30-day
period following the date of the First Option Notice (or 20-day period if
Paddlewheels or any Affiliate thereof is an Optionor Venturer), to each of
the other Venturers setting forth the same information as in the First
Option Notice and the number of Offered JV Interests to be purchased by the
Venture. Upon the giving of the Second Option Notice, each other Venturer
shall have the irrevocable right and option (the "Second Option") to
-------------
collectively purchase all of the remaining Offered JV Interests.
(b) Exercise of First Option. The Venture may exercise the First
------------------------
Option by delivering to the Optionor Venturer written notice (the "Election
--------
Notice") of its election to exercise all or part of the First Option within
------
30 days after the date that the Venture receives the First Option Notice;
provided that if the Optionor Venturer is Paddlewheels or any Affiliate
thereof the Venture shall exercise such First Option within 20 days of the
date the Venture receives the First Option Notice.
(c) Exercise of Second Option. If the Venture does not exercise its
-------------------------
option to purchase all of the Offered JV Interests, each of the other
Venturers shall, pursuant to the Second Option, have the right to
collectively purchase all of the remaining Offered JV Interests. If the
other Venturers exercising the Second Option elect to purchase more JV
Interests than are subject to the Second Option, each participating
Venturer will be entitled to purchase up to its pro rata share, based on
the respective Relative Ownership Ratio of the participating Venturer, of
the remaining Offered JV Interests. Each participating Venturer may
exercise the Second Option by delivering to the Optionor Venturer written
notice of its election to exercise the Second Option within the 10-day
period immediately following the date of the Second Option Notice. If any
participating Venturer should elect to purchase less than its pro rata
share of the remaining Offered JV Interests, the Optionor Venturer shall
give oral or written notice of the number of remaining Offered JV Interests
available to each other eligible Venturer, each of whom shall have five
business days after receipt of such notice to elect to purchase all of such
remaining JV Interests. If the participating Venturers elect to purchase
more of the remaining Offered JV Interests than are available, each
Venturer participating in such re-offer shall have the right to purchase
its pro rata share (based on the respective Relative Ownership Ratio of
such Venturers participating in the re-offer, which shall be calculated by
excluding the JV Interests of such non-participating Venturer) of such
remaining Offered JV Interests. If, after such re-offer, the participating
Venturers shall fail to purchase all of the Offered JV Interests, the
Second Option shall expire.
(d) Purchase Price. The purchase price (the "Purchase Price") for
-------------- --------------
the Offered JV Interests at which the Optionor Venturer shall be obligated
to sell the Offered JV Interests pursuant to the First Option or the Second
Option shall be
22
<PAGE>
equal to the price set forth in the applicable third party offer. No
Venturer shall voluntarily transfer any JV Interests for any consideration
other than for cash. The Venture and Venturers who exercise the First
Option and Second Option shall tender payment in cash for the Offered JV
Interests to be purchased by them on the date of closing of such purchase,
which shall occur no later than the earlier of the tenth day immediately
after the expiration of the 10-day period following the date of the Second
Option Notice or the 75th day immediately following the date of the First
Option Notice.
(e) Sale of Offered JV Interests. If the First Option Notice and
----------------------------
the Second Option Notice shall be duly given, and if the Venture and the
applicable Venturers shall not collectively exercise their options to
purchase all of the Offered JV Interests, then the Optionor Venturer shall
be free to sell all of its Offered JV Interests to any third party
transferee on the same material terms as were described in the First Option
Notice on and after the 30th day immediately following the date the
applicable transferee, if required, obtains a license from the applicable
Gaming Authorities. In such instance, the Venture's and applicable
Venturers' election to purchase any of the Offered JV Interests shall be
null and void and of no further legal effect .
(f) Re-Offers. If the proposed purchase price of a transferee for
---------
the Offered JV Interests is less than the applicable price as set forth in
the First Option Notice, the Optionor Venturer shall not transfer the
Offered JV Interests to such transferee unless the Optionor Venturer shall
first re-offer the Offered JV Interests at such lesser price to the Venture
and each of the other Venturers by giving written notice (the "Re-offer
--------
Notice") thereof, stating the Optionor Venturer's intention to make such
------
transfer at such lower price (the "Re-offer Price"). The Venture and each
--------------
of the other Venturers shall then have the irrevocable and exclusive option
to purchase all of the Offered JV Interests at the Re-offer Price,
exercisable in the same order of priority, proportions and manner as
provided in Sections 10.3(b), (c) and (d) hereof; provided the 30-day and
20-day periods referenced in Section 10.3(b) shall each be reduced to a 10-
day period.
(g) Limitation. Notwithstanding the terms and conditions of this
----------
Section 10.3, Paddlewheels and any Affiliate thereof, individually or
collectively, shall not have the right, in any manner, to acquire from any
Venturer all or a portion of such other Venturer's JV Interests except as
expressly provided elsewhere in this Agreement. Any such acquisition of JV
Interests by Paddlewheels or any Affiliate thereof shall be null and void,
and of no legal effect. In the event HCS I and any other Venturer (other
than Paddlewheels and any Affiliate thereof) have the right to purchase all
of Paddlewheels' JV Interest, then in addition to such rights, HCS I and
such other Venturers and the Venture shall have the right to purchase all
of Paddlewheels' rights to receive payments pursuant to the Marine
Agreement for an additional purchase price equal to the appraised value of
Paddlewheels' right to receive future fees pursuant thereto.
23
<PAGE>
10.4 Involuntary Transfers. In the event a creditor of the Venture
---------------------
commences foreclosure against and acquires the assets of the Venture, then
Paddlewheels' right to receive payments pursuant to the Marine Agreement and
Section 10.5 below shall immediately terminate, and the Venture and the other
Venturers shall have no further obligations to make such payments to
Paddlewheels.
10.5 Special Purchase Rights. If, at any time after the opening of the
-----------------------
Project, (i) the Venture sells all or substantially all of its assets to a
person that is not an Affiliate of HCS I, HCS II, Operator, HCC or any other
Venturer (other than Paddlewheels and any Affiliate thereof), or (ii) HCS I, HCS
II, the Operator, HCC and such other Venturer collectively sell all of their JV
Interests to a person that is not an Affiliate of HCS I, HCS II, the Operator,
HCC or such Venturer, then the Venture or HCS I, HCS II, the Operator, HCC and
such other Venturer shall pay Paddlewheels an amount equal to 10% of the Net
Realized Value of such applicable sale received by the Venture, HCS I, HCS II,
the Operator, HCC and such other Venturer, together with an additional amount
representing the appraised value of Paddlewheels' right to future fees that
would otherwise continue to be payable under the Marine Agreement. Upon payment
of such Net Realized Value to Paddlewheels pursuant to this Section 10.5, the
Venture shall not be obligated to make any payments to Paddlewheels pursuant to
the Marine Agreement, and all of the JV Interests held by Paddlewheels and all
of its Affiliates shall terminate, expire and be of no legal effect. For
purposes of this section, the term "Net Realized Value" shall mean the gross
------------------------
sales proceeds from the applicable sale less (x) transaction costs (including,
but not limited to, accountants' and attorneys' fees), and amounts used to repay
debt and to establish reserves for debt payments, replacements and contingencies
(provided that Net Realized Value shall later be increased to the extent that
any portion of such reserves are paid to the Venture subsequent to the initial
determination of Net Realized Value), and (y) any amounts paid by the Venture to
HCS I, HCS II, Paddlewheels, the Operator, HCC, any other Venturer, or any
Affiliate thereof representing a return of each Venturer's initial Capital
Contributions and any Subsequent Capital Contributions. The parties hereto
agree and acknowledge that if any sale referred to in this Section 10.5 is made
to an Affiliate of the Venture, HCS I, HCS II, the Operator, HCC or any other
Venturer (other than Paddlewheels or any Affiliate thereof), then Paddlewheels
shall not be entitled to receive any payments pursuant to this Section 10.5.
ARTICLE XI
MANDATORY TRANSFERS
-------------------
11.1 Unsuitability in Louisiana. If the Gaming Authorities make a
--------------------------
determination that any Venturer or any Affiliate of such Venturer (the
"Unsuitable Venturer") is unsuitable to hold a license to perform or conduct
- --------------------
gaming activities (an "Unsuitability Determination"), after the commencement of
---------------------------
gaming operations of the Complex, the Unsuitable Venturer shall immediately give
to the other Venturers (except Paddlewheels and any Affiliate thereof), upon
submitting written notice, a right to purchase all of the Unsuitable Venturers'
JV Interests. In the event such other Venturers elect not to purchase all of
the Unsuitable Venturer's JV Interests within a 30-day period following the date
the Unsuitable Venturers' written notice, the Venture shall purchase
24
<PAGE>
all of the remaining Unsuitable Venturer's JV Interests within a 30-day period
following the termination date of the foregoing 30-day period. The purchase
price for the JV Interests purchased pursuant to this Section 11.1 shall be
equal to the lesser of (i) an amount agreed upon by the purchasing and selling
party or parties, and if no such agreement is made, the fair market value as
determined by an appraiser mutually acceptable to the selling and purchasing
party, or (ii) an amount approved by the LGCB. Notwithstanding the foregoing, if
the Unsuitable Venturer receives an offer to purchase such Unsuitable Venturer's
JV Interests from a third person, at any time during either the Venturers' 30-
day election period or Venture's 30-day election period pursuant to this Section
11.1, then the provisions set forth in Sections 10.3 and 10.4 shall govern.
Each Venturer shall independently comply with all federal, state and local
gaming regulations and any jurisdiction to which any Venturer is or becomes
subject to during the term of the license issued by the LGCB to the Venture,
including submitting to and cooperating in any investigation required by such
jurisdiction by virtue of the Venturer's JV Interests in the Venture. Each
Venturer shall bear all of its own costs which it incurs in connection with such
compliance.
11.2 Unsuitability in Other Jurisdictions.
------------------------------------
(a) Buy/Sell. If (i) a Gaming Authority of a State other than
--------
Louisiana makes an Unsuitability Determination as to any Venturer or an
Affiliate of such Venturer and (ii) any other Venturer (the "Affected
--------
Venturer") reasonably determines that the affiliation of the Affected
--------
Venturer with such Unsuitable Venturers threatens any gaming permit,
approval or other entitlement that the Affected Venturer or any Affiliate
of the Affected Venturer holds or has applied for because of such
Unsuitability Determination, then the Affected Venturer shall give a notice
of such determination to such Unsuitable Venturers. Within 20 days after
such notice is given, the Unsuitable Venturers receiving such notice shall
give a notice (a "Buy/Sell Notice") to the Affected Venturer and to the
Affected Venturer's Accountants of its election to either sell all (but not
less that all) of the Unsuitable Venturers' JV Interests to the Affected
Venturer or to buy all (but not less that all) of the JV Interests of the
Affected Venturer, in either case at a purchase price mutually agreed upon
by such parties or at the fair market value of such JV Interests as
determined by an appraiser mutually acceptable to such parties.
(b) Suitability Determination. Without limiting reasonableness to
-------------------------
such circumstances, a determination made by the Affected Venturer referred
to in Section 11.2(a) hereof shall be deemed to be reasonable if based
upon: (i) any written communication from a gaming regulatory authority of
the applicable state; or (ii) written evidence that, if true, the Affected
Venturer's participation in the Venture would violate any law, rule or
regulation administered by any gaming regulatory authority, so long as such
evidence is not induced in bad faith by its recipient.
25
<PAGE>
11.3 Closing of Inter-Venturer Transfers. The closing of any Transfer of
-----------------------------------
the JV Interests of a Venturer to another Venturer under this Article XI shall
take place at the principal office of the Venture or such other place as may be
agreed upon by the Venturers on the first Business Day that is at least ten days
after the date on which the purchase price is determined pursuant to the
applicable provisions set forth in Article XI, or such other date as may be
agreed by the Venturers.
11.4 Limitation of Transfers. Except for Transfers effected pursuant to
-----------------------
any of Sections 11.1 and 11.2, no Transfer shall be made of any JV Interests if
(a) such Transfer, in the opinion of the Venture's legal counsel, would result
in the Venture being treated as an association taxable as a corporation for
federal or state tax purposes, (b) such Transfer, when considered with all other
Transfers of JV Interests within the previous 12 months, would result in the
Venture's being considered to have terminated within the meaning of Code Section
708, (c) such Transfer is effectuated through an "established securities market"
or a "secondary market (or the substantial equivalent thereof)" within the
meaning of Code Section 7704, (d) such Transfer would otherwise result in the
Venture's being classified as a "publicly traded venture" within the meaning of
Code Section 7704(b), (e) in the opinion of the Venture's legal counsel such
Transfer requires the registration of such JV Interests pursuant to any federal
or state securities law, (f) such Transfer would otherwise violate any
applicable federal or state securities laws (including any investor suitability
standards), (g) such Transfer would subject the Venture or any of the Venturers
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 would violate the gaming laws or regulations of any
State; (i) such Transfer is made to any person who lacks the legal right, power
or capacity to own such JV Interests, or (j) the Venture does not receive
written instruments (including, without limitation, true copies of any transfer
instruments and the transferee's consent to be bound by this Agreement) that are
in form and substance satisfactory to HCS I in its sole and absolute discretion.
Notwithstanding Sections 10.2, 10.3 and 10.4 above, no Transfer of any JV
Interests shall be made if such Transfer would (v) result in the termination of
the Venture under Louisiana law or otherwise, (w) result in a default under any
instrument evidencing or securing indebtedness of the Venture unless such
Transfer is otherwise consented to by, or such default is waived by, the
applicable lender, (x) with respect to any agreements or comments to which any
party is bound, require a prepayment of, or result in any adverse change in the
terms of, any other instrument evidencing or securing indebtedness of the
Venture, (y) result in, or jeopardize the revocation, suspension or denial of
the gaming license issued by the Gaming Authorities to the Venture permitting
gaming activities pursuant to the Act, or (z) result in, or jeopardize the
revocation, suspension or denial of any gaming license, or application for a
gaming license, of any Venturer or any of its Affiliates in any jurisdiction in
which such Venturer or its Affiliates are so licensed or have applied for a
gaming license. The Venturers acknowledge that adequate legal remedies are not
likely to exist for any breach of this Section 11.4 and, accordingly, that the
Venture and any aggrieved Venturer or Venture Creditor shall have the right to
secure injunctive relief in the event of any actual or threatened breach of a
Venturer's obligations under this Section 11.4.
26
<PAGE>
11.5 Ineligible Transferees. Notwithstanding any provision of this
----------------------
Agreement to the contrary, no Transfer of any JV Interests may be made under any
circumstances to any person who: (a) has not been determined suitable or
otherwise approved or exempted from such determination by the Gaming
Authorities; or (b) is subject to an unsuitability determination by any
regulatory authority of any other state; or (c) has been convicted of a felony
offense.
11.6 Limitation. (a) Notwithstanding the terms and conditions contained in
----------
this Article XI, neither Paddlewheels nor any Affiliate thereof, individually or
collectively, shall have the right to acquire any JV Interests unless expressly
provided elsewhere in this Agreement. Any such acquisition of JV Interests by
Paddlewheels or any such Affiliate shall be null and void, and of no legal
effect. In the event HCS I or any other Venturer (other than Paddlewheels and
any Affiliate thereof) has the right to purchase Paddlewheels' JV Interests
pursuant to this Article XI, then HCS I and such other Venturer shall have the
right to purchase all of Paddlewheels' rights to receive payments pursuant to
the Marine Agreement for a purchase price equal to the appraised value of
Paddlewheels' right to receive future fees pursuant thereto.
ARTICLE XII
DISSOLUTION UPON CERTAIN EVENTS
-------------------------------
Upon the occurrence of any event enumerated in Section 2.9 herein, then,
unless such occurrence shall by law cause the Venture not to be dissolved, the
Venturers in accordance with the provisions of Article XIV hereof, shall wind up
the affairs of the Venture unless HCS I elects within 60 days after such
dissolution event to continue the Venture. If, upon dissolution of the Venture
for any reason described in this Article XII, the business of the Venture is
continued without liquidation and without the winding up of the affairs of the
Venture pursuant to the terms hereof, title to the property of the Venture shall
be vested in the Venturer continuing the business. Upon such dissolution, each
non-consenting Venturer, or any legal representative of such Venturer, shall
have the right to an accounting of its JV Interests as against the Venture
continuing the business, and such Venturer shall have the right to have the
value of its interest as of the date of dissolution ascertained or have any
right as a creditor or otherwise with respect to the value of its JV Interests.
ARTICLE XIII
DEFAULTS AND TERMINATION
------------------------
13.1 Defaults. Upon the occurrence of any of the following events (the
--------
affected Venturer being herein called the "Defaulting Venturer"):
-------------------
(a) if the Defaulting Venturer shall fail in any other material
respect to perform its obligations and agreements hereunder, and such
default shall continue for 30 days after receipt of a notice of default
with respect thereto (provided that if either the event or condition
causing the default shall be such that it could not
27
<PAGE>
reasonably be cured within 30 days, then no default shall be deemed to have
occurred hereunder if within such 30-day period the Defaulting Venturer
shall have commenced the curing of such default and shall thereafter
proceed with all reasonable diligence to complete the same);
(b) if the Defaulting Venturer shall be dissolved (except as
permitted in Article X);
(c) if the Gaming Authorities provide notice to the effect that the
Defaulting Venturer no longer satisfies the criteria for licensure under
the Act, or that the gaming license of the Venture or the other Venturers
shall be in jeopardy of being revoked, denied or suspended as a result of
the continued participation of the Defaulting Venturer in the Venture, and
the Defaulting Venturer has exhausted all administrative remedies;
(d) if the Defaulting Venturer shall file a voluntary petition in
bankruptcy or shall be adjudicated a bankrupt or insolvent, or shall file
any petition or answer seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief for
itself under the present or any future federal bankruptcy, or state
insolvency or other relief for debtors, or shall seek or consent to or
acquiesce in the appointment of any trustee, receiver, conservator or
liquidator of such Defaulting Venturer or of all, or any substantial part
of its properties or its interest in the Venture (the term "acquiesce"
includes but is not limited to the failure to file a petition or motion to
vacate or discharge any order, judgment or decree providing for such
appointment within 10 days after the appointment) ;
(e) if a court of competent jurisdiction shall enter an order,
judgment or decree approving a petition filed against the Defaulting
Venturer seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under the present
or any future federal bankruptcy act, or any other present or future
applicable federal, state or other statute or law relating to bankruptcy,
insolvency or other relief for debtors, and such Defaulting Venturer shall
acquiesce in the entry of such order, judgment or decree (the term
"acquiesce" includes but is not limited to the failure to file a petition
or motion to vacate or discharge such order, judgment or decree within 10
days after the entry of the order, judgment or decree), or such order,
judgment or decree shall remain unvacated and unstayed for an aggregate of
60 days (whether or not consecutive) from the date of entry thereof, or any
trustee, receiver, conservator or liquidator of such Defaulting Venturer or
of all or any substantial part of its property or its interest in the
Venture shall be appointed without the consent or acquiescence of such
Defaulting Venturer and such appointment shall remain unvacated and
unstayed for an aggregate of 60 days (whether or not consecutive);
(f) if the Defaulting Venturer shall admit in writing its inability
to pay its debts as they mature;
28
<PAGE>
(g) if the Defaulting Venturer shall give written notice to any
governmental body of insolvency or pending insolvency, or suspension or
pending suspension of operations; or
(h) if the Defaulting Venturer shall make an assignment for the
benefit of creditors or take any other similar action for the protection or
benefit of creditors;
then in any such event, the other Venturer(s) (if such Venturers are HCS I, HCS
II or an Affiliate thereof or a successor thereto) (the "Non-defaulting
--------------
Venturer(s)") shall have the right to dissolve the Venture by giving the
- -----------
Defaulting Venturer written notice thereof, unless HCS I, HCS II or such
Affiliate or successor elects to continue the Venture. If the Nondefaulting
Venturer(s) elect to continue the business of the Venture, then the
Nondefaulting Venturer(s) shall have the right to acquire all of the JV
Interests of the Defaulting Venturer at a purchase price equal to the lesser of
book value or liquidation value of the Defaulting Venturer's JV Interests,
provided that Paddlewheels or any Affiliate thereof shall not have the right, in
any manner, to acquire JV Interests pursuant to this Section 13.1.
Failure by the Non-Defaulting Venturers to give any notice of a default as
specified herein, or any failure to insist upon strict performance of any of the
terms of this Agreement shall not constitute a waiver of any such breach or any
of the terms of this Agreement. No breach shall be waived and no duty to be
performed shall be altered or modified except in writing. One or more waivers
or failure to give notice of default shall not be considered as a waiver of a
subsequent or continuing breach of the same covenant.
13.2 Not Exclusive Remedy. The rights granted in Section 13.1 shall not
--------------------
be deemed an exclusive remedy of the Nondefaulting Venturers, but all other
rights and remedies, legal and equitable, shall be available to it.
ARTICLE XIV
DISSOLUTION
-----------
14.1 General Procedures. Upon any event of termination or dissolution of
------------------
the Venture as set forth in Article XII or Article XIII, hereof, the Venture
shall cease to engage in any further business, except to the extent necessary to
perform existing contracts, and shall wind up its affairs and liquidate its
assets, unless the Nondefaulting Venturers elect to continue the business of the
Venture pursuant to Article XII, Section 13.1 above or as otherwise set forth in
this Agreement. During the course of liquidation, the Venturers shall continue
to share in the Profits and Losses as provided in Article V hereof, and the
provisions of this Agreement shall continue to bind the Venturers and apply to
the activities of the Venture, except as specifically provided to the contrary,
but there shall be no cash distributions to any of the Venturers until the
Distribution Date.
29
<PAGE>
14.2 Distribution Date. Liquidation will continue until the Venture's
-----------------
affairs are in such condition that there can be a final accounting, showing that
all fixed or liquidated obligations of the Venture are satisfied or can be
adequately provided for hereunder. The assumption or guarantee in good faith by
one or more financially responsible corporations or other persons shall be
deemed to be an adequate means of providing for such obligations. When the
Venturers shall have determined that there can be a final accounting, the
Venturers shall establish a date for the distribution of the Venture's assets
(the "Distribution Date") and the assets of the Venture shall be distributed as
-----------------
provided in Section 14.3 hereof on such date.
14.3 Liquidation and Winding Up. If upon dissolution of the Venture, the
--------------------------
business of the Venture is not continued pursuant to the terms of Article XII or
Section 13.1 (if Paddlewheels and any Affiliate thereof elect not to acquire JV
Interests pursuant to such Section), the Venture shall be liquidated and HCS I
(or other person or persons designated by a decree of a court with proper
jurisdiction) shall wind up the affairs of the Venture. HCS I or other persons
winding up the affairs of the Venture shall promptly proceed to the liquidation
of the Venture and, in settling the accounts of the Venture, the assets and the
property of the Venture shall be distributed in the following order of priority:
(a) the payment of all debts and liabilities of the Venture in the
order of priority as provided by law (including outstanding loans from a
Venturer);
(b) the establishment of any reserves deemed necessary by HCS I or
the person winding up the affairs of the Venture for any contingent
liabilities or obligations of the Venture;
(c) the payment to each Venturer on a pro rata basis an amount
equal to the aggregate amount of initial and Subsequent Capital
Contributions made by each Venturer; and
(d) the balance, if any, distributed to the Venturers (including
Paddlewheels and any Affiliate thereof) pro rata in accordance with such
Venturers' Residual Ownership Ratios; provided, however, that Paddlewheels
or any Affiliate thereof shall not be entitled to any distribution
whatsoever pursuant to this Section 14.3(d) if such party has been, or has
a right to be, paid an amount equal to 10% of the Net Realized Value in
accordance with Section 10.5 of this Agreement.
14.4 Compensation and Reimbursement. HCS I may retain a person (who may be
------------------------------
any Nondefaulting Venturer) to act as liquidator for the Venture's assets. The
Nondefaulting Venturer or other person so retained shall be entitled to
reimbursement for out-of-pocket expenses incurred and reasonable compensation
for services rendered in connection with the winding up and liquidation of the
Venture, as agreed by the Venturers. Such reimbursement shall be paid as an
expense of the Venture after all debts to third parties have been repaid or
adequately provided for.
30
<PAGE>
14.5 No Capital Contribution Upon Dissolution. Each Venturer shall look
----------------------------------------
solely to the assets of the Venture for all distributions with respect to the
Venture, and shall have no recourse therefor (upon dissolution or otherwise)
against any other Venturer. No Venturer shall be obligated to restore to the
Venture any negative balance that may exist or continue in such Venturer's
Capital Account.
ARTICLE XV
NOTICES
-------
15.1 Notices. All notices or other communications hereunder shall be in
-------
writing and shall be deemed delivered, given or made, upon delivery if delivered
personally, by facsimile, or by express mail or other overnight courier service
or 72 hours after deposit thereof in the United States mails, certified or
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to Paddlewheels:
Shreveport Paddlewheels, L.L.C.
610 S. Peters St.
New Orleans, Louisiana
Facsimile: (504) 587-1740
Attention: Warren L. Reuther, Jr., Chief Executive Officer
With copy to:
Smith Martin
700 Camp Street
New Orleans, Louisiana
Facsimile: (504) 525-0163
Attention: James E. Smith, Jr. Esq.
If to HCS I or HCS II:
HCS I, INC. or HCS II, INC.
c/o Hollywood Casino Corporation
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, Texas 75240
Facsimile: (972) 716-3903
Attention: General Counsel
Any party shall have the right to change its address for notice by written
notice to the other Venturers delivered in accordance with this Section 15.1.
31
<PAGE>
ARTICLE XVI
ADDITIONAL AGREEMENTS
---------------------
16.1 Covenant. Paddlewheels hereby covenants and agrees, and shall cause
--------
all of its permitted assignees and Affiliates, not to institute any legal
proceedings arising out of any claims, which have arisen or may arise out of or
are in any way connected with this Agreement, the Master Agreement, the Marine
Agreement, the Management Agreement, the Technical Services Agreement, the
Assignment Agreement, or any agreement, contract, instrument in connection
herewith or therewith or transactions contemplated hereby or thereby.
Notwithstanding the foregoing, Paddlewheels may bring any claim, demand, cause
of action, either in law or in equity, against the Venture or HCS I, HCS II or
any of their successors and assignees for any and all liabilities and damages
arising from the Venture's failure to make payments due and owing to
Paddlewheels under this Agreement, the Marine Agreement and its right to receive
1% of "Complex Net Revenues" (as defined in the Assignment Agreement pursuant to
--------------------
the Assignment Agreement).
16.2 Additional Obligations. The Venture and the Venturers agree that
----------------------
Paddlewheels shall not be required to make Subsequent Capital Contributions to
the Venture or additional contributions to the City of New Orleans or any other
third party (the "Exit Payments") in connection with the Venture's $7 million
exit fee payment obligation to the City of New Orleans, Louisiana pursuant to
the terms and conditions of the (i) Compromise Agreement, (ii) Loan and
Settlement Agreement, (iii) the Side Agreement, (iv) the Escrow Agreement and
(v) the Indemnity Agreement, each dated January 16, 1998 among NOP, HNOC and
certain other respective parties expressly named therein (collectively, the
"Settlement Agreements") or otherwise, and the Venture shall indemnify, defend
and hold Paddlewheels harmless from and against any claims for any Exit Payments
made by Paddlewheels in connection with the Settlement Agreements. The
Venturers agree not to amend, change or modify any of the Settlement Agreements
in any manner that adversely affects Paddlewheels' rights thereunder without
Paddlewheels' prior written consent. HCS I and HCS II agree and acknowledge
that if Paddlewheels is required to satisfy all or any portion of the
outstanding principal or accrued interest payable by the Venture to HNOC
pursuant to the terms and conditions of the Loan and Settlement Agreement, then
Paddlewheels shall be deemed to be a creditor of the Venture to the extent of
such satisfied amounts, provided that Paddlewheels shall not, in any manner,
seek recourse against HCS I or HCS II or any of their respective Affiliates for
payment of the same.
16.3 Termination of Marine Agreement. In the event Paddlewheels and any
-------------------------------
Affiliate thereof assigns, conveys or otherwise transfers all of their JV
Interests to a party other than Paddlewheels or its Affiliate (a "Third Party"),
then Paddlewheels' right to receive payments from the Venture pursuant to the
Marine Agreement shall immediately terminate, unless at the same time of such
assignment, conveyance or transfer to a Third Party, Paddlewheels and such
Affiliates assign to such Third Party all of Paddlewheels' and such Affiliates'
rights and obligations under the Marine Agreement.
32
<PAGE>
16.4 Appraisal. Unless otherwise expressly set forth in this Agreement,
---------
any appraisal required to be performed between a selling and purchasing party
pursuant to this Agreement shall be conducted by an appraiser selected pursuant
to the provisions set forth in this Section 16.4. The selling party or group and
purchasing party or group shall each appoint an appraiser who, in turn, shall
appoint a "third party" appraiser to perform the applicable appraisal. The
decision of the third party appraiser shall be final and binding and not
reviewable for any type of error. Unless otherwise expressly set forth in this
Agreement, the fees and costs of appraisal shall be borne equally by the selling
party or group and purchasing party or group.
16.5 Conversion to Limited Liability Company or Limited Partnership. The
--------------------------------------------------------------
Venturers hereby agree to pursue the possible change of the Venture from a
general partnership to either a limited liability company or a limited
partnership.
ARTICLE XVII
CASUALTY AND CONDEMNATION
-------------------------
17.1 Insurance. The Venture shall maintain insurance with respect to the
---------
ownership and operation of the Complex, and any additional assets and the risks
of conducting its business, including but not limited to worker's compensation
coverage, all risk coverage, difference in conditions coverage, public liability
coverage, property damage coverage, and boiler and machinery coverage, on such
terms and in such amounts as are determined by HCS I from time to time.
17.2 Procedure Following Casualty. Upon the occurrence of a casualty
----------------------------
resulting in any damage to or destruction of all or any portion of the Complex,
any insurance proceeds in respect of such casualty, net of any collection costs
and amounts due to any lender to the Venture, shall, subject to the Management
Agreement, be used to repair or reconstruct such damaged portion of the Complex
on the condition that the Venturers (other than Paddlewheels and an Affiliate
thereof) shall have previously mutually agreed upon or mutually approved each of
the following:
(a) A construction schedule calling for complete repair or
reconstruction of the damage within a specified time period after the date
of occurrence of the casualty ;
(b) A construction contract pursuant to which the repair or
reconstruction is to be accomplished;
(c) Plans and specifications for the repair or reconstruction;
(d) An operating budget for the restored property which
demonstrates that the Complex, after repair or reconstruction, can
reasonably be expected to be economically viable; and
33
<PAGE>
(e) A budget and source of funds for the cost of such repair or
reconstruction and express approval of any expenses in excess of any
insurance proceeds that may be available for such repair or reconstruction.
17.3 Procedure Following Partial Condemnation. Upon the occurrence of any
----------------------------------------
partial condemnation of the Complex, any proceeds or payments to the Venture as
a result of such partial condemnation, net of any collections costs and amounts
due to any lender to the Venture, shall, subject to the terms and conditions of
the Management Agreement, be used to repair or reconstruct the remaining portion
of the Complex on the condition that the Venturers (other than Paddlewheels and
any Affiliate thereof) shall have previously mutually agreed upon or mutually
approved each of the following:
(a) A construction schedule calling for complete repair or
reconstruction of the remaining portion of the Complex within a specified
time period after the partial taking;
(b) A construction contract pursuant to which the repair or
reconstruction is to be accomplished;
(c) Plans and specifications for the repair or reconstruction;
(d) An operating budget for the remaining portion of the Complex
which demonstrates that such remaining portion of the Complex, after the
repair or reconstruction, can reasonably be expected to be economically
viable; and
(e) A budget and source of funds for the cost of such repair and
reconstruction and express approval of any expenses in excess of any
condemnation proceeds that may be available for such repair or
reconstruction.
ARTICLE XVIII
GENERAL PROVISIONS
------------------
18.1 Other Interests. Each of the Venturers understands that each other
---------------
Venturer or its Affiliates may be interested, directly or indirectly, in various
other businesses and undertakings not included in the Venture. Except as
provided in Section 18.3 hereof or elsewhere in this Agreement or as mutually
agreed upon by the Venturers, the Venturers hereby agree that the creation of
the Venture and the assumption by each of the Venturers of its duties hereunder
shall be without prejudice to their rights (or the rights of its respective
Affiliates) to have such other interests and activities and to receive and enjoy
Profits and Losses or compensation therefrom, and each Venturer waives any
rights it may otherwise have to, by reason of any duty otherwise owed to the
Venture or its Venturers, share or participate in such other interests or
activities of the other Venturer or its Affiliates. Except as provided in
Section 18.3 hereof or elsewhere in the Agreement, the Venturers and their
Affiliates may engage in or possess any interest in any other business venture
of any nature or description independently or with others, including, but not
limited to, the ownership, financing, leasing, operation, management,
syndication, brokerage, or development of real property and gambling casinos,
and
34
<PAGE>
neither the Venture nor any other Venturer shall have the right by virtue of
this Agreement or otherwise to prevent or participate in any such activity or
the income or Profits and Losses derived therefrom.
18.2 Other Opportunities. Except as provided in this Agreement, no
-------------------
Venturer need disclose to any other Venturer or the Venture any other business
venture in which it or its Affiliates may have an interest or any other business
opportunity presented to it, even if such opportunity is of a character which,
if presented to the Venture, could be taken by the Venture, and each Venturer
and its Affiliates shall have the right to take for its own account or to
recommend to others any such particular investment opportunity or business
venture.
18.3 Prohibited Payments. Each Venturer agrees that it and its Affiliates
-------------------
will conduct their activities, and will cause any activities conducted on their
behalf to be conducted, in a lawful manner and specifically will not engage in
the following transactions:
(a) Payments or offers of payment, directly or indirectly, to any
domestic or foreign government official or employee in order to obtain
business, retain business or direct business to others, or for the purpose
of inducing such government official or employee to fail to perform or to
perform improperly his official functions;
(b) receive, pay or offer anything of value, directly or
indirectly, from or to any private party in the form of a commercial bribe,
influence payment or kickback for any such purpose; or
(c) use, directly or indirectly, any funds or other assets of the
Venture or of such Venturer for any unlawful purpose including, without
limitation, political contributions in violation of applicable laws,
regulations, rules or orders.
18.4 Subsequent Actions and Good Faith. Each Venturer shall hereafter
---------------------------------
execute, deliver and file such further instruments and do such further acts and
things as may be required or useful to carry out the intent and purpose of this
Agreement and that are not inconsistent with the terms of this Agreement. Each
Venturer shall exercise in good faith and its best efforts in all transactions
affecting the Venture. If a Venturer is required to retain the services of an
attorney to enforce or otherwise litigate or defend any matter arising out of
this Agreement between such Venturer and the Venture or any other of the
Venturers, the prevailing party shall be entitled to be reimbursed for its
reasonable attorney's fees by the non-prevailing party.
18.5 Standing and Discharge of Liens. Each Venturer: (a) shall at all
-------------------------------
times preserve and keep in good standing its corporate status, as the case may
be, in Louisiana and in the State under whose laws it is organized; and (b)
shall pay all federal, state and local taxes, assessments and other governmental
charges imposed upon it or its JV Interests before any such taxes, assessments
or charges become a lien on its JV Interests.
35
<PAGE>
18.6 Captions. The captions and section headings used herein are for
--------
convenience and for ease of reference only and constitute no part of the
agreement or understanding of the parties hereto, and no reference shall be made
thereto for the purpose of construing or interpreting any of the provisions of
this Agreement.
18.7 Counterparts. This Agreement and any amendments hereto may be
------------
executed in one or more counterparts, all of which, taken together, shall
constitute one agreement binding upon the parties, notwithstanding that all
parties are not signatories to the same counterpart.
18.8 Applicable Law. This Agreement is made pursuant to, and shall be
--------------
governed by the internal laws of the State of Louisiana.
18.9 Entire Agreement. Except for the Master Agreement, Management
----------------
Agreement, the Marine Agreement and the Assignment Agreement and all other
agreements attached hereto and thereto as exhibits or expressly referred to
herein or therein, this Agreement shall supersede any written and oral agreement
among such parties and constitutes the entire understanding and agreement of the
Venturers with respect to the subject matter, and may not be altered, modified
or rescinded except by written instrument executed by the Venturers. The
parties hereto acknowledge that they do not deem or intend their interests in
the Venture, either alone, together or in conjunction with the Management
Agreement or any other document or understanding, to represent or to be a
"security" for the purposes of any state or federal law.
18.10 Severability. If any of the terms and provisions of this Agreement
------------
shall be held invalid or unenforceable for any reason, such invalidity or
unenforceability shall in no event affect any of the other terms or provisions,
each of which other terms and provisions of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
18.11 Successors and Assigns. The terms, provisions, covenants,
----------------------
undertakings, agreements, obligations and conditions of this Agreement shall be
binding upon and shall inure to the benefit of the permitted successors in
interest and assigns of the parties hereto with the same effect as if mentioned
in each instance where the party hereto is named or referred to, except that no
Transfer by a Venturer in violation of the provisions of this Agreement shall
vest any rights in the assignee, transferee, purchaser, secured party, mortgagee
or pledgee.
18.12 Time of the Essence. Time is of the essence with respect to all of
-------------------
the terms, covenants, obligations and agreements herein contained.
18.13 No Third Party Beneficiaries. Except for the rights and benefits
----------------------------
granted to Venture Creditors and to Secured Party Transferees pursuant to this
Agreement, nothing contained in this Agreement shall inure to the benefit of any
third parties or grant such third parties any rights or causes of action against
any of the parties hereto.
18.14 Regulatory Information. Each Venturer shall provide, to the Venture
----------------------
or regulatory agency, as the case may be, as required by applicable laws,
regulations, rules
36
<PAGE>
or orders, all information pertaining to the Venture and such Venturer's
officers, directors, shareholders, financial sources, and associations as shall
be required by any federal or state securities law or any regulatory authority
with jurisdiction over the Venture, the Complex, or any Venturer or any
Affiliates of such person.
18.15 Lender Suitability. No Venturer shall incur or permit any person or
------------------
entity that holds any JV Interests to incur any indebtedness unless the
documents for such indebtedness provide that:
(a) If any lender to the Venture or to any person that holds any JV
Interest becomes subject to an unsuitability determination by the Gaming
Authorities the result of which is to threaten the revocation, suspension,
termination or rescission of any permit, approval, any entitlement or
license granted by the Gaming Authorities to or for the benefit of the
Venture, a Venturer, or any Affiliate of a Venturer, or result in any other
penalty to the Venture, a Venturer and any Affiliate of a Venturer, and if
such Unsuitability Determination is not cured in accordance with applicable
laws, regulations rules or orders, then to the extent and so long as
provided by applicable laws, regulations, rules or orders: (i) all payments
to such lender shall be suspended and escrowed; (ii) such lender shall
immediately divest itself of all loans made to the Venture or such person;
and (iii) such lender shall be subject to any other remedies as shall be
required by applicable laws, regulations, rules and orders.
(b) If HCS I reasonably determines that the existence of a loan
from a lender to the Venture will threaten any gaming license, permit,
approval, or other entitlement that such Venturer or any Affiliate of such
Venturer holds or applies for in any other jurisdiction, such Venturer may,
at no cost to the Venture or the other Venturer: (i) require the Venture to
exercise any redemption rights in any loan documents with such lender and
redeem such loan so long as such Venturer makes a loan to the Venture (with
the same security, interest and maturity provisions as the redeemed loan)
of the funds necessary to effect such redemption or procures a loan for the
Venture (with the same interest, security and maturity provisions as the
redeemed loan) from a substitute lender and so long as such loan is in
compliance with the Venture's loan documents and this Agreement; (ii)
require the Venture to exercise the rights in any loan documents with such
lender to procure a substitute lender or lenders that will assume and
accept the rights and obligations of the objectionable lender; or (iii)
with the consent of such lender, if required in any loan documents with
such lender, procure a substitute lender or lenders that assume and accept
the rights and obligations of the objectionable lender.
ARTICLE XIX
INSURANCE
---------
19.1 Coverage.
--------
37
<PAGE>
(a) Required Insurance. The Venture shall secure and maintain the
------------------
following insurance with respect to the Complex at all times during the
term of this Agreement:
(i) Comprehensive general liability insurance at a limit of
at least $1 million per occurrence/$2 million aggregate, including,
but not limited to, liquor liability and innkeepers liability
coverage to protect against theft of or damage to guests' property;
(ii) Automobile liability and physical damage insurance for
at least $1 million combined single limit to include broad form drive
other car coverage;
(iii) Comprehensive crime insurance including, but not limited
to, employee dishonesty and depositor's forgery coverages;
(iv) Worker's compensation insurance and employer's
liability, including the maritime employers liability endorsement,
U.S.L.& H., and similar insurance as may be required by law;
(v) Group benefits insurance including major medical and
hospitalization for Complex employees;
(vi) Fiduciary liability insurance, as required by the
Employment Retirement Income Security Act of 1974 covering pension
and benefit plans, in a limit sufficient to cover the assets at risk;
(vii) Marine hull and machinery and property insurance in an
amount equal to at least 100% of the agreed insurable value including
all gaming equipment thereof on a replacement cost basis;
(viii) Marine business interruption insurance against loss of
Profits measured by net income of the Venture;
(ix) Builder's risk insurance, if required, including delayed
opening coverage;
(x) Protection and indemnity coverage, if required,
including Jones Act, in an amount of at least $1 million with Excess
Protection and Indemnity coverage in an amount of not less than $25
million;
(xi) Vessel pollution insurance, if required;
(xii) Media/memorabilia professional liability insurance
affording protection for liabilities which may arise from the use and
display of "Hollywood" themed media and memorabilia at the Complex of
at least $2 million;
38
<PAGE>
(xiii) Any insurance which the Venture or Operator may be
required to obtain pursuant to any franchise covering the Complex;
(xiv) Umbrella (excess liability) insurance in an amount of
not less than $100 million;
(xv) Any other insurance required by the terms of the Project
financing; and
(xvi) Insurance against such other insurable risks as may
reasonably be required.
(b) Changes in Coverage. The Venture may raise the minimum amount
-------------------
of insurance to be maintained with respect to the Complex under Section
19.1(a) above to make such insurance comparable to the amount of insurance
carried with respect to other similar operations taking into account the
size, location and character of the Complex. In addition, neither party
shall unreasonably withhold its consent to a request by the other party
that such minimum limits of insurance be lowered on the basis that such
insurance cannot be obtained in such amounts, or can be obtained only at a
prohibitive cost. Similarly, if during the term of this Agreement changes
in the insurance industry shall make any of the descriptions of the
required insurance coverage inaccurate or inappropriate, then the Venture
may change such requirements to accurately describe, the type of insurance
which would be comparable to the coverage described in Section 19.1(a)
above.
(c) Requirements. All policies of insurance shall be written on an
------------
"occurrence" basis, if possible, and if any policy is written on a "claims
made" basis, then such policy must, if possible, be continued in effect for
a period of two years following the expiration or early termination of this
Agreement. The insurance coverage shall in any event comply with the
requirements of the Loan Commitments, if any.
19.2 Policies and Endorsements.
-------------------------
(a) Policies. All insurance provided for under Section 19.1 above
--------
shall be effected by policies issued by insurance companies of good
reputation and of sound and adequate financial responsibility as determined
by HCS I. The Venture shall furnish to each Venturer 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, the Venture shall deliver to each Venturer
certificates of insurance with respect to the renewal policies not less
than 30 days after the respective dates of expiration.
(b) Endorsements. All policies of insurance provided for under this
------------
Article XIX shall have attached thereto (a) an endorsement that such policy
shall not be canceled or materially changed without at least 30 days prior
written notice to the Venture and each Venturer, (b) an endorsement to the
effect that no act or
39
<PAGE>
omission of the Venture or any Venturer shall affect the obligation of the
insurer to pay the full amount of any loss sustained and (c) an endorsement
to the effect that all liability policies of insurance shall be endorsed to
include worldwide coverage for suits brought against named insureds as
described in Section 19.2(c) below.
(c) Named Insureds. All policies of insurance required under
--------------
clauses (a)(i) and (a)(ii) of Section 19.1 shall be carried in the name of
the Venture, and, if required, the lender under the Loan Commitments, and
each of the Venturers shall be named as additional insureds thereunder.
Losses thereunder shall be payable to the parties as their respective
interests may appear. Notwithstanding the foregoing, if the lender under
the Loan Commitments is an institutional lender, and so requires, losses
may be made payable to such lender, or to a bank or trust company, in
either instance as trustee for the custody and disposition of the proceeds
therefrom. The Venturers agree that any Loan Commitment documents shall
contain a provision to the effect that proceeds from property insurance
shall be available for restoration of the Complex. All insurance policies
required in clauses (a)(iii), (a)(iv) and (a)(v) of Section 19.1 shall name
the Venture and its Affiliates, and the directors, officers, agents and
employees of each such entity as named insureds, and the Venturers and
their Affiliates, and the directors, officers, agents and employees of such
entity as additional insureds.
19.3 Waiver of Liability. No Venturer shall assert against the other, and
-------------------
each of the Venturers hereby waives with respect to each other, or against any
other entity or person named as additional insureds on any policies carried
under this Article XIX, any claims for any losses, damages, liability or
expenses (including attorney's fees) incurred or sustained by either of them on
account of injury to persons or damage to property arising out of the ownership,
development, construction, completion, operation or maintenance of the Complex,
to the extent that the same are covered by the insurance required under this
Article XIX. Each policy of insurance shall contain a specific waiver of
subrogation reflecting the provisions of this Section 19.3, or a provision to
the effect that the existence of the preceding waiver shall not affect the
validity of any such policy or the obligation of the insurer to pay the full
amount of any loss sustained.
19.4 Insurance by Venturers. Any insurance provided by the Venture under
----------------------
this Article XIX may be effected under policies of blanket insurance which cover
other properties of the Venturers, or any of their respective Affiliates, and
the pro rata portion of such premiums shall be charged and allocated to the
Complex on the same basis as allocated to other participating operations of said
Venturer. Any policies of insurance maintained by the Venture pursuant to the
provisions of this Article XIX may contain deductible provisions in such amounts
as are maintained with respect to other operations of said Venturer, taking into
account local standards and practices. Further, in lieu of all or a part of
comprehensive public liability insurance and worker's compensation and
employer's liability insurance under clauses (a)(iii) and (a)(v) of Section
19.1, any or all of the risks covered by such insurance may be self-insured or
self-assumed by the Venture under a self-insurance or assumption of risk program
similar to those in effect at
40
<PAGE>
other operations of said Venturer, up to such amounts as such risks are assumed
or self-insured at other operations of said Venturers.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
41
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
HCS I, INC.
By: /s/ PAUL C. YATES
-----------------------------------
Name: Paul C. Yates
---------------------------------
Title: Executive Vice President and
Chief Financial Officer
--------------------------------
HCS II, INC.
By: /s/ PAUL C. YATES
-----------------------------------
Name: Paul C. Yates
---------------------------------
Title: Executive Vice President and
Chief Financial Officer
--------------------------------
SHREVEPORT PADDLEWHEELS, L.L.C.
By: ---------------------------------
Name: --------------------------------
Title: -------------------------------
42
<PAGE>
EXHIBIT A
DEVELOPMENT PARCEL A parcel of land containing 91,703.01.08 square feet, more or
less, located east of Clyde E. Fant Memorial Parkway, as recorded in Book 2100,
pages 279 and 329, records of Caddo Parish. Louisiana. south of the Easterly
extension of Fannin Street, as recorded in Book 50, 537, Caddo Parish.
Louisiana, North of Texas Street Bridge and West of the Ordinary High Water
Stage of Red River, being more particularly described as follows:
From an "x" cut in concrete at the point of intersection of the east
right-of-way line of said Clyde E. Fant Parkway and the Easterly extension of
the centerline of said Fannin Street; run South 39 degrees 38' 37" East, along
said east right-of-way, a distance of 422.28 feet, to the point of beginning
(P.O.B.) of the parcel, herein described; run North 50 degrees 27' 16" East,
along a line common to the Shoreside Complex Parcel and the Development Parcel,
a distance of 281.02 feet, to the point of intersection with the 155.50 foot
contour meander line of Red River, as of 7:15 a.m., December 13, 1996; run
thence South 40 degrees 29' 46" East, along said meander line, a distance of
27.16 feet; run thence South 44 degrees 08' 00" East, along said meander line, a
distance of 44.13 feet; run thence South 39 degrees 47' 11" East, along said
meander line, a distance of 39.06 feet; run thence South 43 degrees 13' 45"
East, along said meander line, a distance of 50.39 feet; run thence South 45
degrees 20' 03" East, along said meander line, a distance of 55.14 feet; run
thence South 51 degrees 11' 22" East, along said meander line, a distance of
47.26 feet, to the point of intersection with the north right-of-way line of the
Texas Street Bridge; run thence South 50 degrees 21' 23" West, along said
right-of-way line of the Clyde E. Fant Memorial Parkway; run thence North 39
degrees 38' 37" West, along said right-of-way line, a distance of 316.72 feet,
to the point of beginning (P.O.B.).
BLOCK 72 A parcel of land containing 122,895.9879 square feet, more or less,
being bound on the West by Commerce Street, on the north by Texas Street Bridge,
On The east by Clyde E. Fant Memorial Parkway, And On The South by Milam Street,
being more particularly described as follows:
From the point of intersection of the north right-of-way line of Milam Street
and the east right-of-way line of Commerce Street, as recorded in book 50, page
537, and book 150, page 129, records of Caddo Parish, Louisiana, said point
being the point of beginning, (P.O.B.) run North 39 degrees 38' 37' West, along
the east right-of-way line of said Commerce Street, being 66.00 feet. east of
and parallel to the centerline of said Commerce Street, a distance of 320.00
feet, to the point of intersection of the south right-of-way line of the Texas
Street Bridge, as recorded in book 50, page 537 and book 150, page 129, records
of Caddo Parish, Louisiana; run thence North 50 degrees 21' 23" East, along said
right-of-way, line being 50.00 feet south of and parallel to the centerline of
said Texas Street Bridge, a distance of 384.05 feet, to the point of
intersection with the west right-of-way line of the Clyde E. Fant Memorial
Parkway, as recorded in book 2100, pages 329 through 335 records of Caddo
Parish, Louisiana; run thence South 39 degrees 38' 37" East, along the west
right-of-way line of said Clyde E. Fant Memorial Parkway, a distance of 320.00
feet, to the point of intersection with the north right-of-way line of Milam
Street, as recorded in book 50, page 537, and book 150, page 129, records of
Caddo Parish, Louisiana; run thence South 50 degrees 21'
<PAGE>
23" west. along said right-of-way line of Milam Street. being 33.00 feet north
of and parallel to the centerline of said Milam Street, a distance of 384.05
feet, to the point of beginning.
BARNWELL CENTER PARKING AREA A parcel of land containing 72.850.0384 square
feet, more or less, bounded on the West by the east right-of-way line of Clyde
E. Fant Memorial Parkway, on the North by the south right-of-way line of Texas
Street Bridge, on the East by the west 155.50 foot contour meander line of Red
River and on the South by the north face of the Barnwell Center building, being
more particularly described as follows:
From the point of intersection of the south right-of-way line of the Texas
Street Bridge, as recorded in book 50, page 537 and book 150, page 129, records
of Caddo Parish, Louisiana and the east right-of-way line of the Clyde E. Fant
Memorial Parkway, as recorded in book 2100, pages 329 through 335, records of
Caddo Paris, Louisiana Said Point Being The Point Of Beginning (P.O.B.), run
North 50 degrees 21' 23" East, along said south right-of-way line, being 50.00
feet south of and parallel to the centerline of said Texas Street Bridge, a
distance of 306.25 feet, to the point of intersection with the 155.50 foot,
contour meander line of Red River, as of 7:15 a.m., December 13, 1996; run
thence South 38 degrees 41' 30" East, along said meander line, a distance of
88.90 feet run thence South 35 degrees 15' 54" East, along said meander line, a
distance of 153.31 feet run thence south 50 degrees 21' 23" West, a distance of
293.07 feet, to the point of intersection with the east right-of-way line, of
said Clyde E. Fant Memorial Parkway; run thence North 39 degrees 38' 37" West,
along said east right-of-way line a distance of 241.75 feet, to the point of
beginning.
EXPO HALL PARKING AREA A parcel of land containing 90,636.8985 square feet, more
or less, bounded on the north by the face of the Expo Hall building, on the east
by the west right-of-way line of the Clyde E. Fant Memorial Parkway, on the
south by north right-of-way line of the Texas Street Bridge and on the west by
the east right-of-way line of Commerce Street, being more particularly described
as follows:
From the point of intersection of the north right-of-way line of the Texas
Street Bridge, and the east right-of-way line of Commerce Street, as recorded in
book 50, page 537 and book 150, page 129, records of Caddo Parish, Louisiana,
said point being the point of beginning (P.O.B.) run North 39 degrees 38' 37"
West, along said east right-of-way line of Commerce Street, being 66.00 feet
east of and parallel to the centerline of said Commerce Street, a distance of
230.01 feet; run then North 50 degrees 21' 23" East, a distance of 394.05 feet,
to the point of intersection with the west right-of-way line of Clyde E. Fant
Memorial Parkway, as recorded in book 2100, page 329 through 335, records of
Caddo Parish, Louisiana; run thence South 39 degrees 38' 37" East, along said
right-of-way line, a distance of 230.01 feet, to the point of intersection with
the north right-of-way line of the said Texas Street Bridge; run thence south 50
degrees 21' 23" West, along said north right-of-way line, being 50.00 feet,
north or and parallel to the centerline of said Texas Street Bridge a distance
of 394.05 feet, to the point of beginning.
<PAGE>
EXHIBIT 3.2
AUGUST 1999 AMENDMENT
TO THIRD AMENDED AND RESTATED
JOINT VENTURE AGREEMENT
OF HOLLYWOOD CASINO SHREVEPORT
(FORMERLY KNOWN AS THE "QUEEN OF NEW ORLEANS
AT THE HILTON JOINT VENTURE" AND "QNOV")
This August 1999 Amendment (the "Amendment") to the Third Amended and
restated Joint Venture Agreement of Hollywood Casino Shreveport dated July 21,
1999 (the "JV Agreement") is hereby entered into as of August 2, 1999 by and
among Shreveport Paddlewheels, L.L.C., HCS I, Inc. and HCS II, Inc.
WHEREAS, subsequent to the filing of the executed JV Agreement that was
delivered to the Louisiana Gaming Control Board, the parties became aware that
the JV Agreement did not identify the principal place of business of the joint
venture in Louisiana; and
WHEREAS, the parties desire to amend the JV Agreement to identify such
principal place of business in Louisiana.
NOW THEREFORE, the parties hereto do hereby amend the JV Agreement to add
the following sentence to Section 2.3 of the JV Agreement as the last sentence
thereof:
"Until such time as the principal office of the Venture is relocated to
Louisiana, the principal place of business of the Venture in Louisiana
shall be located at 201 St. Charles Avenue - Suite 4800, New Orleans,
Louisiana 70170-4800, Attn.: J. Kelly Duncan."
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
as of the date first written above.
HCS I, INC.
By: /s/ Jack E. Pratt
------------------------------
Name: Jack E. Pratt
Title: Chairman of the Board and Chief
Executive Officer
HCS II, Inc.
By: /s/ Jack E. Pratt
------------------------------
Name: Jack E. Pratt
Title: Chairman of the Board and Chief
Executive Officer
SHREVEPORT PADDLEWHEELS, L.L.C.
By:
------------------------------
Name:
Title:
<PAGE>
EXHIBIT 3.3
ARTICLES OF INCORPORATION
OF
SHREVEPORT CAPITAL CORPORATION
-------------------------------
The undersigned, being a natural person capable of contracting and acting
as the incorporator to form a corporation for one or more lawful business
purposes under the provisions of the Business Corporation Law of the State of
Louisiana (the "Business Corporation Law"), does hereby adopt and sign the
following Articles of Incorporation:
ARTICLE I
NAME
----
The name of the corporation (the "Corporation") is Shreveport Capital
Corporation.
ARTICLE II
DURATION
--------
The period of duration of the Corporation is perpetual.
ARTICLE III
PURPOSES
--------
The purpose for which the Corporation is organized is to engage in any
lawful activity for which corporations may be formed under the Business
Corporation Law.
ARTICLE IV
CAPITAL STOCK
-------------
The aggregate number of shares of capital stock which the Corporation shall
have the authority to issue shall be 100,000, all of which shall have a par
value of $1.00 per share and all of which shall be of the same class and shall
be designated as common stock.
ARTICLE V
PREEMPTIVE RIGHTS
-----------------
No shareholder of the Corporation shall, by reason of being a shareholder,
have any preemptive right to acquire additional, unissued or treasury shares of
the Corporation, or securities convertible into or carrying a right to subscribe
to or to acquire any shares of any class of the
<PAGE>
Corporation now or hereafter authorized.
ARTICLE VI
CUMULATIVE VOTING DENIED
------------------------
Cumulative voting shall not be allowed in the election of directors or for
any other purpose.
ARTICLE VII
LIMITATION OF LIABILITY
-----------------------
A director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for such liability as is expressly not subject to
limitation under the Business Corporation Law, as the same exists on the
effective date of these Articles of Incorporation or may hereafter be amended to
further limit or eliminate such liability. Any repeal or modification of this
Article VII by the shareholders of the Corporation shall be prospective only and
shall not adversely affect any limitation on the personal liability of a
director of the Corporation existing at the time of such repeal or modification.
ARTICLE VIII
DIVIDENDS, RECLASSIFICATIONS OR
REDEMPTIONS OF STOCK
--------------------
Cash, property or share dividends, shares issuable to shareholders in
connection with a reclassification of stock, and the redemption price of
redeemed shares, if any, which are not claimed by the shareholders entitled
thereto within a reasonable time as determined by the Board of Directors (not
less than one year in any event) after the dividend or redemption price, if any,
became payable or the shares became issuable, despite reasonable efforts by the
Corporation to pay the dividend or redemption price, if any, or deliver the
certificates for the shares to such shareholders within such time, shall, at the
expiration of such time, revert in full ownership to the Corporation, and the
Corporation's obligation to pay such dividend or redemption price, if any, or
issue such shares, as the case may be, shall thereupon cease; provided that the
Board of Directors may, at any time, for any reason satisfactory to it, but need
not, authorize (a) payment of the amount of any cash or property dividend or
redemption price, if any, or (b) issuance of any shares, ownership of which has
reverted to the Corporation pursuant to this Article VIII, to the entity who or
which would be entitled thereto had such reversion not occurred.
2
<PAGE>
ARTICLE IX
INDEMNIFICATION AND INSURANCE
-----------------------------
The Corporation shall, to the fullest extent permitted by law, indemnify,
and may, to the fullest extent permitted by law or to such lesser extent as is
determined in the discretion of the Board of Directors, advance expenses to, any
and all officers and directors of the Corporation in whatever capacities they
serve, and may, to the fullest extent permitted by law or to such lesser extent
as is determined in the discretion of the Board of Directors, indemnify, and
advance expenses to, any and all other persons whom it shall have power to
indemnify, with respect to all matters arising out of their status as such or
their acts, omissions or services rendered in such capacities. The Corporation
shall have the power to purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability. Any
repeal or modification of this Article IX by the shareholders of the Corporation
shall be prospective only and shall not adversely affect any rights set forth in
this Article IX existing at the time of such repeal or modification.
ARTICLE X
INITIAL BOARD OF DIRECTORS
--------------------------
The number of directors shall be fixed by the Bylaws of the Corporation and
until changed in accordance with the manner prescribed by the Bylaws shall be
three (3). The names and addresses of those persons who are to serve as
directors until the first annual meeting of shareholders, or until their
successors be elected and qualified, shall be as specified in the initial report
or supplemental report of the Corporation filed pursuant to Section 12:101 of
the Business Corporation Law.
ARTICLE XI
ACTION BY CONSENT OF SHAREHOLDERS
---------------------------------
Whenever the affirmative vote of shareholders at a meeting is required to
authorize or constitute corporate action under any provision of the Business
Corporation Law or of the Articles of Incorporation or Bylaws of the
Corporation, any such action may be authorized or constituted by a consent in
writing, without a meeting, signed by the shareholders having at least that
proportion of voting power which would be necessary under any such provision to
authorize or constitute the action by the affirmative vote at a meeting;
provided, however, that any such written consent shall be filed with the record
of proceedings of the shareholders; and provided, further, that prompt notice
shall be given to all of the shareholders entitled thereto of the action taken
pursuant to such written consent.
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ARTICLE XII
INCORPORATOR
------------
The name and address of the incorporator is:
Name Address
---- -------
Evelyn Johnstone Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, Texas 75240
IN WITNESS WHEREOF, I have hereunto set my hand this 20/th/ day of July,
1999.
/s/ Evelyn Johnstone
----------------------------------
Evelyn Johnstone
THE STATE OF TEXAS
COUNTY OF DALLAS
I, Roberta J. Hamann, a Notary Public, do hereby certify that on this
20th day of July, 1999, personally appeared before me Evelyn Johnstone, who
being by me first duly sworn, declared to me that she is the person who signed
the foregoing document as incorporator, and that the statements therein
contained are true.
/s/ Roberta J. Hamann
---------------------------------------
Notary Public, State of Texas
Name: Roberta J. Hamann
-------------------------
My Commission Expires: 11/12/2000
-----------
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EXHIBIT 3.4
BY-LAWS
OF
SHREVEPORT CAPITAL CORPORATION
SECTION 1
OFFICES
1.1 Principal Office. The principal office of the Corporation shall be
located at 8550 United Plaza Boulevard, Baton Rouge, Louisiana 70809.
1.2 Additional Offices. The Corporation may have such offices at such
other places as the board of directors may from time to time determine or the
business of the Corporation may require.
SECTION 2
SHAREHOLDERS MEETINGS
2.1 Place of Meetings. Unless otherwise required by law or these by-laws,
all meetings of the shareholders shall be held at the principal office of the
Corporation or at such other place, within or without the State of Louisiana, as
may be designated by the board of directors.
2.2 Annual Meetings; Notice Thereof. An annual meeting of the shareholders
shall be held on the first Monday of August each year at 10:00 A.M., or at such
other date or at such other time specified as the board of directors shall
designate, for the purpose of electing directors and for the transaction of such
other business as may be properly brought before the meeting.
2.3 Notice of Meetings. The secretary shall cause written notice of the
time, place and purpose of the meeting to be given to all shareholders entitled
to vote at such meeting, at least two days and not more than ten days prior to
the day fixed for the meeting.
2.4 Quorum. The presence, in person or by proxy, of the holders of a
majority of the outstanding stock shall constitute a quorum at all meetings of
shareholders provided that this subsection shall not have the effect of reducing
the vote required to approve or affirm any matter that may be established by
law, the articles of incorporation or these by-laws.
SECTION 3
DIRECTORS
3.1 Number. All of the corporate powers shall be vested in, and the
business and affairs of the Corporation shall be managed by, a board of
directors. Subject to the restriction that the number of directors shall not be
less than the number required by Louisiana law, the number of directors shall be
fixed from time to time by a resolution
<PAGE>
adopted by the board of directors. Unless otherwise fixed by the board of
directors, the number of directors constituting the entire board of directors
shall be three. No director need be a shareholder.
3.2 Powers. The board of directors may exercise all such powers of the
Corporation and do all such lawful acts and things that are not by law, the
articles of incorporation or these by-laws directed or required to be done by
the shareholders.
3.3 Election. The directors shall be elected at each annual meeting of
shareholders, shall serve until the next annual meeting of shareholders and
until their successors are elected and qualified.
3.4 Removal. Any director or the entire board of directors may be removed
at any time, by the affirmative vote of a majority of the holders of the
outstanding shares of stock provided that the removal may only be effected at a
meeting of shareholders duly called for that purpose. The shareholders at such
meeting may proceed to elect a successor or successors for the unexpired term of
the director or directors removed.
SECTION 4
MEETINGS OF THE BOARD
4.1 Place of Meetings. The meetings of the board of directors may be held
at such place within or without the State of Louisiana as the board of directors
or the president may from time to time appoint.
4.2 Meetings; Notice. Meetings of the board of directors may be held at
such times as the board of directors or the president may from time to time
determine. Notice of meetings of the board of directors shall be required, but
no special form of notice or time of notice shall be necessary.
4.3 Quorum. A majority of the board of directors shall be necessary to
constitute a quorum for the transaction of business.
4.4 Action by Consent. Any action which may be taken at a meeting of the
board of directors may be taken by a consent in writing signed by all of the
directors and filed with the records of proceedings of the board of directors.
4.5 Meetings by Telephone or Similar Communication. Members of the board
of directors may participate at and be present at any meeting of the board of
directors by means of conference telephone or similar communications equipment
if all persons participating in such meeting can hear and communicate with each
other.
SECTION 5
OFFICERS
5.1 Designations. The officers of the Corporation shall be elected by the
directors and shall be the Chairman of the Board and Chief Executive Officer,
President,
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Secretary and Treasurer. The board of directors may appoint a Vice Chairman of
the Board, a Chief Operating Officer, a Chief Financial Officer, a General
Counsel, one or more Executive Vice Presidents, one or more Vice Presidents and
such other officers as it shall deem necessary. Officers shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the board. To the extent permitted by
law, more than one office may be held by a single person.
5.2 Term of Office. The officers of the Corporation shall hold office at
the pleasure of the board of directors. Except as otherwise provided in the
resolution of the board of directors electing any officer, each officer shall
hold office until the first meeting of the board of directors after the annual
meeting of shareholders next succeeding his or her election, and until his or
her successor is elected and qualified or until his or her earlier resignation
or removal. Any officer may resign at any time upon written notice to the board,
Chairman of the Board, President or Secretary of the Corporation. Such
resignation shall take effect at the time specified therein and acceptance of
such resignation shall not be necessary to make it effective. The board may
remove any officer with or without cause at any time. Any such removal shall be
without prejudice to the contractual rights of such officers, if any, with the
Corporation, but the election of an officer shall not in and of itself create
contractual rights. Any vacancy occurring in any office of the Corporation by
death, resignation, removal or otherwise may be filled for the unexpired
position of the term by the board at any regular or special meeting.
5.3 The Chairman of the Board and Chief Executive Officer. The Chairman of
the Board and Chief Executive Officer shall preside at meetings of the board of
directors and the shareholders, shall have general and active responsibility for
the management of the business of the Corporation, shall be the chief executive
officer of the Corporation, and shall perform such other duties as may be
designated by the board of directors or these by-laws.
5.4 The President. The President shall be the chief operating officer of
the Corporation and shall supervise the daily operations of the business of the
Corporation and shall ensure that all orders, policies and resolutions of the
board are carried out.
5.5 The Vice Chairman of the Board, the Executive Vice Presidents and the
Vice Presidents. The Vice Chairman of the Board, the Executive Vice Presidents
and the Vice Presidents (if any) shall have such designations and perform such
duties as the board of directors shall prescribe.
5.6 The Secretary. The Secretary shall attend all meetings of the board of
directors and all meetings of the shareholders and record all votes and the
minutes of all proceedings in a book to be kept for that purpose. He shall give,
or cause to be given, notice of all meetings of the shareholders and regular and
special meetings of the board, and shall perform such other duties as may be
prescribed by the board or the Chairman of
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the Board. He shall keep in safe custody the seal of the Corporation, if any,
and affix such seal to any instrument requiring it.
5.7 The Assistant Secretaries. The Assistant Secretaries shall have the
same powers and duties as the Secretary and shall perform such other duties as
may be prescribed by the board or the Chairman of the Board.
5.8 The Treasurer. The Treasurer shall have the custody of the corporate
funds and shall keep or cause to be kept full and accurate accounts of receipts
and disbursements in books belonging to the Corporation and shall deposit all
monies and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the board of directors.
He shall keep a proper accounting of all receipts and disbursements and shall
disburse the funds of the Corporation only for proper corporate purposes or as
may be ordered by the board and shall render to the Chairman of the Board and
the board at the regular meetings of the board, or whenever they may require it,
an account of all his transactions as Treasurer and of the financial condition
and results of operations of the Corporation.
SECTION 6
STOCK
6.1 Certificates. Every holder of stock in the Corporation shall be
entitled to have a certificate signed by the president and the secretary or
treasurer evidencing the number of shares owned by him or her.
6.2 Transfers. Upon surrender to the Corporation of a certificate for
shares duly endorsed or accompanied by proper evidence of succession, assignment
or authority to transfer, it shall be the duty of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
SECTION 7
INDEMNIFICATION
7.1 Definitions. As used in this section the following terms shall have
the meanings set forth below:
(a) "Board" - the board of directors of the Corporation.
(b) "Claim" - any threatened, pending or completed claim, action,
suit, or proceeding, whether civil, criminal, administrative or investigative
and whether made judicially or extra-judicially, or any separate issue or matter
therein, as the context requires.
(c) "Determining Body" - (i) those members of the Board who are not
named as parties to the Claim for which indemnification is being sought
("Impartial Directors"), if there are at least three Impartial Directors, (ii) a
committee of at least three Impartial Directors appointed by the Board
(regardless whether the members of the Board
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<PAGE>
voting on such appointment are Impartial Directors) or (iii) if there are fewer
than three Impartial Directors or if the Board or the committee appointed
pursuant to clause (11) of this paragraph so directs (regardless whether the
members thereof are Impartial Directors), independent legal counsel, which may
be the regular outside counsel of the Corporation.
(d) "Disbursing Officer" - the Chairman of the Board of the
Corporation or, if the Chairman of the Board is a party to the Claim for which
indemnification is being sought, any officer not a party to such Claim who is
designated by the Chairman of the Board to be the Disbursing Officer with
respect to indemnification requests related to the Claim, which designation
shall be made promptly after receipt of the initial request for indemnification
with respect to such Claim.
(e) "Expenses" - any expenses or costs, including, without
limitation, attorney's fees, judgments, punitive or exemplary damages, fines and
amounts paid in settlement.
(f) "Indemnitee" - each person who is or was a director or officer of
the Corporation.
7.2 Indemnity.
(a) To the extent such Expenses exceed the amounts reimbursed or paid
pursuant to policies of liability insurance maintained by the Corporation, the
Corporation shall indemnify each Indemnitee against any Expenses actually and
reasonably incurred by him (as they are incurred) in connection with any Claim
either against him or as to which he is involved solely as a witness or person
required to give evidence, by reason of his position (i) as a director or
officer of the Corporation, (ii) as a director or officer of any subsidiary of
the Corporation, (iii) as a fiduciary with respect to any employee benefit plan
of the Corporation, or (iv) as a director, officer, partner, employee or agent
of another corporation, partnership, joint venture, trust or other for-profit or
not-for-profit entity or enterprise, if such position is or was held at the
request of the Corporation, whether relating to service in such position before
or after the effective date of this Section, if he (i) is successful in his
defense of the claim on the merits or otherwise or (ii) has been found by the
Determining Body (acting in good faith) to have met the Standard of Conduct
(defined below); provided that (A) the amount otherwise payable by the
Corporation may be reduced by the Determining Body to such amount as it deems
proper if it determines that the Claim involved the receipt of a personal
benefit by Indemnitee, and (B) no indemnification shall be made in respect of
any Claim as to which Indemnitee shall have been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be liable
for willful or intentional misconduct in the performance of his duty to the
Corporation or to have obtained an improper personal benefit, unless and only to
the extent that, a court shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such Expenses as
the court deems proper.
5
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(b) For purposes of this Section 7, the Standard of Conduct is met when
the conduct by an Indemnitee with respect to which a Claim is asserted was
conduct that was in good faith and that he reasonably believed to be in, or not
opposed to, the best interest of the Corporation and, in the case of a criminal
action or proceeding, that he had no reasonable cause to believe was unlawful.
The termination of any Claim by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that Indemnitee did not meet the Standard of Conduct.
(c) Promptly upon becoming aware of the existence of any Claim as to which
he may be indemnified hereunder, Indemnitee shall notify the Chairman of the
Board of the Corporation of the Claim and whether he intends to seek
indemnification hereunder. If such notice indicates that Indemnitee does so
intend, the Chairman of the Board shall promptly advise the Board thereof and
notify the Board that the establishment of the Determining Body with respect to
the Claim will be a matter presented at the next regularly scheduled meeting of
the Board. Such a meeting is to be held within 90 calendar days of the date of
Indemnitee's request. If a meeting of the Board is not regularly scheduled
within 120 calendar days of such request, the Chairman of the Board shall cause
a special meeting of the Board to be called within such period in accordance
with these by-laws. After the Determining Body has been established the Chairman
of the Board shall inform the Indemnitee thereof and Indemnitee shall
immediately provide the Determining Body with all facts relevant to the Claim
known to him. No later than the 45th day (the "Determination Date") after its
receipt of such information, together with such additional information as the
Determining Body may request of Indemnitee, the Determining Body shall
determine, and shall advise Indemnitee of its determination, whether Indemnitee
has met the Standard of Conduct.
(d) During such 45-day period, Indemnitee shall promptly inform the
Determining Body upon his becoming aware of any relevant facts not theretofore
provided by him to the Determining Body, unless the Determining Body has
obtained such facts by other means. The providing of such facts to the
Determining Body shall not begin a new 45-day period.
(e) The Determining Body shall have no authority to revoke a determination
that Indemnitee met the Standard of Conduct unless Indemnitee (i) submits
fraudulent information to the Determining Body at any time during the 45 days
prior to the Determination Date or (ii) fails to comply with the provisions of
subsections (c) or (d) hereof, including without limitation Indemnitee's
obligation to submit information or documents relevant to the Claim reasonably
requested by the Determining Body prior to the Determination Date.
(f) In the case of any Claim not involving a proposed, threatened or
pending criminal proceeding.
(i) if Indemnitee has, in the good faith judgment of the Determining
Body, met the Standard of Conduct, the Corporation may, in its sole
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<PAGE>
discretion after notice to Indemnitee, assume all responsibility for the defense
of the Claim, and, in any event, the Corporation and the Indemnitee each shall
keep the other informed as to the progress of the defense, including prompt
disclosure of any proposals for settlement; provided that if the Corporation is
a party to the Claim and Indemnitee reasonably determines that there is a
conflict between the positions of the Corporation and Indemnitee with respect to
the Claim, then Indemnitee shall be entitled to conduct his defense, with
counsel of his choice; and provided further that Indemnitee shall in any event
be entitled at his expense to employ counsel chosen by him to participate in the
defense of the Claim; and
(ii) the Corporation shall fairly consider any proposals by Indemnitee
for settlement of the Claim. If the Corporation (A) proposes a settlement
acceptable to the person asserting the Claim, or (B) believes a settlement
proposed by the person asserting the Claim should be accepted, it shall inform
Indemnitee of the terms thereof and shall fix a reasonable date by which
Indemnitee shall respond. If Indemnitee agrees to such terms, he shall execute
such documents as shall be necessary to effect the settlement. If he does not
agree he may proceed with the defense of the Claim in any manner he chooses, but
if he is not successful on the merits or otherwise, the Corporation's obligation
to indemnify him for any Expenses incurred following his disagreement shall be
limited to the lesser of (A) the total Expenses incurred by him following his
decision not to agree to such proposed settlement or (B) the amount the
Corporation would have paid pursuant to the terms of the proposed settlement.
If, however, the proposed settlement would impose upon Indemnitee any
requirement to act or refrain from acting that would materially interfere with
the conduct of his affairs, Indemnitee may refuse such settlement and proceed
with the defense of the Claim, if he so desires, at the Corporation's expense
without regard to the limitations imposed by the preceding sentence. In no
event, however, shall the Corporation be obligated to indemnify Indemnitee for
any amount paid in a settlement that the Corporation has not approved.
(g) In the case of a Claim involving a proposed, threatened or pending
criminal proceeding, Indemnitee shall be entitled to conduct the defense of the
claim, and to make all decisions with respect thereto, with counsel of his
choice; provided, however, that the Corporation shall not be obligated to
indemnify Indemnitee for an amount paid in settlement that the Corporation has
not approved.
(h) After notifying the Corporation of the existence of a Claim,
Indemnitee may from time to time request the Corporation to pay the Expenses
(other than judgments, fines, penalties or amounts paid in settlement) that he
incurs in pursuing a defense of the Claim prior to the time that the Determining
Body determines whether the Standard of Conduct has been met. If the Disbursing
Officer believes the amount requested to be reasonable, he shall pay to
Indemnitee the amount requested (regardless of Indemnitee's apparent ability to
repay such amount) upon receipt of an undertaking by or on behalf of Indemnitee
to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation under the circumstances. If the
disbursing Officer does not believe such amount to be reasonable, the
Corporation shall
7
<PAGE>
pay the amount deemed by him to be reasonable and Indemnitee may apply directly
to the Determining Body for the remainder of the amount requested.
(i) After the Determining Body has determined that the Standard of
Conduct was met, for so long as and to the extent that the Corporation is
required to indemnify Indemnitee under this Agreement, the provisions of
paragraph (h) shall continue to apply with respect to Expenses incurred after
such time except that (i) no undertaking shall be required of Indemnitee and
(ii) the Disbursing Officer shall pay to Indemnitee such amount of any fines,
penalties or judgments against him which have become final as the Corporation is
obligated to indemnify him.
(j) Any determination by the Corporation with respect to settlements of
a Claim shall be made by the Determining Body.
(k) The Corporation and Indemnitee shall keep confidential, to the
extent permitted by law and their fiduciary obligations, all facts and
determinations provided or made pursuant to or arising, out of the operation of
this Section, and the Corporation and Indemnitee shall instruct its or his
agents and employees to do likewise.
7.3 Enforcement.
(a) The rights provided by this Section shall be enforceable by
Indemnitee in any court of competent jurisdiction.
(b) If Indemnitee seeks a judicial adjudication of his rights under this
Section, Indemnitee shall be entitled to recover from the Corporation, and shall
be indemnified by the Corporation against, any and all Expenses actually and
reasonably incurred by him in connection with such proceeding but only if he
prevails therein. If it shall be determined that Indemnitee is entitled to
receive part but not all of the relief sought, then the Indemnitee shall be
entitled to be reimbursed for all Expenses incurred by him in connection with
such judicial adjudication if the amount to which he is determined to be
entitled exceeds 50% of the amount of his claim. Otherwise, the Expenses
incurred by Indemnitee in connection with such judicial adjudication shall be
appropriately prorated.
(c) In any judicial proceeding described in this subsection, the
Corporation shall bear the burden of proving that Indemnitee is not entitled to
any Expenses sought with respect to any Claim.
7.4 Saving Clause. If any provision of this Section is determined by a court
having jurisdiction over the matter to require the Corporation to do or refrain
from doing any act that is in violation of applicable law, the court shall be
empowered to modify or reform such provision so that, as modified or reformed,
such provision provides the maximum indemnification permitted by law, and such
provision, as so modified or reformed, and the balance of this Section, shall be
applied in accordance with their terms. Without limiting the generality of the
foregoing, if any portion of this Section shall be
8
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invalidated on any ground, the Corporation shall nevertheless indemnify an
Indemnitee to the full extent permitted by any applicable portion of this
Section that shall not have been invalidated and to the full extent permitted by
law with respect to that portion that has been invalidated.
7.5 Non-Exclusivity.
(a) The indemnification and advancement of Expenses provided by or
granted pursuant to this Section shall not be deemed exclusive of any other
rights to which Indemnitee is or may become entitled under any statute, article
of incorporation, by-law, authorization of shareholders or directors, agreement,
or otherwise.
(b) It is the intent of the Corporation by this Section to indemnify and
hold harmless Indemnitee to the fullest extent permitted by law, so that if
applicable law would permit the Corporation to provide broader indemnification
rights than are currently permitted, the Corporation shall indemnify and hold
harmless Indemnitee to the fullest extent permitted by applicable law
notwithstanding that the other terms of this Section would provide for lesser
indemnification.
7.6 Successors and Assigns. This Section shall be binding upon the
Corporation, its successors and assigns, and shall inure to the benefit of the
Indemnitee's heirs, personal representatives, and assigns and to the benefit of
the Corporation, its successors and assigns.
7.7 Indemnification of Other Persons. The Corporation may indemnify any
person not covered by Sections 7.1 through 7.6 to the extent provided in a
resolution of the Board or a separate section of these by-laws.
SECTION 8
AMENDMENTS
These by-laws may be amended or repealed by the board of directors at any
meeting or by the shareholders at any meeting.
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EXHIBIT 3.5
CERTIFICATE OF CORRECTION FILED TO CORRECT
A CERTAIN ERROR IN THE ARTICLES OF AMENDMENT
TO THE ARTICLE OF INCORPORATION FILED IN
THE OFFICE OF THE SECRETARY OF STATE OF
LOUISIANA
Hollywood Casino-Lake Charles, Inc., a corporation organized and existing
under by virtue of the General Corporation Law of the State or Louisiana.
DOES HEREBY CERTIFY:
1. The name of the corporation is: HWCC-LOUISIANA, INC.
2. That the Articles of Amendment to the Articles of Incorporation was
filed by the Secretary of State of Louisiana on July 26, 1995 and that said
amendment requires correction.
3. The inaccuracy or defect of said Amendment to be corrected is as
follows:
The Amendment to the Articles of Incorporation was filed with a
typographic error, stating the name of the corporation is: HWWC-
LOUISIANA, INC., instead of the Amendment stating the name of the
corporation is: HWCC-LOUISIANA, INC.
4. Article One of the Articles of Amendment to the Articles of
Incorporation, which was effective on July 26, 1995, should have read: The name
of the corporation is: HWCC-LOUISIANA, INC.
IN WITNESS WHEREOF, said HWCC-LOUISIANA, INC. has caused the Certificate of
Correction to be signed by Jack E. Pratt, its President and William D. Pratt,
its Secretary this 5th day of October, 1995.
/s/ JACK E. PRATT
---------------------------
Jack E. Pratt, President
/s/ WILLIAM D. PRATT
---------------------------
William D. Pratt, Secretary
On this 5th day of October, 1995, personally appeared before me Jack E. Pratt
and William D. Pratt, who being by me first duly sworn declared that they are
the President and Secretary of the above named corporation, and that the
statements contained therein are true.
/s/ EVELYN JOHNSTONE
--------------------------
Notary
<PAGE>
ARTICLES OF AMENDMENT TO
THE ARTICLES OF INCORPORATION OF
HOLLYWOOD CASINO-LAKE CHARLES, INC.
-----------------------------------
Hollywood Casino-Lake Charles, Inc., a Louisiana corporation (the
"Corporation") having its registered office in Baton Rouge, Louisiana, hereby
certifies to the Secretary of State of Louisiana as follows:
(1) Article First of the Articles of Incorporation of the Corporation
is hereby amended in its entirety to read as follows
"FIRST: The name of the corporation is
HWWC-Louisiana, Inc."
(2) In lieu of a meeting and vote of shareholders, the sole
shareholder of the Corporation has given written consent to these
Articles of Amendment in accordance with the provisions of R.S.
12:76, La. Rev. Stats., 1950.
IN WITNESS WHEREOF, these Articles of Amendment have been executed on
behalf of the Corporation by Jack E. Pratt, its President, and William D. Pratt,
its Secretary, on this 25th day of July, 1995.
HOLLYWOOD CASINO-LAKE CHARLES, INC., a
Louisiana corporation
By: /s/ JACK E. PRATT
-----------------------
Name: Jack E. Pratt
Title: President
By: /s/ WILLIAM D. PRATT
-----------------------
Name: William D. Pratt
Title: Secretary
2
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THE STATE OF TEXAS
COUNTY OF DALLAS
BE IT KNOWN that on this 25th day of July, 1995, before me the undersigned,
a Notary Public in and for the County and State aforesaid, duly commissioned and
qualified, there came and appeared Jack E. Pratt, known to me, Notary, and known
by me to be the President of Hollywood Casino-Lake Charles, Inc., who signed the
within and foregoing instrument before me and who acknowledged to me, Notary,
that he signed, executed, and delivered said instrument in his capacity as
President of Hollywood Casino-Lake Charles, Inc. for the uses and purposes
therein set forth and apparent.
IN WITNESS WHEREOF the said appearer has signed these presents and I have
hereunto affixed my official hand and seal, on the day and date first herein
above written, after due reading of the whole.
/s/ JACK E. PRATT
---------------------
Jack E. Pratt
(NOTARIAL SEAL)
/s/ SANDRA J. CHAPEL
-----------------------
NOTARY PUBLIC
3
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THE STATE OF TEXAS
COUNTY OF DALLAS
BE IT KNOWN that on this 25th day of July, 1995, before me the undersigned,
a Notary Public in and for the County and State aforesaid, duly commissioned and
qualified, there came and appeared William D. Pratt, known to me, Notary, and
known by me to be the Secretary of Hollywood Casino-Lake Charles, Inc., who
signed the within and foregoing instrument before me and who acknowledged to me,
Notary, that he signed, executed, and delivered said instrument in his capacity
as Secretary of Hollywood Casino-Lake Charles, Inc. for the uses and purposes
therein set forth and apparent.
IN WITNESS WHEREOF the said appearer has signed these presents and I have
hereunto affixed my office hand and seal, on the day and date first herein above
written, after due reading of the whole.
/s/ WILLIAM D. PRATT
-----------------------
William D. Pratt
(NOTARIAL SEAL)
/s/ SANDRA J. CHAPEL
------------------------
NOTARY PUBLIC
4
<PAGE>
ARTICLES OF INCORPORATION
OF
Hollywood Casino - Lake Charles, Inc.
-ooOoo--
We, the undersigned, each capable of contracting, for the purpose of
forming a corporation pursuant to Chapter 1 of Title 12 of the Louisiana Revised
Statutes, do hereby certify:
FIRST: The name of the corporation is
Hollywood Casino - Lake Charles, Inc.
SECOND: The purposes for which this corporation is formed are as
follows:
To engage in any lawful activity for which corporations may be formed
under the Louisiana Business corporation Law.
To manufacture, purchase or otherwise acquire, own, mortgage, pledge,
sell, assign and transfer, or otherwise dispose of, to invest, trade, deal in
and with, goods, wares and merchandise and personal property of every class and
description;
To acquire, and pay for in cash, stock or bonds of this corporation,
or otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation;
To acquire, hold, use, sell, assign, lease, grant licenses in respect
of, mortgage, or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses and Privileges, inventions,
improvements and processes, copy-rights, trade-marks and trade names, relating
to or useful in connection with any business of this corporation;
To carry on any of the businesses herein enumerated as principal,
factor, agent, commission merchant or broker;
To borrow money, and to issue, sell, pledge or otherwise dispose of
the bonds, debentures, promissory notes, bills of allonge and other
obligations and evidences of indebtedness of the corporation, from time to time,
for any of the objects or purposes of the corporation, and to secure the same by
mortgage, pledge, or any other hypothecation of any kind of property of the
corporation;
<PAGE>
To purchase, subscribe for, use, take or otherwise acquire, hold as
investment or otherwise enjoy, and to sell, alienate, exchange, deal in, deal
with, guarantee, mortgage, encumber, pledge or otherwise hypothecate or
otherwise dispose of shares, stocks, bonds, debentures, promissory notes,
certificates of beneficial interest, obligations and securities of any person,
association, partnership, joint venture, firm or corporation whatsoever, and
while the owner thereof to exercise and enjoy all the rights, powers and
privileges incident to perfect ownership thereof, including expressly the right
to vote on any shares of stock;
To lend and advance money to such persons, firms, partnerships, joint
ventures, associations and corporations, and on such terms as may seem
expedient, and to customers of, and persons having dealings with this
corporation, in open account, unsecured or secured by goods, wares and
merchandise or lands and real estate, or otherwise howsoever;
To aid by loan of money, property or credit, or in any other lawful
manner, any person, partnership, joint venture, firm or association or
corporation of which the stocks, bonds or other securities or evidences of
indebtedness are held by this corporation, and to do any and all lawful acts or
things designed to protect, preserve, improve or enhance the value of any such
stocks, bonds, securities or evidences of indebtedness;
To guarantee dividends on the shares of the capital stock of any
corporation in which this corporation at any time may have an interest, and to
endorse or otherwise guarantee the principal and interest of the notes, bonds,
debentures or other evidences of indebtedness created or to be created by any
corporation, person, partnership, joint venture, firm or association.
To purchase, lease or otherwise acquire, own, hold, improve, use,
lease to others, sell, mortgage, encumber, pledge, alienate, or otherwise
dispose of and generally to deal in and with real estate, and the fixtures and
personal property incidental thereto or connected therewith, and any and all
lands, tenements, hereditaments or any interest therein, and
To have one or more offices, to carry on all or any of its operations
and business and without restriction or limit as
6
<PAGE>
to amount to purchase or otherwise acquire, hold, own, use, mortgage, encumber,
sell, alienate, convey, or otherwise dispose of real and personal property of
every class and description in any of the States, Districts, Territories or
Colonies of the United States, and in any and all foreign countries, subject to
the laws of such State, District, Territory, Colony or Country.
The foregoing clauses shall be construed both as purposes and powers,
and it is hereby expressly provided that the foregoing enumeration of specific
powers and purposes shall not be held to restrict or limit in any manner the
general powers or purposes of this corporation. In general, to carry on any
other business in connection with or related or incidental to the foregoing,
whether manufacturing or otherwise, permitted by law; to have and exercise all
the powers conferred by present or future laws of Louisiana upon corporations
formed for any or all of the purposes aforesaid, and to do any or all of the
things herein set forth to the same extent as natural persons might or could do.
THIRD: The duration of the corporation is perpetual.
FOURTH: The aggregate number of shares which the corporation shall
have authority to issue is One Million (1,000,000) of the par value of One
Dollar ($1.00) each.
FIFTH: The full name and post office address of each incorporator is
as follows:
NAME ADDRESS
- ---- -------
Marjorie S. Green 350 N. St. Paul Street
Dallas, TX 75201
Jeffrey P. Goins 350 N. St. Paul Street
Dallas, TX 75201
SIXTH: Any director absent from a meeting of the board or any
committee thereof, may be represented by any other director or shareholder, who
may cast the vote of the absent director according to the written instructions,
general or special, of the absent director.
SEVENTH: Whenever by any provision of law, the articles or the by-
laws, the affirmative vote of shareholders is required to authorize or
constitute corporate action, the consent in writing to such corporate action
signed by all of the shareholders having voting power on the particular
question,
7
<PAGE>
shall be sufficient for the purpose, without necessity for a meeting of
shareholders.
Such a consent may be signed by fewer than all of the shareholders
having voting power on any question, the consent need be signed only by
shareholders holding that proportion of the total voting power on the question
which is required by the by-laws or by law whichever requirement is higher.
EIGHTH: This corporation reserves the right to amend, alter, change
or repeal any provision contained in these Articles in the manner now or
hereafter prescribed by statute, and all rights conferred upon shareholders
herein are granted subject to this reservation.
IN WITNESS WHEREOF, we the undersigned, each capable of contracting,
have hereunto affixed our signatures on this 19th day of April, 1993.
/s/ MARJORIE S. GREEN
------------------------
Marjorie S. Green
/s/ JEFFREY P. GOINS
------------------------
Jeffrey P. Goins
8
<PAGE>
STATE OF TEXAS.
COUNTY OF DALLAS.
BE IT KNOWN, that on this 19th day of the month of April, in the year
of our Lord, 1993, before me, the undersigned, a Notary Public in and for the
County and State aforesaid duly commissioned and qualified, there came and
appeared Jeffrey P. Goins known to me, Notary, and known by me to be one of the
persons whose names appear upon the foregoing instrument and said appearer
declared and acknowledged unto me, Notary, that he executed the said instrument
for the uses and purposes therein set forth and apparent.
IN WITNESS WHEREOF, said appearer has signed these presents, and I
have hereunto set my official hand and seal on the day and date first
hereinabove written.
/s/ JEFFREY P. GOINS
------------------------
Jeffrey P. Goins
----------------------
Notary Public
(NOTARIAL SEAL)
9
<PAGE>
Exhibit 3.6
BY-LAWS
OF
HOLLYWOOD CASINO - LAKE CHARLES, INC.
ARTICLE I - OFFICES
Section 1 - Registered Office. The registered office of Hollywood Casino-
-----------------
Lake Charles, Inc. (the "Corporation") in the State Louisiana is CT Corporation
System, 8550 United Plaza Boulevard, Baton Rouge, Louisiana 70809.
Section 2 - Additional Offices. The Corporation may also have offices at
------------------
such other places, both within and without the State of Louisiana, as the Board
of Directors may from time to time determine or as the business of the
Corporation may require.
ARTICLE II - SHAREHOLDERS
Section 1 - Place of Holding Meetings. All meetings of the shareholders
-------------------------
shall be held at the principal business office of the Corporation located at Two
Galleria Tower, Suite 2200, 13455 Noel Road, LB 48, Dallas, Texas 75240 (the
"Principal Business Office"), or at such other place as the Board of Directors
may fix from time to time, and shall be specified in the notice of the meeting
or in a duly executed waiver of notice thereof.
Section 2 - Annual Meetings. The annual meeting of shareholders for the
---------------
election of directors, and the transaction of such other business as may
properly be brought before the meeting, shall be held each year on April 20, if
not a business or legal holiday, or, if a business or legal holiday, then on the
next business day following, at 5:00 p.m., provided, however, that the Board of
Directors by resolution may change the date or time for any such meeting.
Section 3 - Notice of Annual Meetings. Written or printed notice of the
-------------------------
annual meeting, stating the date, place and time thereof, shall be given to each
shareholder entitled to vote at such meeting at his or her last known address
not less than ten (10) (unless a longer period is required by law) nor more than
sixty (60) days before the meeting. Any irregularity in the notice of an annual
meeting held at the Corporation's Principal Business Office at the time
prescribed in Section 2 of this Article II shall not affect the validity of the
meeting or any action taken thereat.
Section 4 - Special Meetings. Special meetings of shareholders may be
----------------
called for any purpose or purposes at any time by the President or a majority of
the Board of Directors.
<PAGE>
Section 5 - Notice of Special Meetings. Written or printed notice of a
--------------------------
special meeting, stating the place, date and time thereof and the purpose or
purposes for which the meeting is called, shall be given to each shareholder
entitled to vote at such meeting not less than five (5) (unless a longer period
is required by law) nor more than sixty (60) days before the special meeting.
Section 6 - Closing of Transfer Books or Fixing of Record Date. For the
--------------------------------------------------
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, sixty (60) days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books shall
be closed for at least five (5) days immediately preceding such meeting. In lieu
of closing the stock transfer books, the Board of Directors may fix in advance a
date as the record date for any such determination of shareholders, such date in
any case to be no more than sixty (60) days and, in case of a meeting of
shareholders, not less than five (5) days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
If the stock transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, the business day before the first notice of the meeting is mailed,
or if notice is waived, the close of business on the day before the meeting,
shall be the record date for such determination of shareholders. If the Board of
Directors does not fix the record date for determining shareholders entitled to
a distribution (other than one involving a repurchase or reacquisition of
shares) , or for any other purpose, the record date is the date the Board of
Directors adopts the resolution relating thereto. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof, unless the Board of Directors fixes a new record date. A new record
date must be fixed if the meeting is adjourned to a date more than one hundred
twenty (120) days after the date fixed for the original meeting.
Section 7 - Voting Lists. The officer or agent having charge of the stock
--------------
transfer books for shares of the Corporation shall make a complete list of the
shareholders entitled to vote at each meeting of shareholders or any adjournment
thereof, arranged in alphabetical order, with the address of and the number of
shares held by each. The voting list shall be kept on file at the Principal
Business Office of the Corporation and shall be subject to inspection by any
shareholder at any time during usual business hours. Such list shall be produced
and kept open at the time and place of the meeting and shall be subject to the
inspection of any shareholder, his agent or attorney, during the whole time of
the meeting or any adjournment thereof.
Section 8 - Quorum. Except as provided in the next section hereof or as
------
otherwise provided by statute, any number of shareholders, together holding at
least a majority of the outstanding shares entitled to vote thereat, who are
present in person or represented by proxy, shall constitute a quorum for the
transaction of business at all meetings despite the subsequent withdrawal or
refusal to vote of any shareholder.
2
<PAGE>
Section 9 - Adjournment of Meetings. If a quorum shall not be present or
-----------------------
represented at any meeting of the shareholders, a majority of the shareholders
entitled to vote thereat who are present in person or represented by proxy shall
have the power to adjourn the meeting from time to time until a quorum shall be
present or represented. If the time and place of the adjourned meeting are
announced at the meeting at which the adjournment is taken, no further notice of
the adjourned meeting need be given. Even if a quorum shall be present or
represented at any meeting of the shareholders, a majority of the shareholders
entitled to vote thereat who are present in person or represented by proxy shall
have the power to adjourn the meeting from time to time for good cause to a date
that is not more than 30 days after the date of the original meeting. Further
notice of the adjourned meeting need not be given if the time and place thereof
are announced at the meeting at which the adjournment is taken. At any adjourned
meeting at which a quorum is present in person or represented by proxy, any
business may be transacted that might have been transacted at the meeting as
originally called. If the adjournment is for more than 30 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 shareholder of record entitled to
vote thereat.
Section 10 - Voting. At any meeting of the shareholders, every shareholder
------
having the right to vote shall be entitled to vote in person or by proxy
appointed by an instrument, in writing, subscribed by such shareholder and filed
with the Secretary at or before the meeting. Each shareholder shall have one (1)
vote for each share of stock having voting power registered in his or her name
on the books of the Corporation as of the date fixed as the date of record for
the determination of shareholders entitled to vote. Except as otherwise
provided by law, by the Articles of Incorporation or these By-Laws, all
elections shall be had by plurality, and all questions decided by a vote of a
majority of the shares present in person or represented by proxy.
ARTICLE III - DIRECTORS
Section 1 - Number and Term of Directors. All of the corporate powers of
----------------------------
the Corporation shall be vested in, and the business and affairs of the
Corporation shall be managed by, a Board of Directors of between one (1) and
seven (7) persons. The exact number of directors may be determined by
resolution of the Board of Directors adopted from time to time; provided,
however, the initial number of directors shall be three (3). Each director
shall serve a term of one year or until such time as he or she resigns or is
removed from the Board of Directors; provided, however, that no director shall
be elected for a single term longer than five (5) years.
Section 2 - Place of Holding Meetings. Regular or special meetings of the
-------------------------
directors may be held at any place, within or without the State of Louisiana, as
a majority of the Board of Directors may determine. If the notice thereof does
not designate a place for such meeting, such meeting shall be at the
Corporation's Principal Business Office.
Section 3 - Regular Directors' Meetings. The regular meeting of each
---------------------------
newly-elected Board of Directors shall be held immediately following the annual
meeting of shareholders, and no notice of such meeting shall be necessary to the
newly-elected directors in order to constitute the meeting
3
<PAGE>
legally, provided a quorum is present. Directors may also meet at such time and
place as is fixed by a consent in writing of all of the directors, or by notice
given by vote of a majority of the directors to the remaining directors. At the
first regular meeting, or at any subsequent meeting called for the purpose, the
directors shall elect the officers of the Corporation.
Section 4 - Special Directors' Meetings. Special meetings of the Board of
---------------------------
Directors may be called by the President, by the Chairman of the Board of
Directors or by two or more directors on at least 2 days' notice to each
director, if such notice is delivered personally or sent by telegram, or on at
least 5 days' notice if sent by registered mail, return receipt requested.
Notice shall be deemed to be received on the date of personal delivery, the
sending of a telegram or the deposit of the letter in the regular mails, as the
case may be. Any such notice need not state the purpose or purposes of such
meeting except as required by Article IX hereof.
Section 5 - Quorum and Adjournments. At all meetings of the Board of
-----------------------
Directors, a majority of the directors then in office and qualified to act shall
constitute a quorum for the transaction of business. If a quorum is not present
at any meeting of the Board of Directors, a majority of the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting at which the adjournment is taken, until a quorum
shall be present. If a quorum be present, the directors present may continue to
vote on any action being considered, notwithstanding the subsequent withdrawal
of enough directors to leave less than a quorum or the refusal of any directors
present to vote.
4
<PAGE>
Section 6 - Voting. The action of a majority of the directors present at
-------
any meeting at which a quorum is present shall be the action of the Board of
Directors, unless the concurrence of a greater proportion is required for such
action by law, the Articles of Incorporation or these By-Laws.
Section 7 - Presumption of Assent. A director of the Corporation who is
---------------------
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
(1) he objects at the beginning of the meeting or promptly upon his arrival; (2)
his dissent or abstention from action taken is entered in the minutes of the
meeting; or (3) he delivers written notice of his dissent or abstention to such
action with the person acting as Secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
Section 8 - Remuneration to Directors. Directors, as such, shall not
-------------------------
receive any stated salary for their services unless such payments are approved
by resolution of the Board of Directors. Directors shall be entitled to receive
reimbursement of expenses of attendance at any regular or special meeting of the
Board of Directors or any committee thereof, if any, and, if approved by the
Board of Directors, any or all of the directors may be paid a fee for attendance
at each regular or special meeting of the Board of Directors or of any committee
thereof. Nothing contained herein shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor in
addition to amounts received hereunder.
Section 9 - Powers of Directors. The Board of Directors is empowered with
-------------------
the management of the business of the Corporation, and subject to any
restrictions imposed by law, the Articles of Incorporation or these By-Laws, may
exercise all the powers of the Corporation.
Section 10 - Removal or Resignations.
-----------------------
(a) Except as otherwise provided by law or the Articles of Incorporation,
any director or the entire Board of Directors may be removed, with or without
cause, by the holders of a majority of the shares then entitled to vote at an
election of directors.
(b) Any director may resign at any time by giving written notice to the
Board of Directors, the Chairman of the Board, if any, or the President or
Secretary of the Corporation. Unless an effective date is specified in such
written notice, a resignation shall take effect upon delivery thereof to the
Board of Directors or the designated officer. It shall not be necessary for a
resignation to be accepted before it becomes effective.
Section 11 - Vacancies. If any vacancies occur in the Board of Directors,
---------
or if any new directorships are created, they may be filled by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director. Each director so chosen shall hold office until the next annual
meeting of shareholders and until his successor is duly elected and qualified.
If there are no directors in office, any officer or shareholder may call a
special meeting of shareholders in accordance
5
<PAGE>
with the provisions of the Articles of Incorporation or these By-Laws, at which
meeting such vacancies shall be filled.
Section 12 - Consent of the Board of Directors. Any action required or
---------------------------------
permitted to be taken at a meeting of the Board of Directors, or any committee
thereof, may be taken without a meeting if a consent in one or more writings or
counterparts, setting forth the action so taken, shall be signed by all of the
directors or committee members entitled to vote with respect to the subject
matter thereof, and such written consent is filed with the minutes of the
proceedings of the Board of Directors or Committee thereof. Action taken under
this Section is effective when the last director signs the consent, unless the
consent specifies a different effective date.
Section 13 - Meetings by Telephone Conference Calls. The members of the
--------------------------------------
Board of Directors may participate in and hold a meeting of the Board of
Directors by means of conference telephone or similar communications equipment,
provided that all persons participating in the meeting can hear and communicate
with each other, and participation in such a meeting shall constitute presence
in such meeting by any such director except where a person participates in the
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened.
ARTICLE IV - OFFICERS
Section 1 - Titles. The officers of the Corporation shall serve at the
------
will and direction of the Board of Directors and shall be a President, a
Treasurer, a Secretary, and, if appointed by the Board of Directors, one or more
Vice-Presidents, Assistant Secretaries or Assistant Treasurers, and such other
officers as may, from time to time, be elected or appointed by the Board of
Directors. Any two offices may be held by the same person, and none need be a
director.
Section 2 - President. The President shall, when present, preside at all
---------
meetings of the Board of Directors and shareholders. The President shall be the
chief executive officer and, subject to the direction of the Board of Directors,
shall have general charge of the Corporation's business and power to make
contracts in the ordinary course of business; shall see that all orders and
resolutions of the Board of Directors are carried into effect and direct the
other officers in the performance of their duties; has power to execute all
authorized instruments except in cases where the signing and execution thereof
shall be expressly delegated by the Board of Directors to some other officer or
agent of the Corporation, or shall be required by law to be otherwise signed or
executed; and shall generally perform all acts incident to the office of
President, or which are authorized or required by law, or which are incumbent
upon him under the provisions of the Articles of Incorporation or these By-Laws.
Unless otherwise directed by the Board of Directors, the President shall also
have the power to vote or otherwise act on behalf of the Corporation, in person
or by proxy, at any meeting of shareholders or with respect to any action of
shareholders of any other corporation in which this Corporation may hold
securities and otherwise to exercise any and all rights and powers which this
Corporation may possess by reason of its ownership of securities in such other
corporation.
6
<PAGE>
Section 3 - Vice-Presidents. The Corporation may have one or more Vice-
---------------
Presidents. A Vice-President shall have such powers, and shall perform such
duties, as shall be assigned to him or her by the Board of Directors or by the
President, from time to time, and, in the order determined by the Board of
Directors, shall, in the absence or disability of the President, perform his or
her duties and exercise his or her powers. Additionally, a Vice-President may,
at the request of the President or Board of Directors, serve as an assistant
Treasurer or Secretary of the Corporation.
Section 4 - Treasurer. The Treasurer shall have custody of all funds,
---------
securities, evidences of indebtedness and other valuable documents of the
Corporation. He or she shall receive and give, or cause to be given, receipts
and acquittances for moneys paid in on account of the Corporation, and shall pay
out of the funds on hand all just debts of the Corporation of whatever nature.
He or she shall enter, or cause to be entered, in the books of the Corporation
to be kept for that purpose, full and accurate accounts of all moneys received
and paid out on account of the Corporation, and, whenever required by the
President or the Board of Directors, he or she shall render a statement of his
or her accounts. The Treasurer shall keep, or cause to be kept, such books as
will show a true record of the expenses, gains, losses, assets and liabilities
of the Corporation, and shall perform all of the other duties incident to the
office of Treasurer as may be directed by the Board of Directors from time to
time. If required by the Board of Directors, the Treasurer shall give the
Corporation a bond for the faithful discharge of his or her duties and for
restoration to the Corporation, upon termination of his or her tenure, of all
property of the Corporation under his or her control.
Section 5 - Secretary. The Secretary shall attend all meetings of the
---------
Board of Directors and the shareholders and record all votes and the proceedings
of the meetings in a book or books to be kept at the Principal Business Office
of the Corporation for that purpose. He or she shall perform like duties for any
committees of the Board of Directors, if so requested. The Secretary shall give,
or cause to be given, notice of all meetings of shareholders, directors and
committees, and all other notices required by law or by these By-Laws, and in
case of his or her absence or refusal or neglect to do so, any such notice may
be given by the shareholder, officer or director upon whose request the meeting
is called as provided in these By-Laws. Except as otherwise determined by the
directors, the Secretary shall have charge of the original stock books, transfer
books and stock ledgers of the Corporation, and shall act as transfer agent in
respect of the stock and other securities issued by the Corporation. The
Secretary shall also perform such other duties as may be assigned to him or her
by the Board of Directors or the President of the Corporation.
Section 6 - Assistants. Assistant Secretaries or Treasurers shall have
----------
such duties as may be delegated to them by the Board of Directors, the President
or the Secretary or Treasurer, respectively.
Section 7 - Compensation. The compensation of all officers shall be fixed
------------
by the Board of Directors, and no officer shall be prevented from receiving a
salary because he is also a director of the Corporation.
Section 8 - Term of Office. Each officer of the Corporation, unless he or
--------------
she resigns, shall hold office until his or her successor is chosen and
qualified in his or her stead. Any officer elected
7
<PAGE>
or appointed by the Board of Directors may be removed, with or without cause, at
any time by a majority vote of the Board of Directors. If the office of any
officer or officers becomes vacant for any reason, the vacancy shall be promptly
filled for the unexpired portion of the term by the affirmative vote of a
majority of the Board of Directors.
Section 9 - Absence. In the case of the absence of any officer of the
-------
Corporation, or for any other reason that the Board of Directors may deem
sufficient, the Board of Directors may delegate, for the time being, all or a
part of the powers or duties of such officer to any other officer or to any
director.
ARTICLE V - AFFILIATED TRANSACTIONS AND INTERESTED DIRECTORS
Section 1 - Affiliated Transactions. No contract or transaction between
-----------------------
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof that
authorizes the contract or transaction or solely because his, her or their votes
are counted for such purpose, if:
(a) The material facts as to his or her relationship or interest and as to
the contract or transaction are disclosed or are known to the Board of Directors
or the committee, and the Board of Directors or committee in good faith
authorizes the contract or transaction by the affirmative vote of a majority of
the disinterested directors, even though the disinterested directors be less
than a quorum; or
(b) The material facts as to his or her relationship or interest and as to
the contract or transaction are disclosed or are known to the shareholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by the vote of the shareholders; or
(c) The contract or transaction is fair as to the Corporation as of the
time it is authorized, approved, or ratified by the Board of Directors, a
committee thereof, or the shareholders.
Section 2 - Determining Quorum. Common or interested directors may be
------------------
counted in determining the presence of a quorum at a meeting of the Board of
Directors or a committee thereof which authorizes the contract or transaction.
ARTICLE VI - CAPITAL STOCK
Section 1 - Certificates of Stock. Certificates of stock, numbered and
---------------------
signed by the Chairman or Vice-Chairman of the Board of Directors or the
President or a Vice-President, and by the Treasurer or Secretary or an Assistant
Treasurer or Secretary, shall be issued to each shareholder legally entitled
thereto, certifying the number of shares owned by the shareholder in the
Corporation. If the stock
8
<PAGE>
certificates are countersigned by a transfer agent or a registrar, the
signatures of the corporate officers may be facsimile.
Section 2 - Lost Certificates. A new certificate of stock may be issued in
-----------------
place of any certificate theretofore issued by the Corporation, alleged to have
been lost, stolen, mutilated or destroyed, or mailed and not received, upon the
making of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen, destroyed, or not received. The Board of Directors
may, in its discretion, require the owner of the replaced certificate to give
the Corporation a bond, in an amount determined by the Board of Directors, to
indemnify the Corporation against any claim which may be made against the
Corporation on account of the replacement of the certificate or any payment or
other action taken in respect thereof.
Section 3 - Transfer of Shares. Shares of stock of the Corporation are
------------------
transferable only on its books, by the holders thereof in person or by their
duly authorized attorneys or legal representatives, and upon such transfer, the
certificate or certificates representing the transferred shares shall be
surrendered to the person in charge of the stock-transfer records, by whom they
shall be cancelled, and a new certificate or certificates shall thereupon be
issued. The Board of Directors may make regulations concerning the transfer of
shares as it deems necessary or appropriate.
ARTICLE VII - INDEMNIFICATION
Section 1 - Right to Indemnification. Each person who was or is a party or
------------------------
is threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), including any action by or in the right of the
Corporation, by reason of the fact that he or she or a person of whom he or she
is the legal representative is or was a director or officer of the Corporation
or, as a director or officer of the Corporation, is or was serving at the
request of the Corporation as a director, officer, partner, employee or agent of
another business, nonprofit or foreign corporation, 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, partner, trustee, employee or agent or in any
other capacity, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by law, including but not limited to the Louisiana
Business Corporation Law ("LBCL"), as the same exists or may hereafter be
amended (but, in the case of any amendment to the LBCL, such amendment shall be
enforced hereunder only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than the LBCL permitted
the Corporation to provide prior to such amendment), against any and all
expenses, including attorneys' fees, liabilities, losses, judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in settlement
actually and reasonably incurred or suffered by such person in connection with
such proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interest of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful; provided, however,
that the Corporation shall indemnify any such person seeking indemnity in
connection with an action, suit or proceeding (or part thereof) initiated by
such person only if such action, suit or proceeding (or
9
<PAGE>
part thereof) initiated by such person was authorized by the Board of Directors
of the Corporation.
In case of actions by or in the right of the Corporation, the indemnity
shall be limited to expenses, including attorneys' fees and amounts paid in
settlement not exceeding, in the judgment of the Board of Directors, the
estimated expense of litigating the action to conclusion, actually and
reasonably incurred in connection with the defense or settlement of such action,
and no indemnification shall be made in respect of any claim, issue, or matter
as to which such person shall have been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable for
willful or intentional misconduct in the performance of his or her duty to the
Corporation, unless, and only to the extent that the court shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, he or she is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
The termination of any action, suit, or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
To the extent that a director or officer has been successful on the merits
or otherwise in defense of any such action, suit or proceeding, or in defense of
any claim, issue or matter therein, he or she shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him or
her in connection therewith.
Any indemnification under this Section, unless ordered by the court, shall
be made by the Corporation only as authorized in a specific case upon a
determination that the applicable standard of conduct has been met. Such
determination shall be made:
(1) By the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or
(2) If such a quorum is not obtainable and the Board of Directors so
directs, by independent legal counsel, or
(3) By the shareholders.
Such right to indemnification shall include the right to be paid by the
Corporation expenses, including attorney's fees incurred in defending any such
proceeding, in advance of its final disposition; provided, however, that the
payment of such expenses in advance of the final disposition of such proceeding
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such director or officer, in which such director or officer agrees to
repay all amounts so advanced if it ultimately should be determined that such
person is not entitled to be indemnified under this Section or otherwise. Such
right to indemnification shall also continue as to a person who has ceased to be
a director or officer and shall inure to the benefit of his or her heirs or
legal representatives.
10
<PAGE>
Section 2. Right of Claimant to Bring Suit. (i) If a claim under Section 1
-------------------------------
is not paid in full by the Corporation within ninety days after a written claim
therefor has been received by the Corporation, the claimant may any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall also be
entitled to be paid the expense (including attorneys' fees) of prosecuting such
claim. 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 LBCL for the Corporation to indemnify the claimant
for the amount claimed, but the burden of proving such defense shall be on the
Corporation.
(ii) Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its shareholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
shareholders) 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. Contractual Rights; Applicability. The rights and obligations
---------------------------------
of the Corporation and the person entitled to relief from liability or
indemnification under this Article VII (i) shall be deemed to be a contract
between the Corporation and such person based upon good and valuable
consideration, pursuant to which the person entitled thereto may bring suit as
if the provisions hereof were set forth in a separate written contract between
the Corporation and the director or officer, (ii) shall be retroactive and shall
be available with respect to events occurring prior to the adoption hereof,
(iii) shall continue to exist after the rescission or restrictive modification
hereof with respect to events occurring prior thereto, and (iv) any repeal,
amendment or modification of Article VII shall not adversely affect any right or
protection of a director or officer existing at the time of such repeal,
amendment or modification.
Section 4. Requested Service. Any director or officer of the Corporation
-----------------
serving, in any capacity, (i) another corporation of which a majority of the
shares entitled to vote in the election of its directors is held by the
Corporation, or (ii) any employee benefit plan of the Corporation or of any
corporation referred to in clause (i), shall be deemed to be doing so at the
request of the Corporation.
Section 5. Non-Exclusivity of Rights. The rights conferred on any person by
-------------------------
Sections 1 and 2 of this Article VII shall not be deemed exclusive of and shall
be in addition to any other rights which such person may have or may hereafter
acquire under any statute, rule, provision of the Corporation's Articles of
Incorporation, By-Laws, agreement, vote of shareholders or disinterested
directors or otherwise; provided, however, that no such other right shall permit
indemnification of any officer or director for the results of such person's
willful or intentional misconduct.
Section 6. Insurance. The Corporation may purchase and maintain insurance,
---------
obtain letters
11
<PAGE>
of credit, act as a self-insurer, create a reserve, trust, escrow or other fund
or account or enter into indemnification agreements either within or beyond the
scope of the LBCL, with or on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, against any liability asserted
against him or her or incurred by such person in any such capacity, or arising
out of his or her status as such, whether or not the Corporation would have the
power to indemnify him or her against such liability under this Article VII.
ARTICLE VIII - MISCELLANEOUS PROVISIONS
Section 1 - Fiscal Year. The fiscal year of the Corporation shall be the
-----------
calendar year, except that the first fiscal year shall begin on the date of
incorporation of the Corporation and end on December 31 of such year.
Section 2 - Checks, Drafts, Notes. All checks, drafts, other orders for
---------------------
the payment of money, and notes, or other evidence of indebtedness, issued in
the name of the Corporation, shall be signed by such officer or officers, or
agent or agents of the Corporation, and in such manner as shall, from time to
time, be determined by the Board of Directors.
Section 3 - Loans. No loans shall be contracted on behalf of the
-----
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
Section 4 - Deposits. All funds of the Corporation not otherwise employed
--------
shall be deposited from time to time to the credit of the Corporation in such
banks, companies or other depositories as the Board of Directors may select.
Section 5 - Notice. Whenever any notice is required by these By-Laws to be
------
given, personal notice is not required unless expressly so stated as the sole
method of notice. Any notice by mail is sufficient if given by depositing the
same in a mail receptacle in a sealed postage paid envelope (return receipt
requested, if the applicable notice provision requires return receipt) addressed
to the person entitled thereto at his, her or its last known address as it
appears on the records of the Corporation; and such notice shall be deemed to
have been given on the day of such mailing. Any notice period expressed in days
shall mean business days, or all days not a Saturday or Sunday or not a Federal
holiday.
Section 6 - Waiver of Notice. Whenever any notice of the time, place or
----------------
purpose of any meeting of shareholders, the Board of Directors or a committee
thereof is required by law, the Articles of Incorporation or these By-Laws, a
waiver thereof in writing, signed by the person or persons entitled to such
notice and filed with the records of the meeting before or after the holding
thereof, or actual attendance at the meeting of shareholders in person or by
proxy or at the meeting of the Board of Directors or a committee thereof in
person, is equivalent to the giving of such notice, except as
12
<PAGE>
otherwise provided by law.
ARTICLE IX - AMENDMENTS
Unless specifically stated otherwise, the shareholders or the Board of
Directors, by the affirmative vote of a majority of those present or
represented, may, at any meeting, amend, alter, or repeal any of these By-Laws,
provided that notice of the proposal to alter or repeal these By-Laws or to
adopt new By-Laws must be included in the notice of the meeting of the
shareholders or Board of Directors at which such action takes place; subject,
however, to the right of the shareholders to change or repeal any By-Laws so
made or amended by the Board of Directors.
13
<PAGE>
CERTIFICATE
I, William D. Pratt, Secretary of Hollywood Casino-Lake Charles, Inc. (the
"Corporation"), a Louisiana corporation, do hereby certify that the foregoing
document consisting of fourteen (14) pages is a true and correct copy of the
Corporation's By-Laws as adopted by the Board of Directors of the Corporation on
April 23, 1993, and that such By-Laws have not been altered or repealed and are
in full force and effect on the date hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 23rd day of April,
1993.
/s/ William D. Pratt
_____________________________________
William D. Pratt, Secretary
14
<PAGE>
Exhibit 3.7
ARTICLES OF INCORPORATION
OF
HCS I, INC.
------------
The undersigned, being a natural person capable of contracting and acting
as the incorporator to form a corporation for one or more lawful business
purposes under the provisions of the Business Corporation Law of the State of
Louisiana (the "Business Corporation Law"), does hereby adopt and sign the
following Articles of Incorporation:
ARTICLE I
NAME
----
The name of the corporation (the "Corporation") is HCS I, Inc.
ARTICLE II
DURATION
--------
The period of duration of the Corporation is perpetual.
ARTICLE III
PURPOSES
--------
The purpose for which the Corporation is organized is to engage in any
lawful activity for which corporations may be formed under the Business
Corporation Law.
ARTICLE IV
CAPITAL STOCK
-------------
The aggregate number of shares of capital stock which the Corporation shall
have the authority to issue shall be 100,000, all of which shall have a par
value of $1.00 per share and all of which shall be of the same class and shall
be designated as common stock.
ARTICLE V
PREEMPTIVE RIGHTS
-----------------
No shareholder of the Corporation shall, by reason of being a shareholder,
have any preemptive right to acquire additional, unissued or treasury shares of
the Corporation, or securities convertible into or carrying a right to subscribe
to or to acquire any shares of any class of the
1
<PAGE>
Corporation now or hereafter authorized.
ARTICLE VI
CUMULATIVE VOTING DENIED
------------------------
Cumulative voting shall not be allowed in the election of directors or for
any other purpose.
ARTICLE VII
LIMITATION OF LIABILITY
-----------------------
A director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for such liability as is expressly not subject to
limitation under the Business Corporation Law, as the same exists on the
effective date of these Articles of Incorporation or may hereafter be amended to
further limit or eliminate such liability. Any repeal or modification of this
Article VII by the shareholders of the Corporation shall be prospective only and
shall not adversely affect any limitation on the personal liability of a
director of the Corporation existing at the time of such repeal or modification.
ARTICLE VIII
DIVIDENDS, RECLASSIFICATIONS OR
REDEMPTIONS OF STOCK
--------------------
Cash, property or share dividends, shares issuable to shareholders in
connection with a reclassification of stock, and the redemption price of
redeemed shares, if any, which are not claimed by the shareholders entitled
thereto within a reasonable time as determined by the Board of Directors (not
less than one year in any event) after the dividend or redemption price, if any,
became payable or the shares became issuable, despite reasonable efforts by the
Corporation to pay the dividend or redemption price, if any, or deliver the
certificates for the shares to such shareholders within such time, shall, at the
expiration of such time, revert in full ownership to the Corporation, and the
Corporation's obligation to pay such dividend or redemption price, if any, or
issue such shares, as the case may be, shall thereupon cease; provided that the
Board of Directors may, at any time, for any reason satisfactory to it, but need
not, authorize (a) payment of the amount of any cash or property dividend or
redemption price, if any, or (b) issuance of any shares, ownership of which has
reverted to the Corporation pursuant to this Article VIII, to the entity who or
which would be entitled thereto had such reversion not occurred.
2
<PAGE>
ARTICLE IX
INDEMNIFICATION AND INSURANCE
-----------------------------
The Corporation shall, to the fullest extent permitted by law, indemnify,
and may, to the fullest extent permitted by law or to such lesser extent as is
determined in the discretion of the Board of Directors, advance expenses to, any
and all officers and directors of the Corporation in whatever capacities they
serve, and may, to the fullest extent permitted by law or to such lesser extent
as is determined in the discretion of the Board of Directors, indemnify, and
advance expenses to, any and all other persons whom it shall have power to
indemnify, with respect to all matters arising out of their status as such or
their acts, omissions or services rendered in such capacities. The Corporation
shall have the power to purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability. Any
repeal or modification of this Article IX by the shareholders of the Corporation
shall be prospective only and shall not adversely affect any rights set forth in
this Article IX existing at the time of such repeal or modification.
ARTICLE X
INITIAL BOARD OF DIRECTORS
--------------------------
The number of directors shall be fixed by the Bylaws of the Corporation and
until changed in accordance with the manner prescribed by the Bylaws shall be
three (3). The names and addresses of those persons who are to serve as
directors until the first annual meeting of shareholders, or until their
successors be elected and qualified, shall be as specified in the initial report
or supplemental report of the Corporation filed pursuant to Section 12:101 of
the Business Corporation Law.
ARTICLE XI
ACTION BY CONSENT OF SHAREHOLDERS
---------------------------------
Whenever the affirmative vote of shareholders at a meeting is required to
authorize or constitute corporate action under any provision of the Business
Corporation Law or of the Articles of Incorporation or Bylaws of the
Corporation, any such action may be authorized or constituted by a consent in
writing, without a meeting, signed by the shareholders having at least that
proportion of voting power which would be necessary under any such provision to
authorize or constitute the action by the affirmative vote at a meeting;
provided, however, that any such written consent shall be filed with the record
of proceedings of the shareholders; and provided, further, that prompt notice
shall be given to all of the shareholders entitled thereto of the action taken
pursuant to such written consent.
3
<PAGE>
ARTICLE XII
INCORPORATOR
------------
The name and address of the incorporator is:
Name Address
---- -------
Evelyn Johnstone Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, Texas 75240
IN WITNESS WHEREOF, I have hereunto set my hand this 20/th/ day of July,
1999.
/s/ Evelyn Johnstone
-------------------------------------
Evelyn Johnstone
THE STATE OF TEXAS
COUNTY OF DALLAS
I, Roberta J. Hamann, a Notary Public, do hereby certify that on this 20th
-----------------
day of July, 1999, personally appeared before me Evelyn Johnstone, who being by
me first duly sworn, declared to me that she is the person who signed the
foregoing document as incorporator, and that the statements therein contained
are true.
/s/ Roberta J. Hamann
---------------------------------------
Notary Public, State of Texas
Name: Roberta J. Hamann
-----------------
My Commission Expires: 11/12/2000
----------
4
<PAGE>
EXHIBIT 3.8
BY-LAWS
OF
HCS I, INC.
SECTION 1
OFFICES
1.1 Principal Office. The principal office of the Corporation shall be
located at 8550 United Plaza Boulevard, Baton Rouge, Louisiana 70809.
1.2 Additional Offices. The Corporation may have such offices at such
other places as the board of directors may from time to time determine or the
business of the Corporation may require.
SECTION 2
SHAREHOLDERS MEETINGS
2.1 Place of Meetings. Unless otherwise required by law or these by-laws,
all meetings of the shareholders shall be held at the principal office of the
Corporation or at such other place, within or without the State of Louisiana, as
may be designated by the board of directors.
2.2 Annual Meetings; Notice Thereof. An annual meeting of the
shareholders shall be held on the first Monday of August each year at 10:00
A.M., or at such other date or at such other time specified as the board of
directors shall designate, for the purpose of electing directors and for the
transaction of such other business as may be properly brought before the
meeting.
2.3 Notice of Meetings. The secretary shall cause written notice of the
time, place and purpose of the meeting to be given to all shareholders entitled
to vote at such meeting, at least two days and not more than ten days prior to
the day fixed for the meeting.
2.4 Quorum. The presence, in person or by proxy, of the holders of a
majority of the outstanding stock shall constitute a quorum at all meetings of
shareholders provided that this subsection shall not have the effect of reducing
the vote required to approve or affirm any matter that may be established by
law, the articles of incorporation or these by-laws.
SECTION 3
DIRECTORS
3.1 Number. All of the corporate powers shall be vested in, and the
business and affairs of the Corporation shall be managed by, a board of
directors. Subject to the restriction that the number of directors shall not be
less than the number required by Louisiana law, the number of directors shall be
fixed from time to time by a resolution
<PAGE>
adopted by the board of directors. Unless otherwise fixed by the board of
directors, the number of directors constituting the entire board of directors
shall be three. No director need be a shareholder.
3.2 Powers. The board of directors may exercise all such powers of the
Corporation and do all such lawful acts and things that are not by law, the
articles of incorporation or these by-laws directed or required to be done by
the shareholders.
3.3 Election. The directors shall be elected at each annual meeting of
shareholders, shall serve until the next annual meeting of shareholders and
until their successors are elected and qualified.
3.4 Removal. Any director or the entire board of directors may be removed
at any time, by the affirmative vote of a majority of the holders of the
outstanding shares of stock provided that the removal may only be effected at a
meeting of shareholders duly called for that purpose. The shareholders at such
meeting may proceed to elect a successor or successors for the unexpired term of
the director or directors removed.
SECTION 4
MEETINGS OF THE BOARD
4.1 Place of Meetings. The meetings of the board of directors may be held
at such place within or without the State of Louisiana as the board of directors
or the president may from time to time appoint.
4.2 Meetings; Notice. Meetings of the board of directors may be held at
such times as the board of directors or the president may from time to time
determine. Notice of meetings of the board of directors shall be required, but
no special form of notice or time of notice shall be necessary.
4.3 Quorum. A majority of the board of directors shall be necessary to
constitute a quorum for the transaction of business.
4.4 Action by Consent. Any action which may be taken at a meeting of the
board of directors may be taken by a consent in writing signed by all of the
directors and filed with the records of proceedings of the board of directors.
4.5 Meetings by Telephone or Similar Communication. Members of the board
of directors may participate at and be present at any meeting of the board of
directors by means of conference telephone or similar communications equipment
if all persons participating in such meeting can hear and communicate with each
other.
SECTION 5
OFFICERS
5.1 Designations. The officers of the Corporation shall be elected by the
directors and shall be the Chairman of the Board and Chief Executive Officer,
President,
2
<PAGE>
Secretary and Treasurer. The board of directors may appoint a Vice Chairman of
the Board, a Chief Operating Officer, a Chief Financial Officer, a General
Counsel, one or more Executive Vice Presidents, one or more Vice Presidents and
such other officers as it shall deem necessary. Officers shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the board. To the extent permitted by
law, more than one office may be held by a single person.
5.2 Term of Office. The officers of the Corporation shall hold office at
the pleasure of the board of directors. Except as otherwise provided in the
resolution of the board of directors electing any officer, each officer shall
hold office until the first meeting of the board of directors after the annual
meeting of shareholders next succeeding his or her election, and until his or
her successor is elected and qualified or until his or her earlier resignation
or removal. Any officer may resign at any time upon written notice to the board,
Chairman of the Board, President or Secretary of the Corporation. Such
resignation shall take effect at the time specified therein and acceptance of
such resignation shall not be necessary to make it effective. The board may
remove any officer with or without cause at any time. Any such removal shall be
without prejudice to the contractual rights of such officers, if any, with the
Corporation, but the election of an officer shall not in and of itself create
contractual rights. Any vacancy occurring in any office of the Corporation by
death, resignation, removal or otherwise may be filled for the unexpired
position of the term by the board at any regular or special meeting.
5.3 The Chairman of the Board and Chief Executive Officer. The Chairman
of the Board and Chief Executive Officer shall preside at meetings of the board
of directors and the shareholders, shall have general and active responsibility
for the management of the business of the Corporation, shall be the chief
executive officer of the Corporation, and shall perform such other duties as may
be designated by the board of directors or these by-laws.
5.4 The President. The President shall be the chief operating officer of
the Corporation and shall supervise the daily operations of the business of the
Corporation and shall ensure that all orders, policies and resolutions of the
board are carried out.
5.5 The Vice Chairman of the Board, the Executive Vice Presidents and the
Vice Presidents. The Vice Chairman of the Board, the Executive Vice Presidents
and the Vice Presidents (if any) shall have such designations and perform such
duties as the board of directors shall prescribe.
5.6 The Secretary. The Secretary shall attend all meetings of the board
of directors and all meetings of the shareholders and record all votes and the
minutes of all proceedings in a book to be kept for that purpose. He shall give,
or cause to be given, notice of all meetings of the shareholders and regular and
special meetings of the board, and shall perform such other duties as may be
prescribed by the board or the Chairman of
3
<PAGE>
the Board. He shall keep in safe custody the seal of the Corporation, if any,
and affix such seal to any instrument requiring it.
5.7 The Assistant Secretaries. The Assistant Secretaries shall have the
same powers and duties as the Secretary and shall perform such other duties as
may be prescribed by the board or the Chairman of the Board.
5.8 The Treasurer. The Treasurer shall have the custody of the corporate
funds and shall keep or cause to be kept full and accurate accounts of receipts
and disbursements in books belonging to the Corporation and shall deposit all
monies and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the board of directors.
He shall keep a proper accounting of all receipts and disbursements and shall
disburse the funds of the Corporation only for proper corporate purposes or as
may be ordered by the board and shall render to the Chairman of the Board and
the board at the regular meetings of the board, or whenever they may require it,
an account of all his transactions as Treasurer and of the financial condition
and results of operations of the Corporation.
SECTION 6
STOCK
6.1 Certificates. Every holder of stock in the Corporation shall be
entitled to have a certificate signed by the president and the secretary or
treasurer evidencing the number of shares owned by him or her.
6.2 Transfers. Upon surrender to the Corporation of a certificate for
shares duly endorsed or accompanied by proper evidence of succession, assignment
or authority to transfer, it shall be the duty of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
SECTION 7
INDEMNIFICATION
7.1 Definitions. As used in this section the following terms shall have
the meanings set forth below:
(a) "Board" - the board of directors of the Corporation.
(b) "Claim" - any threatened, pending or completed claim, action,
suit, or proceeding, whether civil, criminal, administrative or investigative
and whether made judicially or extra-judicially, or any separate issue or matter
therein, as the context requires.
(c) "Determining Body" - (i) those members of the Board who are not
named as parties to the Claim for which indemnification is being sought
("Impartial Directors"), if there are at least three Impartial Directors, (ii) a
committee of at least three
4
<PAGE>
Impartial Directors appointed by the Board (regardless whether the members of
the Board voting on such appointment are Impartial Directors) or (iii) if there
are fewer than three Impartial Directors or if the Board or the committee
appointed pursuant to clause (ii) of this paragraph so directs (regardless
whether the members thereof are Impartial Directors), independent legal counsel,
which may be the regular outside counsel of the Corporation.
(d) "Disbursing Officer" - the Chairman of the Board of the
Corporation or, if the Chairman of the Board is a party to the Claim for which
indemnification is being sought, any officer not a party to such Claim who is
designated by the Chairman of the Board to be the Disbursing Officer with
respect to indemnification requests related to the Claim, which designation
shall be made promptly after receipt of the initial request for indemnification
with respect to such Claim.
(e) "Expenses" - any expenses or costs, including, without
limitation, attorney's fees, judgments, punitive or exemplary damages, fines and
amounts paid in settlement.
(f) "Indemnitee" - each person who is or was a director or officer
of the Corporation.
7.2 Indemnity.
(a) To the extent such Expenses exceed the amounts reimbursed or
paid pursuant to policies of liability insurance maintained by the Corporation,
the Corporation shall indemnify each Indemnitee against any Expenses actually
and reasonably incurred by him (as they are incurred) connection with any Claim
either against him or as to which he is involved solely as a witness or person
required to give evidence, by reason of his position (i) as a director or
officer of the Corporation, (ii) as a director or officer of any subsidiary of
the Corporation, (iii) as a fiduciary with respect to any employee benefit plan
of the Corporation, or (iv) as a director, officer, partner, employee or agent
of another corporation, partnership, joint venture, trust or other for-profit or
not-for-profit entity or enterprise, if such position is or was held at the
request of the Corporation whether relating to service in such position before
or after the effective date of this Section, if he (i) is successful in his
defense of the claim on the merits or otherwise or (ii) has been found by the
Determining Body (acting in good faith) to have met the Standard of Conduct
(defined below) provided that (A) the amount otherwise payable by the
Corporation may be reduced by the Determining Body to such amount as it deems
proper if it determines that the Claim involved the receipt of a personal
benefit by Indemnitee, and (B) no indemnification shall be made in respect of
any Claim as to which Indemnitee shall have been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be liable
for willful or intentional misconduct in the performance of his duty to the
Corporation or to have obtained an improper personal benefit, unless and only to
the extent that, a court shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
5
<PAGE>
Indemnitee is fairly and reasonably entitled to indemnity for such Expenses as
the court deems proper.
(b) For purposes of this Section 7, the Standard of Conduct is met
when the conduct by an Indemnitee with respect to which a Claim is asserted was
conduct that was in good faith and that he reasonably believed to be in, or not
opposed to, the best interest of the Corporation and, in the case of a criminal
action or proceeding, that he had no reasonable cause to believe was unlawful.
The termination of any Claim by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that Indemnitee did not meet the Standard of Conduct.
(c) Promptly upon becoming aware of the existence of any Claim as
to which he may be indemnified hereunder, Indemnitee shall notify the Chairman
of the Board of the Corporation of the Claim and whether he intends to seek
indemnification hereunder. If such notice indicates that Indemnitee does so
intend, the Chairman of the Board shall promptly advise the Board thereof and
notify the Board that the establishment of the Determining Body with respect to
the Claim will be a matter presented at the next regularly scheduled meeting of
the Board. Such a meeting is to be held within 90 calendar days of the date of
Indemnitee's request. If a meeting of the Board is not regularly scheduled
within 120 calendar days of such request, the Chairman of the Board shall cause
a special meeting of the Board to be called within such period in accordance
with these by-laws. After the Determining Body has been established the Chairman
of the Board shall inform the Indemnitee thereof and Indemnitee shall
immediately provide the Determining Body with all facts relevant to the Claim
known to him No later than the 45th day (the "Determination Date") after its
receipt of such information, together with such additional information as the
Determining Body may request of Indemnitee, the Determining Body shall
determine, and shall advise Indemnitee of its determination, whether Indemnitee
has met the Standard of Conduct.
(d) During such 45-day period, Indemnitee shall promptly inform the
Determining Body upon his becoming aware of any relevant facts not theretofore
provided by him to the Determining Body, unless the Determining Body has
obtained such facts by other means. The providing of such facts to the
Determining Body shall not begin a new 45-day period.
(e) The Determining Body shall have no authority to revoke a
determination that Indemnitee met the Standard of Conduct unless Indemnitee (i)
submits fraudulent information to the Determining Body at any time during the 45
days prior to the Determination Date or (ii) fails to comply with the provisions
of subsections (c) or (d) hereof, including without limitation Indemnitee's
obligation to submit information or documents relevant to the Claim reasonably
requested by the Determining Body prior to the Determination Date.
6
<PAGE>
(f) In the case of any Claim not involving a proposed, threatened
or pending criminal proceeding,
(i) if Indemnitee has, in the good faith judgment of the
Determining Body, met the Standard of Conduct, the Corporation may, in its sole
discretion after notice to Indemnitee, assume all responsibility for the defense
of the Claim, and, in any event, the Corporation and the Indemnitee each shall
keep the other informed as to the progress of the defense, including prompt
disclosure of any proposals for settlement; provided that if the Corporation is
a party to the Claim and Indemnitee reasonably determines that there is a
conflict between the positions of the Corporation and Indemnitee with respect to
the Claim, then Indemnitee shall be entitled to conduct his defense, with
counsel of his choice; and provided further that Indemnitee shall in any event
be entitled at his expense to employ counsel chosen by him to participate in the
defense of the Claim; and
(ii) the Corporation shall fairly consider any proposals by
Indemnitee for settlement of the Claim. If the Corporation (A) proposes a
settlement acceptable to the person asserting the Claim, or (B) believes a
settlement proposed by the person asserting, the Claim should be accepted, it
shall inform Indemnitee of the terms thereof and shall fix a reasonable date by
which Indemnitee shall respond. If Indemnitee agrees to such terms, he shall
execute such documents as shall be necessary to effect the settlement. If he
does not agree he may proceed with the defense of the Claim in any manner he
chooses, but if he is not successful on the merits or otherwise, the
Corporation's obligation to indemnify him for any Expenses incurred following
his disagreement shall be limited to the lesser of (A) the total Expenses
incurred by him following his decision not to agree to such proposed settlement
or (B) the amount the Corporation would have paid pursuant to the terms of the
proposed settlement. If, however, the proposed settlement would impose upon
Indemnitee any requirement to act or refrain from acting that would materially
interfere with the conduct of his affairs, Indemnitee may refuse such settlement
and proceed with the defense of the Claim, if he so desires, at the
Corporation's expense without regard to the limitations imposed by the preceding
sentence. In no event, however, shall the Corporation be obligated to indemnify
Indemnitee for any amount paid in a settlement that the Corporation has not
approved.
(g) In the case of a Claim involving a proposed, threatened or
pending criminal proceeding, Indemnitee shall be entitled to conduct the defense
of the claim, and to make all decisions with respect thereto, with counsel of
his choice; provided, however, that the Corporation shall not be obligated to
indemnify Indemnitee for an amount paid in settlement that the Corporation has
not approved.
(h) After notifying the Corporation of the existence of a Claim,
Indemnitee may from time to time request the Corporation to pay the Expenses
(other than judgments, fines, penalties or amounts paid in settlement) that he
incurs in pursuing a defense of the Claim prior to the time that the Determining
Body determines whether the Standard of Conduct has been met. If the Disbursing
Officer believes the amount
7
<PAGE>
requested to be reasonable, he shall pay to Indemnitee the amount requested
(regardless of Indemnitee's apparent ability to repay such amount) upon receipt
of an undertaking by or on behalf of Indemnitee to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation under the circumstances. If the disbursing Officer does not believe
such amount to be reasonable, the Corporation shall pay the amount deemed by him
to be reasonable and Indemnitee may apply directly to the Determining Body for
the remainder of the amount requested.
(i) After the Determining Body has determined that the Standard of
Conduct was met, for so long as and to the extent that the Corporation is
required to indemnify Indemnitee under this Agreement, the provisions of
paragraph (h) shall continue to apply with respect to Expenses incurred after
such time except that (i) no undertaking shall be required of Indemnitee and
(ii) the Disbursing Officer shall pay to Indemnitee such amount of any fines,
penalties or judgments against him which have become final as the Corporation is
obligated to indemnify him.
(j) Any determination by the Corporation with respect to
settlements of a Claim shall be made by the Determining Body.
(k) The Corporation and Indemnitee shall keep confidential, to the
extent permitted by law and their fiduciary obligations, all facts and
determinations provided or made pursuant to or arising out of the operation of
this Section, and the Corporation and Indemnitee shall instruct its or his
agents and employees to do likewise.
7.3 Enforcement.
(a) The rights provided by this Section shall be enforceable by
Indemnitee in any court of competent jurisdiction.
(b) If Indemnitee seeks a judicial adjudication of his rights under
this Section, Indemnitee shall be entitled to recover from the Corporation, and
shall be indemnified by the Corporation against, any and all Expenses actually
and reasonably incurred by him in connection with such proceeding but only if he
prevails therein. If it shall be determined that Indemnitee is entitled to
receive part but not all of the relief sought, then the Indemnitee shall be
entitled to be reimbursed for all Expenses incurred by him in connection with
such judicial adjudication if the amount to which he is determined to be
entitled exceeds 50% of the amount of his claim. Otherwise, the Expenses
incurred by Indemnitee in connection with such judicial adjudication shall be
appropriately prorated.
(c) In any judicial proceeding described in this subsection, the
Corporation shall bear the burden of proving that Indemnitee is not entitled to
any Expenses sought with respect to any Claim.
7.4 Saving Clause. If any provision of this Section is determined by a
court having jurisdiction over the matter to require the Corporation to do or
refrain from doing
8
<PAGE>
any act that is in violation of applicable law, the court shall be empowered to
modify or reform such provision so that, as modified or reformed, such provision
provides the maximum indemnification permitted by law, and such provision, as so
modified or reformed, and the balance of this Section, shall be applied in
accordance with their terms. Without limiting the generality of the foregoing,
if any portion of this Section shall be invalidated on any ground, the
Corporation shall nevertheless indemnify an Indemnitee to the full extent
permitted by any applicable portion of this Section that shall not have been
invalidated and to the full extent permitted by law with respect to that portion
that has been invalidated.
7.5 Non-Exclusivity.
(a) The indemnification and advancement of Expenses provided by or
granted pursuant to this Section shall not be deemed exclusive of any other
rights to which Indemnitee is or may become entitled under any statute, article
of incorporation, by-law, authorization of shareholders or directors, agreement,
or otherwise.
(b) It is the intent of the Corporation by this Section to
indemnify and hold harmless Indemnitee to the fullest extent permitted by law,
so that if applicable law would permit the Corporation to provide broader
indemnification rights than are currently permitted, the Corporation shall
indemnify and hold harmless Indemnitee to the fullest extent permitted by
applicable law notwithstanding that the other terms of this Section would
provide for lesser indemnification.
7.6 Successors and Assigns. This Section shall be binding upon the
Corporation, its successors and assigns, and shall inure to the benefit of the
Indemnitee's heirs, personal representatives, and assigns and to the benefit of
the Corporation, its successors and assigns.
7.7 Indemnification of Other Persons. The Corporation may indemnify any
person not covered by Sections 7.1 through 7.6 to the extent provided in a
resolution of the Board or a separate section of these by-laws.
SECTION 8
AMENDMENTS
These by-laws may be amended or repealed by the board of directors at any
meeting or by the shareholders at any meeting.
9
<PAGE>
EXHIBIT 3.9
ARTICLES OF INCORPORATION
OF
HCS II, INC.
------------
The undersigned, being a natural person capable of contracting and acting
as the incorporator to form a corporation for one or more lawful business
purposes under the provisions of the Business Corporation Law of the State of
Louisiana (the "Business Corporation Law"), does hereby adopt and sign the
following Articles of Incorporation:
ARTICLE I
NAME
----
The name of the corporation (the "Corporation") is HCS II, Inc.
ARTICLE II
DURATION
--------
The period of duration of the Corporation is perpetual.
ARTICLE III
PURPOSES
--------
The purpose for which the Corporation is organized is to engage in any
lawful activity for which corporations may be formed under the Business
Corporation Law.
ARTICLE IV
CAPITAL STOCK
-------------
The aggregate number of shares of capital stock which the Corporation shall
have the authority to issue shall be 100,000, all of which shall have a par
value of $1.00 per share and all of which shall be of the same class and shall
be designated as common stock.
ARTICLE V
PREEMPTIVE RIGHTS
-----------------
No shareholder of the Corporation shall, by reason of being a shareholder,
have any preemptive right to acquire additional, unissued or treasury shares of
the Corporation, or securities convertible into or carrying a right to subscribe
to or to acquire any shares of any class of the
<PAGE>
Corporation now or hereafter authorized.
ARTICLE VI
CUMULATIVE VOTING DENIED
------------------------
Cumulative voting shall not be allowed in the election of directors or for
any other purpose.
ARTICLE VII
LIMITATION OF LIABILITY
-----------------------
A director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for such liability as is expressly not subject to
limitation under the Business Corporation Law, as the same exists on the
effective date of these Articles of Incorporation or may hereafter be amended to
further limit or eliminate such liability. Any repeal or modification of this
Article VII by the shareholders of the Corporation shall be prospective only and
shall not adversely affect any limitation on the personal liability of a
director of the Corporation existing at the time of such repeal or modification.
ARTICLE VIII
DIVIDENDS, RECLASSIFICATIONS OR
REDEMPTIONS OF STOCK
--------------------
Cash, property or share dividends, shares issuable to shareholders in
connection with a reclassification of stock, and the redemption price of
redeemed shares, if any, which are not claimed by the shareholders entitled
thereto within a reasonable time as determined by the Board of Directors (not
less than one year in any event) after the dividend or redemption price, if any,
became payable or the shares became issuable, despite reasonable efforts by the
Corporation to pay the dividend or redemption price, if any, or deliver the
certificates for the shares to such shareholders within such time, shall, at the
expiration of such time, revert in full ownership to the Corporation, and the
Corporation's obligation to pay such dividend or redemption price, if any, or
issue such shares, as the case may be, shall thereupon cease; provided that the
Board of Directors may, at any time, for any reason satisfactory to it, but need
not, authorize (a) payment of the amount of any cash or property dividend or
redemption price, if any, or (b) issuance of any shares, ownership of which has
reverted to the Corporation pursuant to this Article VIII, to the entity who or
which would be entitled thereto had such reversion not occurred.
2
<PAGE>
ARTICLE IX
INDEMNIFICATION AND INSURANCE
-----------------------------
The Corporation shall, to the fullest extent permitted by law, indemnify,
and may, to the fullest extent permitted by law or to such lesser extent as is
determined in the discretion of the Board of Directors, advance expenses to, any
and all officers and directors of the Corporation in whatever capacities they
serve, and may, to the fullest extent permitted by law or to such lesser extent
as is determined in the discretion of the Board of Directors, indemnify, and
advance expenses to, any and all other persons whom it shall have power to
indemnify, with respect to all matters arising out of their status as such or
their acts, omissions or services rendered in such capacities. The Corporation
shall have the power to purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability. Any
repeal or modification of this Article IX by the shareholders of the Corporation
shall be prospective only and shall not adversely affect any rights set forth in
this Article IX existing at the time of such repeal or modification.
ARTICLE X
INITIAL BOARD OF DIRECTORS
--------------------------
The number of directors shall be fixed by the Bylaws of the Corporation and
until changed in accordance with the manner prescribed by the Bylaws shall be
three (3). The names and addresses of those persons who are to serve as
directors until the first annual meeting of shareholders, or until their
successors be elected and qualified, shall be as specified in the initial report
or supplemental report of the Corporation filed pursuant to Section 12:101 of
the Business Corporation Law.
ARTICLE XI
ACTION BY CONSENT OF SHAREHOLDERS
---------------------------------
Whenever the affirmative vote of shareholders at a meeting is required to
authorize or constitute corporate action under any provision of the Business
Corporation Law or of the Articles of Incorporation or Bylaws of the
Corporation, any such action may be authorized or constituted by a consent in
writing, without a meeting, signed by the shareholders having at least that
proportion of voting power which would be necessary under any such provision to
authorize or constitute the action by the affirmative vote at a meeting;
provided, however, that any such written consent shall be filed with the record
of proceedings of the shareholders; and provided, further, that prompt notice
shall be given to all of the shareholders entitled thereto of the action taken
pursuant to such written consent.
3
<PAGE>
ARTICLE XII
INCORPORATOR
------------
The name and address of the incorporator is:
Name Address
---- -------
Evelyn Johnstone Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, Texas 75240
IN WITNESS WHEREOF, I have hereunto set my hand this 20/th/ day of July,
1999.
/s/ Evelyn Johnstone
-------------------------------
Evelyn Johnstone
THE STATE OF TEXAS
COUNTY OF DALLAS
I, Roberta J. Hamann, a Notary Public, do hereby certify that on this 20th
-----------------
day of July, 1999, personally appeared before me Evelyn Johnstone, who being by
me first duly sworn, declared to me that she is the person who signed the
foregoing document as incorporator, and that the statements therein contained
are true.
/s/ Roberta J. Hamann
---------------------------------
Notary Public, State of Texas
Name: Roberta J. Hamann
-----------------
My Commission Expires: 11/12/2000
----------
4
<PAGE>
EXHIBIT 3.10
BY-LAWS
OF
HCS II, INC.
SECTION 1
OFFICES
1.1 Principal Office. The principal office of the Corporation shall be
located at 8550 United Plaza Boulevard, Baton Rouge, Louisiana 70809.
1.2 Additional Offices. The Corporation may have such offices at such
other places as the board of directors may from time to time determine or the
business of the Corporation may require.
SECTION 2
SHAREHOLDERS MEETINGS
2.1 Place of Meetings. Unless otherwise required by law or these by-laws,
all meetings of the shareholders shall be held at the principal office of the
Corporation or at such other place, within or without the State of Louisiana, as
may be designated by the board of directors.
2.2 Annual Meetings; Notice Thereof. An annual meeting of the
shareholders shall be held on the first Monday of August each year at 10:00
A.M., or at such other date or at such other time specified as the board of
directors shall designate, for the purpose of electing directors and for the
purpose of electing directors and for the transaction of such other business as
may be properly brought before the meeting
2.3 Notice of Meetings. The secretary shall cause written notice of the
time, place and purpose of the meeting to be given to all shareholders entitled
to vote at such meeting, at least two days and not more than ten days prior to
the day fixed for the meeting.
2.4 Quorum. The presence, in person or by proxy, of the holders of a
majority of the outstanding stock shall constitute a quorum at all meetings of
shareholders provided that this subsection shall not have the effect of
reducing, the vote required to approve or affirm any matter that may be
established by law, the articles of incorporation or these by-laws.
SECTION 3
DIRECTORS
3.1 Number. All of the corporate powers shall be vested in, and the
business and affairs of the Corporation shall be managed by, a board of
directors. Subject to the restriction that the number of directors shall not be
less than the number required by Louisiana law, the number of directors shall be
fixed from time to time by a resolution adopted by the board of directors.
Unless otherwise fixed by the board of directors, the
<PAGE>
number of directors constituting the entire board of directors shall be three.
No director need be a shareholder.
3.2 Powers. The board of directors may exercise all such powers of the
Corporation and do all such lawful acts and things that are not by law, the
articles of incorporation or these by-laws directed or required to be done by
the shareholders.
3.3 Election. The directors shall be elected at each annual meeting serve
until the next annual meeting of shareholders and until their successors are
elected and qualified.
3.4 Removal. Any director or the entire board of directors may be removed
at any time, by the affirmative vote of a majority of the holders of the
outstanding shares of stock provided that the removal may only be effected at a
meeting of shareholders duty called for that purpose. The shareholders at such
meeting may proceed to elect a successor or successors for the unexpired term of
the director or directors removed.
SECTION 4
MEETINGS OF THE BOARD
4.1 Place of Meetings. The meetings of the board of directors may be held
at such place within or without the State of Louisiana as the board of directors
or the president may from time to time appoint.
4.2 Meetings; Notice. Meetings of the board of directors may be held at
such times as the board of directors or the president may from time to time
determine. Notice of meetings of the board of directors shall be required, but
no special form of notice or time of notice shall be necessary.
4.3 Quorum. A majority of the board of directors shall be necessary to
constitute a quorum for the transaction of business.
4.4 Action by Consent. Any action which may be taken at a meeting of the
board of directors may be taken by a consent in writing signed by all of the
directors and filed with the records of proceedings of the board of directors.
4.5 Meetings by Telephone or Similar communication. Members of the board
of directors may participate at and be present at any meeting of the board of
directors by means of conference telephone or similar communications equipment
if all persons participating in such meeting can hear and communicate with each
other.
SECTION 5
OFFICERS
5.1 Designations. The officers of the Corporation shall be elected by the
directors and shall be the Chairman of the Board and Chief Executive Officer,
President, Secretary and Treasurer. The board of directors may appoint a Vice
Chairman of the Board, a Chief Operating Officer, a Chief Financial Officer, a
General Counsel, one or
2
<PAGE>
more Executive Vice Presidents, one or more Vice Presidents and such other
officers as. it shall deem necessary. Officers shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board. To the extent permitted by law, more
than one office may be held by a single person.
5.2 Term of Office. The officers of the Corporation shall hold office at
the pleasure of the board of directors. Except as otherwise provided in the
resolution of the board of directors electing any officer, each officer shall
hold office until the first meeting of the board of directors after the annual
meeting of shareholders next succeeding, his or her election, and until his or
her successor is elected and qualified or until his or her earlier resignation
or removal. Any officer may resign at any time upon written notice to the board,
Chairman of the Board, President or Secretary of the Corporation. Such
resignation shall take effect at the time specified therein and acceptance of
such resignation shall not be necessary to make it effective. The board may
remove any officer with or without cause at any time. Any such removal shall be
without prejudice to the contractual rights of such officers, if any, with the
Corporation, but the election of an officer shall not in and of itself create
contractual rights. Any vacancy occurring in any office of the Corporation by
death, resignation, removal or otherwise may be filled for the unexpired
position of the term by the board at any regular or special meeting.
5.3 The Chairman of the Board and Chief Executive Officer. The Chairman
of the Board and Chief Executive Officer shall preside at meetings of the board
of directors and the shareholders, shall have general and active responsibility
for the management of the business of the Corporation, shall be the chief
executive officer of the Corporation, and shall perform such other duties as may
be designated by the board of directors or these by-laws.
5.4 The President. The President shall be the chief operating officer of
the Corporation and shall supervise the daily operations of the business of the
Corporation and shall ensure that all orders, policies and resolutions of the
board are carried out.
5.5 The Vice Chairman of the Board, the Executive Vice Presidents and the
Vice Presidents. The Vice Chairman of the Board, the Executive Vice Presidents
and the Vice Presidents (if any) shall have such designations and perform such
duties as the board of directors shall prescribe.
5.6 The Secretary. The Secretary shall attend all meetings of the board
of directors and all meetings of the shareholders and record all votes and the
minutes of all proceedings in a book to be kept for that purpose. He shall give,
or cause to be given, notice of all meetings of the shareholders and regular and
special meetings of the board, and shall perform such other duties as may be
prescribed by the board or the Chairman of the Board. He shall keep in safe
custody the seal of the Corporation, if any, and affix such seal to any
instrument requiring it,
3
<PAGE>
5.7 The Assistant Secretaries. The Assistant Secretaries shall have the
same powers and duties as the Secretary and shall perform such other duties as
may be prescribed by the board or the Chairman of the Board.
5.8 The Treasurer. The Treasurer shall have the custody of the corporate
funds and shall keep or cause to be kept full and accurate accounts of receipts
and disbursements in books belonging to the Corporation and shall deposit all
monies and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the board of directors.
He shall keep proper accounting of all receipts and disbursements and shall
disburse the funds of the Corporation only r proper corporate purposes or as may
be ordered by the board and shall render to the Chairman of the Board and the
board at the regular meetings of the board, or whenever they may require it, an
account of all his transactions as Treasurer and of the financial condition and
results of operations of the Corporation.
SECTION 6
STOCK
6.1 Certificates. Every holder of stock in the Corporation shall be
entitled to have a certificate signed by the president and the secretary or
treasurer evidencing the number of shares owned by him or her.
6.2 Transfers. Upon surrender to the Corporation of a certificate for
shares duly endorsed or accompanied by proper evidence of succession, assignment
or authority to transfer, it shall be the duty of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
SECTION 7
INDEMNIFICATION
7.1 Definitions. As used in this section the following terms shall have
the meanings set forth below:
(a) "Board" - the board of directors of the Corporation.
(b) "Claim" - any threatened, pending or completed claim, action,
suit, or proceeding, whether civil, criminal, administrative or investigative
and whether made judicially or extra-judicially, or any separate issue or matter
therein, as the context requires.
(c) "Determining Body" - (i) those members of the Board who are not
named as parties to the Claim for which indemnification is being sought
("Impartial Directors"), if there are at least three Impartial Directors, (ii) a
committee of at least three Impartial Directors appointed by the Board
(regardless whether the members of the Board voting on such appointment are
Impartial Directors) or (ill) if there are fewer than three Impartial Directors
or if the Board or the committee appointed pursuant to clause (ii) of this
paragraph so directs (regardless whether the members thereof are Impartial
4
<PAGE>
Directors), independent legal counsel, which may be the regular outside counsel
of the Corporation.
(d) "Disbursing Officer" - the Chairman of the Board of the
Corporation or, if the Chairman of the Board is a party to the Claim for which
indemnification is being sought, any officer not a party to such Claim who is
designated by the Chairman of the Board to be the Disbursing Officer with
respect to indemnification requests related to the Claim, which designation
shall be made promptly after receipt of the initial request for indemnification
with respect to such Claim.
(e) "Expenses" - any expenses or costs, including, without
limitation, attorney's fees, judgments, punitive or exemplary damages, fines and
amounts paid in settlement.
(f) "Indemnitee" - each person who is or was a director or officer
of the Corporation.
7.2 Indemnity.
(a) To the extent such Expenses exceed the amounts reimbursed or
paid pursuant to policies of liability insurance maintained by the Corporation,
the Corporation shall indemnify each Indemnitee against any Expenses actually
and reasonably incurred by him (as they are incurred) in connection with any
Claim either against him or as to which he is involved solely as a witness or
person required to give evidence, by reason of his position (i) as a director or
officer of the Corporation, (ii) as a director or officer of any subsidiary of
the Corporation, (iii) as a fiduciary with respect to any employee benefit plan
of the Corporation, or (iv) as a director, officer, partner, employee or agent
of another corporation, partnership, joint venture, trust or other for-profit or
not for-profit entity or enterprise, if such position is or was held at the
request of the Corporation, whether relating to service in such position before
or after the effective date of this Section, if he (i) is successful in his
defense of the claim on the merits or otherwise or (ii) has been found by the
Determining Body (acting in good faith) to have met the Standard of Conduct
(defined below); provided that (A) the amount otherwise payable by the
Corporation may be reduced by the Determining, Body to such amount as it deems
proper if it determines that the Claim involved the receipt of a personal
benefit by Indemnitee, and (B) no indemnification shall be made in respect of
any Claim as to which Indemnitee shall have been adjudged by a court of
--------
competent jurisdiction, after exhaustion of all appeals therefrom, to be liable
for willful or intentional misconduct in the performance of his duty to the
Corporation or to have obtained an improper personal benefit, unless, and only
to the extent that, a court shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such Expenses as
the court deems proper.
(b) For purposes of this Section 7, the Standard of Conduct is met
when the conduct by an Indemnitee with respect to which a Claim is asserted was
conduct that was in good faith and that he reasonably believed to be in, or not
opposed to, the best
5
<PAGE>
interest of the Corporation, and, in the case of a criminal action or
proceeding, that he had no reasonable cause to believe was unlawful. The
termination of any Claim by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that Indemnitee did not meet the Standard of Conduct.
(c) Promptly upon becoming aware of the existence of any Claim as
to which he may be indemnified hereunder, Indemnitee shall notify the Chairman
of the Board of the Corporation of the Claim and whether he intends to seek
indemnification hereunder. If such notice indicates that Indemnitee does so
intend, the Chairman of the Board shall promptly advise the Board thereof and
notify the Board that the establishment of the Determining Body with respect to
the Claim will be a matter presented at the next regularly scheduled meeting of
the Board. Such a meeting is to be held within 90 calendar days of the date of
Indemnitee's request. If a meeting of the Board is not regularly scheduled
within 120 calendar days of such request, the Chairman of the Board shall cause
a special meeting of the Board to be called within such period in accordance
with these by-laws. After the Determining Body has been established the Chairman
of the Board shall inform the Indemnitee thereof and Indemnitee shall
immediately provide the Determining Body with all facts relevant to the Claim
known to him. No later than the 45th day (the "Determination Date") after its
receipt of such information, together with such additional information as the
Determining Body may request of Indemnitee, the Determining Body shall
determine, and shall advise Indemnitee of its determination, whether Indemnitee
has met the Standard of Conduct.
(d) During such 45-day period, Indemnitee shall promptly inform the
Determining Body upon his becoming aware of any relevant facts not theretofore
provided by him to the Determining Body, unless the Determining Body has
obtained such facts by other means. The providing of such facts to the
Determining Body shall not begin a new 45-day period.
(e) The Determining Body shall have no authority to revoke a
determination that Indemnitee met the Standard of Conduct unless Indemnitee (1)
submits fraudulent information to the Determining Body at any time during the 45
days prior to the Determination Date or (ii) falls to comply with the provisions
of subsections (c) or (d) hereof, including without limitation Indemnitee's
obligation to submit information or documents relevant to the Claim reasonably
requested by the Determining Body prior to the Determination Date.
(f) In the case of any Claim not involving a proposed, threatened
or pending criminal proceeding,
(i) if Indemnitee has, in the good faith Judgment of the
Determining Body, met the Standard of Conduct, the Corporation may, in its sole
discretion after notice to Indemnitee, assume all responsibility for the defense
of the Claim, and, in any event, the Corporation and the Indemnitee each shall
keep the other informed as to the progress of the defense, including prompt
disclosure of any proposals for settlement; provided that if the Corporation is
a party to the Claim and Indemnitee reasonably determines that there is a
conflict between the positions of the Corporation
6
<PAGE>
and Indemnitee with respect to the * Claim, then Indemnitee shall be entitled to
conduct his defense, with counsel of his choice; and provided further that
Indemnitee shall in any event be entitled at his expense to employ counsel
chosen by him to participate in the defense of the Claim; and
(ii) the Corporation shall fairly consider any proposals by
Indemnitee for settlement of the Claim. If the Corporation (A) proposes a
settlement acceptable to the person asserting the Claim, or (B) believes a
settlement proposed by the person asserting the Claim should be accepted, it
shall inform Indemnitee of the terms thereof and shall fix a reasonable date by
which Indemnitee shall respond. If Indemnitee agrees to such terms, he shall
execute such documents as shall be necessary to effect the settlement. If he
does not agree he may proceed with the defense of the Claim in any manner he
chooses, but if he is not successful on the merits or otherwise, the
Corporation's obligation to indemnify him for any Expenses incurred following
his disagreement shall be limited to the lesser of (A) the total Expenses
incurred by him following his decision not to agree to such proposed settlement
or (B) the amount the Corporation would have paid pursuant to the terms of the
proposed settlement.. If, however, the proposed settlement would impose upon
Indemnitee any requirement to act or refrain from acting that would materially
interfere with the conduct of his affairs, Indemnitee may refuse such settlement
and proceed with the defense of the Claim, if he so desires, at the
Corporation's expense without regard to the limitations imposed by the preceding
sentence. In no event, however, shall the Corporation be obligated to indemnify
Indemnitee for any amount paid in a settlement that the Corporation has not
approved.
(g) In the case of a Claim involving a proposed, threatened or
pending criminal proceeding, Indemnitee shall be entitled to conduct the defense
of the claim, and to make all decisions with respect thereto, with counsel of
his choice; provided, however, that the Corporation shall not be obligated to
Indemnify Indemnitee for an amount paid in settlement that the Corporation has
not approved.
(h) After notifying the Corporation of the existence of a Claim,
Indemnitee may from time to time request the Corporation to pay the Expenses
(other than judgments, fines, penalties or amounts paid in settlement) that he
incurs in pursuing a defense of the Claim prior to the time that the Determining
Body determines whether the Standard of Conduct has been met. If the Disbursing
Officer believes the amount requested to be reasonable, he shall pay to
Indemnitee the amount requested (regardless of Indemnitee's apparent ability to
repay such amount) upon receipt of an undertaking by or on behalf of Indemnitee
to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation under the circumstances. If the
disbursing Officer does not believe such amount to be reasonable, the
Corporation shall pay the amount deemed by him to be reasonable and Indemnitee
may apply directly to the Determining Body for the remainder of the amount
requested.
(i) After the Determining Body has determined that the Standard of
Conduct was met, for so long as and to the extent that the Corporation is
required to indemnify Indemnitee under this Agreement, the provisions of
paragraph (h) shall
7
<PAGE>
continue to apply with respect to Expenses incurred after such time except that
(i) no undertaking shall be required of Indemnitee and (ii) the Disbursing
Officer shall pay to Indemnitee such amount of any fines, penalties or judgments
against him which have become final as the Corporation is obligated to indemnify
him.
(j) Any determination by the Corporation with respect to
settlements of a Claim shall be made by the Determining Body.
(k) The Corporation and Indemnitee shall keep confidential, to the
extent permitted by law and their fiduciary obligations, all facts and
determinations provided or made pursuant to or arising out of the operation of
this Section, and the Corporation and Indemnitee shall instruct Its or his
agents and employees to do likewise.
7.3 Enforcement.
(a) The rights provided by this Section shall be enforceable by
Indemnitee in any court of competent jurisdiction.
(b) If Indemnitee seeks a judicial adjudication of his rights under
this Section, Indemnitee shall be entitled to recover from the Corporation, and
shall be indemnified by the Corporation against, any and all Expenses actually
and reasonably incurred by him in connection with Such proceeding but only if he
prevails therein. If it shall be determined that Indemnitee is entitled to
receive part but not all of the relief sought, then the Indemnitee shall be
entitled to be reimbursed for all Expenses incurred by him in connection with
such judicial adjudication if the amount to `which he is determined to be
entitled exceeds 50% of the amount of his claim. Otherwise, the Expenses
incurred by Indemnitee in connection with such judicial adjudication shall be
appropriately prorated.
(c) In any judicial proceeding described in this subsection, the
Corporation shall bear the burden of proving that Indemnitee is not entitled to
any Expenses sought with respect to any Claim.
7.4 Saving Clause. If any provision of this Section is determined by a
court having jurisdiction over the matter to require the Corporation to do or
refrain from doing any act that is in violation of applicable law, the court
shall be empowered to modify or reform such provision so that, as modified or
reformed, such provision provides the maximum indemnification permitted by law,
and such provision, as so modified or reformed, and the balance of this Section,
shall be applied in accordance with their terms. Without limiting the generality
of the foregoing, if any portion of this Section shall be invalidated on any
ground, the Corporation shall nevertheless indemnify an Indemnitee to the full
extent permitted by any applicable portion of this Section that shall not have
been invalidated and to the full extent permitted by law with respect to that
portion that has been invalidated.
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7.5 Non-Exclusivity.
(a) The indemnification and advancement of Expenses provided by or
granted pursuant to this Section shall not be deemed exclusive of any other
rights to which Indemnitee is or may become entitled under any statute, article
of incorporation, by-law, authorization of shareholders or directors, agreement,
or otherwise.
(b) It is the intent of the Corporation by this Section to
indemnify and hold harmless Indemnitee to the fullest extent permitted by law,
so that if applicable law would permit the Corporation to provide broader
indemnification rights than are currently permitted, the Corporation shall
Indemnitee and hold harmless Indemnitee to the fullest extent permitted by
applicable law notwithstanding that the other terms of this Section would
provide for lesser indemnification.
(c) Successors and Assigns. This Section shall be binding upon the
Corporation, its successors and assigns, and shall inure to the benefit of the
Indemnitee's heirs, personal representatives, and assigns and to the benefit of
the Corporation, its successors and assigns.
7.6 Indemnification of Other Persons. The Corporation may indemnify any
person not covered by Sections 7.1 through 7.6 to the extent provided in a
resolution of the Board or a separate section of these bylaws.
SECTION 8
AMENDMENTS
These bylaws may be amended or repealed by the board of directors at
any meeting, or by the shareholders at any meeting.
9
<PAGE>
EXHIBIT 4.1
________________________________________________________________________________
HOLLYWOOD CASINO SHREVEPORT
SHREVEPORT CAPITAL CORPORATION
as Issuers,
HWCC-LOUISIANA, INC.
HCS I, INC.
HCS II, INC.
as Guarantors
SERIES A AND SERIES B
$150,000,000 FIRST MORTGAGE NOTES DUE 2006
WITH CONTINGENT INTEREST
_________________________________
INDENTURE
Dated as of August 10, 1999
_________________________________
State Street Bank and Trust Company
as Trustee
_________________________________
________________________________________________________________________________
<PAGE>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310(a)(1)....................................... 7.10
(a)(2)....................................... 7.10
(a)(3)....................................... N.A.
(a)(4)....................................... N.A.
(a)(5)....................................... 7.10
(b).......................................... 7.10
(c).......................................... N.A.
311(a).......................................... 7.11
(b).......................................... 7.11
(c).......................................... N.A.
312(a).......................................... 2.05
(b).......................................... 11.03
(c).......................................... 11.03
313(a).......................................... 7.06
(b)(1)....................................... 10.03
(b)(2)....................................... 7.07
(c).......................................... 7.06;11.02
(d).......................................... 7.06
314(a).......................................... 4.03;11.02
(b).......................................... 10.02
(c)(1)....................................... 11.04
(c)(2)....................................... 11.04
(c)(3)....................................... N.A.
(d).......................................... 10.03, 10.04, 10.05
(e).......................................... 11.05
(f).......................................... N.A.
315(a).......................................... 7.01
(b).......................................... 7.05,11.02
(c).......................................... 7.01
(d).......................................... 7.01
(e).......................................... 6.11
316(a) (last sentence).......................... 2.09
(a)(1)(A).................................... 6.05
(a)(1)(B).................................... 6.04
(a)(2)....................................... N.A.
(b).......................................... 6.07
(c).......................................... 2.12
317(a)(1)....................................... 6.08
(a)(2)....................................... 6.09
(b).......................................... 2.04
318(a).......................................... 11.01
(b).......................................... N.A.
(c).......................................... 11.01
N.A. means not applicable.
* This Cross Reference Table is not part of this Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE............................... 1
Section 1.01. Definitions....................................................... 1
Section 1.02. Other Definitions................................................. 29
Section 1.03. Incorporation by Reference of Trust Indenture Act................. 30
Section 1.04. Rules of Construction............................................. 31
ARTICLE 2 THE NOTES................................................................ 31
Section 2.01. Form and Dating................................................... 31
Section 2.02. Execution and Authentication...................................... 33
Section 2.03. Registrar and Paying Agent........................................ 33
Section 2.04. Paying Agent to Hold Money in Trust............................... 34
Section 2.05. Holder Lists...................................................... 34
Section 2.06. Transfer and Exchange............................................. 34
Section 2.07. Replacement Notes................................................. 47
Section 2.08. Outstanding Notes................................................. 47
Section 2.09. Treasury Notes.................................................... 47
Section 2.10. Temporary Notes................................................... 48
Section 2.11. Cancellation...................................................... 48
Section 2.12. Defaulted Interest................................................ 48
ARTICLE 3 REDEMPTION AND PREPAYMENT................................................ 48
Section 3.01. Notices to Trustee................................................ 48
Section 3.02. Selection of Notes to Be Redeemed................................. 49
Section 3.03. Notice of Redemption.............................................. 49
Section 3.04. Effect of Notice of Redemption.................................... 49
Section 3.05. Deposit of Redemption Price....................................... 50
Section 3.06. Notes Redeemed in Part............................................ 50
Section 3.07. Optional Redemption............................................... 50
Section 3.08. Mandatory Disposition Pursuant to Gaming Laws..................... 51
Section 3.09. Repurchase Offers................................................. 51
ARTICLE 4 COVENANTS................................................................ 54
Section 4.01. Payment of Notes.................................................. 54
Section 4.02. Maintenance of Office or Agency................................... 54
Section 4.03. Reports........................................................... 55
Section 4.04. Compliance Certificate............................................ 55
Section 4.05. Taxes............................................................. 56
Section 4.06. Stay, Extension and Usury Laws.................................... 56
Section 4.07. Restricted Payments............................................... 57
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.... 60
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Equity....... 60
Section 4.10. Asset Sales....................................................... 63
Section 4.11. Events of Loss.................................................... 64
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Section 4.12. Transactions with Affiliates.............................................. 66
Section 4.13. Liens..................................................................... 66
Section 4.14. Line of business.......................................................... 67
Section 4.15. Corporate Existence....................................................... 67
Section 4.16. Offer to Repurchase Upon Change of Control................................ 67
Section 4.17. Construction.............................................................. 68
Section 4.18. Limitations on use of proceeds............................................ 68
Section 4.19. Limitation on status as investment company................................ 68
Section 4.20. sale and leaseback transactions........................................... 69
Section 4.21. Additional Subsidiary Guarantees.......................................... 69
Section 4.22. Designation of Restricted and Unrestricted Subsidiaries................... 69
Section 4.23. Limitation on Issuances and Sales of Equity Interests in Subsidiaries..... 69
Section 4.24. Advances to Restricted Subsidiaries....................................... 70
Section 4.25. Compliance with Securities Laws........................................... 70
Section 4.26. Payments for Consent...................................................... 70
Section 4.27. Further Assurances........................................................ 70
Section 4.28. Insurance................................................................. 71
Section 4.29. Amendments to Certain Agreements.......................................... 72
Section 4.30. Restriction on Payment of Management Fees................................. 72
Section 4.31. Restrictions on Activities of HWCC-Louisiana, HCS I, HCS II and
Shreveport Capital........................................................ 72
ARTICLE 5 SUCCESSORS....................................................................... 73
Section 5.01. Merger, Consolidation, or Sale of Assets.................................. 73
Section 5.02. Successor Corporation Substituted......................................... 75
ARTICLE 6 DEFAULTS AND REMEDIES............................................................ 75
Section 6.01. Events of Default......................................................... 75
Section 6.02. Acceleration.............................................................. 77
Section 6.03. Other Remedies............................................................ 78
Section 6.04. Waiver of Past Defaults................................................... 78
Section 6.05. Control by Majority....................................................... 79
Section 6.06. Limitation on Suits....................................................... 79
Section 6.07. Rights of Holders of Notes to Receive Payment............................. 79
Section 6.08. Collection Suit by Trustee................................................ 80
Section 6.09. Trustee May File Proofs of Claim.......................................... 80
Section 6.10. Priorities................................................................ 80
Section 6.11. Undertaking for Costs..................................................... 81
Section 6.12. Management of Casinos..................................................... 81
Section 6.13. Restoration of Rights and Remedies........................................ 81
ARTICLE 7 TRUSTEE.......................................................................... 82
Section 7.01. Duties of Trustee......................................................... 82
Section 7.02. Rights of Trustee......................................................... 83
Section 7.03. Individual Rights of Trustee.............................................. 83
</TABLE>
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<TABLE>
<S> <C>
Section 7.04. Trustee's Disclaimer............................................... 84
Section 7.05. Notice of Defaults................................................. 84
Section 7.06. Reports by Trustee to Holders of the Notes......................... 84
Section 7.07. Compensation and Indemnity......................................... 84
Section 7.08. Louisiana Gaming Control Board..................................... 86
Section 7.09 Replacement of Trustee............................................. 86
Section 7.10. Successor Trustee by Merger, etc................................... 87
Section 7.11. Eligibility; Disqualification...................................... 87
Section 7.12. Preferential Collection of Claims Against Issuers.................. 87
Section 7.13. Authorization of Trustee to Take Other Actions..................... 88
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE................................... 88
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance........... 88
Section 8.02. Legal Defeasance and Discharge..................................... 88
Section 8.03. Covenant Defeasance................................................ 89
Section 8.04. Conditions to Legal or Covenant Defeasance......................... 89
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions................................... 91
Section 8.06. Repayment to Partnership........................................... 91
Section 8.07. Reinstatement...................................................... 92
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER........................................... 92
Section 9.01. Without Consent of Holders of Notes................................ 92
Section 9.02. With Consent of Holders of Notes................................... 93
Section 9.03. Compliance with Trust Indenture Act................................ 94
Section 9.04. Revocation and Effect of Consents.................................. 94
Section 9.05. Notation on or Exchange of Notes................................... 95
Section 9.06. Trustee to Sign Amendments, etc.................................... 95
ARTICLE 10 COLLATERAL AND SECURITY.................................................... 95
Section 10.01. Security........................................................... 95
Section 10.02. Recording and Opinions............................................. 96
Section 10.03. Release of Collateral.............................................. 97
Section 10.04. Protection of the Trust Estate..................................... 98
Section 10.05. Certificates of the Issuers........................................ 98
Section 10.06. Certificates of the Trustee........................................ 99
Section 10.07. Authorization of Actions to Be Taken by the Trustee Under the
Collateral Documents............................................. 99
Section 10.08. Trustee's Duties................................................... 99
Section 10.09. Authorization of Receipt of Funds by the Trustee Under the
Collateral Documents............................................ 100
Section 10.10. Termination of Security Interest................................... 100
Section 10.11. Cooperation of Trustee............................................. 101
Section 10.12. Collateral Agent................................................... 101
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ARTICLE 11 NOTE GUARANTEES............................................................ 101
Section 11.01. Guarantee.......................................................... 101
Section 11.02. Additional Note Guarantees......................................... 103
Section 11.03. Limitation on Guarantor Liability.................................. 104
Section 11.04. Execution and Delivery of Note Guarantee........................... 104
Section 11.05. Guarantors May Consolidate, etc., on Certain Terms................. 104
Section 11.06. Releases Following Sale of Assets.................................. 105
ARTICLE 12 SATISFACTION AND DISCHARGE................................................. 106
Section 12.01 Satisfaction and Discharge......................................... 106
Section 12.02. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions................................... 107
Section 12.03. Repayment to Partnership........................................... 107
ARTICLE 13 JOINT AND SEVERAL LIABILITY................................................ 107
ARTICLE 14 MISCELLANEOUS.............................................................. 109
Section 14.01. Trust Indenture Act Controls....................................... 109
Section 14.02. Notices............................................................ 109
Section 14.03. Communication by Holders of Notes with Other Holders of Notes...... 111
Section 14.04. Certificate and Opinion as to Conditions Precedent................. 111
Section 14.05. Statements Required in Certificate or Opinion...................... 111
Section 14.06. Rules by Trustee and Agents........................................ 111
Section 14.07. No Personal Liability of Directors, Officers, Employees and
Stockholders..................................................... 112
Section 14.08. Governing Law...................................................... 112
Section 14.09. No Adverse Interpretation of Other Agreements...................... 112
Section 14.10. Successors......................................................... 112
Section 14.11. Severability....................................................... 112
Section 14.12. Counterpart Originals.............................................. 112
Section 14.13. Acts of Holders.................................................... 113
Section 14.14. Benefit of Indenture............................................... 114
Section 14.15. Louisiana Riverboat Economic Development and Gaming Control Act.... 114
Section 14.16. Table of Contents, Headings, etc................................... 114
</TABLE>
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EXHIBITS
Exhibit A1 FORM OF NOTE
Exhibit A2 FORM OF REGULATION S NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Exhibit E FORM ON NOTATION ON NOTE RELATING TO GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
Exhibit G FORM OF INTERCREDITOR AGREEMENT
v
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INDENTURE dated as of August 10, 1999, among Hollywood Casino Shreveport,
a Louisiana general partnership (the "Partnership"), Shreveport Capital
Corporation, a Louisiana corporation ("Capital" and, together with the
Partnership, the "Issuers"), HWCC-Louisiana, Inc., a Louisiana corporation
("HWCC-Louisiana"), HCS I, Inc., a Louisiana corporation ("HCS I"), HCS II,
Inc., a Louisiana corporation ("HCS II" and, together with HWCC-Louisiana and
HCS I, the "Guarantors") and State Street Bank and Trust Company, as trustee
(the "Trustee").
The Issuers, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the holders of
the 13% Series A First Mortgage Notes due 2006 with Contingent Interest (the
"Series A Notes") and the 13% Series B First Mortgage Notes due 2006 with
Contingent Interest (the "Series B Notes" and, together with the Series A Notes,
the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"144A Global Note" means a Global Note substantially in the form of
Exhibits A1 and A2 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of, and registered in the name
of, the Depositary or its nominee that will be issued in a denomination equal to
the outstanding principal amount of the Notes sold or resold in reliance on Rule
144A.
"Acquired Debt" means, with respect to any specified Person:
(1) 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, whether or not such Indebtedness is incurred in connection with,
or in contemplation of, such other Person merging with or into, or
becoming a Subsidiary of, such specified Person; and
(2) 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
Restricted Subsidiaries for such period to Adjusted Fixed Charges of such Person
and its Restricted 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 Restricted Subsidiaries for such
period, plus any Contingent Interest to the extent paid in such period.
<PAGE>
"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; provided, however, that Paddlewheels shall
not be deemed an "Affiliate" of the Partnership. For purposes of this
definition, "control," as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, however,
that beneficial ownership of 10% or more of the voting securities of a Person
shall be deemed to be control. For purposes of this definition, the terms
"controlling," "controlled by" and "under common control with" shall have
correlative meanings.
"Agent" means any Registrar or Paying Agent.
"Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Cedel that apply to such transfer or exchange.
"Assignment Agreement" means the Amended and Restated Assignment of Joint
Venture Interest dated as of September 22, 1998, among Sodak Louisiana, L.L.C.,
a Louisiana limited liability company, HWCC-Louisiana, Paddlewheels and New
Orleans Paddlewheels, Inc., a Louisiana corporation, as in effect on the date of
this Indenture or as amended or modified pursuant to Section 4.29.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights; provided that the sale, conveyance or other disposition
of all or substantially all of the assets of the Partnership and
its Restricted Subsidiaries taken as a whole will be governed by
Section 4.16 and Section 5.01 and not by the provisions of
Section 4.10 hereof; and
(2) the issuance of Equity Interests by any of the Partnership's
Restricted Subsidiaries or the sale of Equity Interests by the
Partnership in any of its Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to
be Asset Sales:
(1) any single transaction or series of related transactions that
involves assets having a fair market value of less than $1.0 million;
(2) a transfer of assets between or among the Partnership and its
Restricted Subsidiaries;
(3) an issuance of Equity Interests by a Restricted Subsidiary to the
Partnership or to another Restricted Subsidiary;
2
<PAGE>
(4) the sale or lease of equipment, inventory, accounts receivable or
other assets in the ordinary course of business;
(5) the sale or other disposition of cash or Cash Equivalents; and
(6) a Restricted Payment or Permitted Investment that is permitted
under Section 4.07 hereof.
"Attributable Debt" in respect of a sale and leaseback transaction means,
at the time of determination, the present value 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. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" shall have a corresponding meaning.
"Board of Directors" means: (1) with respect to a corporation, the Board
of Directors of the corporation; (2) with respect to a partnership, the Board of
Directors of the managing general partner of the partnership; and (3) with
respect to any other Person, the board or committee of such Person serving a
similar function.
"Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.
"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 that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means: (1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock; (3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and (4) 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.
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"Cash Collateral Accounts" means, collectively, the Construction
Disbursement Account, the Completion Reserve Account, the Interest Reserve
Account and the Segregated Account.
"Cash Collateral and Disbursement Agreement" means the Cash Collateral and
Disbursement Agreement dated the date of this Indenture, among the Issuers, the
Trustee and the Disbursement Agent in connection with the Shreveport Resort.
"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is pledged
in support thereof) having maturities of not more than six months from the
date of acquisition;
(3) 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 $500.0 million and a Thomson Bank Watch Rating of
"B" or better;
(4) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (2) and (3)
above entered into with any financial institution meeting the
qualifications specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from
Moody's or S&P and in each case maturing within six months after the date
of acquisition; and
(6) money market funds at least 95% of the assets of which constitute
Cash Equivalents of the kinds described in clauses (1) through (5) of this
definition.
"Cedel" means Cedel Bank, SA.
"Change of Control" means the occurrence of any of the following:
(1) the direct or indirect sale, 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 Hollywood Casino and its Subsidiaries taken as a whole;
(2) the liquidation or dissolution of, or the adoption of a plan
relating to the liquidation or dissolution of, either of the Issuers or
Hollywood Casino or any successor thereto;
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(3) Hollywood Casino 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 any of the Principals, 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 l3d-3 under the Exchange Act, or any successor provision)
of 30% or more of the total voting power entitled to vote in the election
of the Board of Directors of Hollywood Casino or such other Person
surviving the transaction and, at such time, the Principals collectively
shall fail to beneficially own, directly or indirectly, securities
representing greater than the combined voting power of Hollywood Casino's
or such other Person's Voting Stock as is beneficially owned by such
Person or group;
(4) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Hollywood Casino's Board of
Directors (together with any new directors whose election or appointment
by such board or whose nomination for election by the stockholders of
Hollywood Casino was approved by a vote of a majority of the directors
then still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved) ceasing for any reason to constitute a majority of the Hollywood
Casino's Board of Directors then in office;
(5) Hollywood Casino consolidates with, or merges with or into, any
Person, or any Person consolidates with, or merges with or into, Hollywood
Casino, in any such event pursuant to a transaction in which any of the
outstanding Voting Stock of Hollywood Casino is converted into or
exchanged for cash, securities or other property, other than any such
transaction where the Voting Stock of Hollywood Casino outstanding
immediately prior to such transaction is converted into or exchanged for
Voting Stock (other than Disqualified Stock) of the surviving or
transferee Person constituting a majority of the outstanding shares of
such Voting Stock of such surviving or transferee Person immediately after
giving effect to such issuance;
(6) the first day on which Hollywood Casino ceases to Beneficially
Own 100% of the outstanding Equity Interests of the Partnership, other
than the Equity Interests of the Partnership owned by Paddlewheels on the
date of this Indenture; or
(7) the termination or repudiation by the Manager of the Management
Agreement.
"Collateral" means all "collateral" referred to in the Collateral
Documents.
"Collateral Agent" shall have the meaning set forth in the Collateral
Documents.
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"Collateral Documents" means, collectively, the all agreements,
instruments, documents, pledges or filings executed in connection with granting,
or that otherwise evidence, the Lien of the Trustee in the Collateral,
including, without limitation, each security agreement executed by the Trustee
and each of the Partnership, Capital and each Guarantor, as the case may be, and
each stock pledge agreement, partnership interest pledge agreement, mortgage,
ship mortgage and collateral assignment of documents executed by the Partnership
or any of its Restricted Subsidiaries, as the case may be, creating a Lien that
secures the Notes and the Note Guarantees, the control agreements executed by
the Partnership with respect to the Cash Collateral Accounts, and any other
document, agreement, instrument, pledge or filing executed in connection with
the granting, or that otherwise evidence, the Lien of the Trustee on the
Collateral.
"Completion Capital Agreement" means the Completion Capital Agreement
dated as of the date of this Indenture, among Hollywood Casino, HWCC-Louisiana,
HCS I, HCS II and the Partnership, as in effect on the date of this Indenture or
as amended or modified pursuant to Section 4.29 hereof.
"Completion Reserve Account" means the completion reserve 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 $5.0 million
of the proceeds of the Offering will be deposited.
"Compromise Agreement" means the Compromise Agreement dated as of
September 15, 1998, among QNOV, Hilton New Orleans Corporation, New Orleans
Paddlewheels, Inc., the City of New Orleans and Hilton Hotels Corporation.
"Consolidated Cash Flow" means, with respect to any specified Person for
any period, the Consolidated Net Income of such Person for such period plus:
(1) an amount equal to any extraordinary loss plus any net loss
realized by such Person or any of its Restricted Subsidiaries in
connection with an Asset Sale, to the extent such losses were deducted in
computing such Consolidated Net Income; plus
(2) provision for taxes based on income or profits or the Tax Amount
of such Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes or Tax Amount was deducted in
computing such Consolidated Net Income; plus
(3) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance
costs and 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 of the effect of all payments made
or received pursuant
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to Hedging Obligations), to the extent that any such expense was deducted
in computing such Consolidated Net Income; plus
(4) any pre-opening expenses to the extent that such pre-opening
expenses were deducted in computing Consolidated Net Income on a
consolidated basis and determined in accordance with GAAP; plus
(5) depreciation, amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period) and other non-cash expenses (excluding
any such non-cash expense to the extent that it represents an accrual of
or reserve for cash expenses in any future period or amortization of a
prepaid cash expense, other than pre-opening expenses, that was paid in a
prior period) of such Person and its Restricted Subsidiaries for such
period to the extent that such depreciation, amortization and other non-
cash expenses were deducted in computing such Consolidated Net Income;
minus
(6) non-cash items increasing such Consolidated Net Income for such
period, other than the accrual of revenue in the ordinary course of
business, in each case, on a consolidated basis and determined in
accordance with GAAP.
Notwithstanding the preceding, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash expenses
of, a Restricted Subsidiary of the Partnership shall be added to Consolidated
Net Income to compute Consolidated Cash Flow of the Partnership only to the
extent that a corresponding amount would be permitted at the date of
determination to be dividended to the Partnership by such Restricted 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 Restricted Subsidiary or its
equityholders.
"Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided, however, that:
(1) the Net Income 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
specified Person or a Restricted Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be excluded to
the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior 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 that Restricted Subsidiary or its stockholders;
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(3) 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;
(4) the cumulative effect of a change in accounting principles shall
be excluded;
(5) the Net Income of any Unrestricted Subsidiary shall be excluded,
whether or not distributed to the specified Person or one of its
Restricted Subsidiaries; and
(6) for purposes of calculating the Consolidated Net Income of the
Partnership and its Restricted Subsidiaries for any period, Net Income
will be reduced by the amount of any Paddlewheels Revenue Participation
payable with respect to such period.
"Construction Disbursement Account" means the construction disbursement
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 $111.5 million of the net proceeds of the Offering will 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 Shreveport Resort, as such schedules are delivered to the
Disbursement Agent on the date of this Indenture and as amended from time to
time in accordance with the terms of the Cash Collateral and Disbursement
Agreement.
"Construction Repurchase Offer" means an offer by the Issuers at their
sole discretion to all Holders of Notes to purchase the maximum principal amount
of Notes that may be purchased with 50% of the Remaining Construction Amounts;
provided, however, that:
(1) the price for any Notes to be purchased pursuant to such offer
will be paid in cash and will be equal to the sum of (a) 100% of the
principal amount thereof, (b) accrued and unpaid Interest on such Notes
and (c) accrued Liquidated Damages on such Notes, if any;
(2) such offer will be conducted in the manner described under
Section 4.25 hereof; and
(3) if the principal amount of Notes tendered in such offer exceeds
the offer amount, the Trustee shall select the Notes to be purchased in
the manner described under Section 3.02 hereof.
"Contingent Interest" means:
(1) for the purpose of the First Accrual Period and any Semiannual
Period, the product of 5% multiplied by the Partnership's Consolidated
Cash Flow for such First Accrual Period or Semiannual Period, as
applicable;
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(2) for the purpose of any Interim Period occurring after the date
that internal financial statements for the prior two fiscal quarters are
available, the product of (a) 5% multiplied by the Partnership's
Consolidated Cash Flow for those two fiscal quarters and (b) a fraction,
the numerator of which is the number of days from the end of the most
recent Semiannual Period to the date of payment and the denominator of
which is 180;
(3) for the purpose of an Accrual Period that ends prior to the
completion of the First Accrual Period or for any Interim Period occurring
prior to the date that internal financial statements for the immediately
preceding two fiscal quarters are available, the product of (1) 5%
multiplied by the Partnership's Consolidated Cash Flow for all completed
calendar months during such period for which financial statements are
available and (2) a fraction, the numerator of which is the number of days
from the date the Shreveport resort begins Operating to the date of
payment and the denominator of which is the aggregate number of days for
all completed months included in such period;
(4) for purposes of any other Accrual Period, the maximum remaining
amount of Contingent Interest payable through the end of such Accrual
Period; and
in each case, multiplied by a fraction, the numerator of which is the principal
amount of Notes outstanding on the close of business on that Record Date and the
denominator of which is $150.0 million; provided, however, that Contingent
Interest that accrues in respect of any four consecutive fiscal quarters
(excluding any Contingent Interest deferred from prior periods) shall not exceed
the product of (a) 5% multiplied by $100.0 million and (b) a fraction, the
numerator of which is such principal amount of outstanding Notes and the
denominator of which is $150.0 million.
"Contribution and Assumption Agreement" means the Contribution and
Assumption Agreement dated as of July 21, 1999, among HWCC-Louisiana, HCS I, HCS
II and Paddlewheels, as in effect on the date of this Indenture or as amended or
modified pursuant to Section 4.29 hereof.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 14.02 hereof or such other address as to which the
Trustee may give notice to the Issuers.
"Custodian" means the Trustee, as custodian with respect to the Notes in
global form, or any successor entity thereto.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Section 2.06 hereof, substantially
in the form of Exhibits A1 and
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A2 hereto except that such Note shall not bear the Global Note Legend and shall
not have the "Schedule of Exchanges of Interests in the Global Note" attached
thereto.
"Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as Depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Disbursement Agent" means First American Title Insurance Company.
"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, in each case at the option of the holder thereof), 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. Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require the Partnership to repurchase such
Capital Stock upon the occurrence of a change of control or an asset sale shall
not constitute Disqualified Stock if the terms of such Capital Stock provide
that the Partnership may not repurchase or redeem any such Capital Stock
pursuant to such provisions unless such repurchase or redemption complies with
Section 4.07 hereof.
"Eligible Institution" means a domestic commercial banking institution
that has combined capital and surplus of not less than $500 million or its
equivalent in foreign currency, whose debt is rated "A" or higher according to
S&P or Moody's at the time any investment or rollover therein is made.
"Equity Escrow Account" means the account into which $44.7 million in cash
is deposited on the date of this Indenture representing equity contributions
made to the Partnership by HCS I, HCS II and Paddlewheels.
"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).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Event of Loss" means, with respect to any asset, any (1) loss,
destruction or damage of such asset, (2) condemnation, seizure or taking by
exercise of the power of eminent domain or otherwise of such property or asset,
or confiscation of such asset or the requisition of the use of such asset or (3)
settlement in lieu of clause (2) above.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the Commission thereunder.
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"Exchange Notes" means the Series B Notes issued in the Exchange Offer
pursuant to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"FF&E" means furniture, fixtures or equipment used in the ordinary course
of the business of the Partnership and its Restricted Subsidiaries.
"FF&E Financing" means the incurrence of Indebtedness, the proceeds of
which are utilized solely to finance the acquisition of (or entry into a capital
lease by the Partnership or a Restricted Subsidiary with respect to) FF&E.
"Final Plans" with respect to any particular work or improvement means
Plans which (1) have received final approval from all governmental authorities
required to approve such Plans prior to completion of the work or improvements
and (2) contain sufficient specificity to permit the completion of the work or
improvement.
"First Accrual Period" means the period beginning on the date the
Shreveport Resort begins Operating through and including the next June 30 or
December 31, as applicable.
"Fixed Charge Coverage Ratio" means with respect to any specified Person
for any period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person for
such period. In the event that the specified Person or any of its Restricted
Subsidiaries incurs, assumes, Guarantees, repays, repurchases or redeems any
Indebtedness (other than ordinary working capital borrowings) or issues,
repurchases or redeems preferred equity subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated and on or
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, repayment, repurchase or redemption of Indebtedness, or
such issuance, repurchase or redemption of preferred equity, and the use of the
proceeds therefrom as if the same had occurred at the beginning of the
applicable four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) acquisitions that have been made by the specified Person or any
of its Restricted 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 given pro forma effect as
if they had occurred on the first day of the four-quarter reference period
and Consolidated Cash Flow for such reference period shall be calculated
on a pro forma basis in accordance with Regulation S-X under the
Securities Act, but without
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giving effect to clause (3) of the proviso set forth in the definition of
Consolidated Net Income;
(2) 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
(3) 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 specified Person or any of its Restricted Subsidiaries
following the Calculation Date.
"Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:
(1) the consolidated interest expense (excluding Contingent Interest,
if any, paid or accrued) of such Person and its Restricted Subsidiaries
for such period, whether paid or accrued, including, without limitation,
amortization of debt issuance costs and 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 of
the effect of all payments made or received pursuant to Hedging
Obligations; plus
(2) the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period; plus
(3) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured
by a Lien on assets of such Person or one of its Restricted Subsidiaries,
whether or not such Guarantee or Lien is called upon; plus
(4) the product of (a) all dividends, whether paid or accrued and
whether or not in cash, on any series of preferred equity of such Person
or any of its Restricted Subsidiaries, other than dividends on Equity
Interests payable solely in Equity Interests of the Partnership (other
than Disqualified Stock) or to the Partnership or a Restricted Subsidiary
of the Partnership, 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 (or, in the
case of a Person that is a partnership or limited liability company, the
combined federal, state and local income tax rate that was or would have
been used to calculate the Tax Amount of such Person), expressed as a
decimal, in each case, on a consolidated basis and in accordance with
GAAP.
"Fixed Interest" means the fixed interest payable on the Notes.
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"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 government, any foreign government, any state, province or city
or other political subdivision or otherwise, whether now or hereafter in
existence, or any officer or official thereof, including, without limitation,
the Louisiana Gaming Control Board, with authority to regulate any gaming
operation (or proposed gaming operation) owned, managed or operated by either of
the Issuers, Hollywood Casino, the Manager or any of their respective
Subsidiaries.
"Gaming Facility" means any building, riverboat, barge or other structure
used or expected to be used to enclose space in which a gaming operation is
conducted and (1) is wholly or partially owned, directly or indirectly, by the
Partnership or any of its Restricted Subsidiaries or (2) any portion or aspect
of which is managed or used, or expected to be managed or used, by the
Partnership or any of its Restricted Subsidiaries.
"Gaming Law" means the gaming laws of any jurisdiction or jurisdictions to
which either of the Issuers or any of the Partnership's 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 necessary on the date of this Indenture
or at any time thereafter to own, lease, operate or otherwise conduct the
business of either of the Issuers, the Manager or any of the Partnership's
Restricted Subsidiaries.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii)
hereof, which is required to be placed on all Global Notes issued under this
Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in the
form of Exhibits A1 and A2 hereto issued in accordance with Section 2.01,
2.06(b)(iv), 2.06(d)(ii) or 2.06(f) hereof.
"Government Securities" means securities that are: (1) direct obligations
of the United States of America for the timely payment of which its full faith
and credit is pledged; or (2) 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 also
includes a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act), as custodian with respect to any such Government Security
or a specific payment of principal of or interest on any such Government
Security held by such custodian for the account of the holder of such depository
receipt; provided that (except as required by law) such custodian is not
authorized to make any deduction from the
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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, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Guarantor" means HWCC-Louisiana, HCS I, HCS II and any Restricted
Subsidiary of the Partnership that executes a Note Guarantee in accordance with
the provisions of this Indenture.
"HCS I" means HCS I, Inc., a Louisiana corporation.
"HCS II" means HCS II, Inc., a Louisiana corporation.
"Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under: (1) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements; and (2) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered.
"Hollywood Casino" means Hollywood Casino Corporation, a Delaware
corporation.
"IAI Global Note" means the Global Note substantially in the form of
Exhibit A3 hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of and registered in the name of the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold to Institutional Accredited
Investors.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent, in respect of.
(1) borrowed money;
(2) obligations evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof);
(3) banker's acceptances;
(4) Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any
property, except any such balance that constitutes an accrued expense or
trade payable;
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(6) any Hedging Obligations;
(7) all Indebtedness of others secured by a Lien on any asset of the
specified Person (whether or not such Indebtedness is assumed by the
specified Person); provided, however, that the amount of such Indebtedness
shall be limited to the lesser of the fair market value of the assets or
property to which such Lien attaches and the amount of the Indebtedness so
incurred; and
(8) to the extent not otherwise included, the Guarantee by the
specified Person of any indebtedness of any other Person;
and any and all deferrals, renewals, extensions, refinancings and
refundings (whether direct or indirect) thereof and any amendments,
modifications or supplements thereto, if and to the extent any of the
preceding items (other than letters of credit and Hedging Obligations)
would appear as a liability upon a balance sheet of the specified Person
prepared in accordance with GAAP.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness
issued with original issue discount; and
(2) the principal amount thereof, together with any interest thereon
that is more than 30 days past due, in the case of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Independent Construction Consultant" means the independent construction
consultant retained in connection with the construction of the Shreveport
Resort, or any successor independent construction consultant appointed by the
Trustee pursuant to the terms of the Cash Collateral and Disbursement Agreement.
"Indirect Participant" means a Person who holds a beneficial interest in a
Global Note through a Participant.
"Intercompany Notes" means the intercompany notes issued by Restricted
Subsidiaries of the Partnership in favor of the Partnership or a Guarantor to
evidence advances by the Partnership or such Guarantor.
"Intercreditor Agreement" means the Intercreditor Agreement set forth as
Exhibit G hereto.
"Interim Period" means any period, other than the First Accrual Period,
that begins on any January 1 and ends before the next June 30 and any period
that begins on any July 1 and ends before the next December 31.
"Interest" means Fixed Interest and Contingent Interest, if any.
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"Interest Reserve Account" means the interest reserve 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 $27.8 million of the proceeds of the Offering will be deposited.
"Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees or other obligations), advances or capital
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), 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. If the
Partnership or any Restricted Subsidiary of the Partnership sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
of the Partnership such that, after giving effect to any such sale or
disposition, such Person is no longer a Restricted Subsidiary of the
Partnership, the Partnership 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 Restricted Subsidiary not sold or disposed of in an
amount determined as provided in Section 4.07. The acquisition by the
Partnership or any Restricted Subsidiary of the Partnership of a Person that
holds an Investment in a third Person shall be deemed to be an Investment by the
Partnership or such Restricted Subsidiary in such third Person in an amount
equal to the fair market value of the Investment held by the acquired Person in
such third Person in an amount determined as provided in Section 4.07 hereof.
"Joint Venture Agreement" means the Third Amended and Restated Joint
Venture Agreement of Hollywood Casino Shreveport dated as of July 21, 1999,
among Paddlewheels, HCS I and HCS II, as amended by the August 1999 Amendment to
the Third Amended and Restated Joint Venture Agreement of Hollywood Casino
Shreveport dated as of August 2, 1999, among Paddlewheels, HCS I and HCS II, as
in effect on the date of this Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, the Commonwealth of Massachusetts or at a
place of payment are authorized by law, regulation or executive order to remain
closed. If a payment date is a Legal Holiday at a place of payment, payment may
be made at that place on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue on such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared by
the Issuers and the Guarantors and sent to all Holders of the Notes for use by
such Holders in connection with the Exchange Offer.
"License Agreement" means the License Agreement dated as of the date of
this Indenture, between Hollywood Casino and the Partnership, as in effect on
the date of this Indenture or as amended or modified pursuant to Section 4.29
hereof.
"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
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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" has the meaning ascribed thereto in the Registration
Rights Agreement.
"Loan and Settlement Agreement " means the Loan and Settlement Agreement
dated as of January 16, 1998, among New Orleans Paddlewheels, Inc.,
Paddlewheels, HWCC-Louisiana, Sodak Louisiana, L.L.C. and Hilton New Orleans
Corporation, as in effect on the date of this Indenture.
"Management Agreement" means the Management Services Agreement dated as of
September 22, 1998, between the Partnership and the Manager relating to the
management of the Shreveport Resort, as amended by the Amendment to Management
Services Agreement dated as of August 2, 1999, among the Partnership and the
Manager, as in effect on the date of this Indenture or as amended or modified
pursuant to Section 4.29 hereof.
"Management Fees" means any fees payable to the Manager pursuant to the
Management Agreement.
"Manager" means HWCC-Shreveport, Inc., a Louisiana corporation.
"Manager Subordination Agreement" means the Manager Subordination
Agreement dated as of the date of this Indenture, among the Partnership, the
Manager and the Trustee.
"Marine Services Agreement" means the Marine Services Agreement dated as
of September 22, 1998, between the Partnership and Paddlewheels, as in effect on
the date of this Indenture or as amended or modified pursuant to Section 4.29
hereof.
"Membership Interest Purchase Agreement" means the Purchase Agreement
dated as of March 31, 1999, among HWCC-Louisiana, Sodak Gaming and Sodak
Louisiana, L.L.C., as in effect on the date of this Indenture.
"Minimum Facilities" means, with respect to the Shreveport Resort, a
riverboat casino which has in operation at least 1,600 gaming positions, a hotel
which has at least 350 hotel rooms, two restaurants with seating for at least
500 people, two bars, an entertainment lounge and parking for at least 1,800
vehicles.
"Moody's" means Moody's Investors Service, Inc.
"Net Income" means, with respect to any specified Person:
(1) the net income (loss) of such Person, determined in accordance
with GAAP and before any reduction in respect of preferred equity
dividends or distributions, excluding, however:
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(a) any gain (but not loss), together with any related provision
for taxes or Tax Amount on such gain (but not loss), realized in
connection with: (I) any Asset Sale (including, without limitation,
dispositions pursuant to sale and leaseback transactions); or (II) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person
or any of its Restricted Subsidiaries; and
(b) any extraordinary gain (but not loss), together with any
related provision for taxes or Tax Amount on such extraordinary gain
(but not loss); less
(2) in the case of any Person that is a partnership or limited
liability company, the Tax Amount of such Person for such period.
"Net Loss Proceeds" means the aggregate cash proceeds received by the
Partnership or any of its Restricted 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 or the portion of the Tax Amount attributable to such Event
of Loss paid or payable as a result thereof.
"Net Proceeds" means the aggregate cash proceeds received by the
Partnership 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, sales commissions, relocation expenses incurred as
a result thereof and taxes or the portion of the Tax Amount attributable to such
Asset Sale paid or payable as a result thereof, in each case, after taking into
account any available tax credits or deductions and any tax sharing
arrangements, and 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 Asset Sale and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither the Partnership nor any of its Restricted
Subsidiaries (a) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute Indebtedness),
(b) is directly or indirectly liable as a guarantor or otherwise or (c)
constitutes the lender;
(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit upon notice, lapse of time or both
any holder of any other Indebtedness (other than the Notes) of the
Partnership or any of its Restricted Subsidiaries to declare a default on
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such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that they
will not have any recourse to the stock or assets of the Partnership or
any of its Restricted Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person under Regulation
S.
"Note Guarantee" means the Guarantee by each Guarantor of the Issuers'
payment obligations under this Indenture and on the Notes, executed pursuant to
the provisions of this Indenture.
"Notes" has the meaning assigned to it in the preamble to this Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Notes by the 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 a Person
by two Officers of such Person, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of such Person, that meets the requirements of Section 14.05
hereof.
"Operating" means, with respect to the Shreveport Resort, the first time
that:
(1) all Gaming Licenses have been granted and have not been revoked
or suspended;
(2) 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 Shreveport Resort have been
discharged or, if payment is not yet due or if such payment is contested
in good faith by the Partnership, sufficient funds remain in the
Construction Disbursement Account to discharge such Liens and the
Partnership has taken any action (including the institution of legal
proceedings) necessary to prevent the sale of any or all of the Shreveport
Resort or the real property on which the Shreveport Resort will be
constructed;
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(3) the Independent Construction Consultant shall deliver a
certificate to the Trustee certifying that the Shreveport Resort is
substantially complete in all material respects in accordance with the
Final Plans with respect to the Minimum Facilities;
(4) the Shreveport Resort is in a condition (including installation
of furnishings, fixtures and equipment) to receive customers in the
ordinary course of business;
(5) the Minimum Facilities are open to the general public and
operating in accordance with applicable law; and
(6) a permanent or temporary certificate of occupancy has been issued
for the Shreveport Resort by the appropriate governmental authorities.
"Operating Deadline" means April 30, 2001.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 14.05 hereof.
The counsel may be an employee of or counsel to the Issuers, any Subsidiary of
the Issuers or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or Cedel, a
Person who has an account with the Depositary, Euroclear or Cedel, respectively
(and, with respect to DTC, shall include Euroclear and Cedel).
"Paddlewheels" means Shreveport Paddlewheels, L.L.C., a Louisiana limited
liability company.
"Paddlewheels Revenue Participation" means the amount payable by the
Partnership to Paddlewheels equal to 1% of the Complex Net Revenues (as defined
in the Assignment Agreement) pursuant to the terms of the Assignment Agreement.
"Pari Passu Collateral" means the Collateral owned by the Partnership,
excluding the funds held in the Cash Collateral Accounts.
"Pari Passu Lien" means a Lien on the Pari Passu Collateral that ranks
pari passu with the Lien of the Trustee for the ratable benefit of the holders
of Notes pursuant to the intercreditor agreement in substantially the form
attached hereto as Exhibit G.
"Permitted Business " means the gaming business and other businesses
necessary for, incident to, connected with, arising out of, or developed or
operated to permit or facilitate the conduct or pursuit of the gaming business
(including developing and operating lodging facilities, restaurants, sports or
entertainment facilities, transportation services or other related activities or
enterprises and any additions or improvements thereto) and potential
opportunities in the gaming business.
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"Permitted Investments" means:
(1) any Investment in the Partnership or in a Restricted Subsidiary
of the Partnership;
(2) any Investment in Cash Equivalents, Government Securities or
Pledged Securities;
(3) any Investment by the Partnership or any Restricted Subsidiary of
the Partnership in a Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of the
Partnership; 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 Partnership or a Restricted Subsidiary of the
Partnership;
(4) any 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;
(5) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the Partnership;
(6) Hedging Obligations;
(7) one or more investments by the Partnership in any entities the
sole purpose of which is to develop, construct and/or operate golf
courses; provided that (a) the aggregate amount of all such Investments
does not exceed $3.0 million and (b) that the development, construction
and operation of such golf course would satisfy the provisions of Section
4.14 hereof;
(8) any Investment by the Partnership or any of its Restricted
Subsidiaries in persons required in order to secure liquor and/or other
licenses or permits under applicable law incident to the operation by the
Partnership or any of its Restricted Subsidiaries of a Permitted Business;
provided that the aggregate amount of such Investment shall at no time
exceed $100,000;
(9) any Investment made in settlement of gambling debts incurred by
patrons of any casino owned or operated by the Partnership or any of its
Restricted Subsidiaries which settlements have been entered into in the
ordinary course of business; and
(10) Investments not otherwise permitted by the foregoing clauses (1)
through (9) in an aggregate outstanding amount of not more than $250,000.
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"Permitted Liens" means:
(1) Liens on the assets of the Issuers and the Guarantors created by
this Indenture and the Collateral Documents securing the Notes and the
Note Guarantees;
(2) Liens on property of a Person existing at the time such Person is
merged into or consolidated with the Partnership or any Restricted
Subsidiary of the Partnership; 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 Partnership or any Restricted Subsidiary;
(3) Liens on property existing at the time of acquisition thereof by
the Partnership or any Restricted Subsidiary of the Partnership; provided,
however, that such Liens were in existence prior to the contemplation of
such acquisition;
(4) Liens existing on the date of this Indenture;
(5) Liens to secure the performance of statutory obligations, surety
or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) 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;
(7) Liens on FF&E to secure Indebtedness permitted by clause (h) of
the second paragraph of Section 4.09 hereof;
(8) Pari Passu Liens on the Pari Passu Collateral to secure
Indebtedness permitted by clause (j) of the second paragraph of Section
4.09 hereof;
(9) pledges or deposits in the ordinary course of business to secure
lease obligations or non-delinquent obligations under workers'
compensation, unemployment insurance or similar legislation;
(10) 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
Partnership or any Subsidiary incurred in the ordinary course of business;
(11) ground leases in respect of real property on which facilities
owned or leased by the Partnership or any of its Restricted Subsidiaries
is located;
(12) Liens on assets of Unrestricted Subsidiaries that secure Non-
recourse Debt of Unrestricted Subsidiaries;
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(13) Liens arising from UCC financing statements regarding property
leased by the Partnership or any of its Restricted Subsidiaries;
(14) Liens incurred and pledges made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and social security benefits; and
(15) without limiting the ability of the Partnership or any of its
Subsidiaries to create, incur, assume or suffer to exist any Lien
otherwise permitted under any of the foregoing clauses, any extension,
renewal or replacement, in whole or in part, of any Lien described in the
foregoing clauses; provided, however, that any such extension, renewal or
replacement Lien is limited to the property or assets covered by the Lien
extended, renewed or replaced or substitute property or assets, the value
of which is (and, for property or assets having an aggregate fair market
value of more than $100,000, as determined by the Board of Directors to
be) not materially greater than the value of the property or assets for
which the substitute property or assets are substituted.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Partnership or any of its Restricted 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 Partnership or any of its Restricted
Subsidiaries (other than intercompany Indebtedness); provided, however, that:
(1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount
(or accreted value, if applicable) of the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus all accrued
interest thereon and the amount of all expenses and premiums incurred in
connection therewith); provided, however, if such Indebtedness is secured
by a Lien described in clause (7) of the definition of "Permitted Liens,"
then the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness will not exceed the then current fair
market value of the asset so encumbered;
(2) 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;
(3) 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 of Notes as
those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and
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(4) such Indebtedness is incurred either by the Partnership or by the
Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"Plans" means all drawings, plans and specifications, prepared by or on
behalf of the Partnership, as the same may be amended or supplemented from time
to time as specified in the Cash Collateral and Disbursement Agreement and, if
required, submitted to and approved by the appropriate regulatory authorities,
which describe and show the Shreveport Resort and the labor and materials
necessary for the construction thereof.
"Pledged Securities" means:
(1) Government Securities having a maturity date on or before the
date on which the payments of Interest on the Notes to which such
Government Securities are pledged occur;
(2) any certificate of deposit maturing not more than 270 days after
the date of acquisition issued by, or time deposit of, an Eligible
Institution;
(3) commercial paper maturing not more than 270 days after the date
of acquisition issued by a corporation other than an Affiliate of the
Partnership with a rating at the time any investment therein is made, of
"A-1" or higher according to Standard & Poor's Ratings Services or "P-1"
or higher according to Moody's Investors Service, Inc.;
(4) any banker's acceptances or money market deposit accounts issued
or offered by an Eligible Institution; and
(5) any fund investing exclusively in investments of the types
described in clauses (1) through (4) above; and
in the case of clauses (2) through (4) above, which have a maturity date on or
before the date on which the payments of Interest on the Notes to which such
securities are pledged occur.
"Principals" means:
(1) Jack Pratt, Edward T. Pratt, Jr., William D. Pratt, Crystal A.
Pratt, Maria A. Pratt and Edward T. Pratt III, their respective estates
and members of the immediate family (including adopted children) of any of
them who acquire Voting Stock of Hollywood Casino from any such estates;
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(2) C.A. Pratt Partners, Ltd., a Texas limited partnership; provided,
however, that, in each case, the majority of the voting equity interest of
the partnership is Beneficially Owned by a Person named in clause (1); and
(3) The WDP, Jr. Family Trust; provided, however, that a Person named
in clause (1) is:
(a) the Beneficial Owner of a majority of the Voting Stock of
Hollywood Casino held by such trust, or
(b) if the trust is irrevocable, the trustee of the irrevocable
trust is a Person named in clause (1).
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Project Costs" has the meaning ascribed thereto in the Cash Collateral
and Disbursement Agreement.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"QNOV" means QNOV, a Louisiana general partnership.
"Qualified Equity Offering" means an offering of Hollywood Casino's common
stock which results in net proceeds to Hollywood Casino of at least $20.0
million, but only to the extent that the net proceeds of the offering are
contributed directly or indirectly as equity by Hollywood Casino to the
Partnership.
"Registration Rights Agreement" means the Registration Rights Agreement
dated the date of this Indenture, among the Issuers, the Guarantors and Bear,
Stearns & Co. Inc., Credit Suisse First Boston Corporation, Banc of America
Securities LLC, Lehman Brothers Inc. and Prudential Securities Incorporated.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note or
Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note in the
form of Exhibits A-1 and A-2 hereto bearing the Global Note Legend and the
Private Placement Legend and deposited with or on behalf of and registered in
the name of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note in the
form of Exhibit A-3 hereto bearing the Private Placement Legend and deposited
with or on behalf of and
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registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S.
"Remaining Construction Amounts" means an amount equal to the aggregate
of amounts remaining in the Construction Disbursement Account, the Completion
Reserve Account and the Segregated Account on the date the Shreveport Resort
becomes Operating, less the amount of the Remaining Costs.
"Remaining Costs" has the meaning ascribed thereto in the Cash Collateral
and Disbursement Agreement.
"Responsible Officer," when used with respect to the Trustee, means any
officer within Corporate Trust Administration of the Trustee (or any successor
group of the Trustee) or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the Private
Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private Placement
Legend, including the Rule 144A Global Note and the IAI Global Note.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"S&P" means Standard and Poor's Rating Services.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Segregated Account" has the meaning ascribed thereto in the Cash
Collateral and Disbursement Agreement.
"Semiannual Period" means each period that begins on January 1 and ends on
the next June 30 or each period that begins on July 1 and ends on the next
December 31.
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"Series A Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Series B Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Shelf Registration Statement" has the meaning given it in the
Registration Rights Agreement.
"Shreveport Resort" means the project to develop, construct, equip and
operate a riverboat casino, hotel and related amenities in Shreveport,
Louisiana, as described in the Offering Memorandum dated August 3, 1999, used in
connection with the Offering.
"Side Agreement" means the Side Agreement dated as of January 16, 1998,
among Queen of New Orleans at the Hilton Joint Venture, HWCC-Louisiana and Sodak
Louisiana, L.L.C., as in effect on the date of this Indenture or as amended or
modified pursuant to Section 4.29 hereof.
"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 Securities Act, as such Regulation is in effect on the date
hereof.
"Sodak Gaming" means Sodak Gaming, Inc., a South Dakota corporation.
"Software Agreement" means the Software License and Maintenance Agreement
to be entered into between the Partnership and Advanced Casino Systems
Corporation.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any specified Person:
(1) 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
(2) 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).
"Tax Amount" means payments by the Partnership to HCS I and HCS II in
amounts sufficient to permit HCS I and HCS II to fulfill the obligations with
respect to all taxes of
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HWCC-Louisiana, HCS I and HCS II; provided, however, that so long as HWCC-
Louisiana, HCS I and HCS II file a consolidated, combined, unitary or similar
federal, state or local income or franchise tax return with Hollywood Casino,
the payment by the Partnership with respect to such taxes shall be an amount
sufficient to permit HWCC-Louisiana, HCS I and HCS II to fulfill their
respective obligations under the Tax Sharing Agreement solely with respect to
their respective obligations thereunder that are attributable to the
Partnership's income.
"Tax Sharing Agreement" means the Tax Sharing Agreement dated the date of
this Indenture, between Hollywood Casino and its domestic corporate
Subsidiaries, including HWCC-Louisiana, HCS I and HCS II as in effect on the
date of this Indenture or as amended or modified pursuant to Section 4.29
hereof.
"Technical Services Agreement" means the Technical Services Agreement
dated as of September 22, 1998, between the Manager and the Partnership, as in
effect on the date of this Indenture or as amended or modified pursuant to
Section 4.29 hereof.
"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.
"Total Assets" means, with respect to any Person, the aggregate of all
assets of such Person and its subsidiaries as would be shown on the balance
sheet of such Person prepared in accordance with GAAP.
"Trustee" means the party named as such in the preamble to this Indenture
until a successor replaces it in accordance with the applicable provisions of
this Indenture and thereafter means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes that do
not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent Global Note substantially in
the form of Exhibits A1 and A2 attached hereto that bears the Global Note Legend
and that has the "Schedule of Exchanges of Interests in the Global Note"
attached thereto, and that is deposited with or on behalf of and registered in
the name of the Depositary, representing a series of Notes that do not bear the
Private Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary of the Partnership other
than Shreveport Capital that is designated by the Board of Directors as an
Unrestricted Subsidiary pursuant to a resolution, but only to the extent that
such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with the Partnership or any Restricted Subsidiary of the
Partnership unless the terms of any such agreement, contract, arrangement
or understanding are no less favorable to the Partnership or such
Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Partnership;
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(3) is a Person with respect to which neither the Partnership nor any
of its Restricted Subsidiaries has any direct or indirect obligation (a)
to subscribe for additional Equity Interests or (b) to maintain or
preserve such Person's financial condition or to cause such Person to
achieve any specified levels of operating results; and
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of the Partnership or any of its
Restricted Subsidiaries.
Any designation of a Subsidiary of the Partnership as an Unrestricted
Subsidiary shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
preceding conditions and was permitted by Section 4.07 hereof. If, at any time,
any Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Partnership as of such date and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Partnership shall be in
default of such covenant. The Board of Directors of the Partnership may at any
time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Partnership of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (1) such Indebtedness is permitted under Section 4.09 hereof,
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period and (2) no Default or Event of
Default would be in existence following such designation.
"U.S. Person" means a U.S. Person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(1) 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
(2) the then outstanding principal amount of such Indebtedness.
Section 1.02. Other Definitions.
Defined
in
Term Section
---- -------
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"Act"........................................................ 4.13
"Affiliate Transaction"...................................... 4.12
"Asset Sale Offer"........................................... 4.10
"Authentication Order"....................................... 2.02
"Beneficiary"................................................ 2.13
"Benefitted Party"........................................... 11.01
"Change of Control Offer".................................... 4.16
"Change of Control Payment".................................. 4.16
"Change of Control Payment Date"............................. 4.16
"Covenant Defeasance"........................................ 8.03
"DTC"........................................................ 2.03
"Event of Default"........................................... 6.01
"Event of Loss Offer"........................................ 4.11
"Excess Loss Proceeds"....................................... 4.11
"Excess Proceeds"............................................ 4.10
"incur"...................................................... 4.09
"Legal Defeasance"........................................... 8.02
"Offer Amount"............................................... 3.09
"Note Obligations"........................................... 13(a)
"Offer Period"............................................... 3.09
"Pari Passu Debt Holder"..................................... 4.09
"Paying Agent"............................................... 2.03
"Payment Default"............................................ 6.01
"Permitted Debt"............................................. 4.09
"Purchase Date".............................................. 3.09
"Registrar".................................................. 2.03
"Repurchase Offer"........................................... 3.09
"Restricted Payments"........................................ 4.07
Section 1.03. Incorporation by Reference of Trust Indenture Act.
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Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes and the Note Guarantees means the Issuers and the
Guarantors, respectively, and any successor obligor upon the Notes and the Note
Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural include
the singular;
(e) provisions apply to successive events and transactions; and
(f) references to sections of or rules under the Securities Act or the
Exchange Act shall be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time.
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibits A1 and A2, hereto. The Notes may
have notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the
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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, the Guarantors
and the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby. However, to the
extent any provision of any Note conflicts with the express provisions of this
Indenture, the provisions of this Indenture shall govern and be controlling.
(b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibits A1, A2 and A3, respectively, hereto (including the Global
Note Legend thereon and the "Schedule of Exchanges of Interests in the Global
Note" attached thereto). Notes issued in definitive form shall be substantially
in the form of Exhibits A1 and A2 attached hereto (but without the Global Note
Legend thereon and without the "Schedule of Exchanges of Interests in the Global
Note" attached thereto). Each Global Note shall represent such of the
outstanding Notes as shall be specified therein and each shall provide that it
shall represent the aggregate principal amount of outstanding Notes from time to
time endorsed thereon and that the aggregate principal amount of outstanding
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of the
Global Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby shall be made by the
Trustee or the Custodian, at the direction of the Trustee, in accordance with
instructions given by the Holder thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of the Regulation S Temporary
Global Note, which shall be deposited on behalf of the purchasers of the Notes
represented thereby with the Trustee, as custodian for the Depositary, and
registered in the name of the Depositary or the nominee of the Depositary for
the accounts of designated agents holding on behalf of Euroclear or Cedel Bank,
duly executed by the Issuers and authenticated by the Trustee as hereinafter
provided. The Restricted Period shall be terminated upon the receipt by the
Trustee of (i) a written certificate from the Depositary, together with copies
of certificates from Euroclear and Cedel Bank certifying that they have received
certification of non-United States beneficial ownership of 100% of the aggregate
principal amount of the Regulation S Temporary Global Note (except to the extent
of any beneficial owners thereof who acquired an interest therein during the
Restricted Period pursuant to another exemption from registration under the
Securities Act and who will take delivery of a beneficial ownership interest in
a 144A Global Note or an IAI Global Note bearing a Private Placement Legend, all
as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers'
Certificate from the Issuers. Following the termination of the Restricted
Period, beneficial interests in the Regulation S Temporary Global Note shall be
exchanged for beneficial interests in Regulation S Permanent Global Notes
pursuant to the Applicable Procedures. Simultaneously with the authentication
of Regulation S Permanent Global Notes, the Trustee shall cancel the Regulation
S Temporary Global Note. The aggregate principal amount of the Regulation S
Temporary Global Note and the Regulation S Permanent Global Notes may from time
to time be increased or decreased by adjustments made on the records of the
Trustee and the
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Depositary or its nominee, as the case may be, in connection with transfers of
interest as hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes that are held by Participants through
Euroclear or Cedel Bank.
Section 2.02. Execution and Authentication.
One Officer shall sign the Notes for each of the Issuers by manual or
facsimile signature. The Issuers' seals, if any, 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 (an "Authentication Order"), 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 2.07 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. An authenticating agent has
the same rights as an Agent to deal with Holders or an Affiliate of the Issuers.
Section 2.03. 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 or any of
their Subsidiaries may act as Agent.
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The Issuers initially appoint The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes.
The Issuers initially appoint the Trustee to act as the Registrar and
Paying Agent and to act as Custodian for the Depositary with respect to the
Global Notes.
Section 2.04. 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 will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or Interest on the Notes, and
will 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 or a
Subsidiary) shall have no further liability for the money. If the Issuers or a
Subsidiary act as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to either of the Issuers,
the Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the 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 reasonably require of the names and addresses of the Holders of
Notes and the Issuers shall otherwise comply with TIA Section 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged
by the Issuers for Definitive Notes if (i) the Issuers deliver to the Trustee a
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Issuers within 120 days after the date of such notice from the Depositary or
(ii) the Issuers in their sole discretion determine that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and deliver a
written notice to such effect to the Trustee; provided, however, that in no
event shall the Regulation S Temporary Global Note be exchanged by the Issuers
for Definitive Notes prior to (x) the expiration of the Restricted Period and
(y) the receipt by the Registrar of any certificates required pursuant to Rule
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903(c)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of the
preceding events in (i) or (ii) above, Definitive Notes shall be issued in such
names as the Depositary shall instruct the Trustee. Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Sections 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in the
same Restricted Global Note in accordance with the transfer restrictions set
forth in the Private Placement Legend; provided, however, that prior to the
expiration of the Restricted Period, transfers of beneficial interests in the
Temporary Regulation S Global Note may not be made to a U.S. Person or for
the account or benefit of a U.S. Person (other than an Initial Purchaser).
Beneficial interests in any Unrestricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note. No written orders or instructions shall be
required to be delivered to the Registrar to effect the transfers described
in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor of
such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in another
Global Note in an amount equal to the beneficial interest to be transferred
or exchanged and (2) instructions given in accordance with the Applicable
Procedures containing information regarding the Participant account to be
credited with such increase or (B) (1) a written order from a Participant or
an Indirect Participant given to the Depositary in accordance with the
Applicable Procedures directing the Depositary to cause to be issued a
Definitive Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given by the Depositary to the
Registrar containing information regarding the Person in whose name such
Definitive Note shall be registered to effect the transfer or exchange
referred to in (1) above; provided that in no event shall Definitive Notes be
issued upon the transfer or exchange of beneficial interests in the
Regulation S Temporary Global Note prior to (x) the expiration of
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the Restricted Period; (y) the receipt by the Registrar of any certificates
required pursuant to Rule 903 under the Securities Act and (z) the receipt by
the Trustee of written certification that such transfer is in accordance with
the restrictions set forth on the legend. Upon consummation of an Exchange
Offer by the Issuers in accordance with Section 2.06(f) hereof, the
requirements of this Section 2.06(b)(ii) shall be deemed to have been
satisfied upon receipt by the Registrar of the instructions contained in the
Letter of Transmittal delivered by the Holder of such beneficial interests in
the Restricted Global Notes. Upon satisfaction of all of the requirements for
transfer or exchange of beneficial interests in Global Notes contained in
this Indenture and the Notes or otherwise applicable under the Securities
Act, the Trustee shall adjust the principal amount of the relevant Global
Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be transferred
to a Person who takes delivery thereof in the form of a beneficial interest
in another Restricted Global Note if the transfer complies with the
requirements of Section 2.06(b)(ii) above and the Registrar receives the
following:
(A) if the transferee will take delivery in the form of a
beneficial interest in a 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the
Regulation S Global Note, then the transferor must deliver a certificate
in the form of Exhibit B hereto, including the certifications in item (2)
thereof; and
(C) if the transferee will take delivery in the form of a
beneficial interest in the IAI Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications and certificates and Opinion of Counsel required by item
(3) thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in Restricted
Global Notes for Beneficial Interests in Unrestricted Global Notes. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement and
the holder of the beneficial interest to be transferred, in the case of
an exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a broker-dealer,
(2) a Person participating in the distribution of the Exchange Notes or
(3) a Person who is an affiliate (as defined in Rule 144) of the Issuers;
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(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
beneficial interest in an Unrestricted Global Note, a certificate from
such holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person
who shall take delivery thereof in the form of a beneficial interest
in an Unrestricted Global Note, a certificate from such holder in the
form of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the Issuers
so request or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Issuers and the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein and
in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Issuers shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02 hereof, the Trustee shall authenticate one or
more Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the
form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of a Restricted Definitive Note, then, upon
receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note, a
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certificate from such holder in the form of Exhibit C hereto, including
the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S.
Person in an offshore transaction in accordance with Rule 903 or Rule 904
under Regulation S, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an
exemption from the registration requirements of the Securities Act in
accordance with Rule 144 under the Securities Act, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed in
subparagraphs (B) through (D) above, a certificate to the effect set forth
in Exhibit B hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred to either of
the Issuers or any of their Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(G) if such beneficial interest is being transferred pursuant to an
effective registration statement under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the certifications
in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and
the Issuers shall execute and the Trustee shall authenticate and deliver to
the Person designated in the instructions a Definitive Note in the
appropriate principal amount. Any Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to this Section
2.06(c) shall be registered in such name or names and in such authorized
denomination or denominations as the holder of such beneficial interest shall
instruct the Registrar through instructions from the Depositary and the
Participant or Indirect Participant. The Trustee shall deliver such
Definitive Notes to the Persons in whose names such Notes are so registered.
Any Definitive Note issued in exchange for a beneficial interest in a
Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the
Private Placement Legend and shall be subject to all restrictions on transfer
contained therein.
(ii) Beneficial Interests in Regulation S Temporary Global Note to
Definitive Notes. Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in the
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Regulation S Temporary Global Note may not be exchanged for a Definitive Note
or transferred to a Person who takes delivery thereof in the form of a
Definitive Note prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates required pursuant to Rule
903(c)(3)(ii)(B) under the Securities Act, except in the case of a transfer
pursuant to an exemption from the registration requirements of the Securities
Act other than Rule 903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global
Note may exchange such beneficial interest for an Unrestricted Definitive
Note or may transfer such beneficial interest to a Person who takes delivery
thereof in the form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement and
the holder of such beneficial interest, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable Letter
of Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a Person
who is an affiliate (as defined in Rule 144) of either of the Issuers;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Definitive Note that does not bear the Private Placement Legend, a
certificate from such holder in the form of Exhibit C hereto, including
the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person
who shall take delivery thereof in the form of a Definitive Note that
does not bear the Private Placement Legend, a certificate from such
holder in the form of Exhibit B hereto, including the certifications in
item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Issuers
so request or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Issuers and the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein and
in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
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(iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted
Definitive Notes. If any holder of a beneficial interest in an Unrestricted
Global Note proposes to exchange such beneficial interest for a Definitive
Note or to transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Definitive Note, then, upon satisfaction of the
conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause
the aggregate principal amount of the applicable Global Note to be reduced
accordingly pursuant to Section 2.06(h) hereof, and the Issuers shall execute
and the Trustee shall authenticate and deliver to the Person designated in
the instructions a Definitive Note in the appropriate principal amount. Any
Definitive Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iii) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are so
registered. Any Definitive Note issued in exchange for a beneficial interest
pursuant to this Section 2.06(c)(iii) shall not bear the Private Placement
Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note or
to transfer such Restricted Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in a Restricted Global Note,
then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note,
a certificate from such Holder in the form of Exhibit C hereto, including
the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a certificate
to the effect set forth in Exhibit B hereto, including the certifications
in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904 under Regulation S, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those listed in
subparagraphs (B) through (D) above, a
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certificate to the effect set forth in Exhibit B hereto, including the
certifications, certificates and Opinion of Counsel required by item (3)
thereof, if applicable;
(F) if such Restricted Definitive Note is being transferred to
either of the Issuers or any of their Subsidiaries, a certificate to the
effect set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause to
be increased the aggregate principal amount of, in the case of clause (A)
above, the appropriate Restricted Global Note, in the case of clause (B)
above, the 144A Global Note, in the case of clause (C) above, the Regulation
S Global Note, and in all other cases, the IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Restricted Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note
only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the Holder,
in the case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Issuers;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the
form of a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B hereto, including
the certifications in item (4) thereof;
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and, in each such case set forth in this subparagraph (D), if the Issuers
so request or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Issuers and the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein and
in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in
this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Definitive Notes to a Person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global Note at any time.
Upon receipt of a request for such an exchange or transfer, the Trustee shall
cancel the applicable Unrestricted Definitive Note and increase or cause to
be increased the aggregate principal amount of one of the Unrestricted Global
Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been
issued, the Issuers shall issue and, upon receipt of an Authentication Order
in accordance with Section 2.02 hereof, the Trustee shall authenticate one or
more Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name
of Persons who take delivery thereof in the form of a Restricted Definitive
Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications in item (1) thereof;
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(B) if the transfer will be made pursuant to Rule 903 or Rule 904
under Regulation S, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (2)
thereof; and
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel required
by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement and
the Holder, in the case of an exchange, or the transferee, in the case of
a transfer, certifies in the applicable Letter of Transmittal that it is
not (1) a broker-dealer, (2) a Person participating in the distribution of
the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Issuers;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive Note, a
certificate from such Holder in the form of Exhibit C hereto, including
the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take delivery
thereof in the form of an Unrestricted Definitive Note, a certificate
from such Holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably acceptable
to the Issuers to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no longer
required in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes.
A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person
who takes delivery
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thereof in the form of an Unrestricted Definitive Note. Upon receipt of a
request to register such a transfer, the Registrar shall register the
Unrestricted Definitive Notes pursuant to the instructions from the Holder
thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Issuers shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02 hereof,
the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not broker-
dealers, (y) they are not participating in a distribution of the Exchange Notes
and (z) they are not affiliates (as defined in Rule 144) of the Issuers, and
(ii) Definitive Notes in an aggregate principal amount equal to the principal
amount of the Restricted Definitive Notes accepted for exchange in the Exchange
Offer. Concurrently with the issuance of such Notes, the Trustee shall cause
the aggregate principal amount of the applicable Restricted Global Notes to be
reduced accordingly, and the Issuers shall execute and the Trustee shall
authenticate and deliver to the Persons designated by the Holders of Definitive
Notes so accepted Definitive Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange therefor
or substitution thereof) shall bear the legend in substantially the
following form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES (A) TO OFFER, SELL,
PLEDGE OR OTHERWISE TRANSFER THIS NOTE ONLY (1) TO THE ISSUERS, (2) PURSUANT TO
A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (3) TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
AS DEFINED IN RULE 144A IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(4) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 904
UNDER THE SECURITIES ACT, (5) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN
THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
SECURITIES ACT IN A TRANSACTION MEETING THE
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REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, OR (6) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT
(AND BASED ON AN OPINION OF COUNSEL IF THE ISSUERS SO REQUEST), SUBJECT IN EACH
OF THE FOREGOING CASES TO APPLICABLE JURISDICTION, AND (B) THAT IT WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTE
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraphs (b)(iv), (c)(iii), (c)(iv), (d)(ii),
(d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.06 (and all Notes
issued in exchange therefor or substitution thereof) shall not bear the
Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THIS INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THIS INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THIS
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THIS INDENTURE AND (IV) THIS GLOBAL
NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT
OF THE ISSUERS."
(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the following
form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11 hereof. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who will take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made
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on such Global Note by the Trustee or by the Depositary at the direction of the
Trustee to reflect such reduction; and if the beneficial interest is being
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note, such other Global Note
shall be increased accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depositary at the direction of the Trustee to
reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Issuers
shall execute and the Trustee shall authenticate Global Notes and Definitive
Notes upon the Issuers' order or at the Registrar's request, in each case in
accordance with the provisions of Section 2.02 hereof.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the 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 2.10, 3.06, 3.09, 4.10, 4.11, 4.16 and 9.05 hereof).
(iii) The Registrar shall not be required to register the transfer of
or exchange any Note selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Issuers, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Global Notes or
Definitive Notes surrendered upon such registration of transfer or exchange.
(v) The Issuers shall not be required (A) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the opening
of business 15 days before the day of any selection of Notes for redemption
under Section 3.02 hereof and ending at the close of business on the day of
selection, (B) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part or (C) to register the transfer of or to
exchange a Note between a record date and the next succeeding Interest
Payment Date.
(vi) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and either of 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 on
such Notes and for all other purposes, and none of the Trustee, any Agent or
either of the Issuers shall be affected by notice to the contrary.
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(vii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.06 to
effect a registration of transfer or exchange may be submitted by facsimile.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Issuers and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Issuers shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Holder or
Issuers satisfies the reasonable requirements of the Trustee. 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 its
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 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation,
those reductions in the interest in a Global Note effected by the Trustee in
accordance with the provisions hereof, and those described in this Section as
not outstanding. Except as set forth in Section 2.09 hereof, a Note does not
cease to be outstanding because either of the Issuers or an Affiliate of either
of the Issuers holds the Note; however, Notes held by the Issuers or a
Subsidiary of either of the Issuers shall not be deemed to be outstanding for
purposes of Section 3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and Interest on it ceases to accrue.
If the Paying Agent (other than the Issuers, or a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
Interest.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
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
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determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that the Trustee knows are so owned
shall be so disregarded.
Section 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the Issuers
may prepare and the Trustee, upon receipt of an Authentication Order, shall
authenticate temporary Notes. Temporary Notes shall be substantially in the
form of certificated Notes but may have variations that the Issuers consider
appropriate for temporary Notes and as shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Issuers shall prepare and the Trustee
shall authenticate Definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
Section 2.11. Cancellation.
The Issuers at any time may deliver Notes to the Trustee for cancellation.
The Agents 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 on the Notes, they shall
pay the defaulted Interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted Interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Issuers shall notify the Trustee in writing of
the amount of defaulted Interest proposed to be paid on each Note and the date
of the proposed payment. The Issuers shall fix or cause to be fixed each such
special record date and payment date, provided, however, that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted Interest. At least 15 days before the special record date, the
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 to be paid.
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Issuers elect to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, they shall furnish to the Trustee, at least
30 days or such shorter period as is satisfactory to the Trustee but not more
than 60 days before a redemption date, an Officers'
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Certificate setting forth (a) the clause of this Indenture pursuant to which the
redemption shall occur, (b) the redemption date, (c) the principal amount of
Notes to be redeemed and (d) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed or purchased in an offer
to purchase at any time, the Trustee shall select the Notes for redemption or
repurchase as follows: (i) if the Notes are listed, in compliance with the
requirements of the principal national securities exchange on which the Notes
are listed; or (ii) 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.
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 or purchase, the principal amount thereof to be redeemed or
purchased. 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 or purchased. Except as provided in
the preceding sentence, provisions of this Indenture that apply to Notes called
for redemption or purchase also apply to portions of Notes called for redemption
or purchase.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days or such
shorter period as is satisfactory to the Trustee 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; provided, however, that in the case of an optional
redemption in which the Issuers have called for redemption of all outstanding
Notes in connection with a refinancing of such Notes, the Issuers shall be
permitted to (a) specify a proposed redemption date, (b) change the proposed
redemption date not more than two times prior to a final redemption date by
notice mailed to Holders not later than five Business Days prior to the final
redemption date, (c) establish the final redemption date as a date not more than
90 days after the first notice from the Issuers calling the Notes for optional
redemption was mailed to the Holders and (d) rescind the redemption offer at any
time prior to the final redemption date, which recision shall not cause the
maturity of the Notes to have changed. If any Note is to be redeemed in part
only pursuant to Section 3.06 hereof, the notice of redemption that relates to
that note shall state the portion of principal amount thereof to be redeemed.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
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Section 3.05. Deposit of Redemption Price.
On or 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 and Liquidated Damages, 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 and Liquidated Damages, 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 shall cease to accrue on the Notes or
the portions of Notes called for redemption whether redeemed Notes are delivered
to the Paying Agent for payment. 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 and Liquidated Damages, if any, 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 shall be paid on the unpaid principal, from
the redemption date until such principal is paid, and to the extent lawful on
any Interest not paid on such unpaid principal, in each case at the rate
provided in the Notes and in Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, upon cancellation of
the old Note, 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. No Notes in denominations of $1,000 or less shall be redeemed in
part.
Section 3.07. Optional Redemption.
At any time prior to August 1, 2002, the Issuers may on any one or more
occasions redeem up to 35% of the original aggregate principal amount of Notes
issued under this Indenture at a redemption price of 113% of the principal
amount thereof, plus accrued and unpaid Interest and Liquidated Damages, if any,
to the redemption date, with the net cash proceeds of a Qualified Equity
Offering; provided, however, that: (i) at least 65% of the aggregate principal
amount of the Notes originally issued under this Indenture remains outstanding
immediately after the occurrence of such redemption (excluding Notes held by the
Partnership and its Subsidiaries); and (ii) the redemption must occur within 60
days of the date of the closing of such Qualified Equity Offering. Except as
provided herein, the Notes will not be redeemable at the Issuers' option prior
to August 1, 2003. On or after August 1, 2003, the Issuers may redeem all or a
part of the Notes upon not less than 30 nor more than 60 days' notice, at the
following redemption prices (expressed as percentages of principal amount) 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 1 of the years indicated below:
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Year Percentage
---- ----------
2003..................... 106.50%
2004..................... 103.25%
2005 and thereafter...... 100.00%
(b) Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Disposition Pursuant to Gaming Laws.
(a) Redemption Pursuant to Gaming Authority. Notwithstanding any other
provision of this Article 3, if any Gaming Authority requires that a Person who
is a Holder or the Beneficial Owner of a Note be licensed, qualified or found
suitable under any applicable Gaming Law, the Holder or Beneficial Owner, as the
case may be, shall apply for a license, qualification or a finding of
suitability within the time period required by the Gaming Authority. If the
Holder or Beneficial Owner fails to apply for such license, qualification or
finding of suitability within the required time period, such Holder or
Beneficial Owner, as the case may be, shall be required to dispose of its Notes
within the time specified by the Gaming Authority and the Issuers shall have the
right to redeem the Notes of such Holder or Beneficial Owner, subject to
approval of any applicable Gaming Authority, at the least of (i) the principal
amount thereof, (ii) the amount that such Holder or Beneficial Owner paid for
the Notes or (iii) the fair market value of the Notes. Immediately upon the
imposition of a requirement to dispose of Notes by a Gaming Authority, such
Holder or Beneficial Owner of the Notes shall, to the extent required by
applicable law, have no further right (x) to exercise, directly or indirectly,
through any trustee or nominee or any other Person or entity, any right
conferred by the Notes or (y) to receive any Interest, dividends, economic
interests or any other distributions or payments with respect to the Notes or
any remuneration in any form with respect to the Notes from the Issuers or the
Trustee. Any Holder of Notes that is required to apply for a license,
qualification or finding of suitability must pay all fees and costs of any
investigation by the applicable Gaming Authorities. The Issuers are not
required to pay or reimburse any Holder of the Notes or Beneficial Owner 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. The Issuers shall notify the Trustee in writing of any such
redemption as soon as practicable; provided, however, that until such time as
the Trustee receives notice from the Issuers of such redemption in accordance
with Section 14.02 hereof, the Trustee shall be entitled to treat the Holder or
Beneficial Owner as having all of its rights under the Indenture. The Trustee
shall report the names of the record Holders of the Notes to any Gaming
Authority when required by law.
(b) Except as described in this Section 3.08, the Issuers are not
required to make mandatory redemption or sinking fund payments with respect to
the Notes.
Section 3.09. Repurchase Offers.
In the event that, pursuant to Section 4.10, 4.11 or 4.16 hereof, the
Issuers shall be required to commence, or if pursuant to clause (vii) of Section
4.07 hereof, the Issuers
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commence, an offer to all Holders to purchase Notes (a "Repurchase Offer"), they
shall follow the procedures specified below.
The Repurchase Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by 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 at the Purchase Price (as determined in accordance
with clause (vii) of Section 4.07, Section 4.10, 4.11 or 4.16 hereof, as the
case may be) the principal amount of Notes required to be purchased pursuant to
clause (vii) of Section 4.07, Section 4.10, 4.11 or 4.16 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 such Repurchase Offer. Payment for any Notes
so purchased shall be made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid Interest and
Liquidated Damages, if any, shall be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
Interest shall be payable to Holders who tender Notes pursuant to such
Repurchase Offer.
Upon the commencement of a Repurchase 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 such Repurchase
Offer. The Repurchase Offer shall be made to all Holders. The notice, which
shall govern the terms of such Repurchase Offer, shall state:
(a) that the Repurchase Offer is being made pursuant to this Section 3.09
and clause (vii) of Section 4.07, Section 4.10, 4.11 or 4.16 hereof, as the case
may be, and the length of time the Repurchase Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrue Interest and Liquidated Damages, if any;
(d) that, unless the Issuers default in making such payment, any Note
accepted for payment pursuant to the Repurchase Offer shall cease to accrue
Interest and Liquidated Damages, if any after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to any
Repurchase Offer may elect to have Notes purchased in integral multiples of
$1,000 only;
(f) that Holders electing to have a Note purchased pursuant to any
Repurchase Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, 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 on or
before the Purchase Date;
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(g) that Holders shall be entitled to withdraw their election if the
Issuers, the Depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Notes shall be selected for purchase
pursuant to the terms of Section 3.02 hereof, and that Holders whose Notes were
purchased only in part shall be issued new Notes equal in principal amount to
the unpurchased portion of the Notes surrendered; and
(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, pursuant to the terms of Section 3.02 hereof, the Offer
Amount of Notes or portions thereof tendered pursuant to the Repurchase 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 3.09. The Issuers, the Depositary or the Paying Agent, as
the case may be, shall promptly (but in any case not later than five Business
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 Repurchase Offer on the Purchase
Date.
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 that such laws or regulations are applicable in connection with the
repurchase of the Notes pursuant to the Repurchase Offer. To the extent that
the provisions of Rule 14e-1 under the Exchange Act or any securities laws or
regulations conflict with the provisions of Sections 3.09, clause (vii) of
Section 4.07, 4.10, 4.11 or 4.16 of this Indenture, the Issuers will comply with
the applicable securities laws and regulations and will not be deemed to have
breached its obligations under those sections of this Indenture.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
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ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
The Issuers shall pay or cause to be paid the principal of, premium, if
any, and Interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and Interest shall be considered paid on the
date due if the Paying Agent, if other than the Issuers or a Subsidiary thereof,
holds as of 12:00 noon 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 then due. If Interest payable on
the Notes includes Contingent Interest, the Issuers shall provide a calculation
of such Contingent Interest in reasonable detail to the Trustee in the form of
an Officer's Certificate at the time of depositing the amount of such Contingent
Interest with the Trustee. If Interest payable on the Notes does not include
Contingent Interest, the Issuers shall provide notice to the Trustee to that
effect. 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 Fixed Interest rate on the Notes
to the extent lawful; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of Interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.02. 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.
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The Issuers hereby designate the Corporate Trust Office of the Trustee as
one such office or agency of the Issuers in accordance with Section 2.03 hereof.
Section 4.03. Reports.
Whether or not required by the Commission, so long as any notes are
outstanding, the Issuers will furnish to the Holders of Notes, within 15 days
following the time periods specified in the Commission's rules and regulations:
(a) 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" and,
with respect to the annual information only, a report on the annual financial
statements by the Issuers' certified independent accountants; and (b) 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, within 15
days after filing such documents with the Commission, the Guarantors shall
furnish to the Holders of the Notes the items in (a) and (b) of this paragraph.
If the Issuers have designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the consolidated quarterly and annual financial information
required by the preceding paragraph will include a reasonably detailed
presentation, either on the face of the financial statements or in the footnotes
thereto, and in Management's Discussion and Analysis of Financial Condition and
Results of Operations, of the financial condition and results of operations of
the Issuers and the Partnership's Restricted Subsidiaries separate from the
financial condition and results of operations of the Partnership's Unrestricted
Subsidiaries as required by the rules and regulations of the Commission.
In addition, following the consummation of the exchange offer contemplated
by the Registration Rights Agreement, whether or not required by the Commission,
the Issuers will file a copy of all of the information and reports referred to
in clauses (a) and (b) of the first paragraph of this Section 4.03 with the
Commission for public availability within the time periods specified in the
Commission's rules and regulations (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 of
Notes 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. The Issuers shall at all times comply with TIA (S)314(a).
Section 4.04. Compliance Certificate.
(a) The Issuers and each Guarantor (to the extent that such Guarantor is
so required under the TIA) shall deliver to the Trustee, within 120 days after
the end of each fiscal year of such Issuer or Guarantor, as applicable, an
Officers' Certificate stating that a review of the activities of the Issuers,
the Guarantors and their Subsidiaries, as the case may be, during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether each of the Issuers and the Guarantors, as the case
may be, has kept, observed, performed and fulfilled its obligations under this
Indenture, the Cash Collateral and
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Disbursement Agreement and the Collateral Documents, and further stating, as to
each such Officer signing such certificate, that to the best of his or her
knowledge each of the Issuers and the Guarantors, as the case may be, has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture, the Cash Collateral and Disbursement Agreement and the Collateral
Documents and is not in default in the performance or observance of any of the
terms, provisions and conditions of this Indenture, the Cash Collateral and
Disbursement Agreement 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 applicable entity is
taking or proposes to take with respect thereto) and to the best of his or her
knowledge, no event has occurred and is continuing which is, or after notice or
lapse of time or both would become, an Event of Default (or, if such an event
has occurred and is continuing, specifying each such event known to such Officer
and the nature and status thereof) 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
applicable entity is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Issuers' and the Guarantors', as the case may be,
independent public accountants (each of which 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 either of the Issuers or the Guarantors, as the case
may be, has 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 proposes to take with
respect thereto.
Section 4.05. Taxes.
The Issuers shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
Each Issuer and each of the Guarantors covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and each
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Issuer and each of the Guarantors (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
Section 4.07. Restricted Payments.
The Partnership shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (a) declare or pay any dividend or make
any other payment or distribution on account of the Partnership's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Partnership
or any of its Restricted Subsidiaries) or to the direct or indirect holders of
the Partnership's or any of its Restricted Subsidiaries' Equity Interests in any
capacity (other than dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Partnership or dividends or distributions
payable to the Partnership or a Restricted Subsidiary of the Partnership); (b)
purchase, redeem or otherwise acquire or retire for value (including, without
limitation, in connection with any merger or consolidation involving the
Partnership) any Equity Interests of the Partnership or any direct or indirect
parent of the Partnership; (c) 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, except (i) a
payment of Interest or principal at the Stated Maturity thereof and (ii) a
payment at any time of Interest or principal on Indebtedness permitted by
clauses (h) or (j) of the second paragraph of Section 4.09 hereof; or (d) make
any Restricted Investment (all such payments and other actions set forth in
clauses (a) through (d) above being collectively referred to as "Restricted
Payments"), unless, at the time of and after giving effect to such Restricted
Payment:
(i) the Shreveport Resort is Operating;
(ii) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(iii) the Partnership 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 applicable four-quarter period, have been
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
4.09 hereof; and
(iv) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Partnership and its Restricted
Subsidiaries after the date of this Indenture (excluding Restricted Payments
permitted by clauses (ii) through (v) and (vii) through (ix) of the next
succeeding paragraph), is less than the sum, without duplication, of:
(A) 50% of the Consolidated Net Income of the Partnership for
the period (taken as one accounting period) from the date hereof to the
end of the Partnership's most recently ended fiscal quarter for which
internal financial statements are available
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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
(B) 100% of the aggregate net cash proceeds received by the
Partnership since the date hereof as a contribution to its common equity
capital (other than amounts contributed directly or indirectly by
Hollywood Casino to the Partnership (I) which are deposited into the
Equity Escrow Account and (II) pursuant to the Completion Capital
Agreement), plus
(C) 50% of any cash dividends received by the Partnership or any
of its Restricted Subsidiaries after the date hereof from an Unrestricted
Subsidiary of the Partnership, to the extent such dividends were not
otherwise included in Consolidated Net Income of the Partnership for such
period, plus
(D) to the extent that any Restricted Investment that was made
after the date hereof is sold for cash or otherwise liquidated or repaid
for cash, the sum of (I) 50% of the cash proceeds with respect to such
Restricted Investment in excess of the aggregate amount invested in such
Restricted Investment (less the cost of disposition, if any) and (II) the
aggregate amount invested in such Restricted Investment; plus
(E) to the extent that any Subsidiary that was designated as an
Unrestricted Subsidiary after the date hereof is redesignated as a
Restricted Subsidiary, the lesser of (I) the amount of the Investment in
the Subsidiary treated as a Restricted Payment at and since the time that
the Subsidiary was designated as an Unrestricted Subsidiary, as determined
by the last paragraph of this covenant, and (II) the fair market value of
the Investment in the Subsidiary as of the date that it is redesignated as
a Restricted Subsidiary.
With respect to any payments made pursuant to (a) clauses (i) through
(iv), (vii) and (viii) below, so long as no Default has occurred and is
continuing or would be caused thereby, (b) clause (v) below, regardless of
whether any Default or Event of Default has occurred and is continuing or would
be caused thereby and (c) clauses (vi) and (ix) below, so long as no Default or
Event of Default in the payment when due of any principal, Interest, premium or
Liquidated Damages on the Notes shall have occurred or be continuing or would be
caused thereby, the preceding provisions will not prohibit:
(i) the payment of any dividend 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 of the Partnership
or any of its Restricted Subsidiaries that is a Guarantor or of any Equity
Interests of the Partnership in exchange for, or out of the net cash proceeds
of the substantially concurrent sale (other than to a Subsidiary of the
Partnership) of, Equity Interests of the Partnership (other than Disqualified
Stock); provided, however, that the amount of any such net cash proceeds that
are utilized
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for any such redemption, repurchase, retirement, defeasance or other
acquisition shall be excluded from clause (iv)(B) of the preceding paragraph;
(iii) the defeasance, redemption, repurchase or other acquisition of
pari passu or subordinated Indebtedness of the Partnership or any of its
Restricted Subsidiaries that is a Guarantor with the net cash proceeds from
an incurrence of Permitted Refinancing Indebtedness;
(iv) the payment to the Manager of (a) cost reimbursements in the
amounts permitted by the Technical Services Agreement and the Management
Agreement and (b) management fees in the amounts permitted by the Management
Agreement, subject in the case of clause (b) above to (I) the terms of the
Manager Subordination Agreement relating thereto between the Manager and the
Trustee and (II) the requirement that all such payments are made in
compliance with Section 4.30 hereof;
(v) the payment to (a) HCS I or HCS II of any amounts that they may
be required to pay to Paddlewheels pursuant to the Assignment Agreement and
(b) Paddlewheels of amounts required to be paid to it by the Partnership
pursuant to the terms of the Assignment Agreement and the Marine Services
Agreement;
(vi) any redemption required pursuant to Section 3.08 hereof;
(vii) the payment of (a) dividends or distributions by the Partnership
within nine months after the Shreveport Resort begins Operating of an amount
equal to (I) 50% of the Remaining Construction Amounts, less (II) the amount
paid by the Issuers to holders of Notes pursuant to the Construction
Repurchase Offer; provided, however, that (A) no payment may be made pursuant
to this clause (vii) prior to the time that the Construction Repurchase Offer
has been consummated and (B) the Construction Repurchase Offer may only be
commenced after the Shreveport Resort begins Operating and all Project Costs
have been invoiced and paid, other than those amounts required to be retained
pursuant to the Cash Collateral and Disbursement Agreement, and (b) amounts
required to be paid pursuant to the terms of the License Agreement;
(viii) payments by the Partnership to any of its Affiliates with
respect to reimbursements for costs incurred by such Affiliates in connection
with the provision or procurement of goods or services by such Affiliates to
the Partnership in the ordinary course of business; and
(ix) payments by the Partnership to HWCC-Louisiana, HCS I and HCS Il
in amounts equal to the Tax Amount.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the assets or securities
proposed to be transferred or issued to or by the Partnership or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any assets or securities that are required to be valued by this
Section 4.07 shall be determined by Partnership's Board of Directors whose
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resolution with respect thereto shall be delivered to the Trustee. The
Partnership's Board of Directors' determination must be based upon an opinion or
appraisal issued by an accounting, appraisal or investment banking firm of
national standing if the fair market value exceeds $5.0 million. Not later than
the date of making any Restricted Payment, the Partnership 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 were computed, together with a copy of any fairness opinion or
appraisal required by this Indenture.
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.
The Partnership shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to: (a) pay dividends or make any other distributions on
its Capital Stock to the Partnership or any of its Restricted Subsidiaries, or
with respect to any other interest or participation in, or measured by, its
profits, or pay any Indebtedness owed to the Partnership or any of its
Restricted Subsidiaries; (b) make loans or advances to the Partnership or any of
its Restricted Subsidiaries; or (c) transfer any of its properties or assets to
the Partnership or any of its Restricted Subsidiaries.
The preceding restrictions will not apply to encumbrances or restrictions
existing under or by reason of: (a) the Notes, this Indenture, the Note
Guarantees or the Collateral Documents; (b) applicable law; (c) customary non-
assignment provisions in leases entered into in the ordinary course of business
and consistent with past practices; (d) Permitted Refinancing Indebtedness;
provided, however, that the restrictions contained in the agreements governing
such Permitted Refinancing Indebtedness are no more restrictive, taken as a
whole, than those contained in the agreements governing the Indebtedness being
refinanced; (e) the acquisition of the Capital Stock of any Person, or property
or assets of any Person by the Partnership or any Restricted Subsidiary, if the
encumbrances or restrictions (i) existed at the time of the acquisition and were
not incurred in contemplation thereof and (ii) are not applicable to any Person
or the property or assets of any Person other than the Person acquired or the
property or assets of the Person acquired; (f) purchase money obligations or
capital lease obligations for FF&E acquired with FF&E Financing that impose
restrictions of the type described in clause (c) of the first paragraph of this
covenant on the FF&E so acquired; (g) any agreement for the sale or other
disposition of a Restricted Subsidiary that restricts distributions by that
Restricted Subsidiary pending its sale or other disposition; (h) Liens securing
Indebtedness that limit the right of the debtor to dispose of the assets subject
to such Lien; (i) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements, asset sale agreements, stock
sale agreements and other similar agreements entered into in the ordinary course
of business; and (j) restrictions on cash or other deposits or net worth imposed
by customers under contracts entered into in the ordinary course of business.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Equity.
The Partnership 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, with respect to
(collectively, "incur") any Indebtedness
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(including Acquired Debt), and the Partnership shall not issue any Disqualified
Stock and shall not permit any of its Subsidiaries to issue any shares of
preferred equity; provided, however, that, the Issuers may incur Indebtedness
(including Acquired Debt) or issue Disqualified Stock, if (a) the Shreveport
Resort is Operating; and (b) the Fixed Charge Coverage Ratio for the
Partnership'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 2.0 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 preferred equity or Disqualified Stock had
been issued, as the case may be, at the beginning of such four-quarter period.
The first paragraph of this Section 4.09 shall not prohibit the incurrence
of any of the following items of Indebtedness so long as no Default or Event of
Default has occurred and is continuing (collectively, "Permitted Debt"):
(a) the incurrence by the Partnership and its Restricted Subsidiaries of
(i) Indebtedness represented by the Notes to be issued on the date of this
Indenture and the Exchange Notes to be issued pursuant to the Registration
Rights Agreement and (ii) their respective obligations arising under the
Collateral Documents to the extent such obligations would represent
Indebtedness;
(b) the incurrence by the Partnership or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance or replace Indebtedness (other
than intercompany Indebtedness) that was permitted by this Indenture to be
incurred under the first paragraph of this Section 4.09 or clauses (a), (b), (h)
and (j) of this paragraph;
(c) the incurrence by the Partnership or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Partnership and
any of its Restricted Subsidiaries as provided in Section 4.24 hereof; provided,
however, that (i) such Indebtedness must be expressly subordinated to the prior
payment in full in cash of all Obligations with respect to the Notes and (ii)
(A) any subsequent issuance or transfer of Equity Interests that results in any
such Indebtedness being held by a Person other than the Partnership or a
Restricted Subsidiary thereof or (B) any sale or other transfer of any such
Indebtedness to a Person that is not either the Partnership or a Restricted
Subsidiary thereof shall be deemed, in each case, to constitute an incurrence of
such Indebtedness by the Partnership or such Restricted Subsidiary, as the case
may be, that was not permitted by this clause (c);
(d) the incurrence by the Partnership or any of its Restricted
Subsidiaries 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;
(e) the Guarantee by the Partnership or any of its Restricted Subsidiaries
of Indebtedness permitted to be incurred by another provision of this Section
4.09;
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(f) the incurrence by the Partnership or any of its Restricted
Subsidiaries of Indebtedness in respect of performance, surety or appeal bonds
in the ordinary course of business;
(g) the accrual of interest, the accretion or amortization of original
issue discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms and the payment of dividends on
Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an
issuance of Disqualified Stock for the purposes of this covenant; provided,
however, in each such case, that the amount thereof is included in Fixed Charges
of the Partnership or the applicable Restricted Subsidiary as accrued;
(h) the incurrence by the Partnership of FF&E Financing; provided,
however, that (i) 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,
(ii) no Indebtedness incurred under the Notes is utilized for the purchase or
lease of such FF&E and (iii) the aggregate principal amount of such
Indebtedness, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness incurred pursuant to this clause,
does not exceed $35.0 million outstanding at any time;
(i) the Guarantee by the Partnership of Indebtedness incurred by any
minority or women owned business enterprise that provides goods or services to
the Partnership; provided, however, that (i) such Indebtedness is directly
related to the construction, development or operation of the Shreveport Resort
and (ii) the total amount of Guarantees for which the Partnership has become and
may become obligated pursuant to this clause may not exceed an aggregate of
$200,000;
(j) the incurrence by the Partnership or any of its Restricted
Subsidiaries of Indebtedness, including all Permitted Refinancing Indebtedness
incurred to refund, refinance or replace any Indebtedness incurred pursuant to
this clause, in an aggregate principal amount not to exceed $10.0 million at any
one time outstanding for working capital purposes and other general purposes;
(k) the incurrence by the Partnership of Indebtedness to Hilton New
Orleans Corporation, a Louisiana corporation, pursuant to the terms of the Loan
and Settlement Agreement in an amount not to exceed $2.0 million; and
(l) the incurrence by the Partnership of Indebtedness to the City of New
Orleans pursuant to the Compromise Agreement in the amount of $5.0 million to be
paid promptly after the issuance of the Notes.
The Partnership will not incur any Indebtedness (including Permitted Debt)
that is contractually subordinated in right of payment to any other Indebtedness
of the Partnership unless such Indebtedness is also contractually subordinated
in right of payment to the Notes on substantially identical terms; provided,
however, that no Indebtedness of the Partnership shall be
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deemed to be contractually subordinated in right of payment to any other
Indebtedness of the Partnership solely by virtue of being unsecured.
For purposes of determining compliance with this Section 4.09, in the
event that an item of proposed Indebtedness meets the criteria of more than one
of the categories of Permitted Debt described in clauses (a) through (k) above,
or is entitled to be incurred pursuant to the first paragraph of this Section
4.09, the Partnership will be permitted to classify such item of Indebtedness on
the date of its incurrence in any manner that complies with this Section 4.09.
If any Indebtedness that may be incurred under this Section 4.09 may be
secured by a Pari Passu Lien on the Pari Passu Collateral, upon the request of
the Issuers, the Trustee is authorized to enter into an intercreditor agreement
with the holder or holders of that Indebtedness (the "Pari Passu Debtholder") in
substantially the form as Exhibit G hereto.
Section 4.10. Asset Sales.
The Partnership shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless: (a) the Shreveport Resort is
Operating; (b) the Partnership (or the Restricted Subsidiary, as the case may
be) receives consideration at the time of such Asset Sale at least equal to the
fair market value of the assets or Equity Interests issued or sold or otherwise
disposed of; (c) such fair market value is determined by the Partnership's Board
of Directors and evidenced by a resolution of the Board of Directors as set
forth in an Officers' Certificate delivered to the Trustee; and (d) at least 75%
of the consideration therefor received by the Partnership or such Restricted
Subsidiary is in the form of cash. For purposes of this provision and not for
purposes of the definition of "Net Proceeds" (except to the extent set forth in
such definition with respect to the conversion of non-cash proceeds to cash),
each of the following shall be deemed to be cash: (x) any liabilities (as shown
on the Partnership's or such Restricted Subsidiary's most recent balance sheet)
of the Partnership or any Restricted Subsidiary (other than contingent
liabilities and liabilities that are by their terms subordinated to the Notes or
any Restricted Subsidiary's Guarantee) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases the
Partnership or such Restricted Subsidiary from further liability; and (y) any
securities, Notes or other obligations received by the Partnership or any such
Restricted Subsidiary from such transferee that are contemporaneously (subject
to ordinary settlement periods) converted by the Partnership or such Restricted
Subsidiary into cash (to the extent of the cash received in that conversion).
Within 270 days after the receipt of any Net Proceeds from an Asset Sale,
the Partnership or the Restricted Subsidiary may apply such Net Proceeds to make
a capital expenditure, improve real property or acquire longterm assets that are
used or useful in a line of business permitted under Section 4.14 hereof;
provided, however, that the Partnership or the Restricted Subsidiary, as the
case may be, grants to the Trustee, on behalf of the Holders of the Notes, and,
if the Asset Sale relates to Pari Passu Collateral, the holders of any
Indebtedness secured by the Pari Passu Collateral, a first priority perfected
security interest, subject to Permitted Liens, on any such property or assets
acquired or constructed with the Net Proceeds of any Asset Sale on the terms set
forth herein, the intercreditor agreement entered into by the Partnership with
respect to the Pari Passu Collateral in accordance with this Indenture and the
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Collateral Documents. Pending the final application of any such Net Proceeds,
the Partnership or the applicable Restricted Subsidiary may invest such Net
Proceeds in Cash Equivalents held in an account in which the Trustee shall have
a first priority perfected security interest, subject to Permitted Liens, for
the benefit of the Holders of the Notes, and, if the Asset Sale relates to the
Pari Passu Collateral, the Holders of any Indebtedness secured by such Pari
Passu Collateral on a pari passu basis with the Notes.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." Within
ten days following the date that the aggregate amount of Excess Proceeds exceeds
$5.0 million, the Partnership will make an offer (an "Asset Sale Offer") to all
Holders of Notes and all holders of other Indebtedness that is pari passu with
the Notes and secured by Pari Passu Collateral containing provisions similar to
those set forth herein with respect to offers to purchase or redeem with the
proceeds of sales of assets to purchase the maximum principal amount of Notes
and such other Indebtedness that may be purchased out of the Excess Proceeds,
pro rata in proportion to the respective principal amounts of the Notes and such
other Indebtedness. The offer price in any Asset Sale Offer will be equal to
100% of principal amount plus accrued and unpaid Interest and Liquidated
Damages, if any, to the date of purchase, and will be payable in cash. If any
Excess Proceeds remain after consummation of an Asset Sale Offer, the Issuers
may use such Excess Proceeds for any purpose not otherwise prohibited by this
Indenture and the Collateral Documents. If the aggregate principal amount of
Notes and such other Indebtedness tendered pursuant to such Asset Sale Offer
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and
such other Indebtedness to be purchased on a pro rata basis based on the
principal amount of Notes and such other Indebtedness tendered and will select
the Notes to be purchased in the manner described under Section 3.02 hereof.
Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
Section 4.11. Events of Loss.
Within 360 days after any Event of Loss with respect to any Collateral
with a fair market value (or replacement cost, if greater) in excess of $1.0
million, the Partnership or the affected Restricted Subsidiary of the
Partnership, 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 Shreveport Resort, with no concurrent obligation to make any purchase of
any Notes; provided, however, that:
(a) the Partnership delivers to the Trustee within 60 days of such Event
of Loss a written opinion from a reputable contractor that the Shreveport Resort
with at least the Minimum Facilities can be rebuilt, repaired, replaced or
constructed and Operating within 360 days of the Event of Loss;
(b) an Officers' Certificate certifying that the Partnership has available
from Net Loss Proceeds or other sources sufficient funds to complete the
rebuilding, repair, replacement or construction described in clause (a) above;
and
(c) the Net Loss Proceeds are less than $75.0 million.
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Any Net Loss Proceeds that are not reinvested or not permitted to be
reinvested as provided in the first sentence of this Section 4.11 will be deemed
"Excess Loss Proceeds." Within 10 days following the date that the aggregate
amount of Excess Loss Proceeds exceeds $5.0 million, the Partnership will make
an offer (an "Event of Loss Offer") to all Holders of Notes and holders of other
Indebtedness that is pari passu with the Notes and secured by Pari Passu
Collateral containing provisions similar to those set forth in this Indenture
with respect to offers to purchase or redeem with the proceeds of Events of Loss
to purchase the maximum principal amount of Notes and such other Indebtedness
that may be purchased out of the Excess Loss Proceeds, pro rata in proportion to
the respective principal amounts of the Notes and such other Indebtedness. The
offer price in any Event of Loss Offer will be equal to 100% of principal amount
plus accrued and unpaid Interest and Liquidated Damages, if any, to the date of
purchase, and will be payable in cash. If any Excess Loss Proceeds remain after
consummation of an Event of Loss Offer, the Issuers may use such Excess Loss
Proceeds for any purpose not otherwise prohibited by this Indenture and the
Collateral Documents. 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 and such other Indebtedness to be purchased on a pro rata
basis based on the principal amount of Notes and such other Indebtedness
tendered and will select the Notes to be purchased in the manner described under
Section 3.02 hereof. Upon completion of any such Event of Loss Offer, the
amount of Excess Loss Proceeds shall be reset at zero.
If, prior to the date on which the Shreveport Resort becomes Operating,
the Net Loss Proceeds to be used for rebuilding, repair, replacement or
construction of the Shreveport Resort exceed $5.0 million, then the Net Loss
Proceeds will be deposited into an account in which the Trustee will be granted
a first priority perfected security interest, subject to Permitted Liens;
provided, however, that any such Net Loss Proceeds will be disbursed in a manner
consistent with the Plans and the revised budget for the Shreveport Resort.
Pending their final application, all Net Loss Proceeds will be invested in Cash
Equivalents held in an account in which the Trustee has a first priority
perfected security interest, subject to Permitted Liens, for the benefit of the
Holders of Notes and, if the Event of Loss relates to Pari Passu Collateral, the
holders of any Indebtedness secured by such Pari Passu Collateral on a pari
passu basis with the Notes. These pledged funds and securities will be released
to the Partnership to pay for or reimburse the Partnership for the actual cost
of a permitted use of Net Loss Proceeds as provided above, or the Event of Loss
Offer, pursuant to the terms of the Collateral Documents. The Partnership or the
applicable Restricted Subsidiary will grant to the Trustee, on behalf of the
Holders of Notes and, if the Event of Loss relates to Pari Passu Collateral, the
holders of any Indebtedness secured by the Pari Passu Collateral, a first
priority perfected security interest, subject to Permitted Liens, on any
property or asset rebuilt, repaired, replaced or constructed with such Net Loss
Proceeds pursuant to the terms set forth in this Section 4.11, the intercreditor
agreement entered into by the Partnership with respect to the Pari Passu
Collateral in accordance with this Indenture and the Collateral Documents.
In the event of an Event of Loss pursuant to clause (3) of the definition
of "Event of Loss" with respect to any property or assets that have a fair
market value (or replacement cost, if greater) in excess of $5.0 million, the
Partnership or the affected Restricted Subsidiary, as the case may be, shall be
required to receive consideration (a) at least equal to the fair market value
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(evidenced by a resolution of the Partnership's Board of Directors set forth in
an Officers' Certificate delivered to the Trustee) of the property or assets
subject to the Event of Loss and (b) with respect to any "Event of Loss" of any
portion of the hotel, riverboat casino or parking structure and restaurant and
entertainment promenade that are a part of the Shreveport Resort, at least 90%
of which is in the form of Cash Equivalents.
Section 4.12. Transactions with Affiliates.
The Partnership shall not, and shall not permit any of its Restricted
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, an "Affiliate Transaction"), unless: (a) such Affiliate
Transaction is on terms that are no less favorable to the Partnership or the
relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Partnership or such Restricted Subsidiary with an
unrelated Person; and (b) the Partnership delivers to the Trustee:
(i) 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 Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with this
covenant and that such Affiliate Transaction has been approved unanimously
by the Board of Directors; and
(ii) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $5.0
million, other than in connection with the Software Agreement, an opinion
as to the fairness to the holders of Notes of such Affiliate Transaction
from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing.
The foregoing paragraph shall not apply to the following: (a) payments
made pursuant to the Completion Capital Agreement, Management Agreement, License
Agreement, Tax Sharing Agreement, Technical Services Agreement, Assignment
Agreement and Marine Services Agreement; (b) purchases of goods and services in
the ordinary course of business; (c) transactions between or among the
Partnership and/or its Restricted Subsidiaries; (d) Restricted Payments that are
permitted by Section 4.07 hereof; (e) reasonable fees and compensation
(including, without limitation, bonuses, retirement plans and securities, stock
options and stock ownership plans) paid or issued to and indemnities provided on
behalf of, officers, directors, employees or consultants of the Partnership or
any Restricted Subsidiary in the ordinary course of business; and (f) any other
transactions that do not involve, in the aggregate for all such transactions,
the payment of more than $250,000 in consideration in any one calendar year.
Section 4.13. Liens.
The Partnership shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume or suffer to exist any Lien of
any kind on any asset now owned
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or hereafter acquired, or any proceeds, income or profits therefrom or assign or
convey any right to receive income therefrom, except Permitted Liens.
Section 4.14. Line of Business.
The Partnership shall not, and shall not permit any Subsidiary to, engage
in any business or investment activities other than a Permitted Business.
Neither the Partnership nor any of its Subsidiaries may conduct a Permitted
Business in any gaming jurisdiction in which the Partnership or such Subsidiary
is not licensed as of the date of this Indenture if the Holders of the Notes
shall be required to be licensed as a result thereof; provided, however, that
the provisions described in this sentence shall not prohibit the Partnership or
any of its Subsidiaries from conducting a Permitted 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. The Partnership 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 Shreveport Resort until the Shreveport
Resort is Operating.
Section 4.15. Corporate Existence.
Subject to Article 5 and Section 11.05 hereof, each of the Issuers and the
Guarantors shall do or cause to be done all things necessary to preserve and
keep in full force and effect (a) its corporate or organizational existence, as
the case may be, and the corporate, partnership or other existence of each of
its Subsidiaries, in accordance with the respective organizational documents (as
the same may be amended from time to time) of each of the Issuers or any such
Subsidiary and (b) the rights (charter and statutory), licenses and franchises
of each 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, partnership or other existence of any of its Subsidiaries, if
the Partnership's Board of Directors 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 4.16. Offer to Repurchase Upon Change of Control.
If a Change of Control occurs, each Holder of Notes shall have the right
to require the Issuers to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of that Holder's Notes pursuant to an offer described
below (a "Change of Control Offer"). In the Change of Control Offer, the
Issuers shall offer a payment (the "Change of Control Payment") in cash equal to
101% of the aggregate principal amount of Notes repurchased plus accrued and
unpaid Interest and Liquidated Damages, if any, thereon, to the date of
purchase. 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
(the "Change of Control Payment 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, pursuant to the procedures set forth in Section 3.09 hereof,
and described in such notice.
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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.
On the Change of Control Payment Date, the Issuers will, to the extent
lawful: (a) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer; (b) 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 (c) 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, however, that each such new Note shall
be in a principal amount of $1,000 or an integral multiple thereof.
Section 4.17. Construction.
The Partnership will construct the Shreveport Resort, including the
furnishing, fixturing and equipping thereof, with diligence and continuity in a
good and workmanlike manner substantially in accordance with the Plans.
Section 4.18. Limitations on Use of Proceeds.
The Partnership will deposit approximately $111.5 million of the net
proceeds of the Offering into the Construction Disbursement Account, $5.0
million of the net proceeds of the Offering into the Completion Reserve Account
and approximately $27.8 million of the net proceeds of the Offering in the
Interest Reserve Account. The funds in the Cash Collateral Accounts will be
invested solely in Government Securities; provided, however, that, after the
date of this Indenture, funds in the Interest Reserve Account may be invested in
Pledged Securities so long as, on the date of any such investments, such Pledged
Securities have a value on such date which, in the opinion of a nationally
recognized firm of independent public accountants, is at least equal to 125.0%
of (a) the amount of the first three payments of Fixed Interest that are unpaid
or (b) the pro rata portion of those interest payments equal to the percentage
of the interest payments to be secured by the Pledged Securities. All funds in
the Cash Collateral Accounts will be disbursed only in accordance with the Cash
Collateral and Disbursement Agreement.
Section 4.19. Limitation on Status as Investment Company.
The Issuers and the Partnership's Subsidiaries are prohibited 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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Section 4.20. Sale and Leaseback Transactions.
The Partnership will not, and will not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided,
however, that the Partnership may enter into a sale and leaseback transaction
if:
(a) the Partnership could have (i) incurred Indebtedness in an amount
equal to the Attributable Debt relating to such sale and leaseback transaction
under clause (b) of the first paragraph of Section 4.09 hereof and (ii) incurred
a Lien to secure such Indebtedness pursuant to Section 4.13 hereof;
(b) the gross cash proceeds of the sale and leaseback transaction are at
least equal to the fair market value, as determined in good faith by the Board
of Directors of the Partnership 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
(c) the transfer of assets in such sale and leaseback transaction is
permitted by, and the Partnership applies the proceeds of such transaction in
compliance with, Section 4.10 hereof.
Section 4.21. Additional Subsidiary Guarantees.
The Issuers shall, and shall cause each of their Restricted Subsidiaries
to, comply with Section 11.02 hereof.
Section 4.22. Designation of Restricted and Unrestricted Subsidiaries.
The Board of Directors of the Partnership may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if that designation would not cause
a Default. If a Restricted Subsidiary is designated as an Unrestricted
Subsidiary, the aggregate fair market value of all outstanding Investments owned
by the Partnership and its Restricted Subsidiaries in the Restricted Subsidiary
so designated will be deemed to be an Investment made as of the time of such
designation and will reduce the amount available for Restricted Payments under
clause (c) of the first paragraph of Section 4.07 hereof or reduce the amount
available for future Investments under one or more clauses of the definition of
"Permitted Investments," as the Partnership shall determine. The designation of
any such Restricted Subsidiary as an Unrestricted Subsidiary shall only be
permitted if such Restricted Payment would be permitted at that time and if such
Restricted Subsidiary otherwise meets the definition of an "Unrestricted
Subsidiary" set forth in Section 1.01 hereof. The Board of Directors may
redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the
redesignation would not cause a Default.
Section 4.23. Limitation on Issuances and Sales of Equity Interests in
Subsidiaries.
All of the Partnership's Restricted Subsidiaries, other than Shreveport
Capital, shall be wholly owned by the Partnership, by one or more of its
Restricted Subsidiaries or by the Partnership and one or more of its Restricted
Subsidiaries. The Partnership will not, and will not permit any of its
Restricted Subsidiaries to, transfer, convey, sell, lease or otherwise dispose
of
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any Equity Interests in any Restricted Subsidiary of the Partnership to any
Person (other than the Partnership or a Restricted Subsidiary of the
Partnership), unless (a) such transfer, conveyance, sale, lease or other
disposition is of all the Equity Interests in such Restricted 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. In addition, the
Partnership shall not permit any of its Restricted Subsidiaries to issue any of
its Equity Interests to any Person other than to the Partnership or one or more
of its Restricted Subsidiaries.
Section 4.24. Advances to Restricted Subsidiaries.
All advances, other than equity contributions, to Restricted Subsidiaries
made by the Partnership after the date of this Indenture shall be evidenced by
an intercompany Note in favor of the Partnership. Any such intercompany Notes
shall be pledged pursuant to the Collateral Documents to the Trustee as
Collateral to secure the Notes. Each intercompany note shall be payable upon
demand and shall bear interest at a rate equal to the then current fair market
interest rate.
Section 4.25. Compliance with Securities Laws.
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 each
repurchase of Notes pursuant to clause (vii) of Section 4.07 hereof and Sections
4.10, 4.11 or 4.16 hereof. To the extent that the provisions of any securities
laws or regulations conflict with clause (vii) of Section 4.07 hereof or
Sections 3.09, 4.10, 4.11 or 4.16 hereof, the Issuers will comply with the
applicable securities laws and regulations and will not be deemed to have
breached their obligations under this Indenture by virtue of such conflict.
Section 4.26. Payments for Consent.
The Issuers shall not, and shall not permit any of the Partnership's
Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any Holder of Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
and is paid to all Holders of Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
Section 4.27. Further Assurances.
The Issuers shall, and shall cause each of their Restricted 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 to (a) carry out more effectively the
purposes of the Collateral Documents, (b) subject to the Liens created by any of
the Collateral Documents any of the
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properties, rights or interests required to be encumbered thereby, (c) perfect
and maintain the validity, effectiveness and priority of any of the Collateral
Documents and the Liens intended to be created thereby and (d) 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 under any other instrument executed in connection
therewith or granted to the Partnership under the Collateral Documents or under
any other instrument executed in connection therewith.
Section 4.28. Insurance
Until the Notes have been paid in full, the Partnership shall, and shall
cause its Restricted Subsidiaries to, maintain insurance with 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. Customary insurance
coverage shall be deemed to include, without limitation, the following: (a)
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; (b) comprehensive general
liability insurance with minimum limits of $1.0 million; (c) 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;
(d) business interruption insurance at all times on and after the Shreveport
Resort is Operating; and (e) property insurance protecting the property against
losses or damages as is customarily covered by an "all-risk" policy or a
property policy covering "special" causes of loss for a business of similar type
and size; provided, however, that such insurance shall provide coverage of not
less than the lesser of (i) 120% of the outstanding principal amount of the
Notes plus accrued and unpaid Fixed Interest and (ii) 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, in each case, with a deductible no
greater than 2% of the insured value of the Shreveport Resort 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 by this Section 4.28 (except worker's compensation)
shall name the Partnership 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 Partnership 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 Partnership will deliver to the
Trustee on the date of this Indenture and each anniversary thereafter a
certificate of an insurance agent describing the insurance policies obtained by
the Partnership and its Restricted Subsidiaries, together with an
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Officer's Certificate stating that such policies comply with this covenant and
the related applicable provisions of the Collateral Documents.
Section 4.29. Amendments to Certain Agreements
Neither of the Issuers nor any of the Partnership's Restricted
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
any of the Collateral Documents, Completion Capital Agreement, Management
Agreement, License Agreement, Tax Sharing Agreement, Technical Services
Agreement, Assignment Agreement, Marine Services Agreement, Side Agreement and
Contribution and Assumption Agreement; provided, however, that (a) any such
agreement may be amended or modified so long as the terms of such agreement as
so amended or modified are no less favorable to the Holders of the Notes than
the terms of such agreement as of the date of this Indenture and (b) any of the
Collateral Documents may be amended, waived or modified as set forth in Article
9 hereof.
Section 4.30. Restriction on Payment of Management Fees
The Partnership shall not, directly or indirectly, pay to the Manager or
any of its Affiliates any Management Fees, except pursuant to the Management
Agreement in accordance with this Indenture. Amounts payable pursuant to the
Management Agreement may not be prepaid, and no payment of Management Fees,
either current or accrued, will be made:
(a) if at the time of payment of such Management Fee, a Default or an
Event of Default shall have occurred and be continuing or shall occur as a
result thereof; or
(b) to the extent such payment would cause the Partnership'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 to be less than 1.5 to 1
(calculated on a pro forma basis after adding back Management Fees that were
deducted in connection with the calculation of Consolidated Cash Flow during
that period and deducting from Consolidated Cash Flow Management Fees to be paid
pursuant to this provision); provided, however, that, with respect to periods
following the date the Shreveport Resort first becomes Operating and prior to
the time when internal financial statements are available for four full fiscal
quarters following the date the Shreveport Resort first becomes Operating, such
Fixed Charge Coverage Ratio will be calculated 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
Shreveport Resort first becomes Operating.
Any Management Fees not permitted to be paid pursuant to this Section 4.30
will be deferred and will accrue and may be paid only at such time that they
would otherwise be permitted to be paid hereunder.
Section 4.31. Restrictions on Activities of HWCC-Louisiana, HCS i, HCS ii and
Shreveport Capital
None of HWCC-Louisiana HCS I, HCS II or Shreveport Capital may:
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(a) hold any material assets; provided, however, that (i) HWCC-Louisiana
may hold shares of HCS I and HCS II, the $2.5 million in cash that it will use
to fund its obligations under the Membership Interest Purchase Agreement until
such obligations are paid pursuant to the Membership Interest Purchase Agreement
and a promissory note from Paddlewheels in the aggregate amount of $1.0 million
and (ii) HCS I and HCS II may each hold interests in the Partnership;
(b) consolidate or merge with or into any other Person, other than as
permitted under Section 5.01 hereof;
(c) become liable or pay for any obligations; provided, however, that each
of them may become liable for or pay for (i) (A) its obligations under this
Indenture, the Notes, the Note Guarantees, the Registration Rights Agreement,
the Collateral Documents and any performance, surety or appeal bonds incurred in
the ordinary course of business, (B) any judgments and (C) its obligations under
the Membership Interest Purchase Agreement, Tax Sharing Agreement, Assignment
Agreement, Compromise Agreement, Loan and Settlement Agreement, Joint Venture
Agreement, Side Agreement and Contribution and Assumption Agreement and (ii)
Shreveport Capital may be a co-obligor with respect to Indebtedness if the
Partnership is also an obligor of such Indebtedness and the net proceeds thereof
are received by the Partnership or one or more of its Restricted Subsidiaries
other than Shreveport Capital; or
(d) engage in any significant business activities, other than those that
are reasonably necessary for HCS I to take in its capacity as the managing
general partner of the Partnership.
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
Neither the Partnership nor any Guarantor may, directly or indirectly (a)
consolidate or merge with or into another Person (whether or not the Partnership
or the Guarantor is the surviving entity) or (b) sell, assign, transfer, convey
or otherwise dispose of all or substantially all of its and its Restricted
Subsidiaries', properties or assets, taken as a whole, in one or more related
transactions, to another Person; unless:
(i) either (A) the Partnership or the Guarantor, as applicable, is
the surviving entity or (B) the Person formed by or surviving any such
consolidation or merger (if other than the Partnership or the Guarantor)
or to which such sale, assignment, transfer, 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 Person formed by or surviving any such consolidation or
merger (if other than the Partnership or the Guarantor) or the Person to
which such sale, assignment, transfer, conveyance or other disposition
shall have been made assumes all the obligations of the Partnership or the
Guarantor, as applicable, under the Notes, this
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Indenture, the Registration Rights Agreement, the Note Guarantee and the
Collateral Documents pursuant to agreements 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 of the Partnership's or any of its Restricted
Subsidiaries' Gaming Licenses unless a comparable replacement Gaming
License is effective prior to or simultaneously with such loss, suspension
or material impairment;
(v) in the case of a consolidation or merger of the Partnership,
the Partnership or the Person formed by or surviving any such
consolidation or merger (if other than the Partnership) or to which such
sale, assignment, transfer, conveyance or other disposition shall have
been made will, or, in the case of a consolidation or merger of a
Guarantor or the sale, assignment, transfer, conveyance or other
disposition of the property or assets of the Guarantor, the Partnership
shall, on the date of such transaction after giving pro forma effect
thereto and any related financing transactions as if the same had occurred
at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to clause (b) of
the first paragraph of Section 4.09 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,
however, 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.
In addition, neither the Partnership nor any Guarantor may, directly or
indirectly, lease all or substantially all of its properties or assets, in one
or more related transactions, to any other Person. This The restrictions of this
Section 5.01 shall not apply to a sale, assignment, transfer, conveyance or
other disposition of assets between or among the Partnership and any of its
Restricted Subsidiaries.
Notwithstanding the foregoing, the Partnership may reorganize as a
corporation or other business entity in accordance with the procedures
established in this Indenture, provided that the Partnership has delivered to
the Trustee an opinion of counsel in the United States reasonably acceptable to
the Trustee confirming that the reorganization is not adverse to Holder of the
Notes (it being recognized that the reorganization will not be deemed adverse to
the Holders of the Notes solely because (a) of the accrual of deferred tax
liabilities resulting from the reorganization or (b) the successor or surviving
corporation (i) is subject to income tax as a corporate entity or (ii) is
considered to be an "includible corporation" of an affiliated group of
corporations within the meaning of the Internal Revenue Code of 1986, as
amended, or any similar state or local law).
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Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of the Partnership or any Guarantor in accordance with Section 5.01 hereof, the
successor corporation formed by such consolidation or into or with which the
Partnership or Guarantor is merged or to which such sale, assignment, transfer,
lease, conveyance or other disposition is made shall succeed to, and be
substituted for (so that from and after the date of such consolidation, merger,
sale, lease, conveyance or other disposition, the provisions of this Indenture
referring to the "Partnership" or the "Guarantor," as applicable, shall refer
instead to the successor corporation and not to the Partnership or the
Guarantor, as applicable, and may exercise every right and power of the
Partnership or the Guarantor, as applicable, under this Indenture with the same
effect as if such successor Person had been named as the Partnership or the
Guarantor, as applicable, herein; provided, however, that (a) the surviving
entity or acquiring corporation shall (i) assume all of the Obligations of the
acquired Person incurred under this Indenture, the Notes, the Note Guarantees
and the Collateral Documents, as applicable, (ii) acquire and own and operate,
directly or through Subsidiaries, all or substantially all of the properties and
assets then constituting the assets of the Partnership, the applicable Guarantor
or any of their Restricted Subsidiaries, as the case may be, (iii) have been
issued, or have a consolidated Subsidiary which has been issued, Gaming Licenses
to operate the acquired casino operations and entities substantially in the
manner and scope operated prior to such transaction, which Gaming Licenses are
in full force and effect and (iv) be in compliance fully with Section 5.01
hereof and (b) the Partnership or the applicable Guarantor shall deliver to the
Trustee an Officers' Certificate and Opinion of Counsel, subject to customary
assumptions and exclusions, stating that the proposed transaction complies with
this Article 5; provided, further, however, that the predecessor Person shall
not be relieved from the obligation to pay the principal of, premium and
Liquidated Damages, if any, and Interest on, the Notes except in the case of a
sale of all of one or the Partnership's assets that meets the requirements of
Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
Each of the following is an Event of Default:
(a) default for 30 days in the payment when due of Interest on, or
Liquidated Damages with respect to, the Notes; provided that payments of
Contingent Interest that are permitted to be deferred as provided in this
Indenture will not become due for this purpose until such payment is required to
be made pursuant to the terms of this Indenture;
(b) default in payment when due of the principal of, or premium, if any,
on the Notes;
(c) (i) default in the payment of principal of, premium, if any, and
Interest on Notes required to be purchased pursuant to Sections 4.10, 4.11 and
4.16 hereof, when due and payable;
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and (ii) failure to perform or comply with the provisions described under (A)
Sections 4.18 or 5.01, or (B) Section 4.07 but only if the failure under this
clause (B) is caused by a Restricted Payment described in the first set of
clauses (a) through (c) of the first paragraph of Section 4.07 hereof;
(d) failure by (i) either of the Issuers or any of the Partnership's
Restricted Subsidiaries for 60 days after notice thereof to comply with the any
of the other agreements in this Indenture not set forth in clause (c) above or
(ii) the Partnership for 30 days after written notice thereof from the Issuers
in accordance with Section 4.04(c) hereof to comply with any of the agreements
in the Cash Collateral and Disbursement Agreement;
(e) 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 Partnership or any of its Restricted Subsidiaries (or the
payment of which is guaranteed by the Partnership or any of its Restricted
Subsidiaries) whether such Indebtedness or guarantee now exists, or is created
after the date of this Indenture, if that default:
(i) is caused by a failure to pay principal of, or Interest or
premium, if any, 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
(ii) 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) failure by either of the Issuers or any of the Partnership's
Restricted Subsidiaries to pay final judgments aggregating in excess of $5.0
million, which judgments are not paid, discharged or stayed for a period of 60
days;
(g) (i) breach by either of the Issuers or any Guarantor in any material
respect of any representation or warranty or agreement in any of the Collateral
Documents or in any certificates delivered in connection therewith, (ii) the
repudiation by any of them of any of its obligations under any of the Collateral
Documents, (iii) the unenforceability of the Collateral Documents against any of
them for any reason which continues for 30 days after written notice from the
Trustee or Holders of at least 25% in outstanding principal amount of Notes or
(iv) the loss of the perfection or priority of the Liens granted by any of them
pursuant to the Collateral Documents for any reason;
(h) except as permitted by this Indenture, any Note Guarantee by a
Guarantor with Total Assets of $5.0 million or more shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease for any reason
to be in full force and effect or any Guarantor with Total Assets of $5.0
million or more, or any Person acting on behalf of any such Guarantor, shall
deny or disaffirm its obligations under its Note Guarantee;
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(i) the Partnership or any of the Partnership's Restricted 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; or
(j) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that: (i) is for relief against the Partnership or any of the
Partnership's Restricted Subsidiaries in an involuntary case; (ii) appoints a
custodian of the Partnership or any of the Partnership's Restricted Subsidiaries
for all or substantially all of the property of the Partnership or any of the
Partnership's Restricted Subsidiaries; or (iii) orders the liquidation of the
Partnership or any of the Partnership's Restricted Subsidiaries; and the order
or decree remains unstayed and in effect for 60 consecutive days;
(k) default by Hollywood Casino in the performance of its obligations set
forth in, or repudiation of its obligations under, the Completion Capital
Agreement;
(l) if HWCC-Louisiana, HCS I, HCS II and the Partnership ever fail to own
collectively 100% of the issued and outstanding Equity Interests of Shreveport
Capital; or
(m) the failure of the Shreveport Resort to be Operating by the Operating
Deadline or any revocation, suspension or loss of any Gaming License which
results in the cessation or suspension of business at the Shreveport Resort for
a period of more than 90 consecutive days; provided, however, that, in any
event, there shall not be an Event of Default under this clause if the
suspension of business results from an Event of Loss and the Partnership is
complying with Section 4.11 hereof.
Section 6.02. Acceleration.
If any Event of Default (other than an Event of Default specified in
clause (i) or (j) of Section 6.01 hereof with respect to the Issuers, any
Restricted Subsidiary that is a Significant Subsidiary or any group of
Restricted Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary) occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of the then outstanding Notes may declare all the Notes to
be due and payable immediately. Upon any such declaration, the Notes shall
become due and payable immediately. Notwithstanding the foregoing, if an Event
of Default specified in clause (i) or (j) of Section 6.01 hereof occurs with
respect to either of the Issuers, any Restricted Subsidiary that is a
Significant Subsidiary or any group of Subsidiaries that, taken as a whole,
would constitute a Significant Subsidiary, all outstanding Notes shall be due
and payable immediately without further action or notice. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by written
notice to the Trustee may on behalf of all of the Holders of the Notes rescind
an acceleration and its consequences if the rescission would not conflict with
any judgment or decree and if all existing Events of Default (except nonpayment
of principal, Interest, premium or Liquidated Damages, if any, that has become
due solely because of the acceleration) have been cured or waived.
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Notwithstanding the foregoing, the Trustee shall have no obligation to
accelerate the Notes if in the best judgment of the Trustee acceleration is not
in the best interest of the Holders of the Notes.
If an Event of Default occurs 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 3.07(a) hereof,
then upon acceleration of the Notes, an equivalent premium to the premium that
the Issuers would have had to pay pursuant to Section 3.07(a) hereof, shall also
become and be immediately due and payable, to the extent permitted by law,
anything in this Indenture or in the Notes to the contrary notwithstanding. If
an Event of Default occurs prior to August 1, 2003, by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Issuers with
the intention of avoiding the prohibition on redemption of the Notes prior to
August 1, 2003, then the premium specified in this Indenture shall also become
immediately due and payable to the extent permitted by law upon the acceleration
of the Notes.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium and Liquidated
Damages, if any, and Interest on the Notes or to enforce the performance of any
provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of the
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 Interest or Liquidated Damages, if any, on, or the principal of, 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.
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Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it, including the exercise of any remedy under any of the
Collateral Documents. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture that the Trustee reasonably determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(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 reasonably 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 written 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 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and Interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder;
provided, however, that a Holder shall not have the right to institute any such
suit for the enforcement of payment if and to the extent that the institution or
prosecution thereof or the entry of judgment therein would, under applicable
law, result in the surrender, impairment, waiver or loss of the Lien of this
Indenture upon any property subject to such Lien.
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Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) hereof occurs
and is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against either of the Issuers for the whole
amount of principal of, premium and Liquidated Damages, if any, and Interest
remaining unpaid on the Notes and Interest on overdue principal and, to the
extent lawful, Interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Issuers
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and Interest, ratably,
without preference
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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,
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 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 6.11 does not apply to a suit by the Trustee, a suit by a Holder of
a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
Section 6.12. Management of the Shreveport Resort.
Notwithstanding any provision of this Article 6 to the contrary, following
an Event of Default which permits the taking of possession of the Shreveport
Resort, the appointment of a receiver of either the Collateral or any part
thereof pursuant to any of the Collateral Documents, or after such taking of
possession of such appointment, the Trustee or any such receiver may, but shall
not be obligated to, in addition to the rights and powers of the Trustee and
such receiver set forth in this Indenture and the Collateral Documents, to
retain one or more experienced operators or developers or construction
contractors or agents of casinos to manage the operations and/or construction of
the Shreveport Resort on behalf of the Holders of the Notes, provided, however,
that any such operator shall have all necessary legal qualifications, including
all applicable Gaming Licenses to manage the Shreveport Resort.
Section 6.13. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture or any Security Document and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case the Issuers, the Trustee and the Holders shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding has been
instituted.
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ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent Person would
exercise or use under the circumstances in the conduct of such Person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only those
duties that are specifically set forth in this Indenture and no others, and
no implied covenants or obligations shall be read into this Indenture against
the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee in writing 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:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received
by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
(e) No provision of this Indenture, the Cash Collateral and Disbursement
Agreement or the Collateral Documents 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, the
Cash Collateral and Disbursement Agreement or the Collateral Documents at the
request of any Holder of Notes, unless such Holder shall have offered to the
Trustee security and indemnity reasonably satisfactory to it against any loss,
liability or expense.
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(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) The Trustee shall execute and deliver such non-disburbance and
attornment agreements relating to sub-leases of space in the Shreveport Resort
from the Partnership, as lessor, as requested by the Partnership.
Section 7.02. Rights of Trustee.
Subject to the provisions of Section 7.01:
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from an Issuer shall be sufficient if signed by an
Officer of such Issuer.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that might be
incurred by it in compliance with such request or direction.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the 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 SEC for permission to
continue as trustee or resign. Any Agent may do the same with like rights and
duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
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Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture, the Cash Collateral and Disbursement
Agreement, the Collateral Documents 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,
the Cash Collateral and Disbursement Agreement or the Collateral Documents, 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, the Cash Collateral
and Disbursement Agreement, the Collateral Documents or any other document in
connection with the sale of the Notes or pursuant to this Indenture other than
its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to a Responsible Officer of 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 and Liquidated Damages, if any, or Interest on any Note,
the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of the Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA (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).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Issuers. The Issuers shall file a copy of each report
with the SEC 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.
Section 7.07. 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
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counsel, except for such disbursements, advances and expenses as are
attributable to the Trustee's negligence, willful misconduct or bad faith.
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, the Cash
Collateral and Disbursement Agreement and the Collateral Documents, including
the costs and expenses of enforcing this Indenture, the Cash Collateral and
Disbursement Agreement and the Collateral Documents against the Issuers
(including this Section 7.07) and defending itself against any claim (whether
asserted by either of 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 or thereunder, except to the extent any such loss, liability or
expense may be attributable to its negligence, willful misconduct 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 their
consent, which consent shall not be unreasonably withheld.
The obligations of the Issuers under this Section 7.07 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 on
particular Notes. Such Lien shall survive the satisfaction and discharge of
this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(i) or (j) 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 7.08. Louisiana Gaming Control Board.
(a) The Trustee shall notify the Louisiana Gaming Control Board,
simultaneously with any notice given to the Holders, of any Default or
acceleration under the Notes, this Indenture, the Cash Collateral and
Disbursement Agreement, the Collateral Documents, or any other documents,
instrument, agreement, covenant, or condition related to the issuance of the
Notes, whether declared or effectuated by the Trustee or the Holders. The
Trustee shall notify the Louisiana Gaming Control Board on a continuing basis
and in writing, of any actions taken by the Trustee or the Holders with regard
to such default, acceleration or similar matters related thereto.
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(b) The Trustee shall notify the Louisiana Gaming Control Board of the
removal or resignation of the Trustee promptly after such removal or
resignation.
(c) The Trustee shall notify the Louisiana Gaming Control Board of any
transfer or assignment of any rights under this Indenture, the Cash Collateral
and Disbursement Agreement, the Collateral Documents, or any other documents,
instrument, agreement, covenant or condition related to the issuance of the
Notes by the Issuers promptly after such transfer or agreement.
(d) The Trustee shall provide to the Louisiana Gaming Control Board
promptly after its execution of the same, copies of any and all amendments or
modifications to this Indenture, the Notes, the Cash Collateral and Disbursement
Agreement, the Collateral Documents, or any other documents, instrument,
agreement, covenant or condition related to the issuance of the Notes.
(e) The Issuers agree to provide such information as the Trustee shall
request, including the mailing address of the Louisiana Gaming Control Board, in
order to permit the Trustee to mail the reports described herein. The Issuers
shall promptly provide written notice to the Trustee of the occurrence of any
the events described in this Section 7.08. Any failure by the Trustee to
fulfill the reporting obligations in this Section 7.08 shall not be deemed to be
negligence on the part of the Trustee, and the Trustee shall have no liability
to the Issuers, the Guarantors or the Holders for any failure to comply with the
reporting obligations in this Section 7.08.
Section 7.09. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
Subject to applicable Gaming Laws, the Trustee may resign in writing at
any time and be discharged from the trust hereby created by so notifying the
Issuers and applicable Gaming Authorities. Subject to applicable Gaming Laws,
the Holders 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
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outstanding Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Issuers.
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 at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder who has been a Holder
for at least six months, fails to comply with Section 7.10, such Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall take all steps necessary or advisable to be
approved by applicable Gaming Authorities, if required, and 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 Holders. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.09, the Issuers' obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
Section 7.10. 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, however, such corporation shall be otherwise eligible and qualified
under this Article and in accordance with any applicable rules or regulations of
Gaming Authorities.
Section 7.11. 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 7.12. 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.
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Section 7.13. Authorization of Trustee to Take Other Actions.
(a) The Trustee is hereby authorized to enter into and take any actions or
deliver such consents required by or requested under each of the Collateral
Documents, the Intercreditor Agreement and such other documents as directed by
the Holders of a majority of outstanding aggregate principal amount of the
Notes. If at any time any action by or the consent of the Trustee is required
under any of the Collateral Documents, the Intercreditor Agreement or any other
document entered into by the Trustee at the direction of a majority of the
Holders of outstanding aggregate principal amount of the Notes, such action or
consent shall be taken or given by the Trustee upon the consent to such action
by the Holders of a majority of outstanding aggregate principal amount of the
Notes.
(b) Upon the request of the Partnership, the Trustee shall enter into an
Intercreditor Agreement with respect to any FF&E Financing; provided, however,
that the Issuers deliver an Officers' Certificate certifying that (i) such
financing will not violate this Indenture, (ii) the terms of such Intercreditor
Agreement will not violate this Indenture or any of the Collateral Documents and
(iii) any Liens incurred in connection with such FF&E Financing extend only to
the assets financed pursuant to such FF&E Financing as permitted by clause (vii)
of the definition of Permitted Liens included herein.
(c) The Trustee and its directors, officers, employees and Affiliates
shall cooperate with all Gaming Authorities and provide such information and
documentation as may from time to time be requested thereby.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Issuers may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate delivered to the Trustee, at
any time, elect to have either Section 8.02 or 8.03 hereof be applied to all
outstanding Notes upon compliance with the conditions set forth below in this
Article 8.
Section 8.02. Legal Defeasance and Discharge.
Upon the Issuers' exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Issuers and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
deemed to have been discharged from their obligations with respect to all
outstanding Notes and the Note Guarantees, as applicable on the date the
conditions set forth below are satisfied (hereinafter, "Legal 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 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all their other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Issuers,
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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 8.04 hereof, and as more fully
set forth in such Section, payments in respect of the principal of, or Interest
or premium 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 4.02 hereof, (c) the rights, powers, trusts, duties and immunities of
the Trustee hereunder, and the Issuers' and the Guarantor's 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 8.02
notwithstanding the prior exercise of its option under Section 8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Issuers' exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Issuers shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.14, 4.16, 4.17, 4.18. 4.19, 4.20, 4.21, 4.22, 4.23, 4.24,
4.25, 4.26, 4.28, 4.29, 4.30 and 4.31 hereof and clause (iv) of Section 5.01
hereof with respect to the outstanding Notes on and after the date the
conditions set forth in Section 8.04 hereof 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 6.01 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 8.01 hereof of the option applicable to this
Section 8.03, subject to the satisfaction of the conditions set forth in Section
8.04 hereof, Sections 6.01(c) through 6.01(f) and Section 6.01(l) hereof shall
not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either Section
8.02 or 8.03 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 of Notes, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, and Fixed Interest, the
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maximum remaining amount payable as Contingent Interest, and premium 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 8.02 hereof, the Issuers
shall have delivered to the Trustee an Opinion of Counsel 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 will not
recognize income, gain or loss for federal income tax purposes as a result of
such Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the Issuers
shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable
to the Trustee confirming that the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing
either: (i) 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
(ii) 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;
(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 either of the Issuers any of the
Partnership's Restricted Subsidiaries is a party or by which either of the
Issuers or any of the Partnership's Restricted Subsidiaries is bound;
(f) the Issuers must have delivered to the Trustee an Opinion of Counsel
to the effect that, assuming no intervening bankruptcy of either of the Issuers
or any Guarantor between the date of the deposit and the 91st day following the
deposit and assuming that no Holder is an "insider" of either of the Issuers
under applicable bankruptcy law, 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;
(g) 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 of Notes over the other creditors of either of the
Issuers with the intent of defeating, hindering, delaying or defrauding
creditors of either of the Issuers or others; and
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(h) the Issuers must deliver to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent relating to
the Legal Defeasance or the Covenant Defeasance have been complied with.
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the 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 and Liquidated Damages, if
any, and Interest, 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 8.04 hereof or the principal and
Interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Partnership from time to time upon the request of
the Partnership any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 8.06. Repayment to Partnership.
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 and
Liquidated Damages, if any, or Interest on any Note and remaining unclaimed for
two years after such principal, and premium, if any, or Interest has become due
and payable shall be paid to the Partnership on its request or (if then held by
either of the Issuers) shall be discharged from such trust; and the Holder of
such Note shall thereafter 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
will be repaid to the Partnership.
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Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Issuers' obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Issuers make any
payment of principal of, premium, if any, or Interest on any Note following the
reinstatement of its obligations, the Issuer, as applicable, 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 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Issuers, the
Guarantors and the Trustee may amend or supplement this Indenture, the Notes,
the Note Guarantees or the Collateral Documents 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 either of the Issuers'
obligations to Holders of Notes in the case of a merger or consolidation or sale
of all or substantially all of that Issuers' assets;
(d) to make any change that would provide any additional rights or
benefits to the Holders of Notes or that does not adversely affect the legal
rights under this Indenture of any such Holder;
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA; or
(f) to enter into additional or supplemental Collateral Documents pursuant
to Sections 4.10, 4.11 and 10.11 hereof or an intercreditor agreement with a
Pari Passu Debtholder pursuant to Section 4.09 hereof.
Upon the request of the Issuers accompanied by a resolution of their
Boards of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Issuers and
the Guarantors in the execution of any amended or supplemental Indenture
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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 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Issuers, the Guarantors
and the Trustee may amend or supplement this Indenture (including Sections 3.09,
4.10, 4.11 and 4.16 hereof), the Notes, the Note Guarantees and the Collateral
Documents 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, subject to Sections 6.04 and 6.07 hereof, any existing Default
or compliance with any provision of this Indenture, the Notes, the Note
Guarantees or the Collateral Documents may be waived with the consent of the
Holders of a majority in principal amount of the Notes then outstanding
(including, without limitation, consents obtained in connection with a tender
offer or exchange offer for, or purchase of, the Notes).
Upon the request of the Issuers accompanied by a resolution of each of
their respective Boards of Directors authorizing the execution of any such
amended or supplemental Indenture, and upon the filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Holders of Notes as
aforesaid, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Issuers and the Guarantors in the
execution of such amended or supplemental Indenture unless such amended or
supplemental Indenture directly affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Issuers shall mail to the Holders of Notes affected thereby a
notice briefly describing the 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 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Issuers with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver under this Section 9.02 may not
(with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
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(b) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes except as
provided above with respect to Sections 3.09, 4.10, 4.11 and 4.16 hereof;
(c) reduce the rate of or change the time for payment of Interest or
default interest on any Note;
(d) waive a Default or Event of Default in the payment of principal of, or
Interest or premium, or Liquidated Damages, if any, on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the 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 of Notes to receive payments
of principal of, or Interest or premium or Liquidated Damages, if any, on the
Notes;
(g) waive a redemption payment with respect to any Note except as provided
above with respect to Sections 3.09, 4.10, 4.11 and 4.16 hereof;
(h) release any Guarantor from any of its obligations under its Note
Guarantee or this Indenture, except in accordance with the terms of this
Indenture;
(i) release all or substantially all of the Collateral from the Lien of
this Indenture or the Collateral Documents (except in accordance with the
provisions thereof); or
(j) make any change in the preceding amendment and waiver provisions.
Any amendment to, or waiver of the provisions of any of the Collateral
Documents relating to Section 4.13 or Article 10 hereof shall require the
consent of the Holders of at least 85% in aggregate principal amount of Notes
then outstanding.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in a amended or supplemental Indenture that complies with the TIA as then
in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective.
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An amendment, supplement or waiver becomes effective in accordance with its
terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Issuers in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The
Issuers and the Guarantors may not sign an amendment or supplemental Indenture
until their respective Boards of Directors approve such amendment or
supplemental indenture. In executing any amended or supplemental indenture, the
Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall
be fully protected in relying upon, in addition to the documents required by
Section 14.04 hereof, an Officer's Certificate and an Opinion of Counsel stating
that the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.
ARTICLE 10
COLLATERAL AND SECURITY
Section 10.01. Security.
The due and punctual payment of the principal of, premium and Liquidated
Damages, if any, and Interest on the Notes when and as the same shall be due and
payable, whether on an interest payment date, at maturity, by acceleration,
repurchase, redemption or otherwise, and Interest on the overdue principal of,
premium and Liquidated Damages, if any, and interest on the Notes and
performance of all other obligations of the Issuers and the Guarantors to the
Holders of Notes or the Trustee under this Indenture, the Notes and the Note
Guarantees, according to the terms hereunder or thereunder, shall be secured by
the Collateral, as provided in the Collateral Documents which the Issuers and
the Guarantors have entered into simultaneously with the execution of this
Indenture for the benefit of the Holders of Notes. Each Holder of Notes, by its
acceptance thereof, consents and agrees to the terms of the Collateral Documents
and the Intercreditor Agreement as the same may be in effect or may be amended
from time to time in accordance with its terms and authorizes and directs the
Trustee to enter into the Collateral Documents and the Intercreditor Agreement
and to perform its obligations and exercise its rights thereunder in accordance
therewith. The Issuers and the Guarantors shall deliver to the Trustee copies
of all documents executed pursuant to this Indenture and the Collateral
Documents and the Intercreditor Agreement and shall do or cause to be done all
such acts and things as may be
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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
Collateral contemplated hereby, by the Collateral Documents, or any part
thereof, as from time to time constituted, so as to render the same available
for the security and benefit of this Indenture and of the Notes and the Note
Guarantees secured thereby, according to the intent and purposes herein and
therein expressed. The Issuers and the Guarantors shall take, or shall cause
their respective Restricted Subsidiaries to take, upon request of the Trustee,
any and all actions reasonably required to cause the Collateral Documents to
create and maintain, as security for the obligations of the Issuers and the
Guarantors hereunder, a valid and enforceable perfected Lien on the Collateral,
subject to Permitted Liens.
Section 10.02. Recording and Opinions.
The Issuers and the Guarantors will cause the applicable Collateral
Documents and any financing statements, and all amendments or supplements to
each of the foregoing and any other similar security documents as necessary, to
be registered, recorded and filed and/or re-recorded, re-filed and renewed in
such manner and in such place or places, if any, as may be required by law or
reasonably requested by the Trustee in order fully to preserve and protect the
Lien securing the obligations under the Notes and the Note Guarantees pursuant
to the Collateral Documents, except as otherwise provided herein and therein.
The Issuers, the Guarantors and any other obligor shall furnish to the
Trustee:
(a) promptly after the execution and delivery of this Indenture, and
promptly after the execution and delivery of any other instrument of further
assurance or amendment, an Opinion of Counsel in the United States either (i)
stating that, subject to customary assumptions and exclusions, in the opinion of
such counsel, this Indenture, the applicable Collateral Documents and all other
instruments of further assurance or amendment have been properly recorded,
registered and filed to the extent necessary to make effective the Liens
intended to be created by the Collateral Documents and reciting the details of
such action or referring to prior Opinions of Counsel in which such details are
given or (ii) stating that, subject to customary assumptions and exclusions, in
the opinion of such counsel, no such action is necessary to make any other Lien
created under any of the Collateral Documents effective as intended by such
Collateral Documents; and
(b) within 30 days after January 1, in each year beginning with the year
2000, an Opinion of Counsel, dated as of such date, either (i) stating that,
subject to customary assumptions and exclusions, in the opinion of such counsel,
such action has been taken with respect to the recording, registering, filing,
re-recording, re-registering and re-filing of this Indenture and all
supplemental indentures, financing statements, continuation statements or other
instruments of further assurance as is necessary to maintain the Lien of this
Indenture and the Collateral Documents until the next Opinion of Counsel is
required to be rendered pursuant to this paragraph and reciting the details of
such action or referring to prior Opinions of Counsel in which such details are
given or (ii) stating that, subject to customary assumptions and exclusions, in
the opinion of such counsel, no such action is necessary to maintain such Lien,
until the next Opinion of Counsel is required to be rendered pursuant to this
paragraph.
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(c) 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 will be subject to the terms of TIA Section 314(e).
Section 10.03. Release of Collateral.
(a) Subject to subsections (b), (c) and (d) of this Section 10.03,
Collateral may be released from the Lien created by this Indenture and the
Collateral Documents at any time or from time to time upon the request of the
Issuers pursuant to an Officers' Certificate certifying that all terms for
release and conditions precedent hereunder and under any applicable Collateral
Document have been met and specifying (x) the identity of the Collateral to be
released and (y) the provision of this Indenture which authorizes such release.
The Trustee shall release (at the sole cost and expense of the Issuers) (i) all
Collateral that is contributed, sold, leased, conveyed, transferred or otherwise
disposed of (including, without limitation, any Collateral that is contributed,
sold, leased, conveyed, transferred or otherwise disposed of to an Unrestricted
Subsidiary, but excluding any such contribution, sale, lease, conveyance,
transfer or other distribution to the either of the Issuers or a Restricted
Subsidiary); provided, such contribution, sale, lease, conveyance, transfer or
other distribution is or will be made in accordance with the provisions of this
Indenture, including, without limitation, the requirement that the net proceeds
from such contribution, sale, lease, conveyance, transfer or other distribution
are or will be applied in accordance with this Indenture and that no Default or
Event of Default has occurred and is continuing or would occur immediately
following such release; (ii) Collateral that is condemned, seized or taken by
the power of eminent domain or otherwise confiscated pursuant to an Event of
Loss; provided that the Net Loss Proceeds, if any, from such Event of Loss are
or will be applied in accordance with Section 4.11 hereof and that no Default or
Event of Default has occurred and is continuing or would occur immediately
following such release; (iii) Collateral which may be released with the consent
of Holders pursuant to Article 9 hereof; (iv) all Collateral (except as provided
in Article 8 hereof and, in particular, the funds in the trust fund described in
Section 8.04 hereof) upon discharge or defeasance of this Indenture in
accordance with Article 8 hereof; (v) all Collateral upon the payment in full of
all obligations of the Issuers with respect to the Notes; (vi) Collateral of a
Guarantor whose Note Guarantee is released pursuant to Section 11.06 hereof; and
(vii) Collateral that is expressly required to be released by any Collateral
Document. 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 Collateral permitted to
be released pursuant to this Indenture or the Collateral Documents. The Trustee
is hereby authorized and shall, from time to time upon request of the Issuers,
execute and deliver UCC-3 partial release or termination statements and such
other documents evidencing release of Collateral available for release pursuant
to clauses (i) through (vii) above.
(b) Except pursuant to Section 10.03(a) above, no 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 Officers' Certificate required by this Section
10.03.
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(c) The Trustee may release Collateral from the Lien and security interest
created by this Indenture and the Collateral Documents upon the sale or
disposition of Collateral pursuant to the Trustee's powers, rights and duties
with respect to remedies provided under any of the Collateral Documents.
(d) The release of any 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
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 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 10.04. Protection of the Trust Estate.
Subject to the terms of the Intercreditor Agreement and the Collateral
Documents, upon prior written notice to the Issuers and the Guarantors, 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
Collateral under any of the Collateral Documents and in the profits, rents,
revenues and other income arising therefrom, including the power to institute
and maintain suits or proceedings to restrain the enforcement of or compliance
with any legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or compliance with,
such enactment, rule or order would impair any Collateral or be prejudicial to
the interests of the Holders of Notes or the Trustee, to the extent permitted
thereunder; and (ii) to enforce the obligations of the Issuers, the Guarantors
or any Restricted Subsidiary under this Indenture or the Collateral Documents.
Upon receipt of notice that a Restricted Subsidiary or a Guarantor is not in
compliance with any of the requirements of the First Preferred Ship Mortgage,
Leasehold Mortgage and Assignment of Leases and Rents, the Trustee may, but
shall have no obligation to purchase, at the Issuers' expense, such insurance
coverage necessary to comply with the appropriate section of the mortgage.
Section 10.05. Certificates of the Issuers.
The Issuers shall furnish to the Trustee, prior to each proposed release
of Collateral pursuant to the Collateral Documents (i) all documents required by
TIA (S)314(d) and (ii) an Opinion of Counsel in the United States, which may be
rendered by internal counsel to the Issuers, to the effect that, subject to
customary assumptions and exclusions, such accompanying documents constitute all
documents required by TIA (S)314(d). The Trustee may, to the extent permitted
by Sections 7.01 and 7.02 hereof, accept as conclusive evidence of compliance
with the foregoing provisions the appropriate statements contained in such
documents and such Opinion of Counsel.
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Section 10.06. Certificates of the Trustee.
In the event that the Issuers wish to release Collateral in accordance
with the Collateral Documents and has delivered the certificates and documents
required by the Collateral Documents and Sections 10.03 and 10.04 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 10.05(ii), shall
deliver a certificate to the Issuers setting forth such determination.
Section 10.07. Authorization of Actions to Be Taken by the Trustee Under the
Collateral Documents.
Subject to the provisions of Section 7.01, 7.02 and 7.13 hereof, the
Trustee may, in its sole discretion and without the consent of the Holders of
Notes, on behalf of the Holders of Notes, take all actions it deems necessary or
appropriate in order to (a) enforce any of the terms of the Collateral Documents
and (b) collect and receive any and all amounts payable in respect of the
Obligations of the Issuers hereunder, including but not limited to the
appointment and approval of collateral agents and the appointment and approval
of an insurance trustee. 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 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 Collateral (including power to
institute and maintain suits or proceedings to restrain the enforcement of or
compliance with any legislative or other governmental enactment, rule or order
that may be unconstitutional or otherwise invalid if the enforcement of, or
compliance with, such enactment, rule or order would impair the security
interest hereunder or be prejudicial to the interests of the Holders of Notes or
of the Trustee).
Section 10.08. Trustee's Duties.
The powers and duties conferred upon the Trustee by this Article 10 are
solely to protect the Collateral and shall not impose any duty upon the Trustee
to exercise any such powers and duties, except as expressly provided in this
Indenture. The Trustee shall be under no duty to the Issuers or any Guarantor
whatsoever to make or give any presentment, demand for performance, notice or
nonperformance, protest, notice of protest, notice of dishonor, or other notice
or demand in connection with any Collateral, or to take any steps necessary to
preserve this Indenture. The Trustee shall not be liable to the Issuers or any
Guarantor for failure to collect or realize upon any or all of the Collateral,
or for any delay in doing so, nor shall the Trustee be under any duty to the
Issuers or any Guarantor to take any action whatsoever with regard thereto. The
Trustee shall have no duty to the Issuers, the any Guarantor or any Holder to
comply with any recording, filing or other legal requirements necessary to
establish or maintain the validity, priority or enforceability of the Liens in,
or the Trustee's rights in or to, any of the Collateral or to perform on behalf
of the Issuers under any Collateral Documents.
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Section 10.09. Authorization of Receipt of Funds by the Trustee Under the
Collateral Documents.
Upon an Event of Default and so long as such Event of Default continues,
the Trustee may, subject to the terms of the Intercreditor Agreement, exercise
in respect of the 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 Collateral as set forth herein, without notice to the Issuers or any
Guarantor, except as specified below, sell the 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 and the Guarantors 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 and the Guarantors agree
that, to the extent notice of sale shall be required by law, at least 10 days'
notice to the Issuers or the Guarantor, as applicable, of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Trustee shall not be obligated to make
any sale regardless of notice of sale having been given. The Trustee may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
Any cash that is Collateral held by the Trustee and all cash proceeds
received by the Trustee in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be applied (unless
otherwise provided for in the Collateral Documents and after payment of any and
all amounts payable to the Trustee pursuant to this Indenture), as the Trustee
shall determine or as the Holders of the Notes shall direct pursuant to Section
6.05 hereof, (a) against the obligations for the ratable benefit of the Holders
of the Notes, (b) to maintain, repair or otherwise protect the Collateral or (c)
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 applicable Issuer or Guarantor or to whomsoever may be lawfully
entitled to receive such surplus or as a court of competent jurisdiction may
direct.
Section 10.10. Termination of Security Interest.
Upon the payment in full of all Obligations of the Issuers under this
Indenture and the Notes, the Trustee shall (at the request of the Issuers
accompanied by (a) an Officers' Certificate of the Issuers to the Trustee
stating that such Obligations have been paid in full, and (b) instructions from
the Issuers to the Trustee to release the Liens pursuant to this Indenture and
the Collateral Documents) release the Liens securing the Collateral.
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Section 10.11. Cooperation of Trustee.
In the event the Issuers or any Guarantor pledge or grant a security
interest in additional Collateral, the Trustee shall cooperate with the Issuers
or such Guarantor 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 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 Issuer or any Guarantor engages in
any transaction pursuant to Section 10.03 hereof, the Trustee shall cooperate
with the Issuer or such Guarantor in order to facilitate such transaction in
accordance with any reasonable time schedule proposed by the Issuer, including
by delivering and releasing the Collateral in a prompt and reasonable manner.
Section 10.12. Collateral Agent.
The Trustee may, from time to time, appoint one or more Collateral Agents
hereunder. Each of such Collateral Agents may be delegated any one or more of
the duties or rights of the Trustee hereunder or under the Collateral Documents
or Intercreditor Agreement or which are specified in any Collateral Documents or
Intercreditor Agreement, including without limitation, the right to hold any
Collateral in the name of, registered to, or in the physical possession of, such
Collateral Agent, for the rateable benefit of the Holders of the Notes. Each
such Collateral Agent shall have such rights and duties as may be specified in
an agreement between the Trustee and such Collateral Agent. The Trustee and any
Collateral Agent shall be authorized hereunder to give any acknowledgment
reasonably requested by any party under the Intercreditor Agreement to confirm
the rights and obligations of the parties under the Intercreditor Agreement.
ARTICLE 11
NOTE GUARANTEES
Section 11.01. Guarantee.
Subject to this Article 11, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes,
the Collateral Documents or the obligations of the Issuers hereunder or
thereunder, that: (a) the principal of premium and Liquidated Damages, if any,
and Interest on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and Interest on the Notes, if any, if lawful, and all other
obligations of the Issuers to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration
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pursuant to Section 6.02 hereof or otherwise. Failing payment when due of any
amount so guaranteed or any performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay the same immediately.
Each Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.
Each Guarantor hereby agrees that its obligations with regard to this Note
Guarantee shall be joint and several, unconditional, irrespective of the
validity or enforceability of the Notes or the obligations of the Issuers under
this Indenture, the absence of any action to enforce the same, the recovery of
any judgment against the Issuers or any other obligor with respect to this
Indenture, the Notes or the Obligations of the Issuers under this Indenture or
the Notes, any action to enforce the same or any other circumstances (other than
complete performance) which might otherwise constitute a legal or equitable
discharge or defense of a Guarantor. Each Guarantor further, to the extent
permitted by law, waives and relinquishes all claims, rights and remedies
accorded by applicable law to guarantors and agrees not to assert or take
advantage of any such claims, rights or remedies, including but not limited to:
(a) any right to require any of the Trustee, the Holders or the Issuers (each a
"Benefitted Party"), as a condition of payment or performance by such Guarantor,
to (i) proceed against the Issuers, any other guarantor (including any other
Guarantor) of the Obligations under the Note Guarantees or any other Person,
(ii) proceed against or exhaust any security held from the Issuers, any such
other guarantor or any other Person, (iii) proceed against or have resort to any
balance of any deposit account or credit on the books of any Benefitted Party in
favor of the Issuers or any other Person, or (iv) pursue any other remedy in the
power of any Benefitted Party whatsoever; (b) any defense arising by reason of
the incapacity, lack of authority or any disability or other defense of the
Issuers including any defense based on or arising out of the lack of validity or
the unenforceability of the Obligations under the Note Guarantees or any
agreement or instrument relating thereto or by reason of the cessation of the
liability of the Issuers from any cause other than payment in full of the
Obligations under the Note Guarantees; (c) 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; (d) any defense based upon any Benefitted Party's errors or omissions
in the administration of the Obligations under the Note Guarantees, except
behavior which amounts to bad faith; (e)(i) any principles or provisions of law,
statutory or otherwise, which are or might be in conflict with the terms of the
Note Guarantees and any legal or equitable discharge of such Guarantor's
obligations hereunder, (ii) the benefit of any statute of limitations affecting
such Guarantor's liability hereunder or the enforcement hereof, (iii) any rights
to set-offs, recoupments and counterclaims, and (iv) promptness, diligence and
any requirement that any Benefitted Party protect, secure, perfect or insure any
security interest or lien or any property subject thereto; (f) notices, demands,
presentations, protests, notices of protest, notices of dishonor and notices of
any action or inaction, including acceptance of the Note Guarantees, notices of
default under the Notes or any agreement or instrument related thereto, notices
of any renewal, extension or modification of the Obligations under the Note
Guarantees or any agreement related thereto, and notices of any extension of
credit to the Issuers and any right to consent to any thereof; (g) to the extent
permitted under applicable law, the benefits of any "One Action" rule and (h)
any defenses or benefits that may be derived from or afforded by law which limit
the liability of or exonerate guarantors or sureties, or which may conflict with
the terms of the Note Guarantees. Each Guarantor hereby covenants that its Note
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Guarantee will not be discharged except by complete performance of the
obligations contained in its Note Guarantee and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Issuers, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Issuers or the
Guarantors, any amount paid by either to the Trustee or such Holder, this
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (i) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Section 6.02
hereof for the purposes of this Note Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby and (ii) in the event of any declaration of
acceleration of such obligations as provided in Section 6.02 hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Note Guarantee. The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Note Guarantee.
Section 11.02. Additional Note Guarantees.
If any Restricted Subsidiary attains, or if the Issuers or any of its
Restricted Subsidiaries acquires or creates a Restricted Subsidiary that has,
after the date hereof, Total Assets of at least $2.5 million, then the Issuers
shall cause any such Restricted Subsidiary to, within 20 Business Days of the
date on which any such Restricted Subsidiary attained Total Assets of at least
$2.5 million or was acquired or created, (a) execute and deliver to the Trustee
a supplemental indenture and supplemental Collateral Documents in form
reasonably satisfactory to the Trustee pursuant to which such Restricted
Subsidiary shall unconditionally guarantee, on a senior secured basis, all of
the Issuers' obligations under the Notes, this Indenture and the Collateral
Documents on the terms set forth in this Indenture and (b) deliver to the
Trustee an Opinion of Counsel that, subject to customary assumptions and
exclusions, such supplemental indenture and supplemental Collateral Documents
have been duly executed and delivered by such Restricted Subsidiary. Any
Restricted Subsidiary that becomes a Guarantor shall remain a Guarantor unless
designated an Unrestricted Subsidiary by the Issuers in accordance with this
Indenture or is otherwise released from its obligations as a Guarantor pursuant
to Section 11.06 hereof. Any Note Guarantee executed and delivered in
accordance with this Section 11.02 shall be secured by a Lien or charge on all
Collateral of such Guarantor. Any such Note Guarantee shall be released if the
Issuers or their Restricted Subsidiaries cease to own any Equity Interests in
such Restricted Subsidiary or if such Restricted Subsidiary becomes an
Unrestricted Subsidiary in accordance with the terms of this Indenture or is
otherwise released from its obligations as a Guarantor pursuant to Section 11.06
hereof.
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Section 11.03. Limitation on Guarantor Liability.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Note Guarantee of
such Guarantor not constitute a fraudulent transfer or conveyance for purposes
of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders
and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor under this Article 11 shall be limited to the maximum amount as will,
after giving effect to such maximum amount and all other contingent and fixed
liabilities of such Guarantor that are relevant under such laws, and after
giving effect to any collections from, rights to receive contribution from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under this Article 11, result in the
obligations of such Guarantor under its Note Guarantee not constituting a
fraudulent transfer or conveyance.
Section 11.04. Execution and Delivery of Note Guarantee.
To evidence its Note Guarantee set forth in Section 11.01 hereof, each
Guarantor hereby agrees that a notation of such Note Guarantee substantially in
the form included in Exhibit D shall be endorsed by an Officer of such Guarantor
on each Note authenticated and delivered by the Trustee and that this Indenture
shall be executed on behalf of such Guarantor by its President or one of its
Vice Presidents.
Each Guarantor hereby agrees that its Note Guarantee set forth in Section
11.01 hereof shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the Note
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Note Guarantee set forth in this
Indenture on behalf of the Guarantors.
Section 11.05. Guarantors May Consolidate, etc., on Certain Terms.
Except as otherwise provided in Section 11.06 hereof, no Guarantor may
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another Person whether or not affiliated with such Guarantor
unless:
(a) subject to Section 11.06 hereof, the Person formed by or surviving any
such consolidation or merger (if other than a Guarantor or the Issuers)
unconditionally assumes all the obligations of such Guarantor under the Notes,
this Indenture, the Collateral Documents and the Note Guarantee on the terms set
forth herein or therein, pursuant to a supplemental indenture and supplemental
Collateral Documents in form and substance reasonably satisfactory to the
Trustee; and
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(b) the Guarantor complies with the requirements of Article 5 hereof.
In case of any such consolidation, merger, sale or conveyance and upon the
assumption by the successor Person by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the Note
Guarantee endorsed upon the Notes and the due and punctual performance of all of
the covenants and conditions of this Indenture to be performed by the Guarantor,
such successor Person shall succeed to and be substituted for the Guarantor with
the same effect as if it had been named herein as a Guarantor. Such successor
Person thereupon may cause to be signed any or all of the Note Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Issuers and delivered to the Trustee. All the Note
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Note Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Note
Guarantees had been issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) and (b) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Guarantor with or into
either of the Issuers or another Guarantor, or shall prevent any sale or
conveyance of the property of a Guarantor as an entirety or substantially as an
entirety to either of the Issuers or another Guarantor.
Section 11.06. Releases Following Sale of Assets.
In the event of a sale or other disposition of all of the assets of any
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all to the capital stock of any Guarantor, in each case to a
Person that is not (either before or after giving effect to such transactions) a
Restricted Subsidiary of either of the Issuers, then such Guarantor (in the
event of a sale or other disposition, by way of merger, consolidation or
otherwise, of all of the capital stock of such Guarantor) or the corporation
acquiring the property (in the event of a sale or other disposition of all or
substantially all of the assets of such Guarantor) will be released and relieved
of any obligations under its Note Guarantee; provided, however, that the Net
Proceeds of such sale or other disposition are applied in accordance with the
applicable provisions of this Indenture, including without limitation Section
4.10 hereof. Upon delivery by the Issuers to the Trustee of an Officers'
Certificate and an Opinion of Counsel to the effect that such sale or other
disposition was made by the applicable Issuer in accordance with the provisions
of this Indenture, including without limitation Section 4.10 hereof, the Trustee
shall execute any documents reasonably required in order to evidence the release
of any Guarantor from its obligations under its Note Guarantee.
Any Guarantor not released from its obligations under its Note Guarantee
shall remain liable for the full amount of principal of and Interest on the
Notes and for the other obligations of such Guarantor under this Indenture and
the Collateral Documents as provided in this Article 11.
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ARTICLE 12
SATISFACTION AND DISCHARGE
Section 12.01 Satisfaction and Discharge.
This Indenture will be discharged and will cease to be of further effect
as to all Notes issued thereunder, when:
(a) either:
(i) all Notes that have been authenticated (except lost, stolen
or destroyed Notes that have been replaced or paid and Notes for whose
payment money has theretofore been deposited in trust and thereafter
repaid to the Issuers) have been delivered to the Trustee for
cancellation; or
(ii) all Notes that have not been delivered to the Trustee for
cancellation have become due and payable by reason of the making of a
notice of redemption or otherwise or will become due and payable within
one year and the Issuers or any Guarantor have irrevocably deposited or
caused to be deposited with the Trustee as trust funds in trust solely 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 without consideration of any reinvestment of interest, to pay
and discharge the entire indebtedness on the Notes not delivered to the
Trustee for cancellation for principal, Fixed Interest, the maximum amount
payable as Contingent Interest and premium and Liquidated Damages, if any,
to the date of maturity or redemption;
(b) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit or shall occur as a result of such deposit and such
deposit will not result in a breach or violation of, or constitute a default
under, any other instrument to which either of the Issuers or any Guarantor is a
party or by either of the Issuers or any Guarantor is bound;
(c) each of the Issuers and each Guarantor has paid or caused to be paid
all sums payable by it under this Indenture; and
(d) the Issuers have delivered irrevocable instructions to the Trustee
under this Indenture to apply the deposited money toward the payment of the
Notes at maturity or the redemption date, as the case may be.
The Issuers shall deliver an Officers' Certificate and an Opinion of
Counsel to the Trustee stating that all conditions precedent to satisfaction and
discharge have been satisfied.
Notwithstanding the above, the Trustee shall pay to the Partnership from
time to time upon the request of the Partnership any cash or Government
Securities held by it as provided in this section which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification delivered to the Trustee, are in excess of the amount
thereof that would then be required to be deposited to effect a satisfaction and
discharge under this Article 12.
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Section 12.02. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 12.03 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 12.02, the
"Trustee") pursuant to Section 12.01 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 and Liquidated Damages, if
any, and Interest, but such money need not be segregated from other funds except
to the extent required by law.
Section 12.03. Repayment to Partnership.
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 and
Liquidated Damages, if any, or Interest on any Note and remaining unclaimed for
two years after such principal, and premium, if any, or Interest has become due
and payable shall be paid to the Partnership on its request or (if then held by
the Issuers) shall be discharged from such trust; and the Holder of such Note
shall thereafter 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 or The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining will be
repaid to the Partnership.
ARTICLE 13
JOINT AND SEVERAL LIABILITY
(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:
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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
"Beneficiary") to proceed against either of the Issuers or any other Person or
to proceed against or exhaust any security held by a Beneficiary at any time or
to pursue any other remedy in the power of a Beneficiary 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 Beneficiary 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 Beneficiary, 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 Beneficiary as collateral or in connection with the Note
Obligations, (e) any defense based upon an election of remedies by a
Beneficiary, 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 Beneficiary
to disclose to either Issuer any facts a Beneficiary may now or hereafter know
about either of the Issuers or any other Person, regardless of whether a
Beneficiary 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 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 Beneficiary, 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 Beneficiary against the other
Issuer or any collateral which a Beneficiary 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
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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 (1) 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
Article 13 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 14
MISCELLANEOUS
Section 14.01. 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 14.02. Notices.
Any notice or communication by the Issuers, any Guarantor or the Trustee
to the others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to either of the Issuers and/or any Guarantor:
c/o Hollywood Casino Corporation
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, Texas 75240
Attention: General Counsel
Telecopier No.: (972) 386-7411
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With a copy to:
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: Michael A. Saslaw
Telecopier No.: (214) 746-7777
If to the Trustee (By mail):
State Street Bank and Trust Company
P.O. Box 778
Boston, Massachusetts 02110
Attention: Corporate Trust Administration
Re: Hollywood Casino Shreveport
(By hand or Overnight Delivery)
State Street Bank and Trust Company
2 Avenue de Lafayette
Boston, Massachusetts, 02111
Attention: Corporate Trust Administration
Re: Hollywood Casino Shreveport
Telecopier No: (617) 662-1465
The Issuers, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA (S) 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If any of the Issuers or any Guarantor mail a notice or communication to
Holders, it shall mail a copy to the Trustee and each Agent at the same time.
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Section 14.03. 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
Guarantors, the Trustee, the Registrar and anyone else shall have the protection
of TIA (S) 312(c).
Section 14.04. 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, the Issuers or the Guarantors 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 14.05
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 14.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
Section 14.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA (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; provided, however, that with respect
to matters of fact, an Opinion of Counsel may rely on certificates from relevant
corporate officers or public officials.
Section 14.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
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Section 14.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No director, officer, employee, incorporator or stockholder of either of
the Issuers or any Guarantor, as such, or Paddlewheels shall have any liability
for any obligations of either of the Issuers or any of the Guarantors under the
Notes, this Indenture, the Note Guarantees, the Collateral Documents or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes. The waiver may not be effective to waive liabilities under the
federal securities laws.
Section 14.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 14.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Issuers, the Guarantors or any of their Subsidiaries or of
any other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
Section 14.10. Successors.
All agreements of the Issuers in this Indenture, each of the Collateral
Documents to which they are a party and the Notes shall bind their successors.
All agreements of the Trustee in this Indenture shall bind its successors. All
agreements of each Guarantor in this Indenture, each of the Collateral Documents
to which it is a party and its Note Guarantee shall bind its successors, except
as otherwise provided in Section 11.05.
Section 14.11. Severability.
In case any provision in this Indenture, the Notes or in the Note
Guarantees 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 14.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
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Section 14.13. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by the Holders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by agents duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee and, where it is hereby expressly required, to the Issuers and the
Guarantors. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and conclusive in favor of the Trustee, the Issuers
and the Guarantors, if made in the manner provided in this Section 14.13.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to such witness, notary or officer the
execution thereof. Where such execution is by a signer acting in a capacity
other than his individual capacity, such certificate or affidavit shall also
constitute sufficient proof of authority. The fact and date of the execution of
any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.
(c) Notwithstanding anything to the contrary contained in this Section
14.13, the principal amount and serial numbers of Notes held by any Holder, and
the date of holding the same, shall be proved by the register of the Notes
maintained by the Registrar as provided in Section 2.03 hereof.
(d) If the Issuers shall solicit from the Holders of the Notes any
request, demand, authorization, direction, notice, consent, waiver or other Act,
the Issuers may, at their option, by or pursuant to a resolution of their
respective Boards of Directors, fix in advance a record date for the
determination of Holders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other Act, but the Issuers shall have no
obligation to do so. Notwithstanding TIA (S) 316(c), such record date shall be
the record date specified in or pursuant to such resolution, which shall be a
date not earlier than the date 30 days prior to the first solicitation of
Holders generally in connection therewith or the date of the most recent list of
Holders forwarded to the Trustee prior to such solicitation pursuant to Section
2.05 hereof and not later than the date such solicitation is completed. If such
a record date is fixed, such request, demand, authorization, direction, notice,
consent, waiver or other Act may be given before or after such record date, but
only the Holders of record at the close of business on such record date shall be
deemed to be Holders for the purposes of determining whether Holders of the
requisite proportion of the then outstanding Notes have authorized or agreed or
consented to such request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the then outstanding Notes shall be
computed as of such record date; provided, that no such authorization, agreement
or consent by the Holders on such record date shall be deemed effective
113
<PAGE>
unless it shall become effective pursuant to the provisions of this Indenture
not later than eleven months after the record date.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Note shall bind every future Holder of the
same Note and the Holder of every Note issued upon the registration or transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Issuers in reliance
thereon, whether or not notation of such action is made upon such Note.
(f) Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Note may do so itself with
regard to all or any part of the principal amount of such Note or by one or more
duly appointed agents each of which may do so pursuant to such appointment with
regard to all or any part of such principal amount.
Section 14.14. Benefit of Indenture.
Nothing, in this Indenture or in the Notes, express or implied, shall give
to any Person, other than the parties hereto, any Paying Agent, any Registrar
and their successors hereunder, and the Holders, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
Section 14.15. Louisiana Riverboat Economic Development and Gaming Control Act.
Notwithstanding the provisions of Section 14.08 hereof, each of the
provisions of this Indenture is subject to and shall be enforced in compliance
with the provisions of the Louisiana Riverboat Economic Development and Gaming
Control Act, to the extent applicable, and the regulations promulgated
thereunder, unless such provisions are in conflict with the TIA, in which case
the TIA shall control. Each Holder by accepting a Note agrees that all Holders,
whether initial Holders or subsequent transferees, shall be subject to the
qualifications or suitability provisions of the Louisiana Riverboat Economic
Development and Gaming Control Act.
Section 14.16. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
(Signatures on following page)
114
<PAGE>
SIGNATURES
Dated as of August 10, 1999 HOLLYWOOD CASINO SHREVEPORT
By: HCS I, Inc., its managing general partner
By: /s/ Paul C. Yates
------------------------------------------
Name: Paul C. Yates
Title: Executive Vice President and
Chief Financial Officer
Dated as of August 10, 1999 SHREVEPORT CAPITAL CORPORATION
By: /s/ Paul C. Yates
------------------------------------------
Name: Paul C. Yates
Title: Executive Vice President and
Chief Financial Officer
Dated as of August 10, 1999 HWCC-LOUISIANA, INC.
By: /s/ Paul C. Yates
------------------------------------------
Name: Paul C. Yates
Title: Executive Vice President and
Chief Financial Officer
Dated as of August 10, 1999 HCS I, INC.
By: /s/ Paul C. Yates
------------------------------------------
Name: Paul C. Yates
Title: Executive Vice President and
Chief Financial Officer
Dated as of August 10, 1999 HCS II, INC.
By: /s/ Paul C. Yates
------------------------------------------
Name: Paul C. Yates
Title: Executive Vice President and
Chief Financial Officer
<PAGE>
Dated as of August 10, 1999 STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/ Robert J. Dunn
------------------------------------------
Name: Robert J. Dunn
Title: Vice President
F-2
<PAGE>
EXHIBIT A-1
[Face of Note]
- --------------------------------------------------------------------------------
CUSIP/CINS ____________
13% [Series A] [Series B] First Mortgage Notes
with Contingent Interest
No. ___ $____________
HOLLYWOOD CASINO SHREVEPORT
and
SHREVEPORT CAPITAL CORPORATION
promise to pay to
------------------------------------------------------------
or registered assigns,
the principal sum of
---------------------------------------------------------
Dollars on August 1, 2006.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
Dated: ______________, ____
HOLLYWOOD CASINO SHREVEPORT
By: HCS I, Inc., its managing general partner
By:
--------------------------------
Name:
Title:
SHREVEPORT CAPITAL CORPORATION
By:
--------------------------------
Name:
Title:
This is one of the Notes referred to
in the within-mentioned Indenture:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
----------------------------------
Authorized Signatory
- --------------------------------------------------------------------------------
A1-1
<PAGE>
[Back of Note]
13% [Series A] [Series B] First Mortgage Note due 2006 with Contingent Interest
[Insert the Global Note Legend, if applicable pursuant to the terms of the
Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the terms of the
Indenture]
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. Interest. Hollywood Casino Shreveport, a Louisiana general partnership
(the "Partnership"), and Shreveport Capital Corporation, a Louisiana corporation
("Shreveport Capital" and, together with the Partnership, the "Issuers"),
jointly and severally, promise to pay Fixed Interest on the principal amount of
this Note at 13% per annum from August 10, 1999 until maturity and shall pay the
Liquidated Damages, if any, payable pursuant to Section 5 of the Registration
Rights Agreement referred to below. The Issuers will pay Fixed Interest and
Liquidated Damages, if any, semi-annually in arrears on February 1 and August 1
of each year, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). 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 original issuance;
provided, however, that if there is no existing Default in the payment of
Interest, and if this Note is authenticated between a record date referred to on
the face hereof (each a "Record Date") and the next succeeding Interest Payment
Date, Fixed Interest shall accrue from such next succeeding Interest Payment
Date; provided, further, that the first Interest Payment Date shall be February
1, 2000. Fixed Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
In addition, the Notes will bear Contingent Interest after the Shreveport
Resort begins Operating. Contingent Interest will be calculated to accrue (each
an "Accrual Period") as follows:
(1) in the case of the First Accrual Period, from and including the
date on which the Shreveport Resort begins Operating to, and including, the
earlier of:
(a) the end of the First Accrual 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, upon
acceleration, upon any mandatory or optional redemption or otherwise;
(2) in the case of each Semi-annual Period following the First
Accrual Period from, but not including, the end of the First Accrual Period
or the end of the immediately preceding Semiannual Period, as applicable,
to, and including, the end of each such Semiannual Period if the
corresponding principal amount of the Notes has not become due and payable;
and
(3) in the case of any Interim Period following the First Accrual
Period from, but not including, the end of the First Accrual Period or most
recent Semiannual Period,
A1-2
<PAGE>
as applicable, to, and including, the date of payment if the corresponding
principal amount of the Notes has become due and payable, whether at stated
maturity, upon acceleration, upon any mandatory or optional redemption or
otherwise;
provided, however, that if there is no existing Default in the payment of
Interest, and if this Note is authenticated between a Record Date and the next
succeeding Interest Payment Date, Contingent Interest shall accrue from such
next succeeding Interest Payment Date;
Contingent Interest will be payable semi-annually. On each Interest
Payment Date after the First Accrual Period, Contingent Interest with respect to
the Accrual Period completed immediately prior to that Interest Payment Date
will be payable to the Holders of Notes on the Record Date immediately preceding
the applicable Interest Payment Date, unless all or a portion of such Contingent
Interest is permitted to be deferred. The Issuers may defer payment of all or a
portion of accrued Contingent Interest then otherwise due and payable, and may
continue to defer the payment of accrued Contingent Interest which has already
been deferred if, and only to the extent that:
(1) the payment of that portion of Contingent Interest on the
applicable Interest Payment Date will cause the Partnership's Adjusted
Fixed Charge Coverage Ratio for its four consecutive fiscal quarters ending
immediately prior to the applicable Interest Payment Date to be less than
1.5 to 1.0, but may not defer such portion, which, if paid, would not cause
the Adjusted Fixed Charge Coverage Ratio to be less than 1.5 to 1.0; and
(2) the principal amount of the Notes corresponding to that Contingent
Interest has not then matured and become due and payable, whether at stated
maturity, upon acceleration, upon any mandatory or optional redemption or
otherwise.
Contingent Interest that is deferred will become due and payable, in whole
or in part, upon the earlier of:
(1) the next succeeding Interest Payment Date on which all or a portion
of that Contingent Interest is not permitted to be deferred; and
(2) the maturity of the corresponding principal amount of the Notes,
whether at stated maturity, upon acceleration, upon any mandatory or
optional redemption or otherwise.
The Issuers shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the rate
of the Fixed Interest and they shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
Fixed Interest, Contingent Interest and Liquidated Damages, if any, (without
regard to any applicable grace periods) at a rate that is 1% per annum in excess
of the rate of the Fixed Interest to the extent lawful. No interest will accrue
on deferred Contingent Interest.
2. Method of Payment. The Issuers will pay Interest on the Notes (except
defaulted interest) and Liquidated Damages, if any, to the Persons who are
registered Holders of
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<PAGE>
Notes at the close of business on January 15 or July 15 next preceding the
Interest Payment Date, even if such Notes are canceled after such record date
and on or before such Interest Payment Date, except as provided in Section 2.12
of the Indenture with respect to defaulted interest. The Notes will be payable
as to principal, premium and Liquidated Damages, if any, and Interest 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 Global Notes and all other 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, State Street Bank and 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 10, 1999 ("Indenture"), among the Issuers, the
Guarantors 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. To the extent any provision of this
Note conflicts with the express provisions of the Indenture, the provisions of
the Indenture shall govern and be controlling. The Notes are secured
obligations of the Issuers and the Guarantors limited to $150.0 million in
aggregate principal amount. The Notes are secured by the collateral set forth
in the Collateral Documents.
5. Optional Redemption.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the Notes
will not be redeemable at the Issuers' option prior to August 1, 2003. On or
after August 1, 2003, the Issuers may redeem all or a part of the Notes upon not
less than 30 nor more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid
Interest and Liquidated Damages, if any, thereon, to the applicable redemption
date, if redeemed during the twelve-month period beginning on August 1 of the
years indicated below:
Year Percentage
---- ----------
2003.................... 106.50%
2004.................... 103.25%
2005 and thereafter..... 100.00%
A1-4
<PAGE>
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5,
at any time prior to August 1, 2002, the Issuers may on any one or more
occasions redeem up to 35% of the original aggregate principal amount of Notes
issued under the Indenture at a redemption price of 113% of the principal amount
thereof, plus accrued and unpaid Interest and Liquidated Damages, if any, to the
redemption date, with the net cash proceeds of a Qualified Equity Offering;
provided, however, that:
(i) at least 65% of the aggregate principal amount of the Notes
originally issued under the Indenture remains outstanding immediately after
the occurrence of such redemption (excluding Notes held by the Partnership
and its Subsidiaries); and
(ii) the redemption must occur within 60 days of the date of the
closing of such Qualified Equity Offering.
6. Mandatory Redemption.
(a) Except as described in paragraphs 6(b) and 7 below, the Issuers are not
required to make mandatory redemption or sinking fund payments with respect to
the Notes.
(b) If any Gaming Authority requires that a Person who is a Holder or the
Beneficial Owner of a Note be licensed, qualified or found suitable under any
applicable Gaming Law, the Holder or Beneficial Owner, as the case may be, shall
apply for a license, qualification or a finding of suitability within the time
period required by the Gaming Authority. If the Holder or Beneficial Owner
fails to apply for such license, qualification or finding of suitability within
the required time period, such Holder or Beneficial Owner, as the case may be,
shall dispose of its Notes within the time specified by the Gaming Authority and
the Issuers shall have the right to redeem the Notes of such Holder or
Beneficial Owner, subject to approval of any applicable Gaming Authority, at the
least of (i) the principal amount thereof, (ii) the amount that such Holder or
Beneficial Owner paid for the Notes or (iii) the fair market value of the Notes.
Immediately upon the imposition of a requirement to dispose of Notes by a Gaming
Authority, such Holder or Beneficial Owner of the Notes shall, to the extent
required by applicable law, have no further right (x) to exercise, directly or
indirectly, through any trustee or nominee or any other Person or entity, any
right conferred by the Notes or (y) to receive any Interest, dividends, economic
interests or any other distributions or payments with respect to the Notes or
any remuneration in any form with respect to the Notes from the Issuers or the
Trustee. Any Holder of Notes that is required to apply for a license,
qualification or finding of suitability must pay all fees and costs of any
investigation by the applicable Gaming Authorities. The Issuers are not
required to pay or reimburse any Holder of the Notes or Beneficial Owner 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. The Issuers shall notify the Trustee in writing of any such
redemption as soon as practicable; provided, however, that until such time as
the Trustee receives notice from the Issuers of such redemption in accordance
with Section 13.02 of the Indenture, the Trustee shall be entitled to treat the
Holder or Beneficial Owner as having all of its rights under the Indenture. The
Trustee shall report the names of the record Holders of the Notes to any Gaming
Authority when required by law.
A1-5
<PAGE>
7. Repurchase at Option of Holders.
(a) If a Change of Control occurs, the Issuers will be required to make an
offer (a "Change of Control Offer") to purchase 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 thereof plus accrued and unpaid
Interest and Liquidated Damages, if any, thereon, to the date of purchase.
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 Partnership or a Restricted Subsidiary consummates any Asset
Sales, within ten days of each date on which the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Issuers shall commence an offer to all
Holders of Notes (an "Asset Sale Offer") pursuant to the procedures set forth in
the Indenture to all Holders of Notes and all holders of other Indebtedness that
is pari passu with the Notes and secured by Pari Passu Collateral containing
provisions similar to those set forth in the Indenture with respect to offers to
purchase or redeem with the proceeds of sales of assets to purchase with the
Excess Proceeds an amount equal to the maximum principal amount of Notes and
such other Indebtedness that may be purchased out of the Excess Proceeds, pro
rata in proportion to the respective principal amounts of the Notes and such
other Indebtedness. The offer price in any Asset Sale Offer will be equal to
100% of principal amount plus accrued and unpaid Interest and Liquidated
Damages, if any, to the date of purchase, and will be payable in cash. If any
Excess Proceeds remain after consummation of an Asset Sale Offer, the Issuers
may use such Excess Proceeds for any purpose not otherwise prohibited by the
Indenture or the Collateral Documents. If the aggregate principal amount of
Notes and such other Indebtedness tendered pursuant to such Asset Sale Offer
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and
such other Indebtedness to be purchased on a pro rata basis based on the
principal amount of Notes and such other Indebtedness tendered and will select
the Notes to be purchased in the manner described under Section 3.02 of the
Indenture.
(c) If the Partnership or its Restricted Subsidiaries experience an Event
of Loss, within ten days of each date on which the aggregate amount of Excess
Loss Proceeds exceeds $5.0 million, and the aggregate amount of Excess Loss
Proceeds exceeds $5.0 million, the Issuers shall commence an offer to all
Holders of Notes (an ``Event of Loss Offer'') and holders of other Indebtedness
that is pari passu with the Notes and secured by Pari Passu Collateral
containing provisions similar to those set forth in the Indenture with respect
to offers to purchase or redeem with the proceeds of Events of Loss to purchase
the maximum principal amount of Notes and such other Indebtedness that may be
purchased out of such Excess Loss Proceeds, pro rata in proportion to the
respective principal amounts of the Notes and such other Indebtedness. The
offer price in any Event of Loss Offer will be equal to 100% of principal amount
plus accrued and unpaid Interest and Liquidated Damages, if any, to the date of
purchase, and will be payable in cash. If any Excess Loss Proceeds remain after
consummation of an Event of Loss Offer, the Issuers may use such Excess Loss
Proceeds for any purpose not otherwise prohibited by this Indenture and the
Collateral Documents. If the aggregate principal amount of Notes and such other
Indebtedness tendered pursuant to an Event of Loss Offer exceeds the Excess Loss
Proceeds, the Trustee will select the Notes and such other Indebtedness to be
purchased on a pro
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<PAGE>
rata basis based on the principal amount of Notes and such other Indebtedness
tendered and will select the Notes to be purchased in the manner described under
Section 3.02 of the Indenture.
8. Notice of Redemption. Notice of redemption will be mailed at least 30
days or such shorter period as is satisfactory to the Trustee 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, the Issuers
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, the Note Guarantees, the Collateral Documents 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, voting as a single class, and
any existing default or compliance with any provision of the Indenture, the Note
Guarantees, the Collateral Documents or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes,
voting as a single class. Without the consent of any Holder of a Note, the
Indenture, the Note Guarantees, the Collateral Documents 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 either of the Issuers' obligations to
Holders of the Notes in case of a merger or consolidation or sale of all or
substantially all of that Issuers' assets, to make any change that would provide
any additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act or to enter into
additional or supplemental Collateral Documents or an intercreditor agreement
with a Pari Passu Debtholder.
Any amendment to, or waiver of the provisions of any of the Collateral
Documents relating to Section 4.13 or Article 10 of the Indenture shall require
the consent of the Holders of at least 85% in aggregate principal amount of
Notes, then outstanding, voting as a single class.
12. Defaults and Remedies. Events of Default include: (a) default for 30
days in the payment when due of Interest on, or Liquidated Damages with respect
to, the Notes; provided
A1-7
<PAGE>
that payments of Contingent Interest that are permitted to be deferred as
provided in the Indenture will not become for this purpose until such payment is
required to be made pursuant to the terms of the Indenture, (b) default in
payment when due of principal of, or premium, if any, on the Notes, (c)(i)
default in the payment of principal of, premium, if any, and Interest on Notes
required to be purchased pursuant to Sections, 4.10, 4.11 or 4.16 of the
Indenture, when due and payable; and (ii) failure to perform or comply with the
provisions described under (A) Sections 4.18 or 5.01 of the Indenture or (B)
Section 4.07 of the Indenture (but only if the failure under this clause (B) is
caused by a Restricted Payment described in clauses (a) through (c) of the first
paragraph of Section 4.07 of the Indenture; (d) failure by (i) either of the
Issuers or any of the Partnership's Restricted Subsidiaries for 60 days after
notice thereof to comply with any of the other agreements in the Indenture not
set forth in clause (c) above or (ii) the Partnership for 30 days after notice
thereof to comply with any of the agreements in the Cash Collateral and
Disbursement Agreement; (e) default under certain other agreements relating to
Indebtedness of the Issuers which default (i) is caused by a failure to pay
principal of, or Interest or premium, if any, 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 (ii) 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) failure
by either of the Issuers or any of the Partnership's Restricted Subsidiaries to
pay final judgments aggregating in excess of $5.0 million, which judgments are
not paid, discharged or stayed for a period of 60 days; (g) breach by either of
the Issuers or any Guarantor in any material respect of any representation or
warranty or agreement in any of the Collateral Documents or in any certificates
delivered in connection therewith, the repudiation by any of them of any of its
obligations under any of the Collateral Documents, the unenforceability of the
Collateral Documents against any of them for any reason which continues for 30
days after written notice from the Trustee or Holders of at least 25% in
outstanding principal amount of Notes or the loss of the perfection or priority
of the Liens granted by any of them pursuant to the Collateral Documents for any
reason; (h) except as permitted by this Indenture, any Note Guarantee by a
Guarantor with Total Assets of $5.0 million or more shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease for any reason
to be in full force and effect or any Guarantor with Total Assets of $5.0
million or more, or any Person acting on behalf of any such Guarantor, shall
deny or disaffirm its obligations under its Note Guarantee; (i) certain events
of bankruptcy or insolvency with respect to either of the Issuers or any of the
Partnership's Restricted Subsidiaries; (j) default by Hollywood Casino in the
performance of its obligations set forth in, or repudiation of its obligations
under, the Completion Capital Agreement; (k) if HWCC-Louisiana, HCS I, HCS II
and the Partnership ever fail to own collectively 100% of the issued and
outstanding Equity Interests of Shreveport Capital; or (l) the failure of the
Shreveport Resort to be Operating by the Operating Deadline or any revocation,
suspension or loss of any Gaming License which results in the cessation or
suspension of business at the Shreveport Resort for a period of more than 90
consecutive days; provided, however, that, in any event, there shall not be an
Event of Default under this clause if the suspension of business results from an
Event of Loss and the Partnership is complying with Section 4.11 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 then outstanding Notes may
declare all the Notes to be due and
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<PAGE>
payable immediately. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding
Notes will become due and payable without further action or notice. Holders may
not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or Interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive an 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 on, or the
principal of, the Notes. The Issuers and each Guarantor are required to deliver
to the Trustee annually a statement regarding compliance with the Indenture and
the Collateral Documents, 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 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 Paddlewheels or Others. Neither Paddlewheels nor
any of its affiliates, other than the Partnership, will have any obligation to
make any payments of any kind that become due on the Notes. In addition, no
director, officer, employee, partner, incorporator or stockholder of the Issuers
or any Guarantor, as such, shall have any liability for any obligations of
either of the Issuers or any of the Guarantors under the Notes, the Indenture,
the Note Guarantees 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.
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 Restricted Global Notes and Restricted
Definitive Notes. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have all the rights set forth in the A/B Exchange Registration
Rights Agreement dated as of August 10, 1999, between the Issuers and the
parties named on the signature pages thereof (the "Registration Rights
Agreement").
A1-9
<PAGE>
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:
Hollywood Casino Shreveport
c/o Hollywood Casino Corporation
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, Texas 75240
Telecopier No.: (214) 386-7411
A1-10
<PAGE>
Assignment Form
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:_________________________________
(Insert assignee's legal name)
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint________________________________________________________
to transfer this Note on the books of the 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*:______________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A1-11
<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, Section 4.11 or 4.16 of the Indenture, check the appropriate
box below:
[ ] Clause (vii) of the second paragraph of Section 4.07 [ ] Section 4.10
[ ] Section 4.11 [ ] Section 4.16
If you want to elect to have only part of the Note purchased by the
Issuers pursuant to clause (vii) of the second paragraph of Section 4.07,
Section 4.10, Section 4.11 or Section 4.16 of the Indenture, state the amount
you elect to have purchased:
$____________________
Date:_____________
Your Signature:________________________________
(Sign exactly as your name appears
on the face of this Note)
Tax Identification No.:________________________
Signature Guarantee*:______________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A1-12
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Principal Amount of Signature of
Amount of decrease in Amount of increase in this Global Note authorized officer of
Principal Amount of Principal Amount of following such decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ----------------- ------------------- ------------------- -------------------- -----------------
</TABLE>
* This schedule should only be included if the Note is issued in global form.
A1-13
<PAGE>
EXHIBIT A-2
[Face of Regulation S Temporary Global Note]
CUSIP/CINS ____________
13% [Series A] [Series B] First Mortgage Notes
with Contingent Interest
No. ___ $____________
HOLLYWOOD CASINO SHREVEPORT
and
SHREVEPORT CAPITAL CORPORATION
promise to pay to
-----------------------------------------------------------
or registered assigns,
the principal sum of
--------------------------------------------------------
Dollars on August 1, 2006.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
Dated: ,
------------------ -----
HOLLYWOOD CASINO SHREVEPORT
By: HCS I, Inc., its managing general partner
By:
------------------------------------------
Name:
Title:
SHREVEPORT CAPITAL CORPORATION
By:
------------------------------------------
Name:
Title:
This is one of the Notes referred to
in the within-mentioned Indenture:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
------------------------------
Authorized Signatory
===============================================================================
A2-1
<PAGE>
[Back of Regulation S Temporary Global Note]
13% [Series A] [Series B] First Mortgage Note due 2006 with Contingent Interest
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
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 DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. 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.
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT. THE
HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUERS THAT
(A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN OF RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE ISSUERS SO
REQUEST), (2) TO THE ISSUERS OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN
A2-2
<PAGE>
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE NOTE EVIDENCED
HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE.
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. Interest. Hollywood Casino Shreveport, a Louisiana general partnership
(the "Partnership"), and Shreveport Capital Corporation, a Louisiana corporation
("Shreveport Capital" and, together with the Partnership, the "Issuers"),
jointly and severally, promise to pay Fixed Interest on the principal amount of
this Note at 13% per annum from August 10, 1999 until maturity and shall pay the
Liquidated Damages, if any, payable pursuant to Section 5 of the Registration
Rights Agreement referred to below. The Issuers will pay Fixed Interest and
Liquidated Damages, if any, semi-annually in arrears on February 1 and August 1
of each year, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"). 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 original issuance;
provided, however, that if there is no existing Default in the payment of
Interest, and if this Note is authenticated between a record date referred to on
the face hereof (each a "Record Date") and the next succeeding Interest Payment
Date, Fixed Interest shall accrue from such next succeeding Interest Payment
Date; provided, further, that the first Interest Payment Date shall be February
1, 2000. Fixed Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
In addition, the Notes will bear Contingent Interest after the Shreveport
Resort begins Operating. Contingent Interest will be calculated to accrue (each
an "Accrual Period") as follows:
(1) in the case of the First Accrual Period, from and including the
date on which the Shreveport Resort begins Operating to, and including, the
earlier of:
(c) the end of the First Accrual Period if the corresponding
principal amount of the Notes has not become due and payable; or
(d) the date of payment if the corresponding principal amount
of the Notes has become due and payable, whether at stated maturity,
upon acceleration, upon any mandatory or optional redemption or
otherwise;
(4) in the case of each Semi-annual Period following the First
Accrual Period from, but not including, the end of the First Accrual Period
or the end of the immediately preceding Semiannual Period, as applicable,
to, and including, the end of each such Semiannual Period if the
corresponding principal amount of the Notes has not become due and payable;
and
(5) in the case of any Interim Period following the First Accrual
Period from, but not including, the end of the First Accrual Period or most
recent Semiannual Period,
A2-3
<PAGE>
as applicable, to, and including, the date of payment if
the corresponding principal amount of the Notes has become due and payable,
whether at stated maturity, upon acceleration, upon any mandatory or
optional redemption or otherwise;
provided, however, that if there is no existing Default in the payment of
Interest, and if this Note is authenticated between a Record Date and the next
succeeding Interest Payment Date, Contingent Interest shall accrue from such
next succeeding Interest Payment Date;
Contingent Interest will be payable semi-annually. On each Interest
Payment Date after the First Accrual Period, Contingent Interest with respect to
the Accrual Period completed immediately prior to that Interest Payment Date
will be payable to the Holders of Notes on the Record Date immediately preceding
the applicable Interest Payment Date, unless all or a portion of such Contingent
Interest is permitted to be deferred. The Issuers may defer payment of all or a
portion of accrued Contingent Interest then otherwise due and payable, and may
continue to defer the payment of accrued Contingent Interest which has already
been deferred if, and only to the extent that:
(3) the payment of that portion of Contingent Interest on the
applicable Interest Payment Date will cause the Partnership's Adjusted
Fixed Charge Coverage Ratio for its four consecutive fiscal quarters ending
immediately prior to the applicable Interest Payment Date to be less than
1.5 to 1.0, but may not defer such portion, which, if paid, would not cause
the Adjusted Fixed Charge Coverage Ratio to be less than 1.5 to 1.0; and
(4) the principal amount of the Notes corresponding to that Contingent
Interest has not then matured and become due and payable, whether at stated
maturity, upon acceleration, upon any mandatory or optional redemption or
otherwise.
Contingent Interest that is deferred will become due and payable, in whole
or in part, upon the earlier of:
(3) the next succeeding Interest Payment Date on which all or a portion
of that Contingent Interest is not permitted to be deferred; and
(4) the maturity of the corresponding principal amount of the Notes,
whether at stated maturity, upon acceleration, upon any mandatory or
optional redemption or otherwise.
The Issuers shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the rate
of the Fixed Interest and they shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
Fixed Interest, Contingent Interest and Liquidated Damages, if any, (without
regard to any applicable grace periods) at a rate that is 1% per annum in excess
of the rate of the Fixed Interest to the extent lawful. No interest will accrue
on deferred Contingent Interest.
Until this Regulation S Temporary Global Note is exchanged for one or more
Regulation S Permanent Global Notes, the Holder hereof shall not be entitled to
receive
A2-4
<PAGE>
payments of interest hereon; until so exchanged in full, this Regulation S
Temporary Global Note shall in all other respects be entitled to the same
benefits as other Notes under the Indenture.
2. Method of Payment. The Issuers will pay Interest on the Notes (except
defaulted interest) and Liquidated Damages, if any, to the Persons who are
registered Holders of Notes at the close of business on January 15 or July 15
next preceding the Interest Payment Date, even if such Notes are canceled after
such record date and on or before such Interest Payment Date, except as provided
in Section 2.12 of the Indenture with respect to defaulted interest. The Notes
will be payable as to principal, premium and Liquidated Damages, if any, and
Interest 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 Global Notes and all other 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, State Street Bank and 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 10, 1999 ("Indenture"), among the Issuers, the
Guarantors 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. To the extent any provision of this
Note conflicts with the express provisions of the Indenture, the provisions of
the Indenture shall govern and be controlling. The Notes are secured
obligations of the Issuers and the Guarantors limited to $150.0 million in
aggregate principal amount. The Notes are secured by the collateral set forth
in the Collateral Documents.
6. Optional Redemption.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the Notes
will not be redeemable at the Issuers' option prior to August 1, 2003. On or
after August 1, 2003, the Issuers may redeem all or a part of the Notes upon not
less than 30 nor more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid
Interest and Liquidated Damages, if any, thereon, to the applicable redemption
date, if redeemed during the twelve-month period beginning on August 1 of the
years indicated below:
A2-5
<PAGE>
Year Percentage
---- ----------
2003 106.50%
2004 103.25%
2005 and thereafter 100.00%
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph 5,
at any time prior to August 1, 2002, the Issuers may on any one or more
occasions redeem up to 35% of the original aggregate principal amount of Notes
issued under the Indenture at a redemption price of 113% of the principal amount
thereof, plus accrued and unpaid Interest and Liquidated Damages, if any, to the
redemption date, with the net cash proceeds of a Qualified Equity Offering;
provided, however, that:
(ii) at least 65% of the aggregate principal amount of the Notes
originally issued under the Indenture remains outstanding immediately after
the occurrence of such redemption (excluding Notes held by the Partnership
and its Subsidiaries); and
(ii) the redemption must occur within 60 days of the date of the
closing of such Qualified Equity Offering.
6. Mandatory Redemption.
(a) Except as described in paragraphs 6(b) and 7 below, the Issuers are not
required to make mandatory redemption or sinking fund payments with respect to
the Notes.
(b) If any Gaming Authority requires that a Person who is a Holder or the
Beneficial Owner of a Note be licensed, qualified or found suitable under any
applicable Gaming Law, the Holder or Beneficial Owner, as the case may be, shall
apply for a license, qualification or a finding of suitability within the time
period required by the Gaming Authority. If the Holder or Beneficial Owner
fails to apply for such license, qualification or finding of suitability within
the required time period, such Holder or Beneficial Owner, as the case may be,
shall dispose of its Notes within the time specified by the Gaming Authority and
the Issuers shall have the right to redeem the Notes of such Holder or
Beneficial Owner, subject to approval of any applicable Gaming Authority, at the
least of (i) the principal amount thereof, (ii) the amount that such Holder or
Beneficial Owner paid for the Notes or (iii) the fair market value of the Notes.
Immediately upon the imposition of a requirement to dispose of Notes by a Gaming
Authority, such Holder or Beneficial Owner of the Notes shall, to the extent
required by applicable law, have no further right (x) to exercise, directly or
indirectly, through any trustee or nominee or any other Person or entity, any
right conferred by the Notes or (y) to receive any Interest, dividends, economic
interests or any other distributions or payments with respect to the Notes or
any remuneration in any form with respect to the Notes from the Issuers or the
Trustee. Any Holder of Notes that is required to apply for a license,
qualification or finding of suitability must pay all fees and costs of any
investigation by the applicable Gaming Authorities. The Issuers are not
required to pay or reimburse any Holder of the Notes or Beneficial Owner 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. The Issuers shall notify the Trustee in writing of any such
redemption as soon as practicable; provided, however, that until such time as
the Trustee receives notice from the Issuers of such redemption in accordance
with Section 13.02 of the Indenture, the Trustee shall be entitled to treat the
Holder or Beneficial
A2-6
<PAGE>
Owner as having all of its rights under the Indenture. The Trustee shall report
the names of the record Holders of the Notes to any Gaming Authority when
required by law.
7. Repurchase at Option of Holders.
(a) If a Change of Control occurs, the Issuers will be required to make an
offer (a "Change of Control Offer") to purchase 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 thereof plus accrued and unpaid
Interest and Liquidated Damages, if any, thereon, to the date of purchase.
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 Partnership or a Restricted Subsidiary consummates any Asset
Sales, within ten days of each date on which the aggregate amount of Excess
Proceeds exceeds $5.0 million, the Issuers shall commence an offer to all
Holders of Notes (an "Asset Sale Offer") pursuant to the procedures set forth in
the Indenture to all Holders of Notes and all holders of other Indebtedness that
is pari passu with the Notes and secured by Pari Passu Collateral containing
provisions similar to those set forth in the Indenture with respect to offers to
purchase or redeem with the proceeds of sales of assets to purchase with the
Excess Proceeds an amount equal to the maximum principal amount of Notes and
such other Indebtedness that may be purchased out of the Excess Proceeds, pro
rata in proportion to the respective principal amounts of the Notes and such
other Indebtedness. The offer price in any Asset Sale Offer will be equal to
100% of principal amount plus accrued and unpaid Interest and Liquidated
Damages, if any, to the date of purchase, and will be payable in cash. If any
Excess Proceeds remain after consummation of an Asset Sale Offer, the Issuers
may use such Excess Proceeds for any purpose not otherwise prohibited by the
Indenture or the Collateral Documents. If the aggregate principal amount of
Notes and such other Indebtedness tendered pursuant to such Asset Sale Offer
exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and
such other Indebtedness to be purchased on a pro rata basis based on the
principal amount of Notes and such other Indebtedness tendered and will select
the Notes to be purchased in the manner described under Section 3.02 of the
Indenture.
(c) If the Partnership or its Restricted Subsidiaries experience an Event
of Loss, within ten days of each date on which the aggregate amount of Excess
Loss Proceeds exceeds $5.0 million, and the aggregate amount of Excess Loss
Proceeds exceeds $5.0 million, the Issuers shall commence an offer to all
Holders of Notes (an ``Event of Loss Offer'') and holders of other Indebtedness
that is pari passu with the Notes and secured by Pari Passu Collateral
containing provisions similar to those set forth in the Indenture with respect
to offers to purchase or redeem with the proceeds of Events of Loss to purchase
the maximum principal amount of Notes and such other Indebtedness that may be
purchased out of such Excess Loss Proceeds, pro rata in proportion to the
respective principal amounts of the Notes and such other Indebtedness. The
offer price in any Event of Loss Offer will be equal to 100% of principal amount
plus accrued and unpaid Interest and Liquidated Damages, if any, to the date of
purchase, and will be payable in cash. If any Excess Loss Proceeds remain after
consummation of an Event of Loss Offer, the Issuers may use such Excess Loss
Proceeds for any purpose not otherwise prohibited by this Indenture and the
Collateral Documents. If the aggregate principal amount of Notes and
A2-7
<PAGE>
such other Indebtedness tendered pursuant to an Event of Loss Offer exceeds the
Excess Loss Proceeds, the Trustee will select the Notes and such other
Indebtedness to be purchased on a pro rata basis based on the principal amount
of Notes and such other Indebtedness tendered and will select the Notes to be
purchased in the manner described under Section 3.02 of the Indenture.
8. Notice of Redemption. Notice of redemption will be mailed at least 30
days or such shorter period as is satisfactory to the Trustee 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, the Issuers
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.
This Regulation S Temporary Global Note is exchangeable in whole or in part
for one or more Global Notes only (i) on or after the termination of the 40-day
restricted period (as defined in Regulation S) and (ii) upon presentation of
certificates (accompanied by an Opinion of Counsel, if applicable) required by
Article 2 of the Indenture. Upon exchange of this Regulation S Temporary Global
Note for one or more Global Notes, the Trustee shall cancel this Regulation S
Temporary Global Note.
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, the Note Guarantees, the Collateral Documents 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, voting as a single class, and
any existing default or compliance with any provision of the Indenture, the Note
Guarantees, the Collateral Documents or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes,
voting as a single class. Without the consent of any Holder of a Note, the
Indenture, the Note Guarantees, the Collateral Documents 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 either of the Issuers' obligations to
Holders of the Notes in case of a merger or consolidation or sale of all or
substantially all of that Issuers' assets, to make any change that would provide
any additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the SEC in order to effect or maintain the
A2-8
<PAGE>
qualification of the Indenture under the Trust Indenture Act or to enter into
additional or supplemental Collateral Documents or an intercreditor agreement
with a Pari Passu Debtholder.
Any amendment to, or waiver of the provisions of any of the Collateral
Documents relating to Section 4.13 or Article 10 of the Indenture shall require
the consent of the Holders of at least 85% in aggregate principal amount of
Notes, then outstanding, voting as a single class.
12. Defaults and Remedies. Events of Default include: (a) default for 30
days in the payment when due of Interest on, or Liquidated Damages with respect
to, the Notes; provided that payments of Contingent Interest that are permitted
to be deferred as provided in the Indenture will not become for this purpose
until such payment is required to be made pursuant to the terms of the
Indenture, (b) default in payment when due of principal of, or premium, if any,
on the Notes, (c)(i) default in the payment of principal of, premium, if any,
and Interest on Notes required to be purchased pursuant to Sections, 4.10, 4.11
or 4.16 of the Indenture, when due and payable; and (ii) failure to perform or
comply with the provisions described under (A) Sections 4.18 or 5.01 of the
Indenture or (B) Section 4.07 of the Indenture (but only if the failure under
this clause (B) is caused by a Restricted Payment described in clauses (a)
through (c) of the first paragraph of Section 4.07 of the Indenture; (d) failure
by (i) either of the Issuers or any of the Partnership's Restricted Subsidiaries
for 60 days after notice thereof to comply with any of the other agreements in
the Indenture not set forth in clause (c) above or (ii) the Partnership for 30
days after notice thereof to comply with any of the agreements in the Cash
Collateral and Disbursement Agreement; (e) default under certain other
agreements relating to Indebtedness of the Issuers which default (i) is caused
by a failure to pay principal of, or Interest or premium, if any, 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 (ii) 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) failure by either of the Issuers or any of the
Partnership's Restricted Subsidiaries to pay final judgments aggregating in
excess of $5.0 million, which judgments are not paid, discharged or stayed for a
period of 60 days; (g) breach by either of the Issuers or any Guarantor in any
material respect of any representation or warranty or agreement in any of the
Collateral Documents or in any certificates delivered in connection therewith,
the repudiation by any of them of any of its obligations under any of the
Collateral Documents, the unenforceability of the Collateral Documents against
any of them for any reason which continues for 30 days after written notice from
the Trustee or Holders of at least 25% in outstanding principal amount of Notes
or the loss of the perfection or priority of the Liens granted by any of them
pursuant to the Collateral Documents for any reason; (h) except as permitted by
this Indenture, any Note Guarantee by a Guarantor with Total Assets of $5.0
million or more shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Guarantor with Total Assets of $5.0 million or more, or any Person acting on
behalf of any such Guarantor, shall deny or disaffirm its obligations under its
Note Guarantee; (i) certain events of bankruptcy or insolvency with respect to
either of the Issuers or any of the Partnership's Restricted Subsidiaries; (j)
default by Hollywood Casino in the performance of its obligations set forth in,
or repudiation of its obligations under, the Completion Capital Agreement; (k)
if HWCC-Louisiana, HCS I, HCS II and the Partnership ever fail to own
collectively 100% of the issued and outstanding Equity Interests of Shreveport
Capital; or (l) the
A2-9
<PAGE>
failure of the Shreveport Resort to be Operating by the Operating Deadline or
any revocation, suspension or loss of any Gaming License which results in the
cessation or suspension of business at the Shreveport Resort for a period of
more than 90 consecutive days; provided, however, that, in any event, there
shall not be an Event of Default under this clause if the suspension of business
results from an Event of Loss and the Partnership is complying with Section 4.11
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 then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all outstanding Notes will become due and payable
without further action or notice. Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except a Default or Event of Default relating to the payment of
principal or Interest) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Notes
then outstanding by notice to the Trustee may on behalf of the Holders of all of
the Notes waive an 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 on, or the principal of, the Notes.
The Issuers and each Guarantor are required to deliver to the Trustee annually a
statement regarding compliance with the Indenture and the Collateral Documents,
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 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 Paddlewheels or Others. Neither Paddlewheels nor
any of its affiliates, other than the Partnership, will have any obligation to
make any payments of any kind that become due on the Notes. In addition, no
director, officer, employee, partner, incorporator or stockholder of the Issuers
or any Guarantor, as such, shall have any liability for any obligations of
either of the Issuers or any of the Guarantors under the Notes, the Indenture,
the Note Guarantees 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.
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),
A2-10
<PAGE>
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 Restricted Global Notes and Restricted
Definitive Notes. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have all the rights set forth in the A/B Exchange Registration
Rights Agreement dated as of August 10, 1999, between 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:
Hollywood Casino Shreveport
c/o Hollywood Casino Corporation
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, Texas 75240
Telecopier No.: (214) 386-7411
A2-11
<PAGE>
Assignment Form
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:
--------------------------------
(Insert assignee's legal name)
- -------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
-------------------------------------------------------
to transfer this Note on the books of the 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*:
------------------------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A2-12
<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, Section 4.11 or 4.16 of the Indenture, check the appropriate
box below:
[ ] Clause (vii) of the second paragraph of Section 4.07 [ ] Section 4.10
[ ] Section 4.11 [ ] Section 4.16
If you want to elect to have only part of the Note purchased by the
Issuers pursuant to clause (vii) of the second paragraph of Section 4.07,
Section 4.10, Section 4.11 or Section 4.16 of the Indenture, state the amount
you elect to have purchased:
$
------------------
Date:
--------------------
Your Signature:
-----------------------------------
(Sign exactly as your name appears
on the face of this Note)
Tax Identification No.:
-------------------------
Signature Guarantee*:
-------------------------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A2-13
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S
TEMPORARY GLOBAL NOTE*
The following exchanges of a part of this Regulation S Temporary Global
Note for an interest in another Global Note, or of other Restricted Global Notes
for an interest in this Regulation S Temporary Global Note, have been made:
<TABLE>
<CAPTION>
Principal Amount of
Amount of decrease Amount of increase this Global Note Signature of
in following such officer of authorized
Principal Amount of Principal Amount of decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ----------------- ------------------- ------------------- -------------------- -----------------
<S> <C> <C> <C> <C>
</TABLE>
* This schedule should only be included if the Note is issued in global form.
A2-14
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Hollywood Casino Shreveport
Shreveport Capital Corporation
c/o Hollywood Casino Corporation
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, TX 75240
State Street Bank and Trust Company
P. O. Box 778
Boston, Massachusetts 02110
Re: 13% First Mortgage Notes due 2006 with Contingent Interest of
Hollywood Casino Shreveport and Shreveport Capital Corporation
Reference is hereby made to the Indenture dated as of August 10, 1999
(the "Indenture"), among Hollywood Casino Shreveport, a Louisiana general
partnership (the "Partnership"), Shreveport Capital Corporation, a Louisiana
corporation ("Capital" and, together with the Partnership, the "Issuers"), HWCC-
Louisiana, Inc., a Louisiana corporation ("HWCC-Louisiana"), HCS I, Inc., a
Louisiana corporation ("HCS I"), and HCS II, Inc., a Louisiana corporation
("HCS II" and, together with HWCC-Louisiana and HCS I, the "Guarantors"), and
State Street Bank and Trust Company, as trustee (the "Trustee"). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
___________________, (the "Transferor") owns and proposes to transfer
the Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to __________________________ (the "Transferee"), as further specified in Annex
A hereto. In connection with the Transfer, the Transferor hereby certifies
that:
[CHECK ALL THAT APPLY]
1. [_] Check if Transferee will take delivery of a beneficial interest
---------------------------------------------------------------
in the 144A Global Note or a Definitive Note Pursuant to Rule 144A. The
- ------------------------------------------------------------------
Transfer is being effected pursuant to and in accordance with Rule 144A under
the United States Securities Act of 1933, as amended (the "Securities Act"),
and, accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions
B-1
<PAGE>
on transfer enumerated in the Private Placement Legend printed on the 144A
Global Note and/or the Definitive Note and in the Indenture and the Securities
Act.
2. [_] Check if Transferee will take delivery of a beneficial interest
---------------------------------------------------------------
in the Regulation S Global Note or a Definitive Note pursuant to Regulation S.
- -----------------------------------------------------------------------------
The Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and, accordingly, the Transferor hereby
further certifies that (i) the Transfer is not being made to a Person in the
United States and (x) at the time the buy order was originated, the Transferee
was outside the United States or such Transferor and any Person acting on its
behalf reasonably believed and believes that the Transferee was outside the
United States or (y) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither such
Transferor nor any Person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States, (ii) no directed selling efforts
have been made in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S under the Securities Act, (iii) the transaction is not
part of a plan or scheme to evade the registration requirements of the
Securities Act and (iv) if the proposed transfer is being made prior to the
expiration of the Restricted Period, the transfer is not being made to a U.S.
Person or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Upon consummation of the proposed transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on Transfer enumerated in the Private
Placement Legend printed on the Regulation S Global Note and/or the Definitive
Note and in the Indenture and the Securities Act.
3. [_] Check and complete if Transferee will take delivery of a
--------------------------------------------------------
beneficial interest in the IAI Global Note or a Definitive Note pursuant to any
- -------------------------------------------------------------------------------
provision of the Securities Act other than Rule 144A or Regulation S. The
- --------------------------------------------------------------------
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Notes and pursuant to and in accordance with the Securities Act and
any applicable blue sky securities laws of any state of the United States, and
accordingly the Transferor hereby further certifies that (check one):
(a) [_] such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) [_] such Transfer is being effected to either of the Issuers or a
subsidiary thereof;
or
(c) [_] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [_] such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of
the Securities Act other
B-2
<PAGE>
than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further
certifies that it has not engaged in any general solicitation within the
meaning of Regulation D under the Securities Act and the Transfer complies
with the transfer restrictions applicable to beneficial interests in a
Restricted Global Note or Restricted Definitive Notes and the requirements
of the exemption claimed, which certification is supported by (1) a
certificate executed by the Transferee in the form of Exhibit D to the
Indenture and (2) an Opinion of Counsel provided by the Transferor or the
Transferee (a copy of which the Transferor has attached to this
certification) to the effect that such Transfer is in compliance with the
Securities Act. Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the IAI Global Note and/or the
Definitive Notes and in the Indenture and the Securities Act.
4. [_] Check if Transferee will take delivery of a beneficial
------------------------------------------------------
interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.
- -----------------------------------------------------------------------------
(a) [_] Check if Transfer is pursuant to Rule 144. (i) The
Transfer is being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(b) [_] Check if Transfer is Pursuant to Regulation S. (i) The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of any
state of the United States and (ii) the restrictions on transfer contained in
the Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the proposed
Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will no longer be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the Restricted Global Notes, on Restricted Definitive Notes and in the
Indenture.
(c) [_] Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.
B-3
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuers.
----------------------------------------
[Insert Name of Transferor]
By:
-------------------------------------
Name:
Title:
Dated:
------------------
B-4
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Note (CUSIP ____________), or
(ii) [_] Regulation S Global Note (CUSIP ____________), or
(iii) [_] IAI Global Note (CUSIP _____________); or
(b) [_] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Note (CUSIP ____________), or
(ii) [_] Regulation S Global Note (CUSIP ____________), or
(iii) [_] IAI Global Note (CUSIP _____________); or
(iv) [_] Unrestricted Global Note (CUSIP ____________); or
(b) [_] a Restricted Definitive Note; or
(c) [_] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-5
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Hollywood Casino Shreveport
Shreveport Capital Corporation
c/o Hollywood Casino Corporation
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, TX 75240
State Street Bank and Trust Company
P. O. Box 778
Boston, Massachusetts 02110
Re: 13% First Mortgage Notes due 2006 with Contingent Interest of
Hollywood Casino Shreveport and Shreveport Capital Corporation
(CUSIP ____________)
Reference is hereby made to the Indenture, dated as of August 10, 1999
(the "Indenture"), among Hollywood Casino Shreveport, a Louisiana general
partnership (the "Partnership"), Shreveport Capital Corporation, a Louisiana
corporation ("Capital" and, together with the Partnership, the "Issuers"), HWCC-
Louisiana, Inc., a Louisiana corporation ("HWCC-Louisiana"), HCS I, Inc., a
Louisiana corporation ("HCS I"), and HCS II, Inc., a Louisiana corporation
("HCS II" and, together with HWCC-Louisiana and HCS I, the "Guarantors"), and
State Street Bank and Trust Company, as trustee (the "Trustee"). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
__________________________, (the "Owner") owns and proposes to
exchange the Note[s] or interest in such Note[s] specified herein, in the
principal amount of $____________ in such Note[s] or interests (the "Exchange").
In connection with the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in
------------------------------------------------------------------
a Restricted Global Note for Unrestricted Definitive Notes or Beneficial
- ------------------------------------------------------------------------
Interests in an Unrestricted Global Note.
- -----------------------------------------
(a) [_] Check if Exchange is from beneficial interest in a
Restricted Global Note to beneficial interest in an Unrestricted Global Note. In
connection with the Exchange of the Owner's beneficial interest in a Restricted
Global Note for a beneficial interest in an Unrestricted Global Note in an equal
principal amount, the Owner hereby certifies (i) the beneficial interest is
being acquired for the Owner's own account without transfer, (ii) such Exchange
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with the United States Securities
Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on
transfer contained in the Indenture and
C-1
<PAGE>
the Private Placement Legend are not required in order to maintain compliance
with the Securities Act and (iv) the beneficial interest in an Unrestricted
Global Note is being acquired in compliance with any applicable blue sky
securities laws of any state of the United States.
(b) [_] Check if Exchange is from beneficial interest in a
Restricted Global Note to Unrestricted Definitive Note. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for an
Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Definitive Note is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(c) [_] Check if Exchange is from Restricted Definitive Note to
beneficial interest in an Unrestricted Global Note. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an
Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest
is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) [_] Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests
---------------------------------------------------------------
in Restricted Global Notes for Restricted Definitive Notes or Beneficial
- ------------------------------------------------------------------------
Interests in Restricted Global Notes
- ------------------------------------
(a) [_] Check if Exchange is from beneficial interest in a
Restricted Global Note to Restricted Definitive Note. In connection with the
Exchange of the Owner's beneficial interest in a Restricted Global Note for a
Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that the Restricted Definitive Note is being acquired for the Owner's
own account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Note
issued
C-2
<PAGE>
will continue to be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Definitive Note and in the
Indenture and the Securities Act.
(b) Check if Exchange is from Restricted Definitive Note to
beneficial interest in a Restricted Global Note. In connection with the Exchange
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] [_] 144A Global Note, [_] Regulation S Global Note, [_] IAI Global
Note with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, and in compliance with any applicable
blue sky securities laws of any state of the United States. Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the
beneficial interest issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the relevant Restricted
Global Note and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuers.
----------------------------------------
[Insert Name of Transferor]
By:
-------------------------------------
Name:
Title:
Dated:
----------------
C-3
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Hollywood Casino Shreveport
Shreveport Capital Corporation
c/o Hollywood Casino Corporation
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, TX 75240
State Street Bank and Trust Company
P. O. Box 778
Boston, Massachusetts 02110
Re: 13% First Mortgage Notes due 2006 with Contingent Interest of
Hollywood Casino Shreveport and Shreveport Capital Corporation
Reference is hereby made to the Indenture, dated as of August 10, 1999
(the "Indenture"), among Hollywood Casino Shreveport, a Louisiana general
partnership (the "Partnership"), Shreveport Capital Corporation, a Louisiana
corporation ("Capital" and, together with the Partnership, the "Issuers"), HWCC-
Louisiana, Inc., a Louisiana corporation ("HWCC-Louisiana"), HCS I, Inc., a
Louisiana corporation ("HCS I"), and HCS II, Inc., a Louisiana corporation
("HCS II" and, together with HWCC-Louisiana and HCS I, the "Guarantors"), and
State Street Bank and Trust Company, as trustee (the "Trustee"). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) [_] a beneficial interest in a Global Note, or
(b) [_] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and
D-1
<PAGE>
on behalf of any accounts for which we are acting as hereinafter stated, that if
we should sell the Notes or any interest therein, we will do so only (A) to
either of the Issuers or any subsidiary thereof, (B) in accordance with Rule
144A under the Securities Act to a "qualified institutional buyer" (as defined
therein), (C) to an institutional "accredited investor" (as defined below) that,
prior to such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to you and to the Issuers a signed letter substantially in the
form of this letter and an Opinion of Counsel in form reasonably acceptable to
the Issuers to the effect that such transfer is in compliance with the
Securities Act, (D) outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (E) pursuant to the provisions of Rule
144(k) under the Securities Act or (F) pursuant to an effective registration
statement under the Securities Act, and we further agree to provide to any
Person purchasing the Definitive Note or beneficial interest in a Global Note
from us in a transaction meeting the requirements of clauses (A) through (E) of
this paragraph a notice advising such purchaser that resales thereof are
restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or
beneficial interest therein, we will be required to furnish to you and the
Issuers such certifications, legal opinions and other information as you and the
Issuers may reasonably require to confirm that the proposed sale complies with
the foregoing restrictions. We further understand that the Notes purchased by
us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein
purchased by us for our own account or for one or more accounts (each of which
is an institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and each of the Issuers are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
----------------------------------------
[Insert Name of Accredited Investor]
By:
-------------------------------------
Name:
Title:
Dated:
------------------
D-2
<PAGE>
EXHIBIT E
FORM OF NOTATION OF NOTE GUARANTEE
NOTE GUARANTEE
To the extent set forth in the Indenture dated as of August 10, 1999
(the "Indenture"), among Hollywood Casino Shreveport, a Louisiana general
partnership (the "Partnership"), Shreveport Capital Corporation, a Louisiana
corporation ("Shreveport Capital" and, together with the Partnership, the
"Issuers"), HWCC-Louisiana, Inc., a Louisiana corporation ("HWCC-Louisiana"),
HCS I, Inc., a Louisiana corporation ("HCS I"), HCS II, Inc., a Louisiana
corporation ("HCS II" and, together with HWCC-Louisiana and HCS I, the
"Guarantors"), and State Street Bank and Trust Company, as trustee (the
"Trustee"), and for value received, each of the Guarantors (which term includes
any successor Person under the Indenture and the Collateral Documents (as
defined in the Indenture)) has, jointly and severally, unconditionally
guaranteed: (a) the due and punctual payment of the principal of, premium and
Liquidated Damages (as defined in the Indenture), if any, and Interest (as
defined in the Indenture) on the Notes (as defined in the Indenture), whether at
maturity, by acceleration, redemption or otherwise, the due and punctual payment
of interest on overdue principal and premium and Liquidated Damages, and, to the
extent permitted by law, Interest, and the due and punctual performance of all
other obligations of the Issuers to the Holders (as defined in the Indenture) or
the Trustee, all in accordance with the terms of the Indenture and the
Collateral Documents and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
The obligations of the Guarantors to the Holders and to the Trustee pursuant to
this Note Guarantee, the Indenture and the Collateral Documents are expressly
set forth in Article 11 of the Indenture and reference is hereby made to the
Indenture for the precise terms of this Note Guarantee. Each Holder of a Note,
by accepting the same, agrees to and shall be bound by such provisions.
HWCC-LOUISIANA, INC.
By:
--------------------------------------
Name:
Title:
HCS I, INC.
By:
--------------------------------------
Name:
Title:
HCS II, INC.
By:
--------------------------------------
Name:
Title:
<PAGE>
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
Supplemental Indenture (this "Supplemental Indenture") dated as of
________________, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of Hollywood Casino Shreveport (or its permitted successor), a
Louisiana general partnership (the "Partnership"), the Partnership, Shreveport
Capital Corporation, a Louisiana corporation ("Shreveport Capital" and together
with the Partnership, the "Issuers"), the other Guarantors (as defined in the
Indenture referred to herein) and State Street Bank and Trust Company, as
trustee under this Indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Issuers have heretofore executed and delivered to the
Trustee an indenture (the "Indenture") dated as of August 10, 1999, providing
for the issuance of an aggregate principal amount of up to $150,000,000 of 13%
First Mortgage Notes due 2006 with Contingent Interest (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Issuers' Obligations under the Notes, the Indenture and the
Collateral Documents on the terms and conditions set forth herein (the "Note
Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees
as follows:
(a) Along with all Guarantors named in the Indenture, to jointly and
severally Guarantee to each Holder of a Note authenticated and delivered by
the Trustee and to the Trustee and its successors and assigns, the Notes or
the obligations of the Issuers hereunder or thereunder, that:
(i) the principal of premium and Liquidated Damages, if any, and
Interest on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the
overdue principal of and Interest on the Notes, if any, if lawful, and all
other obligations of the Issuers to the Holders or the Trustee hereunder
or thereunder will be promptly paid in full or performed, all in
accordance with the terms hereof and thereof; and
F-1
<PAGE>
(ii) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that same will be promptly paid in
full when due or performed in accordance with the terms of the extension
or renewal, whether at stated maturity, by acceleration pursuant to
Section 6.02 of the Indenture or otherwise. Failing payment when due of
any amount so guaranteed or any performance so guaranteed for whatever
reason, the Guarantors shall be jointly and severally obligated to pay the
same immediately.
(b) The obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Notes, the Indenture or the
Collateral Documents, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against either of the
Issuers, any action to enforce the same or any other circumstance which
might otherwise constitute a legal or equitable discharge or defense of a
guarantor.
(c) The following is hereby waived: diligence presentment, demand of
payment, filing of claims with a court in the event of insolvency or
bankruptcy of either of the Issuers or any Guarantor, any right to require
a proceeding first against the Issuers or any Guarantor, protest, notice
and all demands whatsoever.
(d) This Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes, the Indenture and
the Collateral Documents, and the Guaranteeing Subsidiary accepts all
obligations of a Guarantor under the Indenture.
(e) If any Holder or the Trustee is required by any court or otherwise to
return to the Issuers, the Guarantors, or any Custodian, Trustee,
liquidator or other similar official acting in relation to either the
Issuers or the Guarantors, any amount paid by either to the Trustee or such
Holder, this Note Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed
hereby.
(g) As between the Guarantors, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article 6 of the Indenture for the
purposes of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article 6 of the Indenture,
such obligations (whether or not due and payable) shall forthwith become
due and payable by the Guarantors for the purpose of this Note Guarantee.
(h) The Guarantors shall have the right to seek contribution from any non-
paying Guarantor so long as the exercise of such right does not impair the
rights of the Holders under the Guarantee.
F-2
<PAGE>
(i) Pursuant to Section 11.02 of the Indenture, after giving effect to any
maximum amount and any other contingent and fixed liabilities that are
relevant under any applicable Bankruptcy or fraudulent conveyance laws, and
after giving effect to any collections from, rights to receive contribution
from or payments made by or on behalf of any other Guarantor in respect of
the obligations of such other Guarantor under Article 11 of the Indenture,
this new Note Guarantee shall be limited to the maximum amount permissible
such that the obligations of such Guarantor under this Note Guarantee will
not constitute a fraudulent transfer or conveyance.
3. Execution and Delivery. Each Guaranteeing Subsidiary agrees that the
Note Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
4. Guaranteeing Subsidiary May Consolidate, Etc. on Certain Terms.
(a) The Guaranteeing Subsidiary may not consolidate with or merge with or
into (whether or not such Guarantor is the surviving Person) another
corporation, Person or entity whether or not affiliated with such Guarantor
unless:
(i) subject to Sections 11.05 and 11.06 of the Indenture, the
Person formed by or surviving any such consolidation or merger (if other
than a Guarantor or an Issuer) unconditionally assumes all the obligations
of such Guarantor, pursuant to a supplemental indenture and supplemental
Collateral Documents in form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture, the Note Guarantee and the
Collateral Documents on the terms set forth herein or therein; and
(ii) immediately after giving effect to such transaction, no Default
or Event of Default exists.
(b) In case of any such consolidation, merger, sale or conveyance and upon
the assumption by the successor corporation, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the
Trustee, of the Note Guarantee endorsed upon the Notes and the due and
punctual performance of all of the covenants and conditions of the
Indenture and the Collateral Documents to be performed by the Guarantor,
such successor Person shall succeed to and be substituted for the Guarantor
with the same effect as if it had been named herein as a Guarantor. Such
successor Person thereupon may cause to be signed any or all of the Note
Guarantees to be endorsed upon all of the Notes issuable hereunder which
theretofore shall not have been signed by the Issuers and delivered to the
Trustee. All the Note Guarantees so issued shall in all respects have the
same legal rank and benefit under the Indenture and the Collateral
Documents as the Note Guarantees theretofore and thereafter issued in
accordance with the terms of the Indenture as though all of such Note
Guarantees had been issued at the date of the execution hereof.
(c) Except as set forth in Articles 4 and 5 and Section 11.06 of Article 11
of the Indenture, and notwithstanding clauses (a) and (b) above, nothing
contained in the Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the either of the
Issuers or another Guarantor, or shall prevent any sale or
F-3
<PAGE>
conveyance of the property of a Guarantor as an entirety or substantially
as an entirety to either of the Issuers or another Guarantor.
5. Releases.
(a) In the event of a sale or other disposition of all of the assets of
any Guarantor, by way of merger, consolidation or otherwise, or a sale or
other disposition of all to the capital stock of any Guarantor, in each
case to a Person that is not (either before or after giving effect to such
transactions) a Restricted Subsidiary of either of the Issuers, then such
Guarantor (in the event of a sale or other disposition, by way of merger,
consolidation or otherwise, of all of the capital stock of such Guarantor)
or the corporation acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such Guarantor)
will be released and relieved of any obligations under its Note Guarantee;
provided that the Net Proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of this Indenture,
including without limitation Section 4.10 thereof. Upon delivery by the
Issuers to the Trustee of an Officers' Certificate and an Opinion of
Counsel to the effect that such sale or other disposition was made by the
applicable Issuer in accordance with the provisions of this Indenture,
including without limitation Section 4.10 of the Indenture, the Trustee
shall execute any documents reasonably required in order to evidence the
release of any Guarantor from its obligations under its Note Guarantee.
(b) Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and
Interest on the Notes and for the other obligations of any Guarantor under
this Indenture and the Collateral Documents as provided in Article 11 of
the Indenture.
6. No Recourse Against Others. No past, present or future director,
officer, employee, partner, incorporator, stockholder or agent of the
Guaranteeing Subsidiary, as such, shall have any liability for any obligations
of either of the Issuers or any Guaranteeing Subsidiary under the Notes, any
Note Guarantees, the Indenture or this Supplemental Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of the Notes by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Notes. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the SEC that such a waiver is
against public policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
8. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
F-4
<PAGE>
9. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.
10. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Issuers.
F-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: ____________, ____
[Guaranteeing Subsidiary]
By:
-------------------------------
Name:
Title:
Hollywood Casino Shreveport
By:
-------------------------------
Name:
Title:
Shreveport Capital Corporation
By:
-------------------------------
Name:
Title:
HWCC-Louisiana, Inc.
By:
-------------------------------
Name:
Title:
HCS I, Inc.
By:
-------------------------------
Name:
Title:
HCS II, Inc.
By:
-------------------------------
Name:
Title:
[Other Existing Guarantors]
By:
-------------------------------
Name:
Title:
<PAGE>
State Street Bank and Trust Company,
as Trustee
By:
-------------------------------
Authorized Signatory
<PAGE>
EXHIBIT 4.2
A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
Dated as of August 10, 1999
among
Hollywood Casino Shreveport and
Shreveport Capital Corporation
as Issuers,
HWCC - Louisiana, Inc.
HCS I, Inc.,
HCS II, Inc.,
as Guarantors,
and
Bear, Stearns & Co. Inc.
Credit Suisse First Boston Corporation
Banc of America Securities LLC
Lehman Brothers Inc.
Prudential Securities Corporation
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and entered
---------
into as of August 10, 1999, by and among Hollywood Casino Shreveport, a
Louisiana general partnership (the "Partnership"), Shreveport Capital
-----------
Corporation, a Louisiana corporation ("Shreveport Capital" and, together with
the Partnership, the "Issuers"), HWCC - Louisiana, Inc., a Louisiana corporation
("HWCC - Louisiana"), HCS I, Inc., a Louisiana corporation ("HCS I"), HCS II,
Inc., a Louisiana corporation ("HCS II" and, together with HWCC - Louisiana and
HCS I, the "Guarantors"), and Bear, Stearns & Co. Inc., Credit Suisse First
Boston Corporation, Banc of America Securities LLC, Lehman Brothers Inc. and
Prudential Securities Incorporated (each an "Initial Purchaser" and,
-----------------
collectively, the "Initial Purchasers"), each of whom has agreed to purchase the
------------------
Issuers' 13% Series A First Mortgage Notes due 2006 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 3,
1999 (the "Purchase Agreement"), by and among the Issuers, the Guarantors and
------------------
the Initial Purchasers. In order to induce the Initial Purchasers to purchase
the Series A Notes, the Issuers and the Guarantors 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 Purchasers to
purchase and pay for the Series A Notes under the Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have the meaning
assigned to them in the Indenture, dated as of the date hereof, by and among the
Issuers, the Guarantors and State Street Bank and Trust Company, as Trustee,
relating to the Series A Notes and the Series B Notes (the "Indenture").
---------
The parties hereby agree as follows:
1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
---
Affiliate: As defined in Rule 144 of the Act.
---------
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
-------------
Certificated Securities: Definitive Notes, as defined in the Indenture.
-----------------------
Closing Date: The date hereof.
------------
Commission: The Securities and Exchange Commission.
----------
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
----------
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Series B
Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange
Offer Registration Statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the period required pursuant to
Section 3(b) hereof and (c) 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 tendered by Holders thereof
pursuant to the Exchange Offer.
<PAGE>
Consummation Deadline: As defined in Section 3(b) hereof.
---------------------
Effectiveness Deadline: As defined in Section 3(a) and 4(a) hereof.
----------------------
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
Exchange Offer: The offer by the Issuers to exchange and issue a principal
--------------
amount of Series B Notes (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the outstanding principal amount of
Series A Notes.
Exchange Offer Registration Statement: The Registration Statement relating
-------------------------------------
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers propose
--------------
to sell the Series A Notes to (i) certain "qualified institutional buyers," as
such term is defined in Rule 144A under the Act and (ii) outside the United
States to non-U.S. persons in offshore transactions in reliance on Regulations S
under the Act.
Filing Deadline: As defined in Sections 3(a) and 4(a) hereof.
---------------
Holder: As defined in Section 2 hereof.
------
Indenture: As defined in the preamble hereto.
---------
Notes: Collectively, the Series A Notes and the Series B Notes.
-----
Person: Any individual, corporation, partnership, joint venture,
------
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
Prospectus: The prospectus included in a Registration Statement at the
----------
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all exhibits to and material
incorporated by reference into such Prospectus.
Recommencement Date: As defined in Section 6(d) hereof.
-------------------
Registration Default: As defined in Section 5 hereof.
--------------------
Registration Statement: Any registration statement of the Issuers and the
----------------------
Guarantors relating to (a) an offering of Series B Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, in each case, (i) that is filed
pursuant to the provisions of this Agreement and (ii) including the Prospectus
included therein, all amendments and supplements thereto, including post-
effective amendments, and all exhibits and material incorporated by reference
therein.
Rule 144: Rule 144 promulgated under the Act.
--------
Series B Notes: The Series B Notes to be issued pursuant to the Indenture
--------------
(i) in the Exchange Offer or (ii) as contemplated by Section 4 hereof.
2
<PAGE>
Shelf Registration Statement: As defined in Section 4(a) hereof.
----------------------------
Suspension Notice: As defined in Section 6(d) 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 (A) Series A Note, until the earliest
------------------------------
to occur of (i) the date on which such Series A Note is exchanged in the
Exchange Offer for a Series B Note which is entitled to be resold to the public
by the Holder thereof without complying with the prospectus delivery
requirements of the Act, (ii) the date on which such Series A Note has been
disposed of in accordance with a Shelf Registration Statement (and the
purchasers thereof have been issued a Series B Note pursuant to Section
6(b)(ii)), or (iii) the date on which such Series A Note is distributed to the
public pursuant to Rule 144 under the Act and each (B) Series B Note held by a
Broker-Dealer until the date on which such Series B Note is disposed of by a
Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including the delivery of the Prospectus
contained therein).
2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.
------
3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) below have been
satisfied), the Issuers and the Guarantors shall (i) cause the Exchange Offer
Registration Statement 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 (such 60th day being for purposes of this Section 3(a) the "Filing
------
Deadline"), (ii) use their reasonable best efforts to cause such Exchange Offer
- --------
Registration Statement to become effective at the earliest possible time, but in
no event later than 150 days after the Closing Date (such 150th day being the
"Offer Effectiveness Deadline"), (iii) in connection with the foregoing, (A)
----------------------------
file all pre-effective amendments to such Exchange Offer Registration Statement
as may be necessary in order to cause it to become effective, (B) file, if
applicable, a post-effective amendment to such Exchange Offer Registration
Statement pursuant to Rule 430A under the Act and (C) cause all necessary
filings, if any, 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 Exchange Offer Registration Statement, commence and
Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate
form permitting (i) registration of the Series B Notes to be offered in exchange
for the Series A Notes that are Transfer Restricted Securities and (ii) resales
of Series B Notes by Broker-Dealers that tendered into the Exchange Offer Series
A Notes that any such Broker-Dealer acquired for its own account as a result of
market-making activities or other trading activities (other than Series A Notes
acquired directly from the Issuers or any of their Affiliates) as contemplated
by Section 3(c) below.
(b) The Issuers and the Guarantors shall use their respective best efforts
to 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
3
<PAGE>
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 and the
Guarantors shall cause the Exchange Offer to comply with all applicable federal
and state securities laws. No securities other than the Series B Notes shall be
included in the Exchange Offer Registration Statement. The Issuers and the
Guarantors shall use their respective reasonable 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, unless federal
or state securities laws require a longer period, no later than 30 business days
thereafter (such 30/th/ day being the "Consummation Deadline").
---------------------
(c) The Issuers shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Series A Notes acquired
directly from the Issuers or any of their Affiliates), may exchange such
Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of
Distribution" section shall also contain all other information with respect to
such sales by such Broker-Dealers that the Commission may require in order to
permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Transfer Restricted
Securities held by any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy, rules or regulations after the
date of this Agreement. See the Shearman & Sterling no-action letter (available
July 2, 1993).
Because such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Issuers and the
Guarantors shall permit the use of the Prospectus contained in the Exchange
Offer Registration Statement by such Broker-Dealer to satisfy such prospectus
delivery requirement. To the extent necessary to ensure that the prospectus
contained in the Exchange Offer Registration Statement is available for sales of
Series B Notes by Broker-Dealers, the Issuers and the Guarantors agree to use
their respective reasonable best efforts to keep the Exchange Offer Registration
Statement continuously effective, supplemented, amended and current as required
by and subject to the provisions of Section 6(a) and (c) hereof and in
conformity 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 the Exchange Offer is Consummated or such
shorter period as will terminate when all Transfer Restricted Securities covered
by such Registration Statement have been sold pursuant thereto. The Issuers and
the Guarantors shall provide sufficient copies of the latest version of such
Prospectus to such Broker-Dealers, promptly upon request, and in no event later
than one day after such request, at any time during such period.
4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
------------------
applicable law (after the Issuers and the Guarantors have complied with the
procedures set forth in Section 6(a)(i) below) or (ii) if any Holder of Transfer
Restricted Securities shall notify the Issuers within 20 business days following
the date the Exchange Offer is Consummated that (A) such Holder was prohibited
by law or Commission policy from participating in the Exchange Offer or (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 the Prospectus contained in the
Exchange Offer Registration Statement
4
<PAGE>
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 any Affiliate of the Issuers, then the Issuers and the Guarantors
shall:
(x) cause to be filed, on or prior to 30 days after the earlier of (i) the
date on which the Issuers determine that the Exchange Offer Registration
Statement cannot be filed as a result of clause (a)(i) above and (ii) the
date on which the Issuers receive the notice specified in clause (a)(ii)
above, (such earlier date for purposes of this Section 4(a), the "Filing
------
Deadline"), a shelf registration statement pursuant to Rule 415 under the
--------
Act (which may be an amendment to the Exchange Offer Registration Statement
(the "Shelf Registration Statement")), relating to all Transfer Restricted
----------------------------
Securities; and
(y) shall use their respective reasonable best efforts to cause such Shelf
Registration Statement to become effective on or prior to the later of (i)
60 days after the Filing Deadline for the Shelf Registration Statement and
(ii) the Offer Effectiveness Deadline under Section 3(a) (such 60th day the
"Shelf Effectiveness Deadline" and together with the Offer Effectiveness
----------------------------
Deadline, each an "Effectiveness Deadline").
----------------------
If, after the Issuers and the Guarantors have filed an Exchange Offer
Registration Statement that satisfies the requirements of Section 3(a) above,
the Issuers and the Guarantors are required to file and make effective a Shelf
Registration Statement solely because the Exchange Offer is not permitted under
applicable federal law (i.e., clause (a)(i) above), then the filing of the
Exchange Offer Registration Statement shall be deemed to satisfy the
requirements of clause (x) above; provided that, in such event, the Issuers and
the Guarantors shall remain obligated to meet the Effectiveness Deadline set
forth in clause (y).
To the extent necessary to ensure that the Shelf Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Issuers and
the Guarantors shall use their respective reasonable best efforts to keep any
Shelf Registration Statement required by this Section 4(a) continuously
effective, supplemented, amended and current as required by and subject to the
provisions of Sections 6(b) and (c) hereof and in conformity 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 (as extended pursuant to Section 6(c)(i)) following the Closing Date, or
such shorter period as will terminate when all Transfer Restricted Securities
covered by such Shelf Registration Statement have been sold pursuant thereto.
(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 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information. Each selling Holder agrees to promptly furnish additional
information
5
<PAGE>
required to be disclosed in order to make the information previously furnished
to the Issuers by such Holder not materially misleading.
5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline, (ii) any such
Registration Statement has not been declared effective by the Commission on or
prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not
been Consummated on or prior to the Consummation Deadline or (iv) any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded within 10 business days by a post-
effective amendment to such Registration Statement that cures such failure and
that is itself declared effective within 3 business days of being filed (each
such event referred to in clauses (i) through (iv), a "Registration Default"),
--------------------
then the Issuers and the Guarantors hereby jointly and severally agree to pay to
each Holder of Transfer Restricted Securities affected thereby liquidated
damages in an amount equal to $.05 per week per $1,000 in principal amount of
Transfer Restricted Securities held by such Holder for each week or portion
thereof that the Registration Default continues for the first 90-day period
immediately following the occurrence of such Registration Default. 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 $.50 per week per $1,000 in
principal amount of Transfer Restricted Securities; provided that the Issuers
and the Guarantors shall in no event be required to pay liquidated damages for
more than one Registration Default at any given time. Notwithstanding anything
to the contrary set forth herein, (1) upon filing of the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange
Offer Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (ii) above, (3) upon Consummation of the Exchange
Offer, in the case of (iii) above, or (4) upon the filing of a post-effective
amendment to the Registration Statement or an additional Registration Statement
that causes the Exchange Offer Registration Statement (and/or, if applicable,
the Shelf Registration Statement) to again be declared effective or made usable
in the case of (iv) above, the liquidated damages payable with respect to the
Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or
(iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which liquidated
damages are due cease to be Transfer Restricted Securities, all obligations of
the Issuers and the Guarantors to pay liquidated damages with respect to such
securities shall survive until such time as such obligations shall have been
satisfied in full.
6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
-------------------------------------
Offer, the Issuers and the Guarantors shall (x) comply with all applicable
provisions of Section 6(c) below, (y) use their respective reasonable best
efforts to effect such exchange and to permit the resale of Series B Notes by
Broker-Dealers that tendered in the Exchange Offer Series A Notes that such
Broker-
6
<PAGE>
Dealers acquired for their own accounts as a result of its market-making
activities or other trading activities (other than Series A Notes acquired
directly from the Issuers or any of their Affiliates) being sold in accordance
with the intended method or methods of distribution thereof, and (z) comply with
all of the following provisions:
(i) If, following the date hereof there has been announced a change
in Commission policy with respect to exchange offers such as the Exchange
Offer, that in the reasonable opinion of counsel to the Issuers raises a
substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Issuers and the Guarantors hereby agree to seek
a no-action letter or other favorable decision from the Commission allowing
the Issuers and the Guarantors to Consummate an Exchange Offer for such
Transfer Restricted Securities. The Issuers and the Guarantors hereby agree
to pursue the issuance of such a decision to the Commission staff level. In
connection with the foregoing, the Issuers and the Guarantors hereby agree
to take all such other commercially reasonable actions as may be requested
by the Commission or otherwise required in connection with the issuance of
such decision, including without limitation (A) participating in telephonic
conferences with the Commission, (B) delivering to the Commission staff an
analysis prepared by counsel to the 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 pursuing a resolution (which need
not be favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange Offer, each
Holder of Transfer Restricted Securities (including, without limitation,
any Holder who is a Broker-Dealer) shall furnish, upon the request of the
Issuers, prior to the Consummation of the Exchange Offer, a written
representation to the Issuers and the Guarantors (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.
As a condition to its participation in the Exchange Offer each Holder using
the Exchange Offer to participate in a distribution of the Series B Notes
shall acknowledge and agree that, if the resales are of Series B Notes
obtained by such Holder in exchange for Series A Notes acquired directly
from the Company or an Affiliate thereof, it (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 (available July 2, 1993), and similar no-action letters
(including, if applicable, any no-action letter obtained pursuant to clause
(i) above), and (2) must comply with the registration and prospectus
delivery requirements of the Act in connection with a secondary resale
transaction and that such a secondary resale transaction must be covered by
an effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K.
7
<PAGE>
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Issuers and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Issuers and the Guarantors
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available May
13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) as
interpreted in the Commission's letter to Shearman & Sterling (available
July 2, 1993), and, if applicable, any no-action letter obtained pursuant
to clause (i) above, (B) including a representation that neither of the
Issuers nor any Guarantor has 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' and each Guarantor's
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 and (C)
any other undertaking or representation required by the Commission as set
forth in any no-action letter obtained pursuant to clause (i) above, if
applicable.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Issuers and the Guarantors shall:
(i) comply with all the provisions of Section 6(c) below and use
their respective reasonable best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof (as
indicated in the information furnished to the Issuers pursuant to Section
4(b) hereof), and pursuant thereto the Issuers and the Guarantors will
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 within the time
periods and otherwise in accordance with the provisions hereof; and
(ii) issue, upon the request of any Holder or purchaser of Series A
Notes covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Notes having an aggregate principal amount equal to the
aggregate principal amount of Series A Notes sold pursuant to the Shelf
Registration Statement and surrendered to the Issuers for cancellation.
The Issuers shall register Series B Notes on the Shelf Registration
Statement for this purpose and issue the Series B Notes to the purchaser(s)
of securities subject to the Shelf Registration Statement in the names as
such purchaser(s) shall designate.
(c) General Provisions. In connection with any Registration Statement and
------------------
any related Prospectus required by this Agreement, the Issuers and the
Guarantors shall:
(i) use their respective 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
an untrue statement of material fact or omit to state
8
<PAGE>
any material fact necessary to make the statements therein not misleading
or (B) not to be effective and usable for resale of Transfer Restricted
Securities during the period required by this Agreement, the Issuers and
the Guarantors shall file promptly an appropriate amendment to such
Registration Statement curing such defect, and, if Commission review is
required, use their respective reasonable best efforts to cause such
amendment to be declared effective as soon as practicable;
(ii) prepare and file with the Commission such amendments and post-
effective amendments to the applicable Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, as the case may be; cause the
Prospectus to be supplemented by any required Prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with Rules 424, 430A and 462, as applicable, under the Act in
a timely manner; and comply with the provisions of the Act with respect to
the disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) provide written notice to Holders promptly (A) when the
Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to any applicable Registration Statement or
any post-effective amendment thereto, when the same has become effective,
(B) of any request by the Commission for amendments to the Registration
Statement or amendments or supplements to the Prospectus or for additional
information relating thereto, (C) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement under
the Act or of the suspension by any state securities commission of the
qualification of the Transfer Restricted Securities for offering or sale in
any jurisdiction, or the initiation of any proceeding for any of the
preceding purposes, (D) of the existence of any fact or the happening of
any event that makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or supplement thereto
or any document incorporated by reference therein untrue, or that requires
the making of any additions to or changes in the Registration Statement in
order to make the statements therein not misleading, or that requires the
making of any additions to or changes in the Prospectus in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. If at any time the Commission shall issue any
stop order suspending the effectiveness of the Registration Statement, or
any state securities commission or other regulatory authority shall issue
an order suspending the qualification or exemption from qualification of
the Transfer Restricted Securities under state securities or Blue Sky laws,
the Issuers and the Guarantors shall use their respective reasonable best
efforts to obtain the withdrawal or lifting of such order at the earliest
possible time;
(iv) subject to Section 6(c)(i), if any fact or event contemplated by
Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so
9
<PAGE>
that, as thereafter delivered to the purchasers of Transfer Restricted
Securities, the Prospectus will not contain an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(v) furnish to each Holder who has provided in writing to the
Issuers a telephone or facsimile number and address for deliveries and
notices in connection with such exchange or sale, if any, before filing
with the Commission, copies of any Registration Statement or any Prospectus
included therein or any amendments or supplements to any such Registration
Statement or Prospectus (including all documents incorporated by reference
after the initial filing of such Registration Statement), which documents
will be subject to the review and comment of such Holders in connection
with such sale, 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 such Holders shall reasonably object within five business days after
the receipt thereof. An objection by a selling Holder or underwriter, if
any, shall be deemed to be reasonable if it relates to a material
misstatement or omission in such Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed;
(vi) promptly prior to the filing of any document (other than an
exhibit) that is to be incorporated by reference into a Registration
Statement or Prospectus, provide copies of such document to each Holder in
connection with such exchange or sale, if any, make the Issuers' and the
Guarantors' representatives available for discussion of such document and
other customary due diligence matters, and include such information in such
document prior to the filing thereof as such Holders may reasonably
request;
(vii) make available, at reasonable times, for inspection by each
Holder and any attorney or accountant retained by such Holders all
financial and other records, pertinent corporate documents of the Issuers
and the Guarantors and cause the Issuers' and the Guarantors' officers,
directors and employees to supply all information reasonably requested by
any such Holder, attorney or accountant in connection with such
Registration Statement or any post-effective amendment thereto subsequent
to the filing thereof and prior to its effectiveness;
(viii) if requested by any Holders in connection with such exchange or
sale, promptly include in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such Holders may reasonably request to have included
relating to the "Plan of Distribution" of the Transfer Restricted
Securities or the Holder, 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 included in such Prospectus
supplement or post-effective amendment;
10
<PAGE>
(ix) furnish to each Holder who has provided in writing to the
Issuers a telephone or facsimile number and address for deliveries and
notices in connection with such exchange or sale without charge, at least
one copy of the Registration Statement, as first filed with the Commission,
and of each amendment thereto, including all exhibits and documents
incorporated by reference therein;
(x) deliver to each Holder who has provided in writing to the
Issuers a telephone or facsimile number and address for deliveries and
notices 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 and the Guarantors hereby
consent to the use (in accordance with law) of the Prospectus and any
amendment or supplement thereto by each selling Holder in connection with
the offering and the sale of the Transfer Restricted Securities covered by
the Prospectus or any amendment or supplement thereto;
(xi) upon the request of any Holder, enter into such agreements
(including underwriting agreements) and make such reasonable
representations and warranties and take all such other reasonable actions
in connection therewith in order to expedite or facilitate the disposition
of the Transfer Restricted Securities pursuant to any applicable
Registration Statement contemplated by this Agreement as may be reasonably
requested by any Holder in connection with any sale or resale pursuant to
any applicable Registration Statement. In such connection, the Issuers and
the Guarantors shall:
(A) upon request of any Holder, furnish (or in the case of
paragraphs (2) and (3) below, use their respective reasonable best
efforts to cause to be furnished) to each Holder, upon Consummation of
the Exchange Offer or upon the effectiveness of the Shelf Registration
Statement, as the case may be,
(1) a certificate, dated such date, signed on behalf of the
Issuers and each Guarantor by (x) the President or any Vice President
and (y) a principal financial or accounting officer of each of the
Issuers and each Guarantor, confirming, as of the date thereof, the
matters set forth in Section 8(e) of the Purchase Agreement and such
other similar matters as such Holders 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 and
the Guarantors covering matters similar to those set forth in
paragraph (g) of Section 8 of the Purchase Agreement and such other
matter as such Holder 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
and the Guarantors, representatives of the independent public
accountants for the Issuers and the Guarantors and has 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
11
<PAGE>
advises that, on the basis of the foregoing, 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 of the Exchange Offer, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus contained in such
Registration Statement as of its date and, in the case of the opinion
dated the date of Consummation of the Exchange Offer, as of the date
of Consummation, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. 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, statistical or similar data included in any Registration
Statement contemplated by this Agreement or the related Prospectus;
and
(3) a customary comfort letter, dated the date of Consummation of
the Exchange Offer, or as of 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 to underwriters in
connection with underwritten offerings, and affirming the matters set
forth in the comfort letters delivered pursuant to Section 8(h) of the
Purchase Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by the selling Holders to evidence compliance with the
matters covered in clause (A) above and with any customary conditions
contained in the any agreement entered into by the Issuers and the
Guarantors pursuant to this clause (xi);
(xii) prior to any public offering of Transfer Restricted Securities
by selling Holders, cooperate with the selling Holders and their 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 may request and do any and all other acts or things
reasonable necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the applicable
Registration Statement; provided, however, that neither of the Issuers nor
any Guarantor shall 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) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Transfer Restricted Securities to
be sold and not bearing any restrictive legends; and to register such
Transfer Restricted Securities in such denominations and such names as the
selling Holders may request (subject to the provisions of the Indenture) at
least two business days prior to such sale of Transfer Restricted
Securities;
(xiv) use their respective reasonable best efforts to cause the
disposition of 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 to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (xii)
above;
(xv) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture
with printed certificates for the Transfer Restricted Securities which are
in a form eligible for deposit with the Depository Trust Company;
(xvi) otherwise use their respective reasonable best efforts to
comply with all applicable rules and regulations of the Commission, and
make generally available to its security holders with regard to any
applicable Registration Statement, as soon as practicable, a consolidated
earnings statement meeting the requirements of Rule 158 (which need not be
audited) covering a twelve-month period beginning after the effective date
of the Registration Statement (as such term is defined in paragraph (c) of
Rule 158 under the Act);
(xvii) 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 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 their respective reasonable 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;
and
(xviii) provide promptly to each Holder, upon request, each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
-----------------------
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Issuers of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"Suspension Notice"), such Holder will forthwith discontinue disposition of
-----------------
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received
13
<PAGE>
copies of the supplemented or amended Prospectus contemplated by Section
6(c)(iv) hereof, or (ii) such Holder is advised in writing 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 (in each case, the "Recommencement Date"). Each Holder receiving a
-------------------
Suspension Notice hereby agrees that it will either (i) destroy any
Prospectuses, other than permanent file copies, then in such Holder's possession
which have been replaced by the Issuers with more recently dated Prospectuses or
(ii) 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 the Suspension 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 a number of days equal to the number of days in the period
from and including the date of delivery of the Suspension Notice to the date of
delivery of the Recommencement Date.
7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuers' and the Guarantors' 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; (ii) all fees and
expenses of their 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 the Issuers, the Guarantors and the Holders of
Transfer Restricted Securities; (v) all application and filing fees in
connection with listing the Series B 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 and the Guarantors (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 and the Guarantor's internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Issuers or the Guarantors.
(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 and the Guarantors
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities who are tendering Series A Notes into in the Exchange Offer and/or
selling or reselling Series A Notes or Series B Notes pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or the
Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Latham & Watkins,
unless another firm shall 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.
8. INDEMNIFICATION
(a) The Issuers and the Guarantors, jointly and severally, agree to
indemnify and hold harmless (i) each Holder, (ii) each person, if any, who
controls the Holder within the meaning of
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Section 15 of the Act or Section 20(a) of the Exchange Act and (iii) the
respective officers, directors, partners, employees, representatives and agents
of the Holder or any controlling person to the fullest extent lawful, from and
against any and all losses, liabilities, claims, damages and expenses whatsoever
(including but not limited to reasonable attorneys' fees and any and all
expenses reasonably incurred in investigating, preparing or defending against
any investigation or litigation, commenced or threatened, or any claim
whatsoever, and, subject to the last sentence of Section 8(c), any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the preliminary
prospectus or Prospectus, or in any supplement thereto or amendment thereof, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that neither of the Issuers nor any
Guarantor will be liable in any such case to the extent, but only to the extent,
that any such loss, liability, claim, damage or expense arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with
information relating to the Holder furnished to the Issuers and the Guarantors
in writing by or on behalf of the Holder expressly for use therein. This
indemnity agreement will be in addition to any liability which the Issuers and
the Guarantors may otherwise have, including under this Agreement.
(b) Each Holder agrees to indemnify and hold harmless (i) the Issuers and
the Guarantors, (ii) each person, if any, who controls either of the Issuers or
any of the Guarantors within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act and (iii) the officers, directors, partners,
employees, representatives and agents of the Issuers and the Guarantors, against
any losses, liabilities, claims, damages and expenses whatsoever (including but
not limited to reasonable attorneys' fees and any and all expenses reasonably
incurred in investigating, preparing or defending against any investigation or
litigation, commenced or threatened, or any claim whatsoever and, subject to the
second to last sentence of Section 8(c), any and all amounts paid in settlement
of any claim or litigation), joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in the preliminary prospectus or the Prospectus, or
in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, in each case to
the extent, but only to the extent, that any such loss, liability, claim, damage
or expense arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with information relating to the Holder furnished to the Issuers and
the Guarantors in writing by or on behalf of the Holder expressly for use
therein. In no event shall the Holder, its directors, officers or any Person who
controls such Holder be liable or responsible for any amount in excess of the
amount by which the total amount received by such Holder with respect to its
sale of Transfer Restricted Securities pursuant to a Registration Statement
exceeds (i) the amount paid by such Holder for such Transfer Restricted
Securities and (ii) the amount of any damages that such Holder, its directors,
officers or any Person who controls such Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission.
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(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 8 except to the extent that it has been prejudiced
in any material respect by such failure or from any liability which it may
otherwise have). In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent it
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by the indemnifying parties in connection with the defense of such
action, (ii) the indemnifying parties shall not have employed counsel reasonably
satisfactory to the indemnified party to take charge of the defense of such
action within a reasonable time after notice of commencement of the action, or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying parties (in
which case the indemnifying party or parties shall not have the right to direct
the defense of such action on behalf of the indemnified party or parties), in
any of which events such fees and expenses of counsel shall be borne by the
indemnifying parties; provided, however, that the indemnifying party under
subsection (a) or (b) above shall only be liable for the legal expenses of one
counsel (in addition to any local counsel) for all indemnified parties in each
jurisdiction in which any claim or action arising out of the same general
allegations or circumstances is brought. Anything in this subsection to the
contrary notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its prior written consent,
provided that such consent was not unreasonably withheld. An indemnifying party
will not, without the prior written consent of the indemnified parties, settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In order to provide for contribution in circumstances in which the
indemnification provided for above is for any reason other than by its terms
held to be unavailable from an indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Issuers and the Guarantors, on the
one hand, and the Holder, on the other hand, shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
such indemnification provision (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted, but after deducting in the
case of losses, liabilities, claims, damages and expenses suffered by the
Issuers or any Guarantor, any contribution received by the Issuers and the
Guarantors from persons, other than the Holder, who may also be liable for
contribution, including persons who control either of the Issuers or any of the
Guarantors within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and directors of the Issuers and the Guarantors) to which the
16
<PAGE>
Issuers, the Guarantors, and the Holder may be subject, in such proportion as is
appropriate to reflect the relative benefits received by the Issuers and the
Guarantors, on the one hand, and the Holder, on the other hand, from their sale
of Transfer Restricted Securities or, if such allocation is not permitted by
applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided above, in such
proportion as is appropriate to reflect not only the relative benefits referred
to above but also the relative fault of the Issuers and the Guarantors, on the
one hand, and the Holder, on the other hand, in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations. The relative
fault of the Issuer and the Guarantors, on the one hand, and of the Holder, 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
either of the Issuers, any Guarantor or the Holder and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Issuers, the Guarantors and the Holder agree
that it would not be just and equitable if contribution pursuant to this Section
8(d) were determined by pro rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to above.
Notwithstanding the provisions of this Section 8(d), no Holder, its directors,
its officers or any Person, if any, who controls such Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
total received by such Holder with respect to the sale of Transfer Restricted
Securities pursuant to a Registration statement exceeds (i) the amount paid by
such Holder for such Transfer Restricted Securities and (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. For
purposes of this Section 8(d), (A) each person, if any, who controls the Holder
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
and (B) the respective officers, directors, partners, employees, representatives
and agents of the Holder or any controlling person shall have the same rights to
contribution as the Holder, and (C) each person, if any, who controls either of
the Issuers or any Guarantor within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and (D) the respective officers, directors,
partners, employees, representatives and agents of the Issuers and the
Guarantors shall have the same rights to contribution as the Issuers and the
Guarantors, subject in each case to clauses (i) and (ii) of this Section 8(d).
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 8(d), notify such party or parties from whom contribution may
be sought, but the failure to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have under this Section 8(d) or otherwise. No party shall be liable
for contribution with respect to any action or claim settled without its prior
written consent, provided that such written consent was not unreasonably
withheld.
9. RULE 144A AND RULE 144
Each Issuer and each Guarantor agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding and during any period in which
such Issuer or such Guarantor (i) is not subject to Section 13 or 15(d) of the
Exchange Act, to make available, upon request of any Holder, to such Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by Rule
17
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144A(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of
the Exchange Act, to use its reasonable best efforts to make all filings
required thereby in a timely manner in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144.
10. MISCELLANEOUS
(a) Remedies. The Issuers and the Guarantors acknowledge and agree that
--------
any failure by the Issuers and/or the Guarantors to comply with their respective
obligations under Sections 3 and 4 hereof may result in material irreparable
injury to the Initial Purchasers or the Holders for which there is no adequate
remedy at law, that it will not be possible to measure damages for such injuries
precisely and that, in the event of any such failure, the Initial Purchasers or
any Holder may obtain such relief as may be required to specifically enforce the
Issuers' and the Guarantors' obligations under Sections 3 and 4 hereof. The
Issuers and the Guarantors further agree to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither of the Issuers nor any Guarantor
--------------------------
will, on or after the date of this Agreement, enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof.
Neither of the Issuers nor any Guarantor have 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' and the Guarantors' securities under any agreement in effect on the
date hereof.
(c) 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 (i) in the case of Section 5
hereof and this Section 10(c)(i), the Issuers have obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Issuers have obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Issuers or their Affiliates). Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose Transfer Restricted Securities are being tendered
pursuant to the Exchange Offer, and that does not affect directly or indirectly
the rights of other Holders whose Transfer Restricted Securities are not being
tendered pursuant to such Exchange Offer, may be given by the Holders of a
majority of the outstanding principal amount of Transfer Restricted Securities
subject to such Exchange Offer.
(d) Third Party Beneficiary. The Holders shall be third party
-----------------------
beneficiaries to the agreements made hereunder between the Issuers and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect the rights of the
Issuers and the Guarantors or the rights of the Holders hereunder.
(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:
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(i) if to a Holder, at the address, if any, 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 or the Guarantors:
c/o Hollywood Casino Corporation
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, Texas 75240
Telecopier No.: (972) 716-3903
Attention: Donald A. Shapiro,
Associate General Counsel
With a copy to:
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Telecopier No.: (214) 746-7777
Attention: Michael A. Saslaw, Esq.
All such notices and communications shall be deemed to have been duly given
at the time delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders; provided, that nothing herein shall be deemed to permit any assignment,
transfer or other disposition of Transfer Restricted Securities in violation of
the terms hereof or of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
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<PAGE>
(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 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 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.
HOLLYWOOD CASINO SHREVEPORT
By: HCS I, Inc., its managing general partner
By:/s/ Paul C. Yates
-----------------------------------------
Name: Paul C. Yates
Title: Executive Vice President and
Chief Financial Officer
SHREVEPORT CAPITAL CORPORATION
By:/s/ Paul C. Yates
------------------------------------------
Name: Paul C. Yates
Title: Executive Vice President and
Chief Financial Officer
HWCC-LOUISIANA, INC.
By:/s/ Paul C. Yates
------------------------------------------
Name: Paul C. Yates
Title: Executive Vice President and
Chief Financial Officer
HCS I, INC.
By:/s/ Paul C. Yates
------------------------------------------
Name: Paul C. Yates
Title: Executive Vice President and
Chief Financial Officer
HCS II, INC.
By:/s/ Paul C. Yates
------------------------------------------
Name: Paul C. Yates
Title: Executive Vice President and
Chief Financial Officer
<PAGE>
BEAR, STEARNS & CO. INC.
By:______________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON CORPORATION
By:______________________________
Name:
Title:
BANC OF AMERICA SECURITIES LLC
By:______________________________
Name:
Title:
LEHMAN BROTHERS INC.
By:______________________________
Name:
Title:
PRUDENTIAL SECURITIES INCORPORATED
By:______________________________
Name:
Title:
<PAGE>
EXHIBIT 4.3
COLLATERAL ASSIGNMENT OF CONTRACTS AND DOCUMENTS
THIS COLLATERAL ASSIGNMENT OF CONTRACTS AND DOCUMENTS (the "Assignment")
is made as of August __, 1999, by HOLLYWOOD CASINO SHREVEPORT, a Louisiana
partnership (the "Company"), in favor of STATE STREET BANK AND TRUST COMPANY, a
Massachusetts chartered trust company, acting on behalf of the Holders of the
Notes under (and as defined in) the Indenture described below ("Trustee").
Recitals
A. The Company, Shreveport Capital Corp., a Louisiana corporation
("Shreveport Capital", and together with the Company, the "Issuers"), HCS I,
Inc., a Louisiana corporation, and HCS II, Inc., a Louisiana corporation, and
HWCC-Louisiana, Inc., a Louisiana corporation, each as a Guarantor, have entered
into an Indenture dated as of August __, 1999 (as the same may be amended,
supplemented, restated or otherwise modified from time to time, the "Indenture")
with the Trustee, pursuant to which the Issuers will issue up to $150,000,000 of
their __% First Mortgage Notes due 2006 With Contingent Interest (as the same
may be amended, supplemented, restated, exchanged, replaced or otherwise
modified from time to time, collectively, the "Notes").
B. The parties have entered into this Assignment to evidence the
Company's collateral assignment for security of certain contracts and documents
related to the construction and operation of the Shreveport Resort. Capitalized
terms used herein without definition shall have the meanings assigned to such
terms in the Indenture.
Agreement
NOW, THEREFORE, in consideration of the foregoing premises and in order
to induce the Holders of the Notes to purchase the Notes, the Company agrees 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"), the Company hereby assigns and transfers to the Trustee and
hereby grants to the Trustee a security interest in all of the Company's right,
title and interest, whether now existing or hereafter arising and whether now
owned or hereafter acquired, 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 Company and other
persons, and all amendments, modifications, additions and changes thereto,
related to the Shreveport Resort, (b) all plans, specifications, working
drawings, shop drawings, surveys and other such documents, and all amendments,
modifications, additions and changes thereto, related to the Shreveport Resort,
(c) the Management Agreement, (d) the License Agreement, (e) the Completion
Capital Agreement, (f) all other contracts, agreements, documents and
instruments now existing or hereafter arising
<PAGE>
related to the Shreveport Resort, 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 (g) all proceeds of the foregoing (all items described in subsections (a)
thorough (g), collectively, the "Contracts and Documents"). 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 the Company 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, such as Gaming Licenses,
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 Company. This Assignment is an absolute assignment for
security purposes only. Accordingly, notwithstanding anything to the contrary
set forth herein, the Company 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 the Company thereunder, except
during a period when a "Default" or an "Event of Default" (as such terms are
defined in the Indenture) has occurred and is continuing.
3 Representations and Warranties of the Company. The Company 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 has not executed any instrument which might prevent
or limit Trustee from operating under the terms and conditions of the assignment
contemplated hereby, and (b) that it is not in default and that no event has
occurred that with notice or lapse of time or both would constitute a default by
the Company, or to its knowledge any other party, under any of the Contracts and
Documents.
4 Covenants of the Company. The Company 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 faithfully abide by,
perform and discharge each and every obligation, covenant and agreement of the
Company under the Contracts and Documents, (c) that it will not modify, amend,
supplement or in any way join in the release or discharge of any obligations or
rights of the Company under any of the Contracts and Documents in any material
way (except with respect to any such Contracts or Documents relating to the
construction of the Shreveport Resort, which such Contracts and Documents may be
modified, amended or supplemented in a manner consistent with the terms and
provisions of the Cash Collateral and Disbursement Agreement), (d) 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 (e) that it will send to Trustee any notice
of default or breach of or under any Contract or Document that the Company
either sends to (such notice to Trustee to be sent simultaneously therewith), or
2
<PAGE>
receives from (such notice to Trustee to be sent immediately upon receipt by the
Company thereof), any other party to any such Contract or Document.
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 Company 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 Company 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 Company to perform any
obligation of the Company 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 a
Default or 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 Company or the Trustee thereunder,
and may do so in the Trustee's name, in the name of the Company 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 the Company 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
(a) Upon the occurrence of a Default or an Event of Default under the
Indenture irrespective of whether a notice of default has been given with
respect to such Default or Event of Default (unless required by the
Indenture or any other Collateral Document), 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 Company
under the Contracts and Documents, amend, modify, cancel, terminate or
replace the same, reassign the Company's right, title and interest therein
to any other person, and exercise any and all other rights of the Company
under the Contracts and Documents, either in person or through an agent,
receiver or keeper, without further notice to or consent by the Company,
and without regard to the adequacy of security for the Obligations or 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 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, at law or in equity.
(b) [This subsection to be reviewed by Louisiana local counsel] [The
provisions of this Subparagraph 7(b) shall, without limiting the generality
of any other provision
3
<PAGE>
of this Assignment, be applicable in the event any foreclosure shall take
place in Louisiana on any right, title or interest of the Company in and to
the Contracts and Documents or any proceeds thereof or, in connection with
any foreclosure hereunder, Louisiana law shall otherwise be applicable.
Trustee, instead of exercising the power of sale herein conferred upon it,
may proceed by a suit or suits at law or in equity to foreclose this
Assignment and sell its right, title and interest to the Contracts and
Documents and the proceeds, or any portion thereof, under a judgment or
decree of a court or courts of competent jurisdiction. For the purposes of
Louisiana executory process procedures, the Company does hereby acknowledge
the Obligations and confess judgment in favor of Trustee for the full
amount of such Obligations. The Company does by these presents consent and
agree that upon the occurrence of a Default or Event of Default under the
Indenture it shall be lawful for Trustee to cause all of its right, title
and interest to the Contract and Documents and the proceeds, or any portion
thereof, to be seized and sold under executory or ordinary process, at
Trustee's sole option, without appraisement, appraisement being hereby
expressly waived, to the highest bidder, and otherwise exercise the rights,
powers and remedies afforded herein and under applicable Louisiana law. Any
and all declarations of fact made by authentic act before a Notary Public
in the presence of two (2) witnesses by a person declaring that such facts
lie within his knowledge shall constitute authentic evidence of such facts
for the purpose of executory process. The Company hereby waives in favor of
Trustee: (a) the benefit of appraisement as provided in Louisiana Code of
Civil Procedure Articles 2332, 2336, 2723 and 2724, and all other laws
conferring the same; (b) the demand and three (3) days delay accorded by
Louisiana Code of Civil Procedure Articles 2639 and 2721; (c) the notice of
seizure required by Louisiana Code of Civil Procedure Articles 2293 and
2721; (d) the three (3) days delay provided by Louisiana Code of Civil
Procedure Articles 2331, 2722; and (e) benefit of the other provisions of
Louisiana Code of Civil Procedure Articles 2331, 2722 and 2723 not
specifically mentioned above. In the event the Company's right, title or
interest in and to the Contracts and Documents or any proceeds thereof, or
any part thereof, is seized as an incident to an action for the recognition
or enforcement of this assignment by executory process, ordinary process,
sequestration, writ of fieri facias, or otherwise, the Company and Trustee
agree that the court issuing any such order shall, if petitioned for by
Trustee, direct the applicable sheriff or marshal to appoint as a keeper of
the Company's right, title or interest in and to the Contracts and
Documents and the proceeds, if applicable, Trustee or any agent designated
by Trustee or any Person named by Trustee at the time such seizure is
effected. This designation is pursuant to Louisiana Revised Statutes
9:5136-9:5140.2 and Trustee shall be entitled to all the rights and
benefits afforded thereunder as the same may be amended. It is hereby
agreed that the keeper shall be entitled to receive as compensation, in
excess of its reasonable costs and expenses incurred in the administration
or preservation of the Company's right, title or interest in and to the
Contracts and Documents and the proceeds, an amount equal to $250.00 per
day payable on a monthly basis. The designation of keeper made herein shall
not be deemed to require Trustee to provoke the appointment of such a
keeper.]
8 Additional Instruments. With respect to both existing and future
Contracts and Documents, the Company hereby agrees to execute and deliver such
additional assignments and other documents as the Trustee may reasonably request
in order to implement the purpose and intent of this Assignment.
4
<PAGE>
9 Miscellaneous. 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 Paragraph and in all other places 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 those that would be charged by outside attorneys for comparable
services. This Assignment shall be governed by the laws of the State of New
York.
10 [THIS SECTION TO BE REVIEWED BY LOCAL LOUISIANA/GAMING COUNSEL]
[Gaming Laws and Regulations. The Company 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 Louisiana
Riverboat Economic Development and Gaming Control Act, La. R.S. 4:501, et seq.,
and the Louisiana Gaming Control Law, La. R.S. 27:1-3, 11-26, 31 and 32, 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
Company 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 Gaming Authority approval.]
11 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 Company with a particular cure or notice period, or establishes any
limitations or conditions on Trustee's actions with regard to a particular set
of facts, the Company 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, 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.
5
<PAGE>
IN WITNESS WHEREOF, the Company has executed this Assignment as of the date
first above written.
HOLLYWOOD CASINO SHREVEPORT, a Louisiana
corporation
By: HCS I, Inc., a Louisiana corporation,
its managing general partner
By: /s/ PAUL C. YATES
--------------------------------------
Name: Paul C. Yates
-------------------------------------
Title: Executive Vice President and Chief
------------------------------------
Financial Officer
------------------------------------
S-1
<PAGE>
EXHIBIT A
CONTRACTS AND DOCUMENTS
1. License Agreement dated as of August 10, 1999 by and between Company and
Hollywood Casino Corporation, a Delaware corporation.
2. Management Agreement dated as of August 10, 1999 by and between Company and
HWCC-Shreveport, Inc., a Louisiana corporation.
3. Completion Capital Agreement dated as of August 10, 1999 by and among
Company, Hollywood Casino Corporation, a Delaware corporation, HWCC-
Louisiana, Inc., a Louisiana corporation, and HCS-I, Inc., a Louisiana
corporation.
4. Standard Form of Agreement Between Owner and Architect with Descriptions of
Designated Services and Terms and Conditions dated as of October 19, 1998
by and between QNOV, a Louisiana partnership and Broadmoor Design Group.
5. Abbreviated Standard Form of Agreement Between Owner and Architect dated as
of October 19, 1998 by and between QNOV, a Louisiana partnership and
International Parking Design, Inc.
6. Standard Form of Agreement Between Owner and Architect with Descriptions of
Designated Services and Terms and Conditions dated as of October 19, 1998
by and between QNOV, a Louisiana partnership and MORRIS & BROWN ARCHITECTS,
LTD.
7. Standard Form of Agreement Between Owner and Architect dated as of October
19, 1998 by and between QNOV, a Louisiana partnership and Brown Cunningham
Gannuch.
8. [Coffer Cell Agreement dated as of May 20, 1999 by and between QNOV, a
Louisiana partnership and Red River Entertainment of Shreveport Partnership
in Commendam, a Louisiana partnership.]
9. Consulting Services Agreement dated as of January 18, 1999 by and between
U.S. Foodservice Contract Design and QNOV, a Louisiana partnership.
10. Operations Agreement dated as of May 20, 1999 by and between QNOV, a
Louisiana partnership and Red River Entertainment of Shreveport Partnership
in Commendam, a Louisiana partnership.
11. Retail Space Lease dated as of June 3, 1999 by and between QNOV, a
Louisiana general partnership and Red River Entertainment Company, L.L.C.,
a Tennessee limited liability company.
12. Design Agreement dated as of October 19, 1998 by and between QNOV, a
Louisiana partnership and Wilson & Associates, Inc., a Texas Corporation.
A-1
<PAGE>
EXHIBIT 4.4
SECURITY AGREEMENT
(Partnership)
Made by
HOLLYWOOD CASINO SHREVEPORT,
as Debtor
to
STATE STREET BANK AND TRUST COMPANY,
as Trustee and Secured Party
Acting on behalf of the Holders of the Notes
August 10, 1999
<PAGE>
SECURITY AGREEMENT
------------------
(Partnership)
THIS SECURITY AGREEMENT (this "Agreement") is made as of August 10,
1999, by HOLLYWOOD CASINO SHREVEPORT, a Louisiana general partnership (the
"Debtor"), in favor of STATE STREET BANK AND TRUST COMPANY, a Massachusetts
trust company, as Trustee acting on behalf of the Holders of the Notes under the
Indenture (the "Secured Party").
W I T N E S S E T H:
A. Debtor, Shreveport Capital Corporation, a Louisiana corporation
("Shreveport Capital," and together with the Debtor, the "Issuers"), HCS I,
Inc., a Louisiana corporation, HCS II, Inc., a Louisiana corporation, and HWCC-
Louisiana, Inc., a Louisiana corporation, each as a Guarantor, have entered into
an Indenture dated as of the date hereof (as amended, supplemented, restated or
otherwise modified from time to time, the "Indenture") with the Trustee,
pursuant to which the Issuers will issue up to $150,000,000 of their 13% First
Mortgage Notes due 2006 with Contingent Interest (as the same may be amended,
supplemented, restated, exchanged, replaced or otherwise modified from time to
time, collectively, the "Notes").
B. It is a condition precedent to the purchase of the Notes under the
Indenture that Debtor shall have executed and delivered this Agreement.
C. Therefore, in order to comply with the terms and conditions of the
Indenture and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Debtor hereby agrees with Secured
Party as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Definitions. When used herein, (a) the terms Certificated
Security, Chattel Paper, Deposit Account, Document, Equipment, Financial Asset,
Fixture, Goods, Inventory, Instrument, Investment Property, Security, Security
Entitlement and Uncertificated Security have the respective meanings assigned
thereto in the Code (as defined below); (b) capitalized terms which are not
otherwise defined have the respective meanings assigned thereto in the
Indenture; and (c) the following terms have the following meanings (such
definitions to be applicable to both the singular and plural forms of such
terms):
Account Debtor means the party who is obligated on or under any
Account Receivable, Contract Right or General Intangible.
Account Receivable means any right of Debtor to payment for goods sold
or leased or for services rendered.
Code means the Uniform Commercial Code as in effect in the State of
New York on the date of this Agreement; provided that, if by reason of mandatory
provisions of law, the
<PAGE>
perfection or the effect of perfection or non-perfection of the security
interests in any Collateral is governed by the Uniform Commercial Code as in
effect in any jurisdiction other than the State of New York, "Code" means the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such perfection or the effect of perfection or
non-perfection.
Collateral means all property and rights of Debtor in which a security
interest is granted hereunder.
Completion Reserve Account means collectively (i) account number
122884-010 established with Securities Intermediary and subject to the Control
Agreement (Completion Reserve Account), and any and all cash, cash equivalents,
Certificated Securities, Documents, Financial Assets, Instruments, Investment
Property, Securities, Securities Entitlements, Uncertificated Securities, and,
to the extent not included in the foregoing, other personal property of any kind
or description deposited in such Completion Reserve Account, and all interest,
dividends or other proceeds therefrom and (ii) any other account established
pursuant to a control agreement on essentially the terms of the Control
Agreement (Completion Reserve Account) to which assets from the account
established in subsection (i) above have been transferred, and any and all cash,
cash equivalents, Certificated Securities, Documents, Financial Assets,
Instruments, Investment Property, Securities, Securities Entitlements,
Uncertificated Securities, and, to the extent not included in the foregoing,
other personal property of any kind or description deposited in such account,
and all interest, dividends or other proceeds therefrom.
Computer Hardware and Software means all of Debtor's rights (including
rights as licensee and lessee) with respect to (i) computer and other electronic
data processing hardware, including all integrated computer systems, central
processing units, memory units, display terminals, printers, computer elements,
card readers, tape drives, hard and soft disk drives, cables, electrical supply
hardware, generators, power equalizers, accessories, peripheral devices and
other related computer hardware; (ii) all software programs designed for use on
the computers and electronic data processing hardware described in clause (i)
above, including all operating system software, utilities and application
programs in whatsoever form (source code and object code in magnetic tape, disk
or hard copy format or any other listings whatsoever); (iii) any firmware
associated with any of the foregoing; and (iv) any documentation for hardware,
software and firmware described in clauses (i), (ii) and (iii) above, including
flow charts, logic diagrams, manuals, specifications, training materials, charts
and pseudo codes.
Construction Disbursement Account means collectively (i) account
number 122884-020 established with Securities Intermediary and subject to the
Control Agreement (Construction Disbursement Account), and any and all cash,
cash equivalents, Certificated Securities, Documents, Financial Assets,
Instruments, Investment Property, Securities, Securities Entitlements,
Uncertificated Securities, and, to the extent not included in the foregoing,
other personal property of any kind or description deposited in such
Construction Disbursement Account, and all interest, dividends or other proceeds
therefrom and (ii) any other account established pursuant to a control agreement
on essentially the terms of the Control Agreement (Construction Disbursement
Account) to which assets from the account established in subsection (i) above
have been transferred, and any and all cash, cash equivalents, Certificated
Securities,
2
<PAGE>
Documents, Financial Assets, Instruments, Investment Property, Securities,
Securities Entitlements, Uncertificated Securities, and, to the extent not
included in the foregoing, other personal property of any kind or description
deposited in such account, and all interest, dividends or other proceeds
therefrom.
Contract Rights means any rights of Debtor (including, without
limitation, all rights to payment) under each Contract.
Contracts means all contracts or other agreements between Debtor and
one or more additional parties, including, without limitation, all of the
contracts described on Exhibit C attached hereto.
Control Agreement means one or more of the Control Agreement
(Completion Reserve Account), the Control Agreement (Construction Disbursement
Account), the Control Agreement (Interest Reserve Account), or the Control
Agreement (Segregated Account).
Control Agreement (Completion Reserve Account) means that certain
Control Agreement (Completion Reserve Account) dated as of August 10, 1999 by
and among Securities Intermediary, Debtor and Secured Party.
Control Agreement (Construction Disbursement Account) means that
certain Control Agreement (Construction Disbursement Account) dated as of August
10, 1999 by and among Securities Intermediary, Debtor and Secured Party.
Control Agreement (Interest Reserve Account) means that certain
Control Agreement (Interest Reserve Account) dated as of August 10, 1999 by and
among Securities Intermediary, Debtor and Secured Party.
Control Agreement (Segregated Account) means that certain Control
Agreement (Segregated Account) dated as of August 10, 1999 by and among
Securities Intermediary, Debtor and Secured Party.
Event of Default has the meaning set forth in Section 6.01 hereof.
Excluded Collateral means (i) all such items of personal property (of
the type in which a security interest can be perfected pursuant to Article 9 of
the Code) constituting furniture, fixtures or equipment of the Debtor the
acquisition of which has been financed pursuant to the FF&E Financing, which
items shall constitute "Excluded Collateral" for so long as such items are
subject to a lien in favor of the lender or lenders (or one or more agents
therefor) providing such FF&E Financing, and (ii) the Equity Escrow Account.
General Intangibles means all of Debtor's "general intangibles" as
defined in the Code and, in any event, includes (without limitation) all of
Debtor's trademarks and goodwill of the business relating thereto, trade names,
patents, copyrights, trade secrets, customer lists, inventions, designs,
software programs, mask works, registrations, licenses, franchises, tax refund
claims, guarantee claims, security interests, rights to indemnification, all
contractual rights and obligations or indebtedness owing to Debtor from whatever
source arising, all things in
3
<PAGE>
action, rights represented by judgments, claims arising out of tort and other
claims relating to the Collateral (including the right to assert and otherwise
be the proper party of interest to commence and prosecute actions), and all
rights in respect of any pension plan or similar arrangement maintained for
employees of Debtor.
Intellectual Property means all past, present and future: trade
secrets and other proprietary information; trademarks, service marks, business
names, designs, logos, indicia and other source and/or business identifiers, and
the goodwill of the business relating thereto and all registrations or
applications for registrations which have heretofore been or may hereafter be
issued thereon throughout the world; copyrights (including copyrights for
computer programs) and copyright registrations or applications for registrations
which have heretofore been or may hereafter be issued throughout the world and
all tangible property embodying the copyrights; unpatented inventions (whether
or not patentable); patent applications and patents; industrial designs,
industrial design applications and registered industrial designs; license
agreements related to any of the foregoing and income therefrom; books, records,
writings, computer tapes or disks, flow diagrams, specification sheets, source
codes, object codes and other physical manifestations, embodiments or
incorporations of any of the foregoing; the right to sue for all past, present
and future infringements of any of the foregoing; and all common law and other
rights throughout the world in and to all of the foregoing.
Interest Reserve Account means collectively (i) account number 122884-
030 established with Securities Intermediary and subject to the Control
Agreement (Interest Reserve Account), and any and all cash, cash equivalents,
Certificated Securities, Documents, Financial Assets, Instruments, Investment
Property, Securities, Securities Entitlements, Uncertificated Securities, and,
to the extent not included in the foregoing, other personal property of any kind
or description deposited in such Interest Reserve Account, and all interest,
dividends or other proceeds therefrom and (ii) any other account established
pursuant to a control agreement on essentially the terms of the Control
Agreement (Interest Reserve Account) to which assets from the account
established in subsection (i) above have been transferred, and any and all cash,
cash equivalents, Certificated Securities, Documents, Financial Assets,
Instruments, Investment Property, Securities, Securities Entitlements,
Uncertificated Securities, and, to the extent not included in the foregoing,
other personal property of any kind or description deposited in such account,
and all interest, dividends or other proceeds therefrom.
Non-Tangible Collateral means collectively, Debtor's Accounts
Receivable, Contract Rights and General Intangibles.
Obligations means (i) the payment when due of indebtedness evidenced
by the Notes in the principal sum not to exceed at any time outstanding of
$150,000,000, interest (including post-petition interest) as set forth in the
Indenture and the Notes, and premiums, penalties, and late charges thereon; (ii)
all other indebtedness and other sums (including, without limitation, all
expenses, attorneys' fees, other fees, indemnifications, reimbursements,
damages, other monetary liabilities, and other charges) and obligations that may
or shall become due hereunder or under the Notes, the Guarantees, the Indenture
or the other Collateral Documents; and (iii) any and all renewals,
modifications, amendments, extensions for any period, supplements or
restatements of any of the foregoing.
4
<PAGE>
Obligor means any Person, other than Debtor, liable (whether directly
or indirectly, primarily or secondarily) for the payment or performance of any
of the Obligations whether as maker, co-maker, endorser, guarantor,
accommodation party, general partner or otherwise.
Securities Intermediary means State Street Bank and Trust Company, a
Massachusetts chartered trust company, or its successor under a Control
Agreement with respect to the Completion Reserve Account, the Construction
Disbursement Account and the Interest Reserve Account, and Wells Fargo & Company
or its successor under a Control Agreement with respect to the Segregated
Account.
Segregated Account means collectively (i) account numbers 4296917578
and 11514320 established with Securities Intermediary and subject to the Control
Agreement (Segregated Account), and any and all cash, cash equivalents,
Certificated Securities, Documents, Financial Assets, Instruments, Investment
Property, Securities, Securities Entitlements, Uncertificated Securities, and,
to the extent not included in the foregoing, other personal property of any kind
or description deposited in such Segregated Account, and all interest, dividends
or other proceeds therefrom and (ii) any other account established pursuant to a
control agreement on essentially the terms of the Control Agreement (Segregated
Account) to which assets from the account established in subsection (i) above
have been transferred, and any and all cash, cash equivalents, Certificated
Securities, Documents, Financial Assets, Instruments, Investment Property,
Securities, Securities Entitlements, Uncertificated Securities, and, to the
extent not included in the foregoing, other personal property of any kind or
description deposited in such account, and all interest, dividends or other
proceeds therefrom.
Vessel means any vessel owned by Debtor, whether now owned or acquired
or delivered to Debtor in the future, whether or not such Vessel is a vessel
within the meaning of 46 U.S.C. (S) 31322(a), and all rights of the Debtor
therein, including all equipment, parts and accessories, including, but not
limited to, all of its boilers, engines, generators, air compressors, machinery,
masts, spars, sails, riggings, boats, anchors, cables, chains, tackle, tools,
pumps and pumping equipment, motors, apparel, furniture, computer equipment,
electronic equipment used in connection with the operation of the Vessel and
belonging to the Vessel, all machinery, equipment, engines, appliances and
fixtures for generating or distributing air, water, heat, electricity, light,
fuel or refrigeration, or for ventilating or sanitary purposes, fittings and
equipment, supplies, spare parts, fuel, and all other appurtenances thereunto
appertaining or belonging, whether now owned or hereafter acquired, whether or
not on board said Vessel, and all extensions, additions, accessions,
improvements, renewals, substitutions, and replacements hereafter made in or to
said Vessel or any part thereof, or in or to any said appurtenances.
ARTICLE 2
SECURITY INTEREST
Section 2.01 Grant of Security Interest. As security for the prompt
and complete payment and performance of the Obligations, Debtor grants to
Secured Party a continuing security interest in, Lien upon, and right of set-off
against the following, whether now or hereafter existing or acquired:
5
<PAGE>
All of Debtor's right, title and interest in, to and under the
following:
(i) Accounts Receivable;
(ii) Certificated Securities;
(iii) Chattel Paper;
(iv) Computer Hardware and Software and all rights with respect
thereto, including, any and all licenses, options, warranties,
service contracts, program services, test rights, maintenance
rights, support rights, improvement rights, renewal rights and
indemnifications, and any substitutions, replacements,
additions or model conversions of any of the foregoing ;
(v) all Contracts, together with all Contract Rights arising
thereunder;
(vi) Deposit Accounts;
(vii) Documents;
(viii) Financial Assets;
(ix) General Intangibles;
(x) Goods (including all of its Equipment, Fixtures and Inventory)
and all accessions, additions, attachments, improvements,
substitutions and replacements thereto and therefor;
(xi) Instruments;
(xii) Intellectual Property;
(xiii) Investment Property;
(xiv) money (of every jurisdiction whatsoever);
(xv) Security Entitlements;
(xvi) Uncertificated Securities;
(xvii) the Construction Disbursement Account, the Completion Reserve
Account, the Interest Reserve Account and the Segregated
Account;
(xviii) the Vessel; and
(xix) to the extent not included in the foregoing, other personal
property of any kind or description;
6
<PAGE>
together with all books, records, writings, data bases, information
and other property relating to, used or useful in connection with, or
evidencing, embodying, incorporating or referring to any of the
foregoing, and all proceeds, products, offspring, rents, issues,
profits and returns of and from any of the foregoing; provided that to
the extent that the provisions of any lease or license of Computer
Hardware and Software or Intellectual Property expressly prohibit
(which prohibition is enforceable under applicable law) the grant of a
security interest therein, Debtor's rights in such lease or license
shall be excluded from the foregoing grant for so long as such
prohibition continues, it being understood that upon request of the
Trustee, Debtor will in good faith use reasonable efforts to obtain
consent for the creation of a security interest in favor of the
Trustee in Debtor's rights under such lease or license.
Notwithstanding the foregoing provisions of this Section 2.01, such
grant of security interest shall not extend to, and the term
"Collateral" shall not include (i) any of the Excluded Collateral, and
(ii) any of the foregoing property that is, pursuant to restrictions
enforceable under applicable law, prohibited from being pledged as
security; provided that, with respect to this clause (ii), upon the
termination of such prohibitions for any reason whatsoever or in the
event such prohibitions are or become unenforceable under applicable
law, such foregoing property shall automatically become Collateral
hereunder and, provided further, that upon request of the Trustee,
Debtor will in good faith use reasonable efforts to obtain consent for
the creation of a security interest in favor of the Trustee in
Debtor's rights under such lease or license. Notwithstanding the
foregoing, so long as no Event of Default shall have occurred and be
continuing, all dividends, distributions, interest and principal
payments, cash, instruments, and other property and proceeds made upon
or with respect to or of the Collateral may be used by such Debtor
subject to the terms and conditions of the Indenture. Upon the
occurrence and during the continuance of an Event of Default, all
rights of such Debtor to receive all such dividends, distributions,
interest and principal payments, cash, instruments and other property
and proceeds shall cease, and such dividends, distributions, interest
and principal payments, cash, instruments and other property and
proceeds shall be paid or otherwise delivered to the Secured Party.
It is expressly contemplated that additional property may from time to
time be pledged, assigned or granted to Secured Party as additional
security for the Obligations, and the term "Collateral" as used herein
shall be deemed for all purposes hereof to include all such additional
property, together with all other property of the types described
above related thereto.
7
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
In order to induce Secured Party to accept this Agreement, Debtor
represents and warrants to Secured Party (which representations and warranties
will survive the creation and payment of the Obligations) that:
Section 3.01 Ownership of Collateral; Absence of Encumbrances and
Restrictions. After giving effect to the use of the proceeds of the Notes,
Debtor is, and in the case of property acquired after the date hereof, will be,
the sole legal and beneficial owner of the Collateral holding good and
indefeasible title to the same, free and clear of all Liens except for Permitted
Liens and Debtor has full right, power and authority to assign and grant a
security interest in the Collateral to Secured Party.
Section 3.02 No Required Consent. Except for such authorizations,
consents or approvals previously obtained and in effect, no authorization,
consent, approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body (other than the filing of financing
statements and the other documents required to perfect or maintain the
perfection of the Liens granted hereby) is required for (i) the due execution,
delivery and performance by Debtor of this Agreement, (ii) the grant by Debtor
of the security interest granted by this Agreement, (iii) the perfection of such
security interest or (iv) the exercise by Secured Party of its rights and
remedies under this Agreement, except as may be required by applicable gaming
laws or in connection with the disposition of Collateral or by federal or state
securities laws or antitrust laws.
Section 3.03 Security Interest. After giving effect to the use of
proceeds of the Notes, the grant of the security interest in and Lien on the
Collateral pursuant to this Agreement creates a valid and continuing security
interest in and Lien on the Collateral, enforceable against Debtor, and, upon
the filing of financing statements in the appropriate office for the locations
of the Collateral listed on Exhibit A hereof, the security interests granted
hereby will be perfected, prior to all other Liens except Permitted Liens,
enforceable against third parties and securing payment of the Obligations.
Section 3.04 No Filings By Third Parties. After giving effect to the
use of proceeds of the Notes, and other than any financing statement or other
public notice or recording naming Secured Party as the secured party therein or
financing statements with respect to Permitted Liens, no financing statement or
other public notice or recording covering the Collateral is on file in any
public office and Debtor has not signed any document or agreement authorizing
the filing of any such financing statement or other public notice or recording
so long as any of the Obligations are outstanding.
Section 3.05 Name; No Name Changes. The name of the Debtor set forth
on Exhibit A hereto is the true and correct legal name of the Debtor, and,
except as described on Exhibit A hereto, Debtor has not, during the preceding
five (5) years, entered into any contract, agreement, security instrument or
other document using a name other than, or been known by or otherwise used any
name other than, the name used by Debtor herein.
8
<PAGE>
Section 3.06 Location of Debtor and Collateral; Intellectual Property.
Debtor's chief executive office, principal place of business and the locations
of Debtor's records concerning the Collateral are set forth on Exhibit A hereto.
Any Collateral not at such location(s) nevertheless remains subject to Secured
Party's security interest. Except as disclosed on Exhibit A hereto, all tangible
Collateral of Debtor are located at the locations set forth on Exhibit A hereto.
Exhibit B hereto contains a true, correct and complete listing of all of
Debtor's Intellectual Property which have been registered or for which
applications for registration are pending.
Section 3.07 Collateral. All statements or other information provided
by Debtor to Secured Party describing or with respect to the Collateral is (or,
in the case of subsequently furnished information, will be when provided)
correct and complete in all material respects. The delivery at any time by
Debtor to Secured Party of additional descriptions of Collateral shall
constitute a representation and warranty by Debtor to Secured Party hereunder
that the representations and warranties of this Article 3 are correct in all
material respects insofar as they would pertain to such Collateral or the
descriptions thereof, except as indicated therein.
Section 3.08 Delivery of Documents. With respect to any Collateral
covered by one or more certificates of title or other documents of title
evidencing ownership or possession thereof, each of such certificates or
documents of title shall, after the occurrence and during the continuance of an
Event of Default and upon the request of the Secured Party, be delivered to
Secured Party (provided that all certificates of title and documents of title
referred to in Article 2 hereof shall be subject to the security interest
created by this Agreement irrespective of whether or not such delivery shall
have been made).
Section 3.09 Taxpayer Identification Number. The federal taxpayer
identification number of Debtor is set forth on Exhibit A hereto.
ARTICLE 4
COVENANTS AND AGREEMENTS
Debtor will at all times comply with the covenants and agreements
contained in this Article 4, from the date hereof and for so long as any part of
the Obligations are outstanding.
Section 4.01 Change in Location of Collateral or Debtor. Except with
respect to Collateral under repair or temporarily in transit between locations
(and in any such case, for a period not to exceed four (4) months), Debtor will
not change the location of the Collateral (except for (a) Collateral held by the
Trustee, (b) motor vehicles and rolling stock, and (c) Collateral temporarily in
transit between locations) to any state, county or other jurisdiction in which
Secured Party has not already filed a financing statement or taken other
necessary steps to perfect or maintain its security interests in the Collateral
without Secured Party's prior written consent and the delivery of such new
financing statements or other documentation as may be reasonably necessary or
required by Secured Party to ensure the continued perfection and priority of its
security interest in the Collateral. Debtor will not change the location of
Debtor's chief executive office, principal place of business or the locations of
Debtor's records concerning the Collateral unless Debtor shall have given
Secured Party at least thirty (30) days prior written notice thereof and shall
have delivered to Secured Party such new financing statements or other
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documentation as may be reasonably necessary or required by Secured Party to
ensure the continued perfection and priority of its security interest in the
Collateral.
Section 4.02 Change in Debtor's Name or Corporate Structure. Debtor
will not change its name, identity or corporate structure (including, without
limitation, any merger, consolidation or sale of substantially all of its
assets) unless Debtor shall have given Secured Party at least thirty (30) days
prior written notice thereof and shall have delivered to Secured Party such new
financing statements or other documentation as may be reasonably necessary or
required by Secured Party to ensure the continued perfection and priority of its
security interest on the Collateral.
Section 4.03 Documents; Collateral in Possession of Third Parties. If
certificates of title or other documents evidencing ownership or possession of
the Collateral are issued or outstanding, Debtor will, after the occurrence and
during the continuance of an Event of Default and upon the request of the
Secured Party, cause the interest of Secured Party to be properly noted thereon
and will, forthwith upon receipt, deliver same to Secured Party. If any material
portion of the Collateral is at any time in the possession or control of any
warehouseman, bailee, agent or independent contractor, Debtor shall notify such
Person of Secured Party's security interest in such Collateral. Upon Secured
Party's request, Debtor shall instruct any such Person to hold all such
Collateral for Secured Party's account subject to Debtor's instructions, or, if
an Event of Default shall have occurred, subject to Secured Party's
instructions.
Section 4.04 Delivery of Letters of Credit and Instruments. After the
occurrence and during the continuance of an Event of Default and upon the
request of the Secured Party, Debtor will deliver each letter of credit, if any,
included in the Collateral to Secured Party, in each case forthwith upon receipt
by or for the account of Debtor. After the occurrence and during the continuance
of an Event of Default and upon the request of the Secured Party, if any Non-
Tangible Collateral becomes evidenced by a promissory note, trade acceptance or
any other instrument for the payment of money (other than checks or drafts in
payment of Non-Tangible Collateral collected by Debtor in the ordinary course of
business prior to notification by Secured Party under Section 6.02(g)), Debtor
will immediately deliver such instrument to Secured Party appropriately endorsed
and, regardless of the form of presentment, demand, notice of dishonor, protest
and notice of protest with respect thereto, Debtor will remain liable thereon
until such instrument is paid in full.
Section 4.05 Sale, Disposition or Encumbrance of Collateral. Except as
permitted pursuant to the provisions of the Indenture and by Section 4.09 of
this Agreement or with Secured Party's prior written consent, Debtor will not in
any way encumber any of the Collateral (or permit or suffer any of the
Collateral to be encumbered) or sell, assign, lend, rent, lease or otherwise
dispose of or transfer any of the Collateral to or in favor of any Person other
than Secured Party.
Section 4.06 Records and Information. Debtor shall keep accurate and
complete records of the Collateral (including proceeds). Secured Party may at
any time upon reasonable prior notice have access during normal business hours
to examine, audit, make extracts from and inspect without hindrance or delay
Debtor's records, files and the Collateral. Debtor will
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promptly provide written notice to Secured Party of all information which in any
way relates to or affects the filing of any financing statement or other public
notices or recordings, or the delivery and possession of items of Collateral,
for the purpose of perfecting a security interest in the Collateral. Debtor will
also promptly furnish such information as Secured Party may from time to time
reasonably request regarding the Collateral or Secured Party's rights or
remedies with respect thereto.
Section 4.07 Reimbursement of Expenses. Debtor hereby assumes all
liability for the Collateral, the security interests created hereunder and any
use, possession, maintenance, management, enforcement or collection of any or
all of the Collateral. Debtor agrees to indemnify and hold Secured Party
harmless from and against and covenants to defend Secured Party against any and
all losses, damages, claims, costs, penalties, liabilities and expenses,
including, without limitation, court costs and reasonable attorneys' fees,
incurred because of, incident to, or with respect to the Collateral (including,
without limitation, any use, possession, maintenance or management thereof, or
any injuries to or deaths of Persons or damage to property, except to the extent
caused by the gross negligence or willful misconduct of the Secured Party). All
amounts for which Debtor is liable pursuant to this Section 4.07 shall be due
and payable by Debtor to Secured Party upon demand. If Debtor fails to make such
payment upon demand (or if demand is not made due to an injunction or stay
arising from bankruptcy or other proceedings) and Secured Party pays such
amount, the same shall be due and payable by Debtor to Secured Party, plus
interest thereon from the date of Secured Party's demand (or from the date of
Secured Party's payment if demand is not made due to such proceedings) at the
interest rate applicable to overdue principal as provided in the Notes.
Section 4.08 Further Assurances. Upon the request of Secured Party,
Debtor shall (at Debtor's expense) execute and deliver all such assignments,
certificates, financing statements or other documents and give further
assurances and do all other acts and things as Secured Party may reasonably
request to perfect Secured Party's interest in the Collateral or to protect,
enforce or otherwise effect Secured Party's rights and remedies hereunder.
Section 4.09 Inventory. Debtor may use the Inventory in any lawful
manner not inconsistent with this Agreement and the Indenture and with the terms
of insurance thereon.
Section 4.10 Use of Collateral. Debtor will not use any Collateral in
violation in any material respect of any law, statute, ordinance, regulation or
administrative order, or suffer it to be so used.
Section 4.11 Collateral Attached to Other Property. In the event that
the Collateral is to be attached or affixed to any real property, Debtor hereby
agrees that this Agreement may be filed for record in any appropriate real
estate records as a financing statement which is a fixture filing. In connection
therewith, Debtor will take whatever action is required by Section 4.08. If
Debtor is not the record owner of such real property, Debtor will provide
Secured Party with any additional security agreements or financing statements
necessary for the perfection of Secured Party's security interest in the
Collateral. If the Collateral is wholly or partly affixed to real estate or
installed in or affixed to other goods, Debtor will, on demand of Secured Party,
use its commercially reasonable efforts to furnish Secured Party with landlord's
waivers, signed by all
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Persons having an interest in the real estate or other goods to which the
Collateral may have become affixed, permitting the Secured Party to have access
to the Collateral at all reasonable times and granting the Secured Party a
reasonable period of time in which to remove the Collateral after the occurrence
and during the continuance of an Event of Default.
ARTICLE 5
RIGHTS, DUTIES AND POWERS OF SECURED PARTY
Secured Party shall have the following rights, duties and powers:
Section 5.01 Discharge Encumbrances. After the occurrence and during
the continuance of an Event of Default, Secured Party may, at its option,
discharge any taxes, Liens, security interests or other encumbrances at any time
levied or placed on the Collateral, and may pay for insurance on the Collateral
to the extent required by this Agreement or the Indenture and not obtained by
Debtor. Debtor agrees to reimburse Secured Party upon demand for any payment so
made, plus interest thereon from the date of Secured Party's demand at the
interest rate applicable to overdue principal as provided in the Notes.
Section 5.02 Licenses and Rights to Use Collateral. After the
occurrence and during the continuance of an Event of Default, in connection with
any transfer or sale (to Secured Party or any other Person) of the Collateral,
Secured Party is hereby granted a transferable license or other right to use,
without any charge, any of Debtor's Intellectual Property in completing
production, advertising or selling such Collateral except any of the foregoing
property which is expressly prohibited by its terms from being assigned or
licensed. After the occurrence and during the continuance of an Event of
Default, Debtor's rights under all licenses and franchise agreements shall inure
to the benefit of Secured Party and any transferee of all or any part of the
Collateral.
Section 5.03 Cumulative and Other Rights. The rights, powers and
remedies of Secured Party hereunder are in addition to all rights, powers and
remedies given by law or in equity. The exercise by Secured Party of any one or
more of the rights, powers and remedies herein shall not be construed as a
waiver of any other rights, powers and remedies, including, without limitation,
any other rights of set-off (which set-off rights may be exercised only after
the occurrence and during the continuance of an Event of Default). If any of the
Obligations are given in renewal, extension for any period or rearrangement, or
applied toward the payment of debt secured by any Lien, Secured Party shall be,
and is hereby, subrogated to all the rights, titles, interests and liens
securing the debt so renewed, extended, rearranged or paid.
Section 5.04 Disclaimer of Certain Duties.
(a) The powers conferred upon Secured Party by this Agreement
are to protect its interest in the Collateral and shall not impose any
duty upon Secured Party to exercise any such powers. Debtor hereby
agrees that Secured Party shall not be liable for, nor shall the
indebtedness evidenced by the Obligations be diminished by, Secured
Party's delay or failure to collect upon, foreclose, sell, take
possession of or otherwise obtain value for the Collateral. Nothing
herein shall affect any obligation of Secured Party to the Holders
under the Indenture or under applicable law.
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(b) Except as may be required by the Indenture, and to the
fullest extent permitted by applicable law, Secured Party shall be
under no duty whatsoever to make or give any presentment, notice of
dishonor, protest, demand for performance, notice of non-performance,
notice of intent to accelerate, notice of acceleration, or other
notice or demand in connection with any Collateral or the Obligations,
or to take any steps reasonably necessary to preserve any rights
against any Obligor, Account Debtor or other Person. Debtor waives any
right of marshaling in respect of any and all Collateral, and waives
any right to require Secured Party to proceed against any Obligor,
Account Debtor or other Person, exhaust any Collateral or enforce any
other remedy which Secured Party now has or may hereafter have against
any Obligor or other Person.
Section 5.05 Modification of Obligations; Other Security. Except as
specifically provided for in the Indenture, Debtor waives (i) any and all notice
of acceptance, creation, modification, rearrangement, renewal or extension for
any period of any instrument executed by any Obligor in connection with the
Obligations and (ii) any defense of any Obligor by reason of disability, lack of
authorization, cessation of the liability of any Obligor or for any other
reason. Debtor authorizes Secured Party, without notice or demand and without
any reservation of rights against Debtor and without affecting Debtor's
liability hereunder or on the Obligations, from time to time to (x) after the
occurrence and during the continuance of an Event of Default and after the
acceleration of the Notes, apply the Collateral in the manner permitted by this
Agreement or Indenture and (y) after the occurrence and during the continuance
of an Event of Default and after the acceleration of the Notes, renew, extend
for any period, accelerate, amend or modify, supplement, enforce, compromise,
settle, waive or release the obligations of any Obligor or any instrument or
agreement of such other Person with respect to any or all of the Obligations or
Collateral.
ARTICLE 6
EVENTS OF DEFAULT
Section 6.01 Events of Default. It shall constitute an Event of
Default under this Agreement if an Event of Default occurs and is continuing
under the Indenture.
Section 6.02 Remedies. Upon the occurrence and during the continuance
of an Event of Default, Secured Party may take any or all of the following
actions without notice (except where expressly required below or in the
Indenture) or demand to Debtor:
(a) Take possession of the Collateral, or at Secured Party's
request Debtor shall, at Debtor's cost, assemble the Collateral and
make it available at a location to be specified by Secured Party which
is reasonably convenient to Debtor and Secured Party. In any event,
Debtor shall bear the risk of accidental loss or damage to or
diminution in value of the Collateral, and Secured Party shall have no
liability whatsoever for failure to obtain or maintain insurance, nor
to determine whether any insurance ever in force is adequate as to
amount or as to risk insured.
(b) Sell, in one or more sales and in one or more parcels, or
otherwise dispose of any or all of the Collateral in its then
condition or in any other commercially
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reasonable manner as Secured Party may elect, in a public or private
transaction, at any location as deemed reasonable by Secured Party
(including, without limitation, Debtor's premises), for cash at such
price as Secured Party may deem fair, and (unless prohibited by the
Code, as adopted in any applicable jurisdiction) Secured Party may be
the purchaser of any or all Collateral so sold and may apply upon the
purchase price therefor any Obligations secured hereby. Any such sale
or transfer by Secured Party either to itself or to any other Person
shall be absolutely free from any claim of right by Debtor, including
any equity or right of redemption, stay or appraisal which Debtor has
or may have under any rule of law, regulation or statute now existing
or hereafter adopted. Upon any such sale or transfer, Secured Party
shall have the right to deliver, assign and transfer to the purchaser
or transferee thereof the Collateral so sold or transferred. It shall
not be necessary that the Collateral or any part thereof be present at
the location of any such sale or transfer. Secured Party may, at its
discretion, provide for a public sale, and any such public sale shall
be held at such time or times within ordinary business hours and at
such place or places as Secured Party may fix in the notice of such
sale. Secured Party shall not be obligated to make any sale pursuant
to any such notice. Secured Party may, without notice or publication,
adjourn any public or private sale by announcement at any time and
place fixed for such sale, and such sale may be made at any time or
place to which the same may be so adjourned. In the event any sale or
transfer hereunder is not completed or is defective in the opinion of
Secured Party, such sale or transfer shall not exhaust the rights of
Secured Party hereunder, and Secured Party shall have the right to
cause one or more subsequent sales or transfers to be made hereunder.
If only part of the Collateral is sold or transferred such that the
Obligations remain outstanding (in whole or in part), Secured Party's
rights and remedies hereunder shall not be exhausted, waived or
modified, and Secured Party is specifically empowered to make one or
more successive sales or transfers until all the Collateral shall be
sold or transferred and all the Obligations are paid. In the event
that Secured Party elects not to sell the Collateral, Secured Party
retains its rights to lease or otherwise dispose of or utilize the
Collateral or any part or parts thereof in any manner authorized or
permitted by law or in equity, and to apply the proceeds of the same
towards payment of the Obligations. Each and every method of
disposition of the Collateral described in this subsection or in
subsection (e) shall constitute disposition in a commercially
reasonable manner.
(c) Take possession of all books and records of Debtor
pertaining to the Collateral. Secured Party shall have the authority
to enter upon any real property or improvements thereon in order to
obtain any such books or records, or any Collateral located thereon,
and remove the same therefrom without liability.
(d) Apply proceeds of the disposition of the Collateral to the
Obligations in any manner elected by Secured Party and permitted by
the Code or otherwise permitted by law or in equity and in accordance
with the provisions of the Indenture. Such application may include,
without limitation, the reasonable expenses of retaking, holding,
preparing for sale or other disposition, and the reasonable attorneys'
fees and legal expenses incurred by Secured Party.
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(e) Appoint any Person as agent to perform any act or acts
necessary or incident to any sale or transfer by Secured Party of the
Collateral. Additionally, any sale or transfer hereunder may be
conducted by an auctioneer or any officer or agent of Secured Party.
(f) Execute, assign and endorse negotiable and other
instruments for the payment of money, documents of title or other
evidences of payment, shipment or storage for any form of Collateral
on behalf of and in the name of Debtor..
(g) Notify or require Debtor to notify Account Debtors that
the Non-Tangible Collateral been assigned to Secured Party and direct
such Account Debtors to make payments on the Non-Tangible Collateral
directly to Secured Party. To the extent Secured Party does not so
elect, Debtor shall continue to collect the Non-Tangible Collateral.
Secured Party or its designee shall also have the right, in its own
name or in the name of Debtor, to do any of the following: (i) to
demand, collect, receipt for, settle, compromise any amounts due, give
acquittances for, prosecute or defend any action which may be in
relation to any monies due, or to become due by virtue of, the Non-
Tangible Collateral; (ii) to sell, transfer or assign or otherwise
deal in the Non-Tangible Collateral or the proceeds thereof or the
related goods, as fully and effectively as if Secured Party were the
absolute owner thereof; (iii) to extend the time of payment of any of
the Non-Tangible Collateral, to grant waivers and make any allowance
or other adjustment with reference thereto; (iv) to take control of
cash and other proceeds of any Collateral; (v) to send a request for
verification of the Non-Tangible Collateral to any Account Debtor; and
(vi) to do all other acts and things necessary to carry out the intent
of this Agreement.
(h) The Secured Party, instead of exercising the power of sale
herein conferred upon it, may proceed by a suit or suits to foreclose
the security interest and sell the Collateral or any portion thereof
under a judgment of a court or courts of competent jurisdiction. For
purposes of Louisiana executory process procedures, Debtor
acknowledges the Obligations and does hereby confess judgment in favor
of the Secured Party for the full amount of the Obligations. Debtor
agrees that during the continuance of an Event of Default the Secured
Party may cause the Collateral to be seized and sold under executory
or ordinary process, at the Secured Party's sole option, without
appraisement, appraisement hereby being expressly waived, as an
entirety or in parcels as the Secured Party may determine, to the
highest bidder for cash, and otherwise exercise the rights, powers and
remedies afforded herein and under applicable Louisiana law. Any and
all declarations of fact made by authentic act before a Notary Public
in the presence of two witnesses by a person declaring that such facts
lie within his knowledge shall constitute authentic evidence of such
facts for the purpose of executory process. Debtor hereby waives in
favor of the Secured Party: (i) the benefit of appraisement as
provided in Louisiana Code of Civil Procedure Articles 2332, 2336,
2723 and 2724, and all other laws conferring the same; (ii) the demand
and three (3) days delay accorded by Louisiana Code of Civil Procedure
Articles 2639 and 2721; (iii) the notice of seizure required by
Louisiana Code of Civil Procedure Articles 2293 and 2721; (iv) the
three (3) days delay provided by Louisiana Code of Civil Procedure
Articles 2331 and 2722; and (v) the
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benefit of the other provisions of Louisiana Code of Civil Procedure
Articles 2331, 2722 and 2723 not specifically mentioned above. In the
event the Collateral or any part thereof is seized as an incident to
an action for the recognition or enforcement of this Agreement by
executory process, ordinary process, sequestration, writ of fieri
facias, or otherwise, Debtor and Secured Party agree that the court
issuing such order shall, if petitioned for by Secured Party, direct
the applicable sheriff to appoint as a keeper of the Collateral the
Secured Party or any agent designated by the Secured Party at the time
such seizure is effected. This designation is pursuant to Louisiana
Revised Statutes 9:5136-9:5140.2 and the Secured Party shall be
entitled to all of the rights and benefits afforded thereunder, as the
same may be amended. It is hereby agreed that the keeper shall be
entitled to receive as compensation, in excess of its costs and
expenses incurred in the administration or preservation of the
Collateral, an amount equal to $250.00 per day, which shall be payable
monthly on the first day of each month. The designation of keeper made
herein shall not be deemed to require the Secured Party to provoke the
appointment of such a keeper.
(i) Exercise all other rights and remedies permitted by law or
in equity.
Section 6.03 Attorney-in-Fact. Debtor hereby irrevocably appoints
Secured Party as Debtor's attorney-in-fact, with full authority in the place and
stead of Debtor and in the name of Debtor or otherwise, from time to time in
Secured Party's discretion upon the occurrence and during the continuance of an
Event of Default, but at Debtor's cost and expense and without notice to Debtor:
(a) To obtain, adjust, sell and cancel any insurance with
respect to the Collateral, and endorse any draft drawn by insurers of
the Collateral. Secured Party may apply any proceeds or unearned
premiums of such insurance to the Obligations (whether or not due).
(b) To take any action and to execute any assignment,
certificate, financing statement, notification, document or instrument
which Secured Party may reasonably deem necessary or advisable to
accomplish the purposes of this Agreement, including, without
limitation, to receive, endorse and collect all instruments made
payable to Debtor representing any payment or other distribution in
respect of the Collateral or any part thereof and to give full
discharge for the same.
Section 6.04 Account Debtors. Any payment or settlement of Non-
Tangible Collateral made by an Account Debtor will be, to the extent of such
payment or to the extent provided under such settlement, a release, discharge
and acquittance of the Account Debtor with respect to such Non-Tangible
Collateral, and Debtor shall take any action as may reasonably be required by
Secured Party in connection therewith. No Account Debtor on any Non-Tangible
Collateral will ever be bound to make inquiry as to the termination of this
Agreement or the rights of Secured Party to act hereunder, but shall be fully
protected by Debtor in making payment directly to Secured Party.
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Section 6.05 Liability for Deficiency. If any sale or other
disposition of Collateral by Secured Party or any other action of Secured Party
hereunder results in reduction of the Obligations, such action will not release
Debtor from its liability to Secured Party for any unpaid Obligations, including
costs, charges and expenses incurred in the liquidation of Collateral, together
with interest thereon at the rate then applicable under the Indenture, and the
same shall be immediately due and payable to Secured Party at Secured Party's
address set forth in the Indenture.
Section 6.06 Reasonable Notice. If any applicable provision of any law
requires Secured Party to give reasonable notice of any sale or disposition or
other action, Debtor hereby agrees that ten days' prior written notice shall
constitute reasonable notice thereof. Such notice, in the case of public sale,
shall state the time and place fixed for such sale and in the case of private
sale, the time after which such sale is to be made.
Section 6.07 Non-judicial Enforcement. Secured Party may enforce its
rights hereunder without prior judicial process or judicial hearing, and to the
extent permitted by law Debtor expressly waives any and all legal rights which
might otherwise require Secured Party to enforce its rights by judicial process.
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ARTICLE 7
MISCELLANEOUS PROVISIONS
Section 7.01 Notices. Any notice required or permitted to be given
under or in connection with this Agreement shall be given in accordance with the
notice provisions of the Indenture.
Section 7.02 Amendments and Waivers. Secured Party's acceptance of
partial or delinquent payments or any forbearance, failure or delay by Secured
Party in exercising any right, power or remedy hereunder shall not be deemed a
waiver of any obligation of Debtor or any Obligor, or of any right, power or
remedy of Secured Party, and no partial exercise of any right, power or remedy
shall preclude any other or further exercise thereof Secured Party may remedy
any Event of Default hereunder or in connection with the Obligations without
waiving the Event of Default so remedied. Debtor hereby agrees that if Secured
Party agrees to a waiver of any provision hereunder, or an exchange of or
release of the Collateral or the addition or release of any Obligor or other
Person, any such action shall not constitute a waiver of any of Secured Party's
other rights or of Debtor's obligations hereunder. This Agreement may be amended
only by an instrument in writing executed jointly by Debtor and Secured Party
and may be supplemented only by documents delivered or to be delivered in
accordance with the express terms hereof.
Section 7.03 Copy as Financing Statement. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral is sufficient as a financing statement, and the same may be filed
with any appropriate filing authority for the purpose of perfecting Secured
Party's security interest in the Collateral.
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Section 7.04 Possession of Collateral. Secured Party shall be deemed
to have possession of any Collateral in transit to it or set apart for it (or,
in either case, any of its agents, affiliates or correspondents).
Section 7.05 Redelivery of Collateral. If any sale or transfer of
Collateral by Secured Party results in full satisfaction of the Obligations, and
after such sale or transfer and discharge there remains a surplus of proceeds,
Secured Party will deliver to Debtor such excess proceeds in a commercially
reasonable time; provided, however, that Secured Party shall not be liable for
any interest, cost or expense in connection with any reasonable delay in
delivering such proceeds to Debtor.
Section 7.06 Governing Law; Jurisdiction. This Agreement and the
security interest granted hereby shall be construed in accordance with and
governed by the laws of the State of New York (except to the extent that the
laws of any other jurisdiction govern the perfection and priority of the
security interests granted hereby).
Section 7.07 Gaming Laws and Regulations. (a) Each of the provisions
of this Agreement is subject to, and shall be enforced in compliance with, any
requirements imposed by any applicable Gaming Authority.
(b) 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 Louisiana Riverboat Economic Development and Gaming Control
Act, La. R.S. 27:41, et seq., and the Louisiana Gaming Control Law, La. R.S.
27:1, and the regulations promulgated pursuant to each such law, all as amended
from time to time. The Gaming License held by Debtor is not part of the
Collateral of this Agreement and, 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 Agreement
under the defaults and remedies provisions of this Agreement. 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 Gaming Authority approval.
Section 7.08 Continuing Security Agreement
(a) Except as may be expressly applicable pursuant to Section
9-505 of the Code, no action taken or omission to act by Secured Party
hereunder, including, without limitation, any action taken or inaction
pursuant to Section 6.02 hereof, shall be deemed to constitute a
retention of the Collateral in satisfaction of the Obligations or
otherwise to be in full satisfaction of the Obligations, and the
Obligations shall remain in full force and effect, until Secured Party
shall have applied payments (including, without limitation,
collections from Collateral) towards the Obligations in the full
amount then outstanding or until such subsequent time as is
hereinafter provided in subsection (b) below.
(b) To the extent that any payments on the Obligations or
proceeds of the Collateral are subsequently invalidated, declared to
be fraudulent or preferential set aside
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or required to be repaid to a trustee, debtor in possession, receiver
or other Person under any bankruptcy law, common law or equitable
cause, then to such extent the Obligations so satisfied shall be
revived and continue as if such payment or proceeds had not been
received by Secured Party, and Secured Party's security interests,
rights, powers and remedies hereunder shall continue in full force and
effect. In such event, this Agreement shall be automatically
reinstated if it shall theretofore have been terminated pursuant to
Section 7.09.
Section 7.09 Termination. The grant of a security interest hereunder
and all of Secured Party's rights, powers and remedies in connection therewith
shall unless otherwise provided in the Indenture or this Agreement, remain in
full force and effect until payment in full of (A) the Notes under the terms of
the Indenture, (B) all obligations then due and owing under the Indenture, the
Notes and the Collateral Documents and (C) all other Obligations; provided,
however, that after receipt from the Debtor by the Trustee of a request for a
release of any Collateral permitted under the Indenture upon the sale, transfer,
assignment, exchange or other disposition of such Collateral not prohibited by
the Indenture (and upon receipt by the Trustee of all proceeds of such sale,
transfer, assignment, exchange or other disposition to the extent required to be
remitted to the Trustee under the Indenture or otherwise), such Collateral shall
be released from the lien and security interest created hereunder in accordance
with the provisions of the Indenture and shall no longer constitute Collateral.
Upon the payment in full of (A) the Notes under the terms of the Indenture (B)
all obligations then due and owing under the Indenture and the Collateral
Documents, and (C) all other Obligations, the Debtor shall be entitled to the
return, upon its request and at its expense, of such of the Collateral pledged
by it as shall not have been sold or otherwise applied pursuant to the terms
hereof. Notwithstanding the foregoing, the reimbursement and indemnification
provisions of Section 4.07 and the provisions of subsection 7.08(b) shall
survive the termination of this Agreement.
Upon any termination of this Agreement or release of any Collateral as
permitted by the Indenture the Trustee will, at the expense of the Debtor,
execute and deliver to the Debtor such documents and take such other actions as
the Debtor shall reasonably request to evidence the termination of this
Agreement or the release of such Collateral, as the case may be. Any such
action taken by the Trustee shall be without warranty by or recourse to the
Trustee, except as to the absence of any prior assignments by the Trustee of its
interests in the Collateral, and shall be at the expense of the Debtor. The
Trustee may conclusively rely on any certificate delivered to it by the Debtor
stating that the execution of such documents and release of the Collateral is in
accordance with and permitted by the terms of the Indenture and this Agreement.
Section 7.10 Counterparts; Effectiveness. This Agreement may be
executed in two or more counterparts. Each counterpart is deemed an original,
but all such counterparts taken together constitute one and the same instrument.
This Agreement becomes effective upon the execution hereof by Debtor and
delivery of the same to Secured Party, and it is not necessary for Secured Party
to execute any acceptance hereof or otherwise signify or express its acceptance
hereof.
Section 7.11 Indenture. This Agreement is subject to the terms,
conditions and provisions of the Indenture. To the extent a term or provision of
this Agreement conflicts with
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the Indenture, the Indenture shall control with respect to the subject matter of
such term or provision.
Section 7.12 Rights of Noteholders. No Holder of a Note shall have any
independent rights hereunder other than those rights granted to individual
Holders of Notes pursuant to Section 6.07 of the Indenture; provided that
nothing in this Section 7.12 shall limit any rights granted to the Trustee under
the Notes, the Indenture or the Collateral Documents.
Section 7.13 No Personal Liability of Directors, Officers, Employees
and Stockholders. No past, present or future director, officer, employee,
incorporator or stockholder of the Debtor as such or any successor Person, as
such, shall have any liability for any obligations of the Debtor under the
Notes, the Collateral Documents, this Agreement or for any claim based on, in
respect of, or by reason of, such obligations or their creation.
Section 7.14 Trustee. State Street Bank and Trust Company is acting
hereunder solely in its capacity as Trustee under the Indenture, and all of the
rights of Trustee set forth in the Indenture shall apply to Trustee's actions
hereunder. To the extent this agreement contemplates payments by the Secured
Party, the Trustee shall have no liability therefor, such liability continuing
to be the liability of Debtor or realized through the value of any collateral
for the Obligations.
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
IN WITNESS WHEREOF, Debtor has caused this Security Agreement to be
executed and delivered as of the date first set forth above.
DEBTOR: HOLLYWOOD CASINO SHREVEPORT, a
Louisiana general partnership
By: HCS I, Inc., a Louisiana
corporation, its managing general
partner
By: /s/ PAUL C. YATES
-----------------------------
Name: Paul C. Yates
Title: Executive Vice President and
Chief Financial Officer
[Signature Page to Security Agreement (Partnership)]
<PAGE>
EXHIBIT A
PERFECTION
(a) Legal Name of Debtor:
Hollywood Casino Shreveport, a Louisiana general partnership
(b) Other Names:
QNOV
Queen of New Orleans at the Hilton Joint Venture
The Queen of New Orleans at the Hilton Joint Venture
(c) (i) Chief Executive Office and Principal Place of Business of Debtor:
Chief Executive Office: Dallas County, Texas
Principal Place of Business: Caddo Parish, Louisiana
Bossier Parish, Louisiana
(ii) Other Premises at which Collateral is Stored or Located:
None
(iii) Locations of Records Concerning Collateral:
Dallas County, Texas
Caddo Parish, Louisiana
Bossier Parish, Louisiana
(d) Federal Taxpayer Identification Number:
72-1225563
A-1
<PAGE>
EXHIBIT B
INTELLECTUAL PROPERTY
None
B-1
<PAGE>
EXHIBIT C
CONTRACTS
1. License Agreement dated as of August 10, 1999 by and between Company and
Hollywood Casino Corporation, a Delaware corporation.
2. Management Services Agreement dated as of September 27, 1998 by and between
Company and HWCC-Shreveport, Inc., a Louisiana corporation.
3. Completion Capital Agreement dated as of August 10, 1999 by and among
Company, Hollywood Casino Corporation, a Delaware corporation, HWCC-
Louisiana, Inc., a Louisiana corporation, and HCS-I, Inc., a Louisiana
corporation and HCS II, Inc., a Louisiana corporation.
4. Standard Form of Agreement Between Owner and Architect with Descriptions of
Designated Services and Terms and Conditions dated as of October 19, 1998 by
and between QNOV, a Louisiana partnership and Broadmoor Design Group.
5. Abbreviated Standard Form of Agreement Between Owner and Architect dated as
of October 19, 1998 by and between QNOV, a Louisiana partnership and
International Parking Design, Inc.
6. Standard Form of Agreement Between Owner and Architect with Descriptions of
Designated Services and Terms and Conditions dated as of October 19, 1998 by
and between QNOV, a Louisiana partnership and MORRIS & BROWN ARCHITECTS,
LTD.
7. Standard Form of Agreement Between Owner and Architect dated as of October
19, 1998 by and between QNOV, a Louisiana partnership and Brown Cunningham
Gannuch.
8. Design Agreement dated as of October 19, 1998 by and between QNOV, a
Louisiana partnership and Wilson & Associates, Inc., a Texas corporation.
9. QNOV 280' x 114' Paddlewheel Casino Vessel Engineering Proposal of Rodney
Lay & Associates Naval Architects dated October 19, 1998 with Rodney E. Lay
& Associates, Inc.
10. Vessel Construction Agreement dated July 16, 1999 with Leevac Shipyards,
Inc.
11. Standard Form of Agreement between Owner and Contractor Where the Basis for
Payment is the Cost of the Work Plus a Fee with a Negotiated Guaranteed
Maximum Price, dated as of July 30, 1999 between Hollywood Casino Shreveport
and Broadmoor Anderson.
C-1
<PAGE>
EXHIBIT 4.5
PARTNERSHIP INTEREST PLEDGE AGREEMENT
MADE BY
HCS I, INC.
in favor of
STATE STREET BANK AND TRUST COMPANY,
AS TRUSTEE AND SECURED PARTY
August 10, 1999
<PAGE>
PARTNERSHIP INTEREST PLEDGE AGREEMENT
THIS PARTNERSHIP INTEREST PLEDGE AGREEMENT (this "Agreement") is made as of
August 10, 1999 by HCS I, INC., Louisiana corporation, with principal offices at
Two Galleria Tower, Suite 2200, 13455 Noel Road, LB 48, Dallas, Texas 75240
("Pledgor"), in favor of STATE STREET BANK AND TRUST COMPANY, Massachusetts
chartered trust company, with offices at Two Avenue De Lafayette, Boston,
Massachusetts 02111-1724, as Trustee acting on behalf of the Holders of the
Notes under (and as defined in) the Indenture described below ("Secured Party").
RECITALS
A. Hollywood Casino Shreveport, a Louisiana general partnership ("Hollywood
Casino Shreveport"), Shreveport Capital Corporation, a Louisiana corporation
("Shreveport Capital", and together with Hollywood Casino Shreveport, the
"Issuers"), HWCC-Louisiana, Inc., a Louisiana corporation, HCS II, Inc., a
Louisiana corporation, and Pledgor, each as a Guarantor, and Secured Party, as
Trustee, have entered into an Indenture dated as of August 10, 1999 (as the same
may be amended, supplemented, restated or otherwise modified from time to time,
the "Indenture"), pursuant to which the Issuers will issue up to $150,000,000 of
their 13% First Mortgage Notes due 2006 with Contingent Interest (as the same
may be amended, supplemented, restated, exchanged, replaced or otherwise
modified from time to time, collectively, the "Notes").
B. Pledgor is the managing general partner of Hollywood Casino Shreveport
and holds a general partnership interest in Hollywood Casino Shreveport.
C. It is a condition to the issuance of the Notes that Pledgor execute and
deliver this Agreement, and Pledgor has agreed to enter into this Agreement.
D. Therefore, in order to comply with the terms and conditions of the
Indenture and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Pledgor hereby agrees with Secured
Party as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Terms Defined Above or in the Indenture. As used in this
Agreement, the terms defined herein shall have the meanings respectively
assigned to them. Other capitalized terms which are defined in the Indenture but
which are not defined herein shall have the same meanings as defined in the
Indenture.
Section 1.02 Certain Definitions. As used in this Agreement, the following
terms shall have the following meanings, unless the context otherwise requires:
"Code" shall mean the Uniform Commercial Code as presently in effect
in the State of New York. Unless otherwise indicated by the context
herein, all uncapitalized
<PAGE>
terms which are defined in the Code shall have their respective meanings as
used in Articles 8 and 9 of the Code; provided that, if by reason of
mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interests in any Collateral is governed by
the Uniform Commercial Code as in effect in any jurisdiction other than the
State of New York, "Code" means the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to
such perfection or the effect of perfection or non-perfection.
"Collateral" shall mean the following types or items of property,
whether now owned or hereafter acquired:
(a) Pledgor's rights in any and all specific property of Hollywood
Casino Shreveport;
(b) Pledgor's interests in Hollywood Casino Shreveport, including all
general partnership interests, all of Pledgor's right, title and interest
in, to and under the Third Amended and Restated Joint Venture Agreement of
Hollywood Casino Shreveport dated as of July 21, 1999 (as heretofore
amended and as further amended, supplemented or otherwise modified from
time to time) (the "Partnership Agreement") and Pledgor's "JV Interests"
(as defined in the Partnership Agreement), and all options or other rights
to acquire such interests, now owned or hereafter acquired by Pledgor in
Hollywood Casino Shreveport, and including all of the rights of Pledgor in
and to the distributions, capital, profits and surplus of Hollywood Casino
Shreveport; and
(c) All other property hereinafter owned by, delivered to, or in the
possession or in the custody of, Pledgor, in substitution for or in
addition to the foregoing and all proceeds of the foregoing (excluding
distributions permitted under Section 4.02 hereof).
"Event of Default" shall mean any event specified in Section 6.01
hereof.
"Obligations" shall mean: (i) the payment when due of indebtedness
evidenced by the Notes in the aggregate principal sum not to exceed at any
time outstanding of $150,000,000, interest as set forth in the Indenture
and the Notes, and premiums, penalties, and late charges thereon; (ii) all
other indebtedness and other sums (including, without limitation, all
expenses, attorneys' fees, other fees, indemnifications, reimbursements,
damages, other monetary liabilities, and other charges) and obligations
that may or shall become due hereunder or under the Notes, the Guarantees,
the Indenture, or the other Collateral Documents, and (iii) any and all
renewals, modifications, amendments, extensions for any period, supplements
or restatements of any of the foregoing.
"Obligor" shall mean any Person, other than Pledgor, liable (whether
directly or indirectly, primarily or secondarily) for the payment or
performance of any of the Obligations whether as maker, co-maker, endorser,
guarantor, accommodation party, general partner or otherwise.
2
<PAGE>
ARTICLE II
SECURITY INTEREST
Section 2.01 Pledge. Pledgor hereby assigns, endorses, delivers, pledges,
and grants to Secured Party a continuing security interest in and Lien upon, the
Collateral to secure the prompt and complete payment and performance of the
Obligations and the performance by Pledgor of this Agreement. This security
interest is granted as security only and shall not subject Secured Party to, or
transfer or in any way affect or modify, any obligation or liability of the
Pledgor or any Obligor with respect to any of the Collateral, the Obligations or
any transaction in connection therewith.
Section 2.02 Ratable Benefit of Holders of the Notes. Pledgor and Secured
Party agree that the security interest and lien granted hereby are for the
benefit of the Trustee for the equal and ratable benefit of the Holders of the
Notes.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
In order to induce Secured Party to accept this Agreement, Pledgor
represents and warrants to Secured Party (which representations and warranties
will survive the creation and payment of the Obligations) that:
Section 3.01 Ownership of Collateral; Location of Pledgor; Absence of
Encumbrances and Restrictions. Pledgor is the managing general partner of
Hollywood Casino Shreveport and owns the general partnership interest in
Hollywood Casino Shreveport described in the Partnership Agreement as in effect
on the date hereof. After giving effect to the use of proceeds of the Notes,
Pledgor is, and in the case of Collateral acquired after the date hereof, will
be, the legal and sole holder of record and the sole beneficial owner of the
Collateral, free and clear of all Liens except for Permitted Liens, and Pledgor
has full right, power and authority to pledge, assign and grant a security
interest in the Collateral to Secured Party. Pledgor's tax identification
number, chief executive office, principal place of business and the locations of
Pledgor's records concerning the Collateral are set forth on Exhibit A attached
hereto. The Partnership Agreement contains no restrictions preventing the
pledge, assignment and grant of a security interest in the Collateral to Secured
Party as contemplated herein. The exercise of remedies hereunder by the Secured
Party does not violate the Partnership Agreement, nor will such exercise give
additional rights to or allow exercise of rights by any other party to the
Partnership Agreement. No Collateral is evidenced by any certificate or
instrument. All of the partnership interests included in the Collateral have
been duly and validly issued in compliance with all applicable laws and
regulations. Pledgor has not performed any acts that might prevent Secured Party
from enforcing any of the terms of this Agreement or that would limit Secured
Party in any such enforcement.
Section 3.02 No Required Consent. Except for such authorizations, consents
and other actions as shall have been obtained and shall be in effect, no
authorization, consent,
3
<PAGE>
approval or other action by, and no notice to or registration, recordation or
filing with, any Governmental Authority or third party is required for (i) the
due execution, delivery and performance by Pledgor of this Agreement, (ii) the
grant by Pledgor of the security interest granted by this Agreement, (iii) the
perfection of such security interest (except for the filing of any appropriate
financing statements) or (iv) except as may be required by applicable gaming
laws or except as may be required in connection with the disposition of
Collateral by federal and state securities laws or antitrust laws and the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, the exercise by Secured Party
of its rights and remedies under this Agreement. Pledgor has not performed nor
will perform any acts which might prevent Secured Party from enforcing any of
the terms and conditions of this Agreement or which would limit Secured Party in
any such enforcement.
Section 3.03 First Priority Security Interest. The pledge, assignment and
delivery of the Collateral pursuant to this Agreement creates and grants a valid
first lien and perfected first priority security interest in the Collateral,
subject to Permitted Liens, enforceable against Pledgor and all third parties
and securing payment of the Obligations, except that (a) the enforceability of
any rights to indemnity and contribution hereunder may be limited by federal or
state securities laws or principles of public policy, (b) the enforceability
hereof may be subject to applicable bankruptcy, insolvency, fraudulent
conveyance or transfer, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and (c) the enforceability hereof may
be subject to general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity).
ARTICLE IV
COVENANTS AND AGREEMENTS
Pledgor will at all times comply with the covenants and agreements
contained in this Article IV from the date hereof and for so long as any part of
the Obligations are outstanding.
Section 4.01 Sale, Disposition or Encumbrance of Collateral. Except as may
be permitted by the provisions hereof or of the Indenture, Pledgor will not in
any way encumber any of its rights in or to any of the Collateral (or permit or
suffer any of the Collateral to be encumbered) or sell, pledge, assign, lend or
otherwise dispose of or transfer any of the Collateral to or in favor of any
Person other than Secured Party. The Pledgor is not, and will not become, a
party to or be otherwise bound by any agreement, other than this Agreement or as
permitted by the Indenture, which restricts in any manner the rights of any
present or future holder of any of the Collateral. Except as may be permitted by
the Indenture, Pledgor shall not consent to or approve the issuance to any
person of any additional partnership interests of any type in Hollywood Casino
Shreveport, or any other interest in the assets of, or rights to distributions
from, Hollywood Casino Shreveport.
Section 4.02 Distributions. So long as no Event of Default shall have
occurred and be continuing, Pledgor shall be entitled to receive and retain free
and clear of the Lien of this Agreement any and all distributions, interest and
principal payments, cash, instruments and other property and proceeds made upon
or with respect to the Collateral, which shall not constitute
4
<PAGE>
Collateral and may be used by Pledgor subject to the terms and conditions of the
Indenture; provided, however, that in the event Pledgor now is or hereafter
becomes entitled to distributions paid or payable in securities of Hollywood
Casino Shreveport, including all securities convertible into any Collateral, and
warrants, options or other rights to purchase stock or equity interests, in
Hollywood Casino Shreveport, receivable or otherwise distributed in respect of,
or in exchange for (including, without limitation, any certificate or share
purchased or exchanged in connection with a tender offer or merger agreement)
any Collateral, shall be, and shall be forthwith delivered to Secured Party to
hold as, Collateral and shall, if received by Pledgor, be received in trust for
the benefit of Secured Party, be segregated from the other Property or funds of
Pledgor, and be forthwith delivered to Secured Party as Collateral in the same
form as so received (with any necessary endorsement). Pledgor shall execute and
deliver all documents, and if required, certificates, necessary to perfect
Secured Party's Lien on such Collateral. Upon the occurrence and during the
continuance of an Event of Default, all rights of Pledgor to receive all
distributions, interest and principal payments, cash, instruments and other
property and proceeds shall cease, and such distributions, interests and
principal payments, cash, instruments and other property and proceeds shall
constitute Collateral and shall be paid or otherwise delivered to the Secured
Party.
Section 4.03 Records and Information. Pledgor shall keep accurate and
complete records of the Collateral (including proceeds, payments, distributions,
income and profits). Upon reasonable notice and without undue interference with
the Pledgor's business, Secured Party may at any time have access to, examine,
audit, make extracts from and inspect without hindrance or delay Pledgor's
records, files and the Collateral.
Section 4.04 Further Assurances. Upon the request of Secured Party, Pledgor
shall (at Pledgor's expense) execute and deliver all such assignments, financing
statements or other documents and give further assurances and do all other acts
and things as Secured Party may reasonably request to perfect Secured Party's
interest in the Collateral or which is necessary to protect, enforce or
otherwise effect Secured Party's rights and remedies hereunder.
Section 4.05 Certificates or Instruments; Change in Location of Pledgor.
Pledgor shall not cause or permit its general partnership interest in the
Collateral to be evidenced by any certificate or instrument. Pledgor will not
change the location of Pledgor's chief executive office, principal place of
business or the locations of Pledgor's records concerning the Collateral unless
Pledgor shall have given Secured Party at least thirty (30) days prior written
notice thereof and shall have delivered to Secured Party such new financing
statements or other documentation as may be reasonably necessary or required by
Secured Party to ensure the continued perfection and priority of its security
interest in the Collateral.
Section 4.06 Rights to Sell.
(a) If Secured Party shall determine to exercise its rights to sell all or
any of the Collateral pursuant to its rights hereunder, Pledgor agrees that,
upon request of the Secured Party, Pledgor will, at its own expense, use its
commercially reasonable best efforts to do or cause to be done all such other
acts and things as may be necessary to make such sale of the
5
<PAGE>
Collateral or any part thereof valid and binding and in compliance with
applicable law and the Partnership Agreement.
(b) Pledgor further acknowledges the impossibility of ascertaining the
amount of damages which would be suffered by Secured Party and the Holders of
the Notes by reason of the failure by Pledgor to perform any of the covenants
contained in this Section 4.06 and consequently agrees that if Pledgor shall
fail to perform any of such covenants, it shall be subject to a suit for
specific performance of such covenants.
Section 4.07 Voting and Other Consensual Rights. Except to the extent
otherwise provided in Section 6.06(d) hereof, Pledgor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Collateral or any part thereof for any purpose not inconsistent with the terms
of this Agreement or the Indenture or any other Collateral Document.
ARTICLE V
RIGHT, DUTIES, AND POWERS OF SECURED PARTY
Secured Party shall have the following rights, duties and powers:
Section 5.01 Discharge Encumbrances. After the occurrence and during the
continuance of an Event of Default, Secured Party may, at its option, discharge
any taxes, Liens, security interests or other encumbrances at any time levied or
placed on the Collateral. Pledgor agrees to reimburse Secured Party as provided
in the Indenture.
Section 5.02 Cumulative and Other Rights. The rights, powers and remedies
of Secured Party hereunder are in addition to all rights, powers and remedies
given by law or in equity. The exercise by Secured Party of any one or more of
the rights, powers and remedies herein shall not be construed as a waiver of any
other rights, powers and remedies, including, without limitation, any other
rights of set-off (provided that set-off rights may not be exercised prior to
the acceleration of the Notes).
Section 5.03 Disclaimer of Certain Duties.
(a) The powers conferred upon Secured Party by this Agreement are to
protect its interest in the Collateral and shall not impose any duty upon
Secured Party to exercise any such powers. Pledgor hereby agrees that Secured
Party shall not be liable for, nor shall the indebtedness evidenced by the
Obligations be diminished by, Secured Party's delay or failure to collect upon,
foreclose, sell, take possession of or otherwise obtain value for the
Collateral.
(b) Except as may be required by the provisions of the Indenture, and to
the fullest extent permitted by applicable law, Secured Party shall be under no
duty whatsoever to make or give any presentment, notice of dishonor, protest,
demand for performance, notice of non-performance, notice of intent to
accelerate, notice of acceleration, or other notice or demand in connection with
any Collateral or the Obligations, or to take any steps necessary to preserve
any rights against any Obligor or other Person. Pledgor waives any right of
marshaling in respect
6
<PAGE>
of any and all Collateral, and waives any right to require Secured Party to
proceed against any Obligor or other Person, exhaust any Collateral or enforce
any other remedy which Secured Party now has or may hereafter have against any
Obligor or other Person.
(c) The security interests are granted as security only and shall not
subject Secured Party to, or transfer or in any way affect or modify, any
obligation or liability of the Pledgor with respect to any of the Collateral or
any transaction in connection therewith. The Pledgor shall remain liable under
the Partnership Agreement to the extent set forth therein to perform its duties
and obligations thereunder to the same extent as if this Agreement had not been
executed. The exercise by Secured Party of any of its rights hereunder shall not
release the Pledgor from any of its duties or obligations under the Partnership
Agreement and Secured Party shall not have any obligation or liability under the
Partnership Agreement by reason of this Agreement or otherwise, nor shall
Secured Party be obligated to perform any of the obligations or duties of the
Pledgor thereunder, to make any payment, to make any inquiry as to the nature or
sufficiency of any payment received by the Pledgor or Secured Party or the
sufficiency of any performance by any party under the Partnership Agreement or
to take any action to collect or enforce any claim for payment assigned
hereunder. Secured Party shall not by reason of this Agreement or the exercise
of any remedies hereunder become responsible or liable in any manner or to any
extent for the obligations and liabilities of Hollywood Casino Shreveport,
whether now existing or hereafter incurred, except as a result of obligations
and liabilities of Hollywood Casino Shreveport first arising after Secured
Party's admission as a general partner in Hollywood Casino Shreveport. The
Pledgor specifically understands and agrees that Secured Party shall have no
responsibility for (i) collecting or protecting any income, earnings, or
proceeds with regard to the Collateral, (ii) preserving any of the Pledgor's
rights against parties to the Collateral or against third persons, (iii)
ascertaining any maturities, calls, conversion rights, exchanges, offers,
tenders or similar matters relating to the Collateral, or (iv) informing the
Pledgor about any of these matters, whether or not Secured Party actually has or
is deemed to have knowledge thereof. Beyond the exercise of reasonable care in
the custody thereof, Secured Party shall have no duty as to any Collateral in
its possession or control or in the possession or control of any agent or bailee
or any income thereon. The Pledgor hereby agrees to indemnify and hold harmless
Secured Party and its directors, officers, employees and agents against any and
all claims, actions, liabilities, costs and expenses of any kind or nature
whatsoever (including reasonable fees and disbursements of counsel) that may be
imposed on, incurred by, or asserted against any of them, in any way relating to
or arising out of this Agreement or any action taken or omitted by them
hereunder (including such obligations and liabilities of Hollywood Casino
Shreveport), except to the extent that they directly resulted from the gross
negligence or willful misconduct of such persons.
Section 5.04 Modification of Obligations; Other Security. Except as
specifically provided for in the Indenture, Pledgor waives (i) any and all
notice of acceptance, creation, modification, rearrangement, renewal or
extension for any period of any instrument executed by any Obligor in connection
with the Obligations, and (ii) to the fullest extent permitted by applicable
law, any defense of any Obligor by reason of disability, lack of authorization,
cessation of the liability of any Obligor or for any other reason. Pledgor
authorizes Secured Party, without notice or demand and without any reservation
of rights against Pledgor and
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without affecting Pledgor's liability hereunder or on the Obligations, from time
to time after the occurrence and during the continuance of an Event of Default,
to (x) apply the Collateral in the manner permitted by this Agreement, and (y)
after the occurrence and during the continuance of an Event of Default, renew,
extend for any period, accelerate, amend or modify, supplement, enforce,
compromise, settle, waive or release the obligations of any Obligor or any
instrument or agreement of such other Person with respect to any or all of the
Obligations or Collateral.
Section 5.05 Custody and Preservation of the Collateral. Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which comparable secured parties accord
comparable collateral, it being understood and agreed, however, that Secured
Party shall not have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Collateral, whether or not Secured Party has or is deemed to
have knowledge of such matters, or (ii) taking any necessary steps to preserve
rights against Persons or entities with respect to any Collateral.
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01 Events. It shall constitute an Event of Default under this
Agreement if an "Event of Default" occurs and is continuing under the Indenture.
Section 6.02 Remedies. Upon the occurrence and during the continuance of
any Event of Default, Secured Party may take any or all of the following actions
without notice (except where expressly required below or in the Indenture) or
demand to Pledgor:
(a) Sell, in one or more sales and in one or more parcels, or otherwise
dispose of any or all of the Collateral in any commercially reasonable manner as
Secured Party may elect, in a public or private transaction, at any location as
deemed reasonable by Secured Party for cash at such price as Secured Party may
deem fair; and (unless prohibited by the Code, as adopted in any applicable
jurisdiction) Secured Party may be the purchaser of any or all Collateral so
sold and may apply upon the purchase price therefor any Obligations secured
hereby. Any such sale or transfer by Secured Party either to itself or to any
other Person shall be absolutely free from any claim of right by Pledgor,
including any equity or right of redemption, stay or appraisal which Pledgor has
or may have under any rule of law, regulation or statute now existing or
hereafter adopted. Upon any such sale or transfer, Secured Party shall have the
right to deliver, assign and transfer to the purchaser or transferee thereof the
Collateral so sold or transferred. If Secured Party deems it advisable to do so,
it may restrict the bidders or purchasers of any such sale or transfer to
Persons or entities who will represent and agree that they are purchasing the
Collateral for their own account and not with the view to the distribution or
resale of any of the Collateral. Secured Party may, at its discretion, provide
for a public sale, and any such public sale shall be held at such time or times
within ordinary business hours and at such place or places as Secured Party may
fix in the notice of such sale. Secured Party shall not be obligated to make any
sale pursuant to any such notice. Secured Party may, without notice or
publication, adjourn any public or private sale by announcement at any time and
place fixed for such sale, and such
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sale may be made at any time or place to which the same may be so adjourned. In
the event any sale or transfer hereunder is not completed or is defective in the
opinion of Secured Party, such sale or transfer shall not exhaust the rights of
Secured Party hereunder, and Secured Party shall have the right to cause one or
more subsequent sales or transfers to be made hereunder. If only part of the
Collateral is sold or transferred such that the Obligations remain outstanding
(in whole or in part), Secured Party's rights and remedies hereunder shall not
be exhausted, waived or modified, and Secured Party is specifically empowered to
make one or more successive sales or transfers until all the Collateral shall be
sold or transferred and all the Obligations are paid. In the event that Secured
Party elects not to sell the Collateral, Secured Party retains its rights to
dispose of or utilize the Collateral or any part or parts thereof in any manner
authorized or permitted by law or in equity, and to apply the proceeds of the
same towards payment of the Obligations. Each and every method of disposition of
the Collateral described in this Section 6.02 shall constitute disposition in a
commercially reasonable manner.
(b) Apply proceeds of the disposition of the Collateral to the Obligations
as provided by the Indenture. Such application may include, without limitation,
the reasonable attorneys' fees and legal expenses incurred by Secured Party.
(c) Appoint any Person as agent to perform any act or acts necessary or
incident to any sale or transfer by Secured Party of the Collateral.
(d) Execute, assign and endorse negotiable and other instruments for the
payment of money, documents of title or other evidences of payment, shipment or
storage for any form of Collateral on behalf of and in the name of Pledgor.
(e) Secured Party, instead of exercising the power of sale herein conferred
upon it, may proceed by a suit or suits at law or in equity to foreclose the
security interests and sell the Collateral, or any portion thereof, under a
judgment or decree of a court or course of competent jurisdiction. For the
purposes of Louisiana executory process procedures, the Pledgor does hereby
acknowledge the Obligations and does hereby confess judgment in favor of Secured
Party for the full amount of the Obligations. The Pledgor does by these
presents, consent, agree and stipulate that during the continuance of an Event
of Default it shall be lawful for Secured Party, and the Pledgor does hereby
authorize Secured Party, to cause all and singular the Collateral to be seized
and sold under executory or ordinary process, at Secured Party's sole option,
without appraisement, appraisement being hereby expressly waived, in one lot as
an entirety or in separate portions or parcels as Secured Party may determine,
to the highest bidder, and otherwise exercise the rights, powers and remedies
afforded herein and under applicable Louisiana law. Any and all declarations of
fact made by authentic act before a Notary Public in the presence of two
witnesses by a person declaring that such facts lie within his knowledge shall
constitute authentic evidence of such facts for the purpose of executory
process. The Pledgor hereby waives in favor of Secured Party: (i) the benefit of
appraisement as provided in Louisiana Code of Civil Procedure Articles 2332,
2336, 2723 and 2724, and all other laws conferring the same; (ii) the demand and
three days delay accorded by Louisiana Code of Civil Procedure Articles 2639 and
2721; (iii) the notice of seizure required by Louisiana Code of Civil Procedure
Articles 2293 and 2721; (iv) the three days delay provided by Louisiana Code of
Civil Procedure
9
<PAGE>
Articles 2331 and 2722; and (v) the benefit of the other provisions of Louisiana
Code of Civil Procedure Articles 2331, 2722 and 2723, not specifically mentioned
above.
(f) Exercise all other rights and remedies permitted by law or in equity.
Section 6.03 Attorney-in-Fact. Pledgor hereby irrevocably appoints Secured
Party as Pledgor's attorney-in-fact, with full authority in the place and stead
of Pledgor and in the name of Pledgor or otherwise, from time to time in Secured
Party's reasonable discretion upon the occurrence and during the continuance of
an Event of Default, but at Pledgor's cost and expense, to take any action and
to execute any assignment, certificate, financing statement, stock power,
notification, document or instrument which Secured Party may reasonably deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation, to receive, endorse and collect all instruments made payable
to Pledgor representing any dividend, interest payment or other distribution in
respect of the Collateral or any part thereof and to give full discharge for the
same.
Section 6.04 Liability for Deficiency. If any sale or other disposition of
Collateral by Secured Party or any other action of Secured Party hereunder
results in reduction of the Obligations, such action will not release Pledgor
from its liability to Secured Party for any unpaid Obligations, including
reasonable costs, charges and expenses incurred in the liquidation of Collateral
and the same shall be immediately due and payable to Secured Party at Secured
Party's address set forth in the opening paragraph hereof.
Section 6.05 Reasonable Notice. If any applicable provision of any law
requires Secured Party to give reasonable notice of any sale or disposition or
other action, Pledgor hereby agrees that ten (10) days' prior written notice
shall constitute reasonable notice thereof. Such notice, in the case of public
sale, shall state the time and place fixed for such sale and, in the case of
private sale, the time after which such sale is to be made.
Section 6.06 Collateral. Upon the occurrence and during the continuance of
an Event of Default:
(a) All rights of Pledgor to receive the property which it would otherwise
be authorized to receive and retain pursuant to Section 4.02 hereof shall cease,
and all such rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right to receive and hold as Collateral such property,
but Secured Party shall have no duty to receive and hold such property and shall
not be responsible for any failure to do so or delay in so doing.
(b) All property which is received by Pledgor contrary to the provisions of
this Section 6.06 shall be received in trust for the benefit of Secured Party,
shall be segregated from other funds of Pledgor and shall be forthwith paid over
to Secured Party as Collateral in the same form as so received (with any
necessary endorsement).
(c) Secured Party may exercise any and all rights of conversion, exchange,
or any other rights, privileges or options pertaining to any of the Collateral
as if it were the absolute owner thereof, including without limitation, the
right to exchange at its discretion, any and all of
10
<PAGE>
the Collateral upon the merger, consolidation, reorganization, recapitalization
or other readjustment of Hollywood Casino Shreveport or upon the exercise by
Hollywood Casino Shreveport or Secured Party of any right, privilege or option
pertaining to any of the Collateral, and in connection therewith, to deposit and
deliver any and all of the Collateral with any committee, depository, transfer
agent, registrar or other designated agency upon such terms and conditions as it
may determine, all without liability except to account for property actually
received by it, but Secured Party shall have no duty to exercise any of the
aforesaid rights, privileges or options and shall not be responsible for any
failure to do so or delay in so doing.
(d) All rights of Pledgor to exercise the voting and other consensual
rights which Pledgor would otherwise be entitled to exercise pursuant to Section
4.07 hereof with respect to the Collateral shall cease, and all such rights
shall thereupon become vested in Secured Party who shall thereupon have the sole
right to exercise such voting and other consensual rights, but Secured Party
shall have no duty to exercise any such voting or other consensual rights and
shall not be responsible for any failure to do so or delay in so doing.
Notwithstanding the foregoing, Secured Party's ability to exercise voting rights
is subject to Secured Party foreclosing on or acquiring the Collateral hereunder
and being admitted as a partner of Hollywood Casino Shreveport in accordance
with the Partnership Agreement, and therefore, during the continuance of an
Event of Default, if Secured Party shall not be entitled under the Partnership
Agreement to exercise voting or other consensual rights regarding the
Collateral, then until Secured Party shall be so entitled in accordance with the
Partnership Agreement to exercise such voting or other consensual rights, the
Pledgor shall be permitted to exercise such voting or other consensual rights,
but only at the sole direction of Secured Party.
Section 6.07 Non-judicial Enforcement. Secured Party may enforce its rights
hereunder without prior judicial process or judicial hearing, and to the extent
permitted by law, Pledgor expressly waives any and all legal rights which might
otherwise require Secured Party to enforce its rights by judicial process.
Section 6.08 Private Sale of Collateral. Pledgor recognizes that Secured
Party may deem it impracticable to effect a public sale of all or any part of
the Collateral and that Secured Party may, therefore, determine to make one or
more private sales of any such Collateral to a restricted group of purchasers
who will be obligated to agree, among other things, to acquire such Collateral
for their own account, for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges that any such private sale may be at prices
and on terms less favorable to the seller than the prices and other terms which
might have been obtained at a public sale and, notwithstanding the foregoing,
agrees that such private sale shall be deemed to have been made in a
commercially reasonably manner and that Secured Party shall have no obligation
to delay sale of any such securities for the period of time necessary to permit
Pledgor to register such Collateral for public sale under the Securities Act of
1933, as amended (the "Securities Act"). Pledgor further acknowledges and agrees
that any offer to sell such Collateral which has been (i) publicly advertised on
a bona fide basis in a newspaper or other publication of general circulation in
the financial community of New York, New York (to the extent that such an offer
may be so advertised without prior registration under the Securities Act), or
(ii) made privately in the manner described above to not less than fifteen (15)
bona fide offerees shall be deemed to involve a "public sale" for the purposes
of Section 9-504(c) of the Code (or any
11
<PAGE>
successor or similar, applicable statutory provision) as then in effect in the
State of New York, notwithstanding that such sale may not constitute a "public
offering" under the Securities Act and that Secured Party may, in such event,
bid for the purchase of such Collateral.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Notices. Any notice required or permitted to be given under or
in connection with this Agreement shall be given in accordance with the notice
provisions of the Indenture.
Section 7.02 Amendments and Waivers. Secured Party's acceptance of partial
or delinquent payments or any forbearance, failure or delay by Secured Party in
exercising any right, power or remedy hereunder shall not be deemed a waiver of
any obligation of Pledgor or any Obligor, or of any right, power or remedy of
Secured Party, and no partial exercise of any right, power or remedy shall
preclude any other or further exercise thereof. Secured Party may remedy any
Event of Default hereunder or in connection with the Obligations without waiving
the Event of Default so remedied. Pledgor hereby agrees that if Secured Party
and the Holders of the Notes agree to a waiver of any provision hereunder, as
provided by the Indenture, or an exchange of or release of the Collateral, or
the addition or release of any Obligor or other Person, any such action shall
not constitute a waiver of any of Secured Party's other rights or of Pledgor's
obligations hereunder. This Agreement may be amended only by an instrument in
writing in the manner set forth in the Indenture and may be supplemented only by
documents delivered or to be delivered in accordance with the express terms
hereof.
Section 7.03 Redelivery of Collateral. If any sale or transfer of
Collateral by Secured Party results in full satisfaction of the Obligations, and
after such sale or transfer and discharge there remains a surplus of proceeds,
Secured Party will deliver to Pledgor or such other Person as may be required by
a Governmental Authority such excess proceeds in a commercially reasonable time;
provided, however, that neither Secured Party nor any Holders of the Notes shall
have any liability for any interest, cost or expense in connection with any
reasonable delay in delivering such proceeds to Pledgor.
Section 7.04 Gaming Laws and Regulations. 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 Louisiana Riverboat
Economic Development and Gaming Control Act, La. R.S. 27:41, et seq., and the
Louisiana Gaming Control Law, La. R.S. 27:1, and the regulations promulgated
pursuant to each such law, all as amended from time to time. The Gaming License
held by Hollywood Casino Shreveport is not part of the Collateral of this
Agreement and, 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 Agreement under the defaults
and remedies provisions of this Agreement. 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,
12
<PAGE>
the sale of Collateral may be denied by Gaming Authorities or delayed pending
Gaming Authority approval.
Section 7.05 Governing Law; Jurisdiction. This Agreement and the security
interest granted hereby shall be construed in accordance with and governed by
the laws of the State of New York (except to the extent that the laws of any
other jurisdiction govern the perfection and priority of the security interests
granted hereby).
Section 7.06 Continuing Security Agreement.
(a) Except as may be expressly applicable pursuant to Section 9-505 of the
Code, no action taken or omission to act by Secured Party hereunder, including,
without limitation, any exercise of voting or consensual rights pursuant to
Section 6.06(d) hereof or any other action taken or inaction pursuant to Section
6.02 hereof, shall be deemed to constitute a retention of the Collateral in
satisfaction of the Obligations or otherwise to be in full satisfaction of the
Obligations, and the Obligations shall remain in full force and effect until
Secured Party shall have applied payments (including, without limitation,
collections from Collateral) towards the Obligations in the full amount then
outstanding or until such subsequent time as is hereinafter provided in Section
7.06(b) hereof.
(b) To the extent that any payments on the Obligations or proceeds of the
Collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent the Obligations so satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Secured Party, and Secured Party's security interests, rights, powers and
remedies hereunder shall continue in full force and effect. In such event, this
Agreement shall be automatically reinstated if it shall theretofore have been
terminated pursuant to Section 7.07 or Section 7.08 hereof.
Section 7.07 Termination. The grant of a security interest hereunder and
all of Secured Party's rights, powers and remedies in connection therewith
shall, unless otherwise provided in the Indenture or in this Agreement, remain
in full force and effect until the payment in full of (a) the Notes under the
terms of the Indenture and (b) all Obligations then due and owing under the
Indenture, the Notes and the Collateral Documents; provided, however, that after
receipt from the Pledgor by the Secured Party of a request for a release of any
Collateral permitted under the Indenture upon the sale, transfer, assignment,
exchange or other disposition of the Collateral not prohibited by the Indenture
(and upon receipt by the Secured Party of all proceeds of such sale, transfer,
assignment, exchange or other disposition to the extent required to be remitted
to the Secured Party under the Indenture), such Collateral shall be released
from the Lien and security interest created hereunder in accordance with the
provisions of the Indenture and no longer constitute Collateral. Notwithstanding
the foregoing, the provisions of Section 7.06(b) hereof shall survive the
termination of this Agreement.
Section 7.08 Release. Subject to the provisions of Section 7.06(b) hereof,
this Agreement shall terminate upon payment in full of (a) the Notes under the
terms of the Indenture and (b) all Obligations then due and owing under the
Indenture, the Notes and the Collateral
13
<PAGE>
Documents. At such time, the Secured Party shall, at the request of the Pledgor,
reassign and redeliver to the Pledgor all of the Collateral hereunder that has
not been sold, disposed of, retained or applied by the Secured Party in
accordance with the terms of the Indenture or the Collateral Documents. Such
reassignment and redelivery 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 Collateral, and shall be at the expense of the
Pledgor. Notwithstanding the foregoing, the provisions of Section 7.06(b) hereof
shall survive the termination of this Agreement.
Section 7.09 Counterparts, Effectiveness. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which taken together shall constitute one and the same instrument. This
Agreement becomes effective upon the execution hereof by Pledgor and delivery of
the same to Secured Party, and it is not necessary for Secured Party to execute
any acceptance hereof or otherwise signify or express its acceptance hereof.
Section 7.10 Interpretation of Agreement. To the extent a term or provision
of this Agreement conflicts with the Indenture, the Indenture shall control with
respect to the subject matter of such term or provision.
Section 7.11 Rights of Holders. No Holder of Notes shall have any
independent rights hereunder other than those rights granted to individual
Holders of Notes pursuant to the Indenture; provided that, nothing in this
Section 7.11 shall limit any rights granted to the Secured Party under the
Notes, the Indenture or the Collateral Documents.
Section 7.12 No Personal Liability of Directors, Officer, Employees, and
Stockholders. Other than as set forth in the Indenture or the documents executed
and delivered pursuant thereto, no past, present or future director, officer,
employee, incorporator or stockholder of the Pledgor, as such or any successor
Person, as such, shall have any liability for any obligations of the Pledgor
under this Agreement or for any claim based on, in respect of, or by reason of,
such Obligations or their creation.
Section 7.13 Trustee. State Street Bank and Trust Company is acting
hereunder solely in its capacity as Trustee under the Indenture, and all of the
rights of Trustee set forth in the Indenture shall apply to Trustee's actions
hereunder. To the extent this Agreement contemplates payments by the Secured
Party, the Trustee shall have no liability therefor, such liability continuing
to be the liability of Pledgor or realized through the value of any collateral
for the obligations under the Indenture.
[SIGNATURE PAGE FOLLOWS]
14
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IN WITNESS WHEREOF, Pledgor has caused this Partnership Interest
Pledge Agreement to be executed as of the date first above written.
Pledgor: HCS I, INC., a Louisiana corporation
By: /s/ PAUL C. YATES
---------------------------------------
Name: Paul C. Yates
Title: Executive VP & CFO
[SIGNATURE PAGE TO PARTNERSHIP PLEDGE AGREEMENT (HCS I, INC.)]
S-1
<PAGE>
EXHIBIT A
PERFECTION
(a) Legal Name of Pledgor:
HCS I, Inc.
(b) Other Names:
None
(c) (i) Chief Executive Office and Principal Place of Business of Pledgor:
Chief Executive Office: Dallas County, Texas
Principal Place of Business: Dallas County, Texas
(ii) Other Premises at which Collateral is Stored or Located:
Caddo Parish, Louisiana
Bossier Parish, Louisiana
(iii) Locations of Records Concerning Collateral:
Dallas County, Texas
(d) Tax Identification Number:
75-2830161
A-1
<PAGE>
ACKNOWLEDGMENT OF HOLLYWOOD CASINO SHREVEPORT
The undersigned hereby:
(a) acknowledges receipt of a copy of the foregoing Partnership
Interest Pledge Agreement (the "Agreement") and that such receipt
constitutes notice to it of the Pledgor's authorization and direction to it
to comply with the terms and provisions hereof and of the Agreement and of
the Partnership Agreement (as defined in the Agreement), and accepts,
consents to, confirms and agrees to be bound by such terms and provisions;
(b) acknowledges that, pursuant to the Agreement, and as permitted by
the Partnership Agreement, the Pledgor has pledged and assigned to Secured
Party, and granted to Secured Party a continuing first-priority security
interest in, all right, title and interest of the Pledgor, whether now
existing or hereafter arising or acquired, in, to and under the Collateral,
and hereby consents to such assignment;
(c) agrees, upon notice from Secured Party, to make direct payment to
Secured Party of any amounts due or to become due to the Pledgor in respect
of the Collateral, and to do every act and thing necessary or appropriate
to carry out the terms and provisions hereof and of the Agreement and of
the Partnership Agreement, and agrees to make no payments or distributions
contrary to such terms and provisions; and
(d) waives notice of acceptance of the Agreement by Secured Party.
DELIVERED on August 10, 1999.
HOLLYWOOD CASINO SHREVEPORT, a Louisiana general
partnership
By: HCS I, Inc., a Louisiana corporation, its
managing general partner
By: /s/ PAUL C. YATES
-----------------------------------
Name: Paul C. Yates
Title: Executive Vice President and
Chief Financial Officer
<PAGE>
ACKNOWLEDGMENT OF GENERAL PARTNER
The undersigned, in its capacity as a General Partner of
Hollywood Casino Shreveport, hereby:
(a) acknowledges receipt of a copy of the foregoing Partnership
Interest Pledge Agreement (the "Agreement");
(b) consents to the pledge and assignment by the Pledgor to Secured
Party, and the grant by the Pledgor to Secured Party of a continuing first-
priority security interest in, all right, title and interest of the
Pledgor, whether now existing or hereafter arising or acquired, in, to and
under the Collateral, and the exercise by Secured Party of its rights and
remedies pursuant to the Agreement (including any sale or transfer of the
Collateral in accordance with the Agreement), and agrees to do every act
and thing necessary or appropriate to carry out the terms and provisions
hereof and of the Agreement, including without limitation, upon request of
Secured Party or any transferee of the Collateral, confirming and ratifying
the admission of such transferee as a partner in Hollywood Casino
Shreveport, and electing any transferee of the Collateral as the Managing
General Partner, under Hollywood Casino Shreveport's partnership agreement.
DELIVERED on August 10, 1999.
HCS II, INC., a Louisiana corporation
By: /s/ PAUL C. YATES
---------------------------------------
Name: Paul C. Yates
Title: Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT 4.6
CASH COLLATERAL
AND DISBURSEMENT AGREEMENT
among
HOLLYWOOD CASINO SHREVEPORT
AND
SHREVEPORT CAPITAL CORPORATION
AND
FIRST AMERICAN TITLE INSURANCE COMPANY,
AS DISBURSEMENT AGENT
AND
STATE STREET BANK AND TRUST COMPANY,
AS TRUSTEE
DATED AS OF AUGUST 10, 1999
<PAGE>
TABLE OF CONTENTS
-----------------
Section 1. Defined Terms......................................................2
Section 2. Duties of Disbursement Agent.......................................6
Section 2.1 Maintenance Of Accounts.....................................6
Section 2.2 Review Of Disbursement Requests.............................7
Section 2.3 Disbursement of Funds from Interest Reserve Account.........7
Section 2.4 Disbursement of Funds from Completion Reserve Account.......7
Section 2.5 Disbursement Of Funds To Trustee............................8
Section 2.6 Realized Savings............................................8
Section 3 Construction Disbursement Budget, Contracts, Segregated Account....8
Section 3.1 Allocation of Contingency; Amendments To
Construction Disbursement Budget............................8
Section 3.2 Amendments To Plans.........................................9
Section 3.3 Major Contracts And Permits................................10
Section 3.4 Segregated Account.........................................10
Section 4. Conditions Precedent to Disbursement.............................10
Section 4.1 General Conditions.........................................10
Section 4.2 Final Disbursement Following Operating Date................11
Section 4.3 Representations and Warranties.............................11
Section 5. Disbursement Agent's Compensation................................12
Section 6. Limitation of Disbursement Agent's Liability, Etc................12
Section 7. Indemnity........................................................12
Section 8. Termination......................................................13
Section 9. Substitution of Disbursement Agent...............................13
Section 10. Security Interest in Accounts and Segregated Account.............13
Section 11. Equity Contribution..............................................14
Section 12. Miscellaneous....................................................14
Section 12.1 Waiver....................................................14
Section 12.2 Invalidity................................................14
Section 12.3 No Authority..............................................14
Section 12.4 Assignment................................................14
Section 12.5 Benefit...................................................14
Section 12.6 Time......................................................14
i
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Section 12.7 Choice Of Law.............................................15
Section 12.8 Entire Agreement; Amendments..............................15
Section 12.9 Notices...................................................15
Section 12.10 Counterparts..............................................15
Section 12.11 Captions..................................................15
ii
<PAGE>
TABLE OF EXHIBITS
-----------------
Exhibits
- --------
A. Form of Architect's Certificate
B. Form of Construction Disbursement Budget
C. Form of Independent Construction Consultant's Certificate
D. Form of General Contractor's Certificate
E. Form of Construction Schedule
F. Form of Disbursement Request
G. Independent Construction Consultant's Certificate
H. Form of Control Agreement
I. Initial Deposits
J. Form of Interest Disbursement Request
iii
<PAGE>
CASH COLLATERAL AND
DISBURSEMENT AGREEMENT
THIS CASH COLLATERAL AND DISBURSEMENT AGREEMENT (the "Agreement") is
dated as of August 10, 1999, by and among SHREVEPORT CAPITAL CORPORATION, a
Louisiana corporation, HOLLYWOOD CASINO SHREVEPORT, a Louisiana general
partnership ("HCS", and together with Shreveport Capital Corporation, the
"Issuer"), FIRST AMERICAN TITLE INSURANCE COMPANY, as disbursement agent (the
"Disbursement Agent") and STATE STREET BANK AND TRUST COMPANY, as trustee (the
"Trustee") under the Indenture (as defined below).
RECITALS
A. The Issuer has entered into the Indenture dated as of August 10,
1999 (as the same may be amended, supplemented, restated or otherwise modified
from time to time, the "Indenture") between the Issuer and the Trustee pursuant
to which the Issuer will issue up to $150,000,000 of its 13% First Mortgage
Notes with Contingent Interest due 2006 (as the same may be amended,
supplemented, restated, exchanged, replaced or otherwise modified from time to
time, the "Notes"). The net proceeds of the issuance of the Notes are to be
deposited into the Accounts (as defined below) maintained by the Disbursement
Agent pursuant to this Agreement.
B. The Notes are secured by, among other collateral, the Project
Mortgages (as defined below), and the net proceeds of the sale of the Notes are
to be used to pay the Project Costs of the Project (each as defined below).
C. 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 from
the Accounts to HCS in order to permit HCS to pay Project Costs for the
construction and opening of the Project. Funds disbursed to HCS hereunder will
be deposited by the Disbursement Agent into the Segregated Account (as defined
below). Funds held in the Accounts or the Segregated Account will be owned
beneficially by HCS, subject to the terms and conditions of this Agreement and
subject also to the security interest granted in favor of the Trustee under the
Security Agreement (as defined below).
D. This Agreement is made for the benefit of, and intended to be
enforceable by the Trustee, for the benefit of the Holders of the Notes, as
lienholder under the Project Mortgages.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
<PAGE>
SECTION 1. DEFINED TERMS.
Terms not otherwise defined in this Agreement shall have the meanings
provided in the Indenture. In addition, the following terms shall have the
meanings set forth below.
"Accounts" means, collectively, the Construction Disbursement
Account, the Completion Reserve Account and the Interest Reserve Account.
"Architect" means one or more of Architect - Land Development,
Architect - Marine, Architect - Garage and Architect - Basin.
"Architect - Basin" means Brown Cunningham Gannuch and its successors
and assigns identified by written notice to the Disbursement Agent, Trustee and
Independent Construction Consultant.
"Architect - Garage" means International Parking Design, Inc. and its
successors and assigns identified by written notice to the Disbursement Agent,
Trustee and Independent Construction Consultant.
"Architect - Land Development" means Broadmoor Design Group and its
successors and assigns identified by written notice to the Disbursement Agent,
Trustee and Independent Construction Consultant.
"Architect - Marine" means Rodney E. Lay & Associates and its
successors and assigns identified by written notice to the Disbursement Agent,
Trustee and Independent Construction Consultant.
"Architect's Certificate" means a certificate of the appropriate
Architect substantially in the form of Exhibit "A" hereto.
"Available Funds" means the sum of (a) the Initial Equity
Contribution, to the extent not yet spent by HCS, (b) the unspent funds
contained in the Segregated Account, (c) the unspent funds contained in the
Accounts, (d) the Unutilized Equipment Financing, and (e) Estimated Future
Interest, to the extent not yet received on deposits in the Accounts and the
Segregated Accounts.
"Completion Reserve Account" means a special account maintained with
the Pledged Account Bank, Account No. 122884-010, in the name of HCS but under
the sole dominion and control of the Disbursement Agent as agent for the Trustee
hereunder and subject to the terms of the Security Agreement, this Agreement,
and a Control Agreement.
"Construction Disbursement Account" means a special account
maintained with the Pledged Account Bank, Account No. 122884-020, in the name of
HCS but under the sole dominion and control of the Disbursement Agent as agent
for the Trustee hereunder and subject to the terms of the Security Agreement,
this Agreement, and a Control Agreement.
2
<PAGE>
"Construction Disbursement Budget" means an itemized schedule in the
form of Exhibit "B" hereto setting forth on a line item basis all Project Costs
which HCS estimates will be incurred by it in connection with the Project
through the Operating Date, as such Construction Disbursement Budget may be
amended from time to time pursuant to Section 3.1 hereof.
"Construction Schedule" means a schedule in the form of Exhibit "E"
hereto describing the sequencing of the components of work to be undertaken in
connection with the Project, as may be amended from time to time, and
demonstrating that the Operating Date will occur on or before the Operating
Deadline.
"Consultant's Certificate" means a certificate of the Independent
Construction Consultant substantially in the form of Exhibit "C" hereto.
"Contracts" means the contracts pertaining to the construction of the
Project, including without limitation any contracts, subcontracts, licenses and
performance and payment bonds or guarantees.
"Control Agreement" means an agreement substantially in the form of
Exhibit "H" hereto and sufficient to perfect Trustee's security interest in an
Account or the Segregated Account.
"Disbursement" means a disbursement from any Account to the
Segregated Account, or from the Interest Reserve Account to the Trustee,
including both Payment Disbursements and Reimbursement Disbursements.
"Disbursement Request" has the meaning specified in Section 2.2.
"Equity Contribution" means the Initial Equity Contribution and such
additional contributions as are made pursuant to Sections 2.3, 3.1, 3.2 or 11
hereof, or to avoid an Event of Default under the Indenture, in all cases (other
than the Initial Equity Contribution) in cash deposited by the Issuer into the
Accounts; provided, that for the purposes of Sections 3.1 and 3.2 hereof,
contributions shall not constitute Equity Contributions to the extent they are
made pursuant to the Completion Capital Agreement.
"Equity Escrow Account" means a special account maintained with the
Pledged Account Bank in the name of HCS pursuant to an agreement between HCS and
the Pledged Account Bank.
"Estimated Future Interest" means, from time to time, investment
income, less any losses or costs associated therewith, which HCS reasonably
determines (and with which the Independent Construction Consultant concurs in
writing) will be earned on funds in the Accounts and the Segregated Account
through the Operating Date.
"Funding Endorsement" has the meaning specified in Section 4.1.
"General Contractor" means one or both of the General Contractor -
Land Development and the General Contractor - Marine.
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"General Contractor - Land Development" means Broadmoor Anderson, a
Louisiana joint venture, and its successors and assigns identified by written
notice to the Disbursement Agent, Trustee and Independent Construction
Consultant.
"General Contractor - Marine" means Leevac Shipyards, Inc. and its
successors and assigns identified by written notice to the Disbursement Agent,
Trustee and Independent Construction Consultant.
"General Contractor's Certificate" means a certificate of the
appropriate General Contractor substantially in the form of Exhibit "D" hereto.
"Hard Costs" means the costs and expenses in supplying goods,
materials and labor for the construction of the Project.
"Independent Construction Consultant" means CCM Consulting Group.
"Initial Equity Contribution" means one or more contributions to HCS
in the aggregate amount of Fifty Million Dollars ($50,000,000).
"Interest Disbursement Request" means a certificate of HCS in
substantially the form of Exhibit "J" hereto.
"Interest Reserve Account" means a special account maintained with
the Pledged Account Bank, Account No. 122884-030, in the name of HCS but under
the sole dominion and control of the Disbursement Agent as agent for the Trustee
hereunder and subject to the terms of the Security Agreement, this Agreement,
and a Control Agreement.
"Leasehold Mortgage" means that certain Mortgage, Leasehold Mortgage
and Assignment of Leases and Rents, effective as of August 10, 1999, on the
Property from HCS as mortgagor in favor of the Trustee as mortgagee
"Major Contract" means any Contract or series of related Contracts
entered into by HCS for Hard Costs for $750,000 or more.
"Operating Date" means that date by which the Shreveport Resort is
Operating.
"Operating Deadline" means April 30, 2001.
"Payment Disbursement" means a disbursement from the Construction
Disbursement Account or the Completion Reserve Account to the Segregated Account
for the payment of amounts due but not yet paid in accordance with the
Construction Disbursement Budget.
"Plans" means all drawings, plans and specifications, prepared by or
on behalf of HCS, as the same may be amended or supplemented from time to time
as specified herein, and, if required, submitted to and approved by the
appropriate regulatory authorities, which describe and show the Project and the
labor and materials necessary for the construction thereof.
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"Pledged Account Bank" means State Street Bank and Trust Company, at
its office in New York, New York.
"Project" means those improvements to be constructed on or adjacent
to real property in Shreveport, Louisiana to be known as the Hollywood Casino-
Shreveport in accordance with the Plans.
"Project Costs" means Hard Costs and Soft Costs.
"Project Liens" means, at any time, any and all present and future
liens upon the Project voluntarily granted or available as a matter of law to
any Person supplying services, goods, material, labor or other items of value to
the Project, whether provided or contracted for at or prior to such time or at
some future time and whether such lien was granted, claimed, filed or perfected
at such time or could be granted, claimed or filed or perfected at some future
time, except only the Project Mortgages.
"Project Mortgages" means the Leasehold Mortgage, that certain
Security Agreement (Vessel Construction) from HCS as debtor in favor of Trustee
as secured party, any First Preferred Ship Mortgage that may be executed by HCS
in favor of the Trustee, and the Security Agreement.
"Property" means the premises leased under that certain Ground Lease
dated May 19, 1999 by and between the City of Shreveport, Louisiana as Landlord
and HCS (as successor to QNOV, a Louisiana general partnership) as Tenant.
"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 HCS to complete the tasks set forth in such line item and
for the materials and services used to complete such tasks, but (i) Realized
Savings for any line item shall be deemed to be zero if such savings are
obtained in a manner that materially detracts from the overall quality and
amenities of the Project, and (ii) Realized Savings for each line item shall in
all cases be deemed to be zero until HCS has (x) satisfied or provided for in
all material respects the obligations arising out of the completion of that line
item or (y) obtained contracts for the completion of all tasks set forth in such
line item and for all materials and services required for such tasks for a fixed
or guaranteed maximum price.
"Reimbursement Disbursement" means a disbursement from the
Construction Disbursement Account or the Completion Reserve Account to the
Segregated Account for reimbursement of payments previously made from the
Segregated Account in accordance with the Construction Disbursement Budget.
"Remaining Costs" means the amount necessary to pay, through
completion of the Project, all theretofore unpaid Project Costs to be incurred
in connection with the Project, in accordance with the Plans.
"Retainage" means with respect to each General Contractor an amount
to be withheld until such General Contractor has completed the performance of
certain obligations and such performance has been accepted by HCS.
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"Security Agreement" means that certain Security Agreement
(Partnership), dated as of the date hereof, from HCS as debtor in favor of
Trustee as secured party.
"Segregated Account" means, collectively, those special accounts
maintained with Wells, Account Nos. 4296917578 and 11514320, in the name of HCS
and subject to the terms of the Security Agreement, this Agreement and a Control
Agreement.
"Soft Costs" means all costs other than Hard Costs that are related
to the Project, including, without limitation, finance, pre-opening costs, the
"Working Capital" line item on the Construction Disbursement Budget and a
payment in the amount of $5,000,000 by HCS pursuant to a certain compromise
agreement with the City of New Orleans and certain other parties.
"Title Insurer" means First American Title Insurance Company.
"Title Policy" means the lender's policy of title insurance to be
provided by the Title Insurer to the Trustee pursuant to the Indenture, together
with all endorsements thereto.
"Trustee Interest Disbursement Request" has the meaning set forth in
Section 2.3 hereof.
"Unutilized Equipment Financing" means at any time, lending
commitments available to HCS for FF&E Financing and Capitalized Lease
Obligations permitted under the Indenture, less the then outstanding aggregate
liability of HCS for all such FF&E Financing and Capitalized Lease Obligations.
"Wells" means Wells Fargo & Company, a national banking institution.
SECTION 2. DUTIES OF DISBURSEMENT AGENT.
The parties hereto agree, for the benefit of the Holders and the
Trustee that:
SECTION 2.1 MAINTENANCE OF ACCOUNTS.
Upon receipt of the proceeds of the sale of the Notes to the Holders
(net of financing and other transaction costs), the Issuer shall deposit such
proceeds into the Accounts in the relative amounts set forth on Exhibit I
hereto. Any funds received by the Issuer under any contract, including without
limitation penalties and damages, shall be deposited into the Construction
Disbursement Account. Pursuant to a Control Agreement, such funds deposited to
the Accounts and the Segregated Account will be held by the Pledged Account Bank
(or Wells in the case of the Segregated Account) subject to the terms of this
Agreement, the Security Agreement and the Control Agreements, and will not be
commingled with any other funds or deposits. All funds contained in the
Accounts and the Segregated Account shall be invested in such investments
permitted under the respective Control Agreement as are specified, from time to
time, by HCS in writing to the Pledged Account Bank (or Wells in the case of the
Segregated Account), consistent with the respective Control Agreement, pending
disbursement, in the case of the Accounts, of such funds pursuant to this
Agreement. The Disbursement Agent will be the only authorized person with
respect to the giving of disbursement instructions to the Pledged Account Bank.
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SECTION 2.2 REVIEW OF DISBURSEMENT REQUESTS. HCS may, no more than once
every two weeks, submit to the Disbursement Agent, with a copy to the
Independent Construction Consultant, a request for the disbursement of funds
from the Construction Disbursement Account in the form of Exhibit "F" attached
hereto (together with the appropriate Architect's Certificates and the
appropriate General Contractor's Certificates, the "Disbursement Request"). The
Disbursement Agent shall not give disbursement instructions to the Pledged
Account Bank in connection with such Disbursement Request unless the applicable
conditions set forth in Section 4 hereof are satisfied. If such conditions are
satisfied, the Disbursement Agent, within three Business Days following receipt
of a Disbursement Request, shall direct the Pledged Account Bank to disburse to
the Segregated Account the funds requested in such Disbursement Request. The
Disbursement Agent shall notify HCS and the Trustee promptly if (i) any
conditions set forth in Section 4 remain unsatisfied with respect to any
particular Disbursement Request or (ii) the Disbursement Agent becomes aware of
a Project Lien.
SECTION 2.3 - DISBURSEMENT OF FUNDS FROM INTEREST RESERVE ACCOUNT. No later
than ten (10) days prior to each of the first three (3) Interest Payment Dates,
HCS shall deliver to the Disbursement Agent (with a copy to the Trustee) an
Interest Disbursement Request describing the amount of fixed interest required
to be paid and the Interest Payment Date upon which such payment is due and
payable. No later than five (5) days prior to the next Interest Payment Date,
the Disbursement Agent shall instruct the Pledged Account Bank to liquidate
investments (to the extent required) held in the Interest Reserve Account and
when to liquidate such investments, and disburse to the Trustee the amounts
described in the Interest Disbursement Request as fixed interest due and payable
on that date; provided, however, that, in the event HCS fails to deliver the
Interest Disbursement Request for any of the first three (3) Interest Payment
Dates within the time frame specified above, the Trustee shall direct
Disbursement Agent to direct the Pledged Account Bank to liquidate investments
(to the extent required), and disburse to the Trustee the amounts necessary to
pay the amounts required to be paid on the Notes as fixed interest with respect
to such Interest Payment Date (each a "Trustee Interest Disbursement Request").
In the event that there are insufficient funds in the Interest Reserve
Account to pay any amount due pursuant to an Interest Disbursement Request or
Trustee Interest Disbursement Request, HCS shall, no later than three (3)
Business Days prior to the applicable Interest Payment Date, (x) effect
disbursement pursuant hereto into the Interest Reserve Account of amounts
reallocated pursuant to Section 3.1 hereof from the "Contingency" line item on
the Construction Disbursement Budget to the "Interest" line item on the
Construction Disbursement Budget, or (y) make an Equity Contribution into the
Interest Reserve Account in an amount equal to such deficiency; provided, 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 that such amounts are not received from HCS on a timely
basis. HCS acknowledges that its failure to provide notice or deposit funds
referenced in this Section shall not in any way exonerate or diminish HCS's
obligation to make all payments under the Notes as and when due.
SECTION 2.4 DISBURSEMENT OF FUNDS FROM COMPLETION RESERVE ACCOUNT. In the
event that the Disbursement Agent receives a Disbursement Request and all
conditions to fund thereunder are otherwise met, Disbursement Agent shall fund
from the Completion Reserve Account
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all amounts thereunder for which insufficient funds exist in the Construction
Disbursement Account.
SECTION 2.5 DISBURSEMENT OF FUNDS TO TRUSTEE. Upon receipt of a certificate
executed by the Trustee, which certifies that an Event of Default has occurred
and is continuing under the Indenture, and that pursuant to the Indenture, the
Trustee is entitled to possession of any funds in any Account or the Segregated
Account, then the Disbursement Agent, without the approval of any other party,
shall direct the Pledged Account Bank and Wells to disburse such funds in any
manner specified by the Trustee.
SECTION 2.6 REALIZED SAVINGS. Realized Savings shall be reallocated to the
"Contingency" line item of the Construction Disbursement Budget. Twenty-Five
Percent (25%) of Realized Savings shall be disbursed by the Disbursement Agent
from the Construction Disbursement Account and deposited directly into the
Completion Reserve Account. Such amount shall be available for allocation to
other line items in the Construction Disbursement Budget in accordance with
Section 3.1 below, and disbursement in accordance with Section 2.4 hereof.
SECTION 2.7 MAINTENANCE OF AND DISBURSEMENT FROM EQUITY ESCROW ACCOUNT.
Concurrent with the closing of the sale of the Notes, the Issuer shall deposit
into the Equity Escrow Account the Initial Equity Contribution to the extent
that it has not previously been spent by HCS on the Project. All funds in the
Equity Escrow Account shall be invested in cash or Cash Equivalents pursuant to
the agreement governing the Equity Escrow Account. Disbursements from the
Equity Escrow Account shall not be subject to the procedures set forth herein
for disbursements from the Accounts. HCS may at any time submit to the Pledged
Account Bank, with a copy to the Independent Construction Consultant, a written
request for the disbursement of funds from the Equity Escrow Account that shall
include the payee(s), the payment amount(s) and a certificate from an officer of
HCS that such payment(s) are in connection with the Project. The Pledged
Account Bank shall make such payment(s) in accordance with such request,
pursuant to the agreement governing the Equity Escrow Account.
SECTION 3. CONSTRUCTION DISBURSEMENT BUDGET, PLANS, CONTRACTS, SEGREGATED
ACCOUNT.
SECTION 3.1 ALLOCATION OF CONTINGENCY; AMENDMENTS TO CONSTRUCTION
DISBURSEMENT BUDGET. HCS may allocate the "Contingency" line item and amend
the Construction Disbursement Budget from time to time to reflect any changes in
the amounts allocated for specific line item components of the work required to
complete the Project; provided, that if such amendment provides for an increase
in any line item in the Construction Disbursement Budget in excess of $25,000,
such amendment shall require the written approval of the Independent
Construction Consultant, who shall be required to approve such amendment in the
manner set forth below. Any such amendment shall be in writing and shall
identify with particularity the line item to be changed, the amount of the
change, and, if any line item is increased, the amount from the "Contingency"
line item in the Construction Disbursement Budget to be reallocated or the
Equity Contributions which will be utilized to pay for the increase. The
Independent Construction Consultant shall approve any amendment providing for an
increase in the Construction Disbursement Budget in excess of $25,000 if, and
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only if, HCS certifies (in an Officer's Certificate, as defined in the
Indenture), and the Independent Construction Consultant believes in its
reasonable judgment, that the following conditions have been satisfied:
a. all line item increases, if any, are reasonably necessary in order
to complete the work represented by such line item;
b. the costs represented by such line item increases do not exceed
the "Contingency" line item and Equity Contributions, in each case to the extent
not previously expended or dedicated to the payment of items contained in the
Construction Disbursement Budget (other than in the "Contingency" line item),
and
c. immediately following such increases (i) the Construction
Disbursement Budget provides for construction of improvements which are
substantially consistent with the Project and the Plans, (ii) the Construction
Schedule calls for construction which will permit the Operating Date to occur on
or prior to the Operating Deadline, (iii) as of such date the Construction
Disbursement Budget reasonably establishes the line item components of the work
required to be undertaken in order to complete construction of the Project, and
reasonably establishes the cost of completing each line item component of such
work, and (iv) the Remaining Costs will not exceed the Available Funds.
SECTION 3.2 AMENDMENTS TO PLANS. HCS may amend the Plans from time to time
to increase the scope of the Project, subject to the written approval of the
Independent Construction Consultant, which shall be granted in the manner set
forth below. Any such amendment shall be in writing and shall identify with
particularity the changes to the Plans, and the corresponding changes to the
Construction Disbursement Budget and each line item to be changed, the amount of
the change, and the amount from the "Contingency" line item in the Construction
Disbursement Budget to be reallocated or Equity Contributions which will be
utilized to pay for the increase. Pursuant to an agreement between the
Independent Construction Consultant and HCS, the Independent Construction
Consultant shall approve of the amendment if, and only if, HCS certifies (in an
Officer's Certificate, as defined in the Indenture), and the Independent
Construction Consultant believes in his reasonable judgment, that the following
conditions have been satisfied:
a. all such changes to the Plans are in the best interest of HCS and
the Project, and in no way detract from or decrease the original scope or
quality of the Project;
b. all line item increases, if any, are reasonably necessary in order
to complete the work represented by such line item;
c. the costs represented by such line item increases do not exceed
the "Contingency" line item and Equity Contributions, in each case to the extent
not previously expended or dedicated to the payment of items contained in the
Construction Disbursement Budget (other than the "Contingency" line item); and
d. immediately following such increases (i) the Construction
Disbursement Budget provides for construction of improvements which are
substantially consistent with the Project and the Plans as amended, (ii) the
Construction Schedule calls for
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construction which will permit the Operating Date to occur on or prior to the
Operating Deadline, (iii) the Construction Disbursement Budget reasonably
establishes the line item components of the work required to be undertaken in
order to complete construction of the Project, and reasonably establishes the
cost of completing each line item component of such work, and (iv) the Remaining
Costs will not exceed the Available Funds.
SECTION 3.3 MAJOR CONTRACTS AND PERMITS. HCS shall not enter into, nor
permit any of its Affiliates to enter into, any Major Contract unless (i) such
contract is in form and substance reasonably satisfactory to the Independent
Construction Consultant and (ii) a Retainage of at least 5% is provided for
until substantial completion of the applicable work if the Major Contract is of
a type typically subject to Retainage. HCS shall deliver to the Independent
Construction Consultant as promptly as possible copies of (i) all Major
Contracts, together with all amendments and modifications thereof, and (ii) all
work permits, building permits and other permits required to construct and open
the Project.
SECTION 3.4 SEGREGATED ACCOUNT. (a) All funds disbursed from the
Construction Disbursement Account and the Completion Reserve Account will be
deposited in the Segregated Account and HCS will use such funds solely to pay
the Project Costs specified in the pertinent Disbursement Request. Such funds
will not be commingled with any other funds or deposits. Provided that no Event
of Default has occurred and is continuing, any funds remaining in the Segregated
Account upon the Operating Date shall first be used to pay Remaining Costs, and
then shall be released to HCS for use in any manner not prohibited by the
Indenture.
(b) Concurrently with the funding of the initial disbursement
pursuant to Section 4.2 hereof, and provided that all conditions to the initial
disbursement have been fulfilled, the Disbursement Agent shall authorize
disbursement of the sum of Five Million Dollars ($5,000,000) from the
Construction Disbursement Account to the Segregated Account to be used as
contemplated herein.
SECTION 4. CONDITIONS PRECEDENT TO DISBURSEMENT.
SECTION 4.1 GENERAL CONDITIONS. The Disbursement Agent's obligation to
direct the Pledged Account Bank to disburse funds requested in any Disbursement
Request is subject to the satisfaction of the following conditions:
a. HCS must have submitted a Disbursement Request to the Disbursement
Agent and the Independent Construction Consultant, accompanied by the
appropriate Architect's Certificate(s) and the appropriate General Contractor's
Certificate(s).
b. The Disbursement Agent must have received, (i) the Independent
Construction Consultant's Certificate, (ii) an endorsement from the Title
Insurer insuring through the date of such Disbursement that the Leasehold
Mortgage has priority over any and all present and future Project Liens against
the Property and the improvements thereon to the extent of the funds disbursed
(a "Funding Endorsement") and (iii) copies of unpaid invoices, bills, receipts,
other evidence of amounts due or paid in connection with the Disbursement
Request as the Disbursement Agent may reasonably request and such other
information as the Disbursement Agent may reasonably request.
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c. The Disbursement Agent must not have received any notice from the
Trustee that any Default or Event of Default has occurred and is continuing
under the Indenture.
d. The Disbursement Agent must not have actual knowledge of any
material error or inaccuracy in a Disbursement Request.
e. On the date of such requested Disbursement, HCS shall have paid
all amounts then owed under Section 5 of this Agreement.
f. HCS and the Independent Construction Consultant shall have
delivered a certificate substantially in the form of Exhibit "G" hereto dated
the later of August 10, 1999 and the date of the latest amendment to the
Construction Disbursement Budget.
g. With respect to each Disbursement Request immediately following
completion of any foundation for any building, and completion of the boat basin,
the Title Insurer shall have issued, on a building-by-building basis, a
foundation endorsement insuring that such foundation is constructed wholly
within the boundaries of the Property, and does not encroach on any easement or
violate any covenants, conditions or restrictions of record, and shall have
delivered such endorsement to the Independent Construction Consultant and the
Trustee.
SECTION 4.2 INITIAL DISBURSEMENT. In addition to the requirements of
Section 4.1 hereof, as a condition to the initial disbursement, the Disbursement
Agent and the Independent Construction Consultant shall have received a
certificate from HCS representing (i) that the entire Initial Equity
Contribution has been spent by HCS on Project Costs consistent with the
Construction Disbursement Budget, and setting forth the amount expended for each
line item of the Construction Disbursement Budget from the Initial Equity
Contribution; and (ii) performance bonds, naming Trustee for the benefit of the
holders of the Notes as an additional beneficiary, have been issued with respect
to the contract of each General Contractor.
SECTION 4.3 FINAL DISBURSEMENT FOLLOWING OPERATING DATE. (a) Provided no
Event of Default has occurred and is continuing, if any funds remain in the
Construction Disbursement Account or the Completion Reserve Account upon the
Operating Date, the Disbursement Agent shall disburse all remaining funds in the
Construction Disbursement Account and the Completion Reserve Account into any
account specified by HCS first to pay any Remaining Costs, and then for use in
any manner not prohibited by the Indenture.
(b) Provided no Event of Default has occurred and is continuing, if
any funds remain in the Interest Reserve Account after the third Interest
Payment Date, the Disbursement Agent shall disburse all remaining funds in the
Interest Reserve Account into any account specified by HCS for use in any manner
not prohibited by the Indenture.
SECTION 4.4 REPRESENTATIONS AND WARRANTIES. HCS hereby represents and
warrants as follows, as of the date hereof:
(a) HCS does not have any reason to believe that the Operating Date
will not occur on or prior to the Operating Deadline.
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(b) The Construction Disbursement Budget accurately and completely
sets forth (i) the anticipated Project Costs through the Operating Date, and
(ii) the various components of the Project identified thereon as line items and
the respective anticipated line item amounts.
(c) Giving effect to the funding of the offering of the Notes, there
are sufficient Available Funds to pay for the anticipated Remaining Costs.
(d) HCS has delivered to the Disbursement Agent, in a separate
certificate, lists of all contractors, subcontractors, suppliers and materialmen
that have provided work, supplies and/or labor in connection with the Project to
date, and whether such have received payments, and the amount of such payments,
as part of the Initial Equity Contribution, all as required by the Disbursement
Agent to insure over liens at the Property, 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.
SECTION 5. DISBURSEMENT AGENT'S COMPENSATION. The Disbursement Agent shall
receive from HCS a fee of $4,000.00 per month, in arrears, commencing September
1, 1999 and continuing until the Disbursement Agent's performance hereunder is
terminated, in consideration for its services hereunder during the term of this
Agreement, payable in advance on the first day of each calendar month by
disbursement from the Segregated Account. HCS shall also pay the Disbursement
Agent's expenses as set forth in the Indenture.
SECTION 6. LIMITATION OF DISBURSEMENT AGENT'S LIABILITY, ETC. The Disbursement
Agent (i) shall not be liable for, and does not represent, warrant or guarantee
the performance of any obligation of HCS, the Independent Construction
Consultant, any Architect, any General Contractor, any subcontractor or provider
of materials or services in connection with construction of the Project or any
other Person, (ii) shall have no responsibility to HCS, any Holders, the Trustee
or any other Person for any action taken or omitted by, or relating to the
performance hereunder of, the Disbursement Agent except gross negligence or
willful misconduct of the Disbursement Agent, (iii) except as expressly set
forth herein, is not obligated to supervise, inspect or inform HCS or any third
party of any aspect of the construction of the Project or any other matter
referred to above, and (iv) owes no duty of care to HCS to protect against, or
to inform HCS of, any negligent, faulty, inadequate or defective design or
construction of the Project. HCS shall remain solely responsible for all aspects
of its business and conduct in connection with the Project, including but not
limited to the quality and suitability of the Plans, the supervision of the work
of construction, the qualifications, financial condition and performance of all
architects, engineers, contractors, subcontractors, suppliers, consultants and
property managers, the accuracy of all applications for payment, and the proper
application of all disbursements. The Trustee shall not be liable for any action
taken or omitted by, or relating to the performance hereunder of, the
Disbursement Agent.
SECTION 7. INDEMNITY. HCS SHALL INDEMNIFY, HOLD HARMLESS AND DEFEND THE
DISBURSEMENT AGENT, ITS OFFICERS, DIRECTORS, AGENTS AND EMPLOYEES, FROM AND
AGAINST ANY AND ALL CLAIM, ACTIONS, OBLIGATIONS, LIABILITY AND EXPENSES,
INCLUDING DEFENSE COSTS,
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INVESTIGATIVE FEES AND COSTS, LEGAL FEES, AND CLAIMS FOR DAMAGES, ARISING FROM
THE DISBURSEMENT AGENT'S PERFORMANCE UNDER THIS AGREEMENT, EXCEPT TO THE EXTENT
THAT SUCH LIABILITIES, EXPENSE OR CLAIM IS ATTRIBUTABLE TO THE GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT OF DISBURSEMENT AGENT.
SECTION 8. TERMINATION. The Disbursement Agent's performance under this
Agreement shall terminate automatically upon disbursement of all funds remaining
in the Accounts, unless sooner terminated pursuant to Section 9 hereof. The
obligations of HCS under Section 7 of this Agreement shall survive termination
of this Agreement.
SECTION 9. SUBSTITUTION OF DISBURSEMENT AGENT. Upon an Event of Default under
the Indenture, the Trustee shall have the right to terminate the performance of
the Disbursement Agent at any time, so long as it promptly selects a substitute
disbursement agent to serve hereunder. Any substitute disbursement agent
hereunder shall be subject to approval by the Louisiana Gaming Control Board.
Upon selection of such substitute disbursement agent, the Trustee, HCS 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 copies of all books, records, plans and other documents in the
Disbursement Agent's possession relating to the Notes, the Project or this
Agreement and all funds remaining on deposit in the Accounts.
SECTION 10. SECURITY INTEREST IN ACCOUNTS AND SEGREGATED ACCOUNT. Issuer hereby
confirms that the security interest granted by the Security Agreement extends
and attaches to the Accounts and the Segregated Account and all moneys now or
hereafter placed or deposited in, or delivered to Disbursement Agent for
placement or deposit in the Accounts. The parties also acknowledge the Accounts
and the Segregated Account are the subject of Control Agreements in favor of the
Trustee. The Disbursement Agent, Wells and the Pledged Account Bank shall note
in their respective records that all funds and other assets in the Accounts and
the Segregated Account have been pledged to the Trustee and that the
Disbursement Agent, Wells and the Pledged Account Bank are holding such items as
agent for the Trustee, as secured party. The Disbursement Agent shall maintain
dominion and control over the Accounts and the Segregated Account and the funds
and assets therein solely for the benefit of the Trustee, as secured party, and
for no other parties, persons or entities; provided, that HCS shall be able to
obtain disbursements solely 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. As between the Disbursement Agent and the
Trustee, the Disbursement Agent hereby acknowledges the Trustee's security
interest in the Accounts and the Segregated Account, waives any security
interest or statutory lien therein and further waives any right to charge or set
off now or in the future for any liability of HCS to the Disbursement Agent,
including without limitation, the obligations under Sections 5 and 7 hereof. The
Disbursement Agent shall have sole dominion and control over the Accounts and,
solely for the purposes of maintaining the perfection and priority of the
security interest of the Trustee in the Accounts, shall act as agent for the
Trustee and on behalf of the Holders in accordance with the terms of this
Agreement. If (and promptly after it is) so instructed by the Trustee at any
time when an Event of Default is continuing,
13
<PAGE>
the Disbursement Agent will remit to the Trustee all funds then held in the
Accounts and all proceeds of any funds at any time so held then remain in the
possession, custody or control of the Disbursement Agent. Nothing in this
section shall be construed as waiving, limiting or diminishing any rights of the
Trustee vis-a-vis HCS.
SECTION 11. EQUITY CONTRIBUTION. If at any time Available Funds are less than
the amount required to pay Remaining Costs, either (x) an Equity Contribution in
the amount of such shortfall shall be made within sixty (60) days, or (y) within
sixty (60) days HCS shall deliver a certificate of the Independent Construction
Consultant stating that Available Funds are sufficient to pay Remaining Costs.
SECTION 12. INDEPENDENT CONSTRUCTION CONSULTANT. HCS shall retain the
Independent Construction Consultant who shall examine the Plans and Construction
Disbursement Budget and changes thereto, and cost breakdowns and estimates, make
periodic inspections of the construction of the Project for the benefit of the
Trustee and the Holders, advise and render reports to the Disbursement Agent
with respect thereto and take such other action as is specified herein or in an
agreement between HCS and the Independent Construction Consultant. The
Independent Construction Consultant shall perform such duties with the exercise
of independent judgment.
SECTION 13. MISCELLANEOUS.
SECTION 13.1 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.
SECTION 13.2 INVALIDITY. If, for any reason whatsoever, any one 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.
SECTION 13.3 NO AUTHORITY. The Disbursement Agent is acting solely for its
own account, is not acting as agent or fiduciary for, and shall have no
authority to act or speak for, any Holder, the Trustee, HCS or any other party,
except that the Disbursement Agent shall be deemed to be acting as agent for the
Trustee and on behalf of the Holders pursuant to this Agreement solely for
purposes of and only to the extent necessary for maintaining the perfection and
priority of the security interest of the Trustee in the Accounts and Segregated
Account.
SECTION 13.4 ASSIGNMENT. The rights and duties of any party hereunder shall
not be assignable except with the prior written consent of the other parties.
SECTION 13.5 BENEFIT. The parties hereto shall be bound hereby and entitled
to the benefits hereof.
SECTION 13.6 TIME. Time is of the essence as to each provision of this
Agreement.
14
<PAGE>
SECTION 13.7 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 laws of the State of New
York.
SECTION 13.8 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.
SECTION 13.9 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 (i) on the day of hand delivery or (ii) on the day sent, when
sent by United States certified mail, postage and certification fee prepaid,
return receipt requested, addressed as follows:
To the Issuer: HWCC-Louisiana, Inc.
Hollywood Casino Shreveport
Two Galleria Tower, Suite 2200
13455 Noel Road LB 48
Dallas, Texas 75240
Attention: Charles F. LaFrano III
Copy to: Same address, Attention: General Counsel
To the Trustee: State Street Bank and Trust Company
2 Avenue de Lafayette
Corporate Trust Department
Boston, Massachusetts 02111
Attention: Robert Dunn
To the Disbursement
Agent: First American Title Insurance Company
510 Bienville Street
New Orleans, Louisiana 70130
Attention: Scott Gallinghouse
or at such other address as the specified entity most recently may have
designated in writing in accordance with this paragraph to the others.
SECTION 13.10 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.
SECTION 13.11 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.
15
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Cash
Collateral and Disbursement Agreement as of the day first above written.
SHREVEPORT CAPITAL CORPORATION,
a Louisiana corporation
By: /s/ PAUL C. YATES
--------------------------
Name: Paul C. Yates
-------------------------
Title: Executive VP & CFO
------------------------
HOLLYWOOD CASINO SHREVEPORT,
a Louisiana general partnership
By: HCS I, Inc., a Louisiana
corporation, its managing general
partner
By: /s/ PAUL C. YATES
--------------------------
Name: Paul C. Yates
-------------------------
Title: Executive VP & CFO
------------------------
FIRST AMERICAN TITLE INSURANCE
COMPANY, a New York corporation
By: /s/ REGINALD E. CASSIBRY
--------------------------
Name: Reginald E. Cassibry
-------------------------
Title: Agent
------------------------
STATE STREET BANK AND TRUST COMPANY,
as Trustee under the Indenture
By: /s/ ROBERT J. DUNN
--------------------------
Name: Robert J. Dunn
-------------------------
Title: Vice President
------------------------
16
<PAGE>
EXHIBIT A
TO CASH COLLATERAL AND
DISBURSEMENT AGREEMENT
Certificate of Architect
[Date]
First American Title Insurance Company
510 Bienville Street
New Orleans, Louisiana 70130
Attention: Scott Gallinghouse
Re: Disbursement Request (herein so called) dated ______________, ___
Hollywood Casino Shreveport, a general partnership ("HCS").
Ladies and Gentlemen:
___________________________ ("Architect") hereby represents as follows:
1. Architect acknowledges the above referenced Disbursement Request
and the Cash Collateral and Disbursement Agreement dated August 10, 1999, to
which HCS 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 Cash Collateral and Disbursement Agreement and to provide the
certification contained herein.
2. With respect to those provisions of the Plans prepared by
Architect, and based on Architect's knowledge, information and belief, Architect
hereby represents that the quality of construction performed as of the date
hereof is generally in accordance with the Plans, and the Disbursement (herein
so called) requested by the Disbursement Request is appropriate in light of the
percentage of construction completed and the amount of stored materials.
Architect has no reason to believe that the Operating Date will not occur on or
prior to the Operating Deadline.
The foregoing representations are true and correct and Disbursement
Agent is entitled to rely on the foregoing in instructing the Pledged Account
Bank to make the Disbursement.
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Cash Collateral and Disbursement Agreement.
A-1
<PAGE>
[ARCHITECT]
By:_____________________
Name:___________________
Title:__________________
A-2
<PAGE>
EXHIBIT B
TO CASH COLLATERAL
AND DISBURSEMENT AGREEMENT
Project Construction Disbursement Budget
----------------------------------------
Date: ____________
Line Item Line Item Construction Disbursement Budget
Land Based Construction: $68,709,253
Riverboat Construction 34,386,000
Testing, Insurance and Other 1,050,000
Furniture, Fixtures and Equipment:
Pavilion and Hotel 16,279,792
Riverboat 4,465,010
Gaming Equipment 14,320,398
Special Systems, Memorabilia 7,374,350
and Signage
Consultants and Project Management 9,146,209
Working Capital, Pre-Opening and 16,000,000
License
Financing Costs, net of Interest Income 31,911,164
Contingency 26,357,824
Total Construction Disbursement Budget 230,000,000
=============
B-1
<PAGE>
EXHIBIT C
TO CASH COLLATERAL
AND DISBURSEMENT AGREEMENT
Certificate of Independent Construction Consultant
--------------------------------------------------
[Date]
First American Title Insurance Company
510 Bienville Street
New Orleans, Louisiana 70130
Attention: Scott Gallinghouse
Re: Disbursement Request (herein so called) dated ________, ______
Hollywood Casino Shreveport, a general partnership ("HCS").
Ladies and Gentlemen:
The undersigned, CCM Consulting Group, refers to the Cash Collateral
and Disbursement Agreement, dated as of August 10, 1999 (the "Disbursement
Agreement"; the terms defined therein being used herein as therein defined),
among HCS the Trustee and you and certain other parties and to the above-
referenced Disbursement Request, requesting a disbursement in the aggregate
amount of $______________ (the "Disbursement") .
The undersigned hereby certifies that the following statements are
true on the date hereof:
(a) pursuant to commercially reasonable efforts and prudent
practices, a review of the documentation provided by HCS in support of the
Disbursement Request was made and such documentation is in form and
substance satisfactory to the Independent Construction Consultant and, to
the best of its knowledge, the information contained therein is true and
correct in all material respects and the Independent Construction
Consultant is not aware of any fact that would make such statement untrue
in any material respect;
(b) to the best of Independent Construction Consultant's
knowledge, all of the work theretofore completed on the Project has been
completed substantially in accordance with the Plans, without material
deviation therefrom;
(c) to the best of Independent Construction Consultant's
knowledge, all permits and approvals required to date have been obtained
and are in full force and effect;
(d) the Independent Construction Consultant has visited the
Project within the last month; and
C-1
<PAGE>
(e) based upon its review and to the best of the Independent
Construction Consultant's knowledge, (i) the Disbursement is appropriate in
light of the percentage of construction completed and the amount of stored
materials and (ii) the Construction Disbursement Budget in effect on the
date hereof and attached hereto sets forth the anticipated costs of
completing the Project and there are sufficient Available Funds to complete
the construction of each component of the Project within the Construction
Disbursement Budget therefor. The Independent Construction Consultant has
no reason to believe that the Operating Date will not occur on or prior to
the Operating Deadline.
Very truly yours,
CCM CONSULTING GROUP
By:___________________________
Name:_________________________
Title:________________________
C-2
<PAGE>
EXHIBIT D
TO CASH COLLATERAL
AND DISBURSEMENT AGREEMENT
Certificate of General Contractor
---------------------------------
[Date]
First American Title Insurance Company
510 Bienville Street
New Orleans, Louisiana 70130
Attention: Scott Gallinghouse
Re: Disbursement Request (herein so called) dated _______________,
_____ of Hollywood Casino Shreveport, a general partnership
("HCS") .
Ladies and Gentlemen:
_____________________________ ("General Contractor") hereby certifies as
follows:
1. General Contractor has reviewed the above referenced Disbursement
Request and the Cash Collateral and Disbursement Agreement dated August 10,
1999, to which HCS 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 Cash Collateral and Disbursement Agreement and to provide the
certification contained herein.
2. General Contractor hereby certifies that with respect to all work
to be performed by General Contractor or for which General Contractor is
responsible pursuant to its contract with HCS: (i) the construction performed
as of the date hereof is substantially in accordance with the Plans, (ii) the
Disbursement (herein so called) requested by the Disbursement Request is
appropriate in light of the percentage of construction completed and the amount
of stored materials and (iii) the Construction Disbursement Budget in effect on
the date hereof and attached hereto sets forth the anticipated costs of
completing all such work.
3. The undersigned has no reason to believe that the Operating Date
will not occur on or prior to the Operating Deadline.
4. General Contractor hereby certifies that lien releases have been
received for all work, materials and/or services performed, paid for in
connection with the work to be performed by General Contractor or for which
General Contractor is responsible pursuant to its contract with HCS.
D-1
<PAGE>
The foregoing representations, warranties and certifications are true
and correct and Disbursement Agent is entitled to rely on the foregoing in
instructing the Pledged Account Bank to make the Disbursement.
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Cash Collateral and Disbursement Agreement.
[CONTRACTOR]
By:_____________________
Name:___________________
Title:__________________
D-2
<PAGE>
EXHIBIT E
TO CASH COLLATERAL
AND DISBURSEMENT AGREEMENT
Construction Schedule
---------------------
Date: ______________
Phase Description Project Completion Date
Begin mobilization and start construction August 12, 1999
Foundation work complete December 31, 1999
Top out all structures June 1, 2000
Begin interior finishes June 1, 2000
Vessel enters basin at construction site September 1, 2000
Weatherproof enclosures complete August 31, 2000
Project Completion October 31, 2000
E-1
<PAGE>
EXHIBIT F
TO CASH COLLATERAL
AND DISBURSEMENT AGREEMENT
Disbursement Request and Certificate
------------------------------------
[Date]
First American Title Insurance Company
510 Bienville Street
New Orleans, Louisiana 70130
Attention: Scott Gallinghouse
Re: Disbursement Request of $________
Ladies and Gentlemen:
Hollywood Casino Shreveport, a general partnership ("HCS") requests
that a disbursement of $_________________ (the "Disbursement") be made on
_________________, ____ to Account No. 4296917578 at Wells Fargo & Company (the
"Segregated Account"), for use by HCS. Capitalized Terms used herein shall have
the meanings afforded them under that certain Cash Collateral and Disbursement
Agreement dated as of August 10, 1999, to which you are a party. In connection
with the requested Disbursement, the undersigned hereby represents, warrants and
certifies as follows:
1. The Disbursement consists of $_______________ as a Payment
Disbursement, and $__________ as a Reimbursement Disbursement, each for payment
of the Project Costs set forth on the attached schedule.
2. The Reimbursement Disbursement is required to replenish the
Segregated Account for expenditures previously made in accordance with the
Construction Disbursement Budget and the Plans. Following disbursement of the
funding requested pursuant to this Disbursement Request, the balance of the
Segregated Account will not exceed $5,000,000 plus the amount of any Payment
Disbursement hereunder. HCS will utilize the excess of (x) the balance of the
Segregated Account over (y) any unused Payment Disbursements in the Segregated
Account only for working capital purposes pursuant to the Construction
Disbursement Budget.
3. The construction performed as of the date hereof is substantially
in accordance with the Plans and the Disbursement is appropriate in light of the
Construction Disbursement Budget and the percentage of construction completed
and the amount of stored materials.
4. HCS does not have any reason to believe that the Operating Date
will not occur on or prior to the Operating Deadline.
F-1
<PAGE>
5. HCS does not have any knowledge of nor has HCS received any notice
of any lien or claim of Project Lien either filed or threatened against the
Project, or if HCS has knowledge or has received notice of such a Project Lien
or claim of Project Lien, the Title Insurer has insured over such Project Lien,
or such Project Lien has been otherwise bonded over in favor of the Trustee.
6. The Construction Disbursement Budget in effect on the date hereof
and attached hereto sets forth the anticipated costs of completing the Project,
and there are sufficient Available Funds to complete the construction of each
component of the Project within the Construction Disbursement Budget therefor.
7. No Event of Default exists under the Indenture and HCS is in
compliance in all material respects with each representation, warranty and
covenant contained therein.
8. No circumstances have occurred which would provide HCS with any
defenses against the obligations evidenced by the Notes or permit HCS to assert
any right to set off any amounts against such obligations.
9. All Equity Contributions required to have been made under the Cash
Collateral and Disbursement Agreement on or before the date of this Disbursement
Request have been made.
10. All permits and approvals necessary at the phase of construction
as of the date of this Cash Collateral and Disbursement Agreement have been
obtained and are in full force and effect.
11. Neither the vessel being constructed by General Contractor -
Marine, nor any part thereof nor any equipment or any other property to be
installed thereon or attached thereto has suffered any material damage by fire
or any other casualty or otherwise (in each case other than any damage for which
an insurance claim has been submitted or has been theretofore repaired or
restored).
The foregoing representations, warranties and certifications are true
and correct and Disbursement Agent is entitled to rely on the foregoing in
authorizing and making the Disbursement.
Attached to this Disbursement Request and Certificate are the
appropriate Architect's Certificate(s) and the appropriate General Contractor's
Certificate(s), which form an integral part of this Disbursement Request and
Certificate.
F-2
<PAGE>
HOLLYWOOD CASINO SHREVEPORT,
a general partnership
By: HCS I, Inc., a Louisiana corporation,
its managing general partner
By:_____________________
Name:___________________
Title:__________________
cc: CCM Consulting Group
F-3
<PAGE>
EXHIBIT G
TO CASH COLLATERAL
AND DISBURSEMENT AGREEMENT
Project Construction Disbursement Budget Certification
------------------------------------------------------
[Date]
The undersigned hereby certify that the attached Construction
Disbursement Budget dated ____________, 1999 sets forth the anticipated costs of
completing the Project and the Construction Disbursement Budget is adequate to
complete the Project substantially in accordance with the Plans, without
material deviation therefrom; provided that, with respect to CCM Consulting
Group (the "Independent Construction Consultant") only, such certification shall
be based upon the Independent Construction Consultant's review and to the best
of the Independent Construction Consultant's knowledge.
HOLLYWOOD CASINO SHREVEPORT, CCM CONSULTING GROUP
a Louisiana general partnership Independent Construction
Consultant
By. HCS I, Inc., a Louisiana corporation, By:__________________________
its managing general partner Name:________________________
Title:_______________________
By:__________________________
Name:________________________
Title:_______________________
G-1
<PAGE>
EXHIBIT I
TO CASH COLLATERAL
AND DISBURSEMENT AGREEMENT
INITIAL ACCOUNT DEPOSITS
Construction Disbursement Account $113,410,985.60
Completion Reserve Account $ 5,000,000
Interest Reserve Account $ 27,276,514.40
I-1
<PAGE>
EXHIBIT J
TO CASH COLLATERAL
AND DISBURSEMENT AGREEMENT
FORM OF INTEREST DISBURSEMENT REQUEST
-------------------------------------
[Date]
First American Title Insurance Company
510 Bienville Street
New Orleans, Louisiana 70130
Attention: Scott Gallinghouse
Re: Disbursement Request of $_________________
Ladies and Gentlemen:
This Interest Disbursement Request is delivered to you pursuant to
that certain Cash Collateral and Disbursement Agreement dated as of August 10,
1999 to which you are a party (the "Disbursement Agreement").
Pursuant to Section 2.3 of the Disbursement Agreement, you are hereby
directed to liquidate investments (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 in
respect of fixed interest will be due and payable on the Notes on the Interest
Payment Date.
The foregoing representations, warranties and certifications are true
and correct and the Disbursement Agent is entitled to rely on the foregoing in
authorizing and making the Disbursement.
HOLLYWOOD CASINO SHREVEPORT,
a Louisiana general partnership
By: HCS I, INC., a Louisiana corporation, its
managing general partner
By:______________________________
Name:____________________________
Title:___________________________
K-1
<PAGE>
EXHIBIT 4.7
STOCK PLEDGE AGREEMENT
MADE BY
HWCC-LOUISIANA, INC.
in favor of
STATE STREET BANK AND TRUST COMPANY,
AS TRUSTEE AND SECURED PARTY
August 10, 1999
<PAGE>
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement") is made as of August 10,
1999 by HWCC-LOUISIANA, INC., a Louisiana corporation, with principal offices at
Two Galleria Tower, Suite 2200, 13455 Noel Road, LB 48, Dallas, Texas 75240
("Pledgor"), in favor of STATE STREET BANK AND TRUST COMPANY, Massachusetts
chartered trust company, with offices at 2 Avenue de Lafayette, Corporate Trust
Department, Boston, Massachusetts 02111, as Trustee acting on behalf of the
Holders of the Notes under (and as defined in) the Indenture described below
("Secured Party").
RECITALS
A. Hollywood Casino Shreveport, a Louisiana general partnership
("Hollywood Casino Shreveport"), Shreveport Capital Corporation, a Louisiana
corporation ("Shreveport Capital", and together with Hollywood Casino
Shreveport, the "Issuers"), HCS I, Inc., a Louisiana corporation, HCS II, Inc.,
a Louisiana corporation, and Pledgor, each as a Guarantor, and Secured Party, as
Trustee, have entered into an Indenture dated as of August 10, 1999 (as the same
may be amended, supplemented, restated or otherwise modified from time to time,
the "Indenture"), pursuant to which the Issuers will issue up to $150,000,000 of
their 13% First Mortgage Notes due 2006 with Contingent Interest (as the same
may be amended, supplemented, restated, exchanged, replaced or otherwise
modified from time to time, collectively, the "Notes").
B. The Secured Party has requested pursuant to the terms of the
Indenture that Pledgor execute and deliver this Agreement, and Pledgor has
agreed to enter into this Agreement.
C. Therefore, in order to comply with the terms and conditions of the
Indenture and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Pledgor hereby agrees with Secured
Party as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Terms Defined Above or in the Indenture. As used in this
Agreement, the terms defined above shall have the meanings respectively assigned
to them. Other capitalized terms which are defined in the Indenture but which
are not defined herein shall have the same meanings as defined in the Indenture.
Section 1.02 Certain Definitions. As used in this Agreement, the
following terms shall have the following meanings, unless the context otherwise
requires:
"Code" shall mean the Uniform Commercial Code as presently in effect
in the State of New York. Unless otherwise indicated by the context herein,
all uncapitalized terms which are defined in the Code shall have their
respective meanings as used in Articles 8 and 9 of the Code; provided that,
if by reason of mandatory provisions of law,
<PAGE>
the perfection or the effect of perfection or non-perfection of the
security interests in any Collateral is governed by the Uniform Commercial
Code as in effect in any jurisdiction other than the State of New York,
"Code" means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
perfection or the effect of perfection or non-perfection.
"Collateral" shall mean the following types or items of property,
whether now owned or hereafter acquired:
(a) The securities of the Pledged Entities described or referred to in
Exhibit A attached hereto and made a part hereof (as the same may hereafter
be amended, supplemented or otherwise modified); and
(b) (i) all shares of, all securities convertible or exchangeable
into, and all warrants, options or other rights to purchase shares of,
stock of the Pledged Entities; (ii) all certificates or instruments
representing such additional shares, convertible or exchangeable
securities, warrants, and other rights; (iii) except as otherwise provided
herein, all proceeds, income and profits thereon, and all interest,
dividends and other payments, property and distributions with respect
thereto; (iv) except as otherwise provided herein, all proceeds received or
receivable by the Pledgor, in cash, stock or otherwise, from any
recapitalization, reclassification, merger, dissolution, liquidation or
other termination of the existence of the Pledged Entities and (v) except
as otherwise provided herein, any proceeds of any of the foregoing.
(c) It is expressly contemplated that pursuant to clause (b) above,
additional securities or other property may from time to time be pledged,
assigned or granted to Secured Party as additional security for the
Obligations, and the term "Collateral" as used herein shall be deemed for
all purposes hereof to include all such additional securities and property,
together with all other property of the types described above related
thereto.
"Event of Default" shall mean any event specified in Section 6.01
hereof.
"Obligations" shall mean: (i) the payment when due of indebtedness
evidenced by the Notes in the aggregate principal sum not to exceed at any
time outstanding of $150,000,000, interest as set forth in the Indenture
and the Notes, and premiums, penalties, and late charges thereon; (ii) all
other indebtedness and other sums (including, without limitation, all
expenses, attorneys' fees, other fees, indemnifications, reimbursements,
damages, other monetary liabilities, and other charges) and obligations
that may or shall become due hereunder or under the Notes, the Guarantees,
the Indenture, or the other Collateral Documents, and (iii) any and all
renewals, modifications, amendments, extensions for any period, supplements
or restatements of any of the foregoing.
"Obligor" shall mean any Person, other than Pledgor, liable (whether
directly or indirectly, primarily or secondarily) for the payment or
performance of any of
2
<PAGE>
the Obligations whether as maker, co-maker, endorser,guarantor,
accommodation party, general partner or otherwise.
"Pledged Entities" shall mean each of the Subsidiaries of Pledgor
named on Exhibit A attached hereto and made a part hereof, and any other
Restricted Subsidiary of Pledgor required to become a Guarantor pursuant to
Section 11.02 of the Indenture, and which pledge to the Trustee hereunder
has been approved by applicable Gaming Authorities. To the extent that any
Restricted Subsidiary of Pledgor is required to be designated a Pledged
Entity, Exhibit A shall be hereafter amended, supplemented or modified in
accordance with Section 4.02.
"Pledged Securities" shall mean all of the securities referred to in
the definition of Collateral and all additional securities (as that term is
defined in the Code), if any, constituting Collateral under this Agreement.
ARTICLE II
SECURITY INTEREST
Section 2.01 Pledge. Pledgor hereby assigns, endorses, delivers,
pledges, and grants to Secured Party, a continuing security interest in, and
Lien upon, the Collateral to secure the prompt and complete payment and
performance of the Obligations and the performance by Pledgor of this Agreement.
This security interest is granted as security only and shall not subject Secured
Party to, or transfer or in any way affect or modify, any obligation or
liability of the Pledgor or any Obligor with respect to any of the Collateral,
the Obligations or any transaction in connection therewith.
Section 2.02 Transfer of Collateral. All certificates or instruments
representing or evidencing the Pledged Securities shall be delivered to and held
by Secured Party or a Person designated by Secured Party pursuant hereto. All
Pledged Securities shall be in suitable form for transfer by delivery, or shall
be accompanied by duly executed instruments of transfer or assignment in blank,
and accompanied by any required transfer tax stamps. Upon the occurrence and
continuance of an Event of Default, Secured Party shall have the right, at any
time in its discretion and without notice to Pledgor, to transfer to or to
register in the name of Secured Party or any of its nominees any or all of the
Collateral. In addition, upon the occurrence and continuance of an Event of
Default, Secured Party shall have the right at any time to exchange certificates
or instruments representing or evidencing Pledged Securities for certificates or
instruments of smaller or larger denominations.
Section 2.03 Ratable Benefit of Holders of the Notes. Pledgor and
Secured Party agree that the security interest and lien granted hereby are for
the benefit of the Trustee for the equal and ratable benefit of the Holders of
the Notes.
3
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
In order to induce Secured Party to accept this Agreement, Pledgor
represents and warrants to Secured Party (which representations and warranties
will survive the creation and payment of the Obligations) that:
Section 3.01 Ownership of Collateral; Absence of Encumbrances and
Restrictions. After giving effect to the use of proceeds of the Notes, Pledgor
is, and in the case of Collateral acquired after the date hereof, will be, the
legal and sole holder of record and the sole beneficial owner of the Collateral,
free and clear of all Liens except for Permitted Liens, and Pledgor has full
right, power and authority to pledge, assign and grant a security interest in
the Collateral to Secured Party. All of the Pledged Securities are presently
represented by the certificates listed on Exhibit A hereto. As of the date
hereof, there are no existing options, warrants, calls or commitments of any
character whatsoever relating to the Pledged Securities.
Section 3.02 No Required Consent. Except for such authorizations,
consents and other actions as shall have been obtained and shall be in effect,
no authorization, consent, approval or other action by, and no notice to or
registration, recordation or filing with, any Governmental Authority is required
for (i) the due execution, delivery and performance by Pledgor of this
Agreement, (ii) the grant by Pledgor of the security interest granted by this
Agreement, (iii) the perfection of such security interest (except for the filing
of any appropriate financing statements) or (iv) except as may be required by
applicable gaming laws or except as may be required in connection with the
disposition of Collateral by federal and state securities laws or antitrust laws
and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the exercise by
Secured Party of its rights and remedies under this Agreement. Neither the
Pledgor nor any of its Subsidiaries has performed or will perform any acts which
might prevent Secured Party from enforcing any of the terms and conditions of
this Agreement or which would limit Secured Party in any such enforcement. None
of the Pledged Securities have been issued or transferred in violation of the
securities registration, securities disclosure or similar laws of any
jurisdiction to which such issuance or transfer may be subject.
Section 3.03 Pledged Securities. The Pledged Securities have been duly
authorized and validly issued, and are fully paid and non-assessable. The
Pledged Securities constitute 100% of the issued and outstanding shares of
capital stock of the Pledged Entities. Contemporaneously with the issuance of
the Notes, the Pledgor is delivering to Secured Party in pledge hereunder the
certificates and other instruments evidencing all Pledged Securities owned by
the Pledgor as of the date hereof.
Section 3.04 First Priority Security Interest. Upon the delivery of
Pledged Securities to the Secured Party, this Agreement creates a valid and
perfected first priority security interest in the Collateral, subject to
Permitted Liens, enforceable against Pledgor and all third parties and securing
payment of the Obligations, except that (a) the enforceability of any rights to
indemnity and contribution hereunder may be limited by federal or state
securities laws or principles of public policy, (b) the enforceability hereof
may be subject to applicable bankruptcy,
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insolvency, fraudulent conveyance or transfer, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and (c) the
enforceability hereof may be subject to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity).
ARTICLE IV
COVENANTS AND AGREEMENTS
Pledgor will at all times comply with the covenants and agreements
contained in this Article IV from the date hereof and for so long as any part of
the Obligations are outstanding.
Section 4.01 Sale, Disposition or Encumbrance of Collateral. Except as
may be permitted by the provisions hereof or of the Indenture, Pledgor will not
in any way encumber any of its rights in or to any of the Collateral (or permit
or suffer any of the Collateral to be encumbered) or sell, pledge, assign, lend
or otherwise dispose of or transfer any of the Collateral to or in favor of any
Person other than Secured Party. The Pledgor is not, and will not become, a
party to or be otherwise bound by any agreement, other than this Agreement or as
permitted by the Indenture, which restricts in any manner the rights of any
present or future holder of any of the Pledged Securities.
Section 4.02 Dividends or Distributions. So long as no Event of
Default shall have occurred and be continuing, Pledgor shall be entitled to
receive and retain free and clear of the Lien of this Agreement any and all
dividends, distributions, interest and principal payments, cash, instruments and
other property and proceeds made upon or with respect to the Collateral, which
shall not constitute Collateral and may be used by Pledgor subject to the terms
and conditions of the Indenture; provided, however, that any and all dividends
paid or payable in securities of the Pledged Entities, including all securities
convertible into any Collateral, and warrants, options or other rights to
purchase stock or equity interests, in any of the Pledged Entities, receivable
or otherwise distributed in respect of, or in exchange for (including, without
limitation, any certificate or share purchased or exchanged in connection with a
tender offer or merger agreement) any Collateral, shall be, and shall be
forthwith delivered to Secured Party to hold as, Collateral and shall, if
received by Pledgor, be received in trust for the benefit of Secured Party, be
segregated from the other Property or funds of Pledgor, and be forthwith
delivered to Secured Party as Collateral in the same form as so received (with
any necessary endorsement). Upon the occurrence and during the continuance of an
Event of Default, all rights of Pledgor to receive all dividends, distributions,
interest and principal payments, cash, instruments and other property and
proceeds shall cease, and such dividends, distributions, interests and principal
payments, cash, instruments and other property and proceeds shall constitute
Collateral and shall be paid or otherwise delivered to the Secured Party. In the
event that Pledgor is required by the provisions hereof or of the Indenture to
pledge additional capital stock (including, without limitation, the capital
stock of any newly acquired or formed Restricted Subsidiary of Pledgor) as
collateral for the Obligations, then Pledgor and Secured Party shall execute an
amendment to this Agreement attaching an amended, supplemented or modified
Exhibit A hereto.
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Section 4.03 Records and Information. Pledgor shall keep accurate and
complete records of the Collateral (including proceeds, payments, distributions,
income and profits). Upon reasonable notice during regular business hours and
without undue interference with the Pledgor's business, Secured Party may at any
time have access to, examine, audit, make extracts from and inspect without
hindrance or delay Pledgor's records, files and the Collateral.
Section 4.04 Further Assurances. Upon the request of Secured Party,
Pledgor shall (at Pledgor's expense) execute and deliver all such assignments,
certificates, instruments, securities, financing statements, notifications to
financial intermediaries, clearing corporations, the Pledged Entities of the
Pledged Securities or other third parties or other documents and give further
assurances and do all other acts and things as Secured Party may reasonably
request to perfect Secured Party's interest in the Collateral or which is
necessary to protect, enforce or otherwise effect Secured Party's rights and
remedies hereunder.
Section 4.05 Stock Powers. Pledgor shall furnish to Secured Party such
stock powers and other instruments as may reasonably be required by Secured
Party to assure the transferability of the Collateral when and as often as may
be requested by Secured Party.
Section 4.06 Rights to Sell.
(a) If Secured Party shall determine to exercise its rights to sell
all or any of the Collateral pursuant to its rights hereunder, Pledgor agrees
that, upon request of Secured Party, Pledgor will, at its own expense:
(i) use its best efforts to qualify the Collateral under the
state securities or "Blue Sky" laws and to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by Secured Party; and
(ii) use its commercially reasonable best efforts to do or cause
to be done all such other acts and things as may be necessary to make such sale
of the Collateral or any part thereof valid and binding and in compliance with
applicable law.
(b) Pledgor further acknowledges the impossibility of ascertaining the
amount of damages which would be suffered by Secured Party and the Holders of
the Notes by reason of the failure by Pledgor to perform any of the covenants
contained in this Section 4.06 and consequently agrees that if Pledgor shall
fail to perform any of such covenants, it shall be subject to a suit for
specific performance of such covenants.
Section 4.07 Voting and Other Consensual Rights. Except to the extent
otherwise provided in Section 6.06(d) hereof, Pledgor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Collateral or any part thereof for any purpose not inconsistent with the terms
of this Agreement or the Indenture or any other Collateral Document.
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ARTICLE V
RIGHT, DUTIES, AND POWERS OF SECURED PARTY
Secured Party shall have the following rights, duties and powers:
Section 5.01 Discharge Encumbrances. After the occurrence and during,
the continuance of an Event of Default, Secured Party may, at its option,
discharge any taxes, Liens, security interests or other encumbrances at any time
levied or placed on the Collateral. Pledgor agrees to reimburse Secured Party as
provided in the Indenture.
Section 5.02 Cumulative and Other Rights. The rights, powers and
remedies of Secured Party hereunder are in addition to all rights, powers and
remedies given by law or in equity. The exercise by Secured Party of any one or
more of the rights, powers and remedies herein shall not be construed as a
waiver of any other rights, powers and remedies, including, without limitation,
any other rights of set-off (provided that set-off rights may not be exercised
prior to the acceleration of the Notes).
Section 5.03 Disclaimer of Certain Duties.
(a) The powers conferred upon Secured Party by this Agreement are to
protect its interest in the Collateral and shall not impose any duty upon
Secured Party to exercise any such powers. Pledgor hereby agrees that Secured
Party shall not be liable for, nor shall the indebtedness evidenced by the
Obligations be diminished by, Secured Party's delay or failure to collect upon,
foreclose, sell, take possession of or otherwise obtain value for the
Collateral.
(b) Except as may be required by the provisions of the Indenture, and
to the fullest extent permitted by applicable law, Secured Party shall be under
no duty whatsoever to make or give any presentment, notice of dishonor, protest,
demand for performance, notice of non-performance, notice of intent to
accelerate, notice of acceleration, or other notice or demand in connection with
any Collateral or the Obligations, or to take any steps necessary to preserve
any rights against any Obligor or other Person. Pledgor waives any right of
marshaling in respect of any and all Collateral, and waives any right to require
Secured Party to proceed against any Obligor or other Person, exhaust any
Collateral or enforce any other remedy which Secured Party now has or may
hereafter have against any Obligor or other Person.
Section 5.04 Modification of Obligations; Other Security. Except as
specifically provided for in the Indenture, Pledgor waives (i) any and all
notice of acceptance, creation, modification, rearrangement, renewal or
extension for any period of any instrument executed by any Obligor in connection
with the Obligations, and (ii) to the fullest extent permitted by applicable
law, any defense of any Obligor by reason of disability, lack of authorization,
cessation of the liability of any Obligor or for any other reason. Pledgor
authorizes Secured Party, without notice or demand and without any reservation
of rights against Pledgor and without affecting Pledgor's liability hereunder or
on the Obligations, from time to time after the occurrence and during the
continuance of an Event of Default, to (x) apply the Collateral in the manner
permitted by this Agreement, and (y) after the occurrence and during the
continuance of
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an Event of Default, renew, extend for any period, accelerate, amend or modify,
supplement, enforce, compromise, settle, waive or release the obligations of any
Obligor or any instrument or agreement of such other Person with respect to any
or all of the Obligations or Collateral.
Section 5.05 Custody and Preservation of the Collateral. Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which comparable secured parties accord
comparable collateral, it being understood and agreed, however, that Secured
Party shall not have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Collateral, whether or not Secured Party has or is deemed to
have knowledge of such matters, or (ii) taking any necessary steps to preserve
rights against Persons or entities with respect to any Collateral.
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01 Events. It shall constitute an Event of Default under
this Agreement if an "Event of Default" occurs and is continuing under the
Indenture.
Section 6.02 Remedies. Upon the occurrence and during the continuance
of any Event of Default, Secured Party may take any or all of the following
actions without notice (except where expressly required below or in the
Indenture) or demand to Pledgor:
(a) Sell, in one or more sales and in one or more parcels, or
otherwise dispose of any or all of the Collateral in any commercially reasonable
manner as Secured Party may elect, in a public or private transaction, at any
location as deemed reasonable by Secured Party for cash at such price as Secured
Party may deem fair; and (unless prohibited by the Code, as adopted in any
applicable jurisdiction) Secured Party may be the purchaser of any or all
Collateral so sold and may apply upon the purchase price therefor any
Obligations secured hereby. Any such sale or transfer by Secured Party either to
itself or to any other Person shall be absolutely free from any claim of right
by Pledgor, including any equity or right of redemption, stay or appraisal which
Pledgor has or may have under any rule of law, regulation or statute now
existing or hereafter adopted. Upon any such sale or transfer, Secured Party
shall have the right to deliver, assign and transfer to the purchaser or
transferee thereof the Collateral so sold or transferred. If Secured Party deems
it advisable to do so, it may restrict the bidders or purchasers of any such
sale or transfer to Persons or entities who will represent and agree that they
are purchasing the Collateral for their own account and not with the view to the
distribution or resale of any of the Collateral. Secured Party may, at its
discretion, provide for a public sale, and any such public sale shall be held at
such time or times within ordinary business hours and at such place or places as
Secured Party may fix in the notice of such sale. Secured Party shall not be
obligated to make any sale pursuant to any such notice. Secured Party may,
without notice or publication, adjourn any public or private sale by
announcement at any time and place fixed for such sale, and such sale may be
made at any time or place to which the same may be so adjourned. In the event
any sale or transfer hereunder is not completed or is defective in the opinion
of Secured Party, such sale or transfer shall not exhaust the rights of Secured
Party hereunder, and Secured Party shall
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have the right to cause one or more subsequent sales or transfers to be made
hereunder. If only part of the Collateral is sold or transferred such that the
Obligations remain outstanding (in whole or in part), Secured Party's rights and
remedies hereunder shall not be exhausted, waived or modified, and Secured Party
is specifically empowered to make one or more successive sales or transfers
until all the Collateral shall be sold or transferred and all the Obligations
are paid. In the event that Secured Party elects not to sell the Collateral,
Secured Party retains its rights to dispose of or utilize the Collateral or any
part or parts thereof in any manner authorized or permitted by law or in equity,
and to apply the proceeds of the same towards payment of the Obligations. Each
and every method of disposition of the Collateral described in this Section 6.02
shall constitute disposition in a commercially reasonable manner.
(b) Apply proceeds of the disposition of the Collateral to the
Obligations as provided by the Indenture. Such application may include, without
limitation, the reasonable attorneys' fees and legal expenses incurred by
Secured Party.
(c) Appoint any Person as agent to perform any act or acts necessary
or incident to any sale or transfer by Secured Party of the Collateral.
(d) Execute, assign and endorse negotiable and other instruments for
the payment of money, documents of title or other evidences of payment, shipment
or storage for any form of Collateral on behalf of and in the name of Pledgor.
(e) Exercise all other rights and remedies permitted by law or in
equity.
Section 6.03 Attorney-in-Fact. Pledgor hereby irrevocably appoints
Secured Party as Pledgor's attorney-in-fact, with full authority in the place
and stead of Pledgor and in the name of Pledgor or otherwise, from time to time
in Secured Party's reasonable discretion upon the occurrence and during the
continuance of an Event of Default, but at Pledgor's cost and expense, to take
any action and to execute any assignment, certificate, financing statement,
stock power, notification, document or instrument which Secured Party may
reasonably deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, to receive, endorse and collect all
instruments made payable to Pledgor representing any dividend, interest payment
or other distribution in respect of the Collateral or any part thereof and to
give full discharge for the same.
Section 6.04 Liability for Deficiency. If any sale or other
disposition of Collateral by Secured Party or any other action of Secured Party
hereunder results in reduction of the Obligations, such action will not release
Pledgor from its liability to Secured Party for any unpaid Obligations,
including reasonable costs, charges and expenses incurred in the liquidation of
Collateral and the same shall be immediately due and payable to Secured Party at
Secured Party's address set forth in the opening paragraph hereof.
Section 6.05 Reasonable Notice. If any applicable provision of any law
requires Secured Party to give reasonable notice of any sale or disposition or
other action, Pledgor hereby agrees that ten (10) days' prior written notice
shall constitute reasonable notice thereof.
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Such notice, in the case of public sale, shall state the time and place fixed
for such sale and, in the case of private sale, the time after which such sale
is to be made.
Section 6.06 Pledged Securities. Upon the occurrence and during the
continuance of an Event of Default:
(a) All rights of Pledgor to receive the property which it would
otherwise be authorized to receive and retain pursuant to Section 4.02 hereof
shall cease, and all such rights shall thereupon become vested in Secured Party
who shall thereupon have the sole right to receive and hold as Collateral such
property, but Secured Party shall have no duty to receive and hold such property
and shall not be responsible for any failure to do so or delay in so doing.
(b) All property which is received by Pledgor contrary to the
provisions of this Section 6.06 shall be received in trust for the benefit of
Secured Party, shall be segregated from other funds of Pledgor and shall be
forthwith paid over to Secured Party as Collateral in the same form as so
received (with any necessary endorsement).
(c) Secured Party may exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options pertaining to
any of the Pledged Securities as if it were the absolute owner thereof,
including without limitation, the right to exchange at its discretion, any and
all of the Pledged Securities upon the merger, consolidation, reorganization,
recapitalization or other readjustment of the Pledged Entities or upon the
exercise by the Pledged Entities or Secured Party of any right, privilege or
option pertaining to any of the Pledged Securities, and in connection therewith,
to deposit and deliver any and all of the Pledged Securities with any committee,
depository, transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine, all without liability except to account for
property actually received by it, but Secured Party shall have no duty to
exercise any of the aforesaid rights, privileges or options and shall not be
responsible for any failure to do so or delay in so doing .
(d) All rights of Pledgor to exercise the voting and other consensual
rights which Pledgor would otherwise be entitled to exercise pursuant to Section
4.07 hereof with respect to the Pledged Securities issued by the Pledged
Entities shall cease, and all such rights shall thereupon become vested in
Secured Party who shall thereupon have the sole right to exercise such voting
and other consensual rights, but Secured Party shall have no duty to exercise
any such voting or other consensual rights and shall not be responsible for any
failure to do so or delay in so doing.
Section 6.07 Non-judicial Enforcement. Secured Party may enforce its
rights hereunder without prior judicial process or judicial hearing, and to the
extent permitted by law, Pledgor expressly waives any and all legal rights which
might otherwise require Secured Party to enforce its rights by judicial process.
Section 6.08 Private Sale of Securities. Pledgor recognizes that
Secured Party may deem it impracticable to effect a public sale of all or any
part of the Securities and that Secured Party may, therefore, determine to make
one or more private sales of any such Securities to
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a restricted group of purchasers who will be obligated to agree, among other
things, to acquire such Securities for their own account, for investment and not
with a view to the distribution or resale thereof. Pledgor acknowledges that
any such private sale may be at prices and on terms less favorable to the seller
than the prices and other terms which might have been obtained at a public sale
and, notwithstanding the foregoing, agrees that such private sale shall be
deemed to have been made in a commercially reasonably manner and that Secured
Party shall have no obligation to delay sale of any such securities for the
period of time necessary to permit Pledgor to register such Securities for
public sale under the Securities Act of 1933, as amended (the "Securities Act").
Pledgor further acknowledges and agrees that any offer to sell such Securities
which has been (i) publicly advertised on a bona fide basis in a newspaper or
other publication of general circulation in the financial community of New York,
New York (to the extent that such an offer may be so advertised without prior
registration under the Securities Act), or (ii) made privately in the manner
described above to not less than fifteen (15) bona fide offerees shall be deemed
to involve a "public sale" for the purposes of Section 9-504(c) of the Code (or
any successor or similar, applicable statutory provision) as then in effect in
the State of New York, notwithstanding that such sale may not constitute a
"public offering" under the Securities Act and that Secured Party may, in such
event, bid for the purchase of such Securities.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Notices. Any notice required or permitted to be given
under or in connection with this Agreement shall be given in accordance with the
notice provisions of the Indenture.
Section 7.02 Amendments and Waivers. Secured Party's acceptance of
partial or delinquent payments or any forbearance, failure or delay by Secured
Party in exercising any right, power or remedy hereunder shall not be deemed a
waiver of any obligation of Pledgor or any Obligor, or of any right, power or
remedy of Secured Party, and no partial exercise of any right, power or remedy
shall preclude any other or further exercise thereof. Secured Party may remedy
any Event of Default hereunder or in connection with the Obligations without
waiving the Event of Default so remedied. Pledgor hereby agrees that if Secured
Party and the Holders of the Notes agree to a waiver of any provision hereunder,
as provided by the Indenture, or an exchange of or release of the Collateral, or
the addition or release of any Obligor or other Person, any such action shall
not constitute a waiver of any of Secured Party's other rights or of Pledgor's
obligations hereunder. This Agreement may be amended only by an instrument in
writing in the manner set forth in the Indenture and may be supplemented only by
documents delivered or to be delivered in accordance with the express terms
hereof.
Section 7.03 Redelivery of Collateral. If any sale or transfer of
Collateral by Secured Party results in full satisfaction of the Obligations, and
after such sale or transfer and discharge there remains a surplus of proceeds,
Secured Party will deliver to Pledgor or such other Person as may be required by
a Governmental Authority such excess proceeds in a commercially reasonable time;
provided, however, that neither Secured Party nor any Holders of the Notes
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shall have any liability for any interest, cost or expense in connection with
any reasonable delay in delivering such proceeds to Pledgor.
Section 7.04 Gaming Authority. Each of the provisions of this
Agreement is subject to, and shall be enforced in compliance with, the
requirements of any applicable Gaming Authority.
Section 7.05 Governing Law; Jurisdiction. This Agreement and the
security interest granted hereby shall be construed in accordance with and
governed by the laws of the State of New York (except to the extent that the
laws of any other jurisdiction govern the perfection and priority of the
security interests granted hereby).
Section 7.06 Continuing Security Agreement.
(a) Except as may be expressly applicable pursuant to Section 9-505 of
the Code, no action taken or omission to act by Secured Party hereunder,
including, without limitation, any exercise of voting or consensual rights
pursuant to Section 6.06(d) hereof or any other action taken or inaction
pursuant to Section 6.02 hereof, shall be deemed to constitute a retention of
the Collateral in satisfaction of the Obligations or otherwise to be in full
satisfaction of the Obligations, and the Obligations shall remain in full force
and effect until Secured Party shall have applied payments (including, without
limitation, collections from Collateral) towards the Obligations in the full
amount then outstanding or until such subsequent time as is hereinafter provided
in Section 7.06(b) hereof.
(b) To the extent that any payments on the Obligations or proceeds of
the Collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law or
equitable cause, then to such extent the Obligations so satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Secured Party, and Secured Party's security interests, rights, powers and
remedies hereunder shall continue in full force and effect. In such event, this
Agreement shall be automatically reinstated if it shall theretofore have been
terminated pursuant to Section 7.07 hereof.
Section 7.07 Termination. The grant of a security interest hereunder
and all of Secured Party's rights, powers and remedies in connection therewith
shall, unless otherwise provided in the Indenture or in this Agreement, remain
in full force and effect until the payment in full of (a) the Notes under the
terms of the Indenture and (b) all Obligations then due and owing under the
Indenture, the Notes and the Collateral Documents; provided, however, that after
receipt from the Pledgor by the Secured Party of a request for a release of any
Collateral permitted under the Indenture upon the sale, transfer, assignment,
exchange or other disposition of the Collateral not prohibited by the Indenture
(and upon receipt by the Secured Party of all proceeds of such sale, transfer,
assignment, exchange or other disposition to the extent required to be remitted
to the Secured Party under the Indenture), such Collateral shall be released
from the Lien and security interest created hereunder in accordance with the
provisions of the Indenture and no longer constitute Collateral. Notwithstanding
the foregoing, the provisions of Section 7.06(b) hereof shall survive the
termination of this Agreement.
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Section 7.08 Release. Subject to the provisions of Section 7.06(b)
hereof, this Agreement shall terminate upon payment in full of (a) the Notes
under the terms of the Indenture and (b) all Obligations then due and owing
under the Indenture, the Notes and the Collateral Documents. At such time, the
Secured Party shall, at the request of the Pledgor, reassign and redeliver to
the Pledgor all of the Collateral hereunder that has not been sold, disposed of,
retained or applied by the Secured Party in accordance with the terms of the
Indenture or the Collateral Documents. Such reassignment and redelivery 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 Collateral,
and shall be at the expense of the Pledgor.
Section 7.09 Counterparts, Effectiveness. This Agreement becomes
effective upon the execution hereof by Pledgor and delivery of the same to
Secured Party, and it is not necessary for Secured Party to execute any
acceptance hereof or otherwise signify or express its acceptance hereof.
Section 7.10 Interpretation of Agreement. To the extent a term or
provision of this Agreement conflicts with the Indenture, the Indenture shall
control with respect to the subject matter of such term or provision.
Section 7.11 Rights of Holders. No Holder of Notes shall have any
independent rights hereunder other than those rights granted to individual
Holders of Notes pursuant to the Indenture; provided that, nothing in this
Section 7.11 shall limit any rights granted to the Secured Party under the
Notes, the Indenture or the Collateral Documents.
Section 7.12 No Personal Liability of Directors, Officer, Employees,
and Stockholders. No past, present or future director, officer, employee,
incorporator or stockholder of the Pledgor, as such or any successor Person, as
such, shall have any liability for any obligations of the Pledgor under this
Agreement or for any claim based on, in respect of, or by reason of, such
Obligations or their creation.
Section 7.13 Trustee. State Street Bank and Trust Company is acting
hereunder solely in its capacity as Trustee under the Indenture, and all of the
rights of Trustee set forth in the Indenture shall apply to Trustee's actions
hereunder. To the extent this Agreement contemplates payments by the Secured
Party, the Trustee shall have no liability therefor, such liability continuing
to be the liability of Pledgor or realized through the value of any collateral
for the Obligations.
Section 7.14 Gaming Laws and Regulations. 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 Louisiana Riverboat
Economic Development and Gaming Control Act, La. R.S. 27:41, et seq., and the
Louisiana Gaming Control Law, La. R.S. 27:1, and the regulations promulgated
pursuant to each such law, all as amended from time to time. The Gaming License
held by Hollywood Casino Shreveport is not part of the Collateral of this
Agreement and, 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 Agreement under the defaults
and remedies provisions of this Agreement.
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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 Gaming Authority approval.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Pledgor has caused this Stock Pledge Agreement to
be executed as of the date first above written.
Pledgor: HWCC-LOUISIANA, INC., a Louisiana
corporation
By: /s/ PAUL C. YATES
--------------------------------
Name: Paul C. Yates
Title: Executive Vice President and
Chief Financial Officer
[SIGNATURE PAGE TO STOCK PLEDGE AGREEMENT]
S-1
<PAGE>
EXHIBIT A
PLEDGED SECURITIES
<TABLE>
<CAPTION>
Stock % of
Pledged Entity Class of Stock Certificate No. No. of Shares Outstanding
<S> <C> <C> <C> <C>
1. HCS I, Inc., a Common 1 1,000 100%
Louisiana corporation
2. HCS II, Inc., a Common 1 1,000 100%
Louisiana corporation
</TABLE>
A-1
<PAGE>
EXHIBIT 4.8
SECURITY AGREEMENT
------------------
(Guarantors and Co-Issuer)
Made by
SHREVEPORT CAPITAL CORPORATION,
HWCC LOUISIANA, INC.
HCS I, INC.
and
HCS II, INC.
as Debtor
to
STATE STREET BANK AND TRUST COMPANY,
as Trustee and Secured Party
Acting on behalf of the Holders of the Notes
August 10, 1999
<PAGE>
SECURITY AGREEMENT
------------------
(Guarantors and Co-Issuer)
THIS SECURITY AGREEMENT (this "Agreement") is made as of August 10,
---------
1999, by SHREVEPORT CAPITAL CORPORATION, a Louisiana corporation ("Shreveport
Capital"), HWCC LOUISIANA, INC., a Louisiana corporation ("HWCC Louisiana"),
HCS I, INC., a Louisiana corporation ("HCS I"), and HCS II, INC., a Louisiana
corporation ("HCS II", and together with Shreveport Capital, HWCC Louisiana and
HCS I, collectively, the "Debtors" and individually each a "Debtor"), in favor
-------
of STATE STREET BANK AND TRUST COMPANY, A MASSACHUSETTS TRUST COMPANY, AS
TRUSTEE ACTING ON BEHALF OF THE HOLDERS OF THE NOTES UNDER THE INDENTURE (THE
"SECURED PARTY").
- --------------
W I T N E S S E T H:
- - - - - - - - - -
A. Shreveport Capital, Hollywood Casino Shreveport, a Louisiana
general partnership (the "Partnership", and together with Shreveport Capital,
the "Issuers") and the other Debtors, each as a Guarantor, have entered into an
Indenture dated as of the date hereof (as amended, supplemented, restated or
otherwise modified from time to time, the "Indenture") with the Trustee,
---------
pursuant to which the Issuers will issue up to $150,000,000 of their 13% First
Mortgage Notes due 2006 with Contingent Interest (as the same may be amended,
supplemented, restated, exchanged, replaced or otherwise modified from time to
time, collectively, the "Notes").
-----
B. Each of the Debtors other than Shreveport Capital has executed
the Indenture as a Guarantor for the purpose of guaranteeing the Obligations of
the Issuers under and as defined in the Indenture.
C. It is a condition precedent to the purchase of the Notes under
the Indenture that the Debtors shall have executed and delivered this Agreement.
NOW THEREFORE, in order to comply with the terms and conditions of the
Indenture and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Debtor hereby agrees with
Secured Party as follows:
ARTICLE 1
DEFINITIONS
-----------
Section 1.01 Definitions. When used herein, (a) the terms Certificated
-----------
Security, Chattel Paper, Deposit Account, Document, Equipment, Financial Asset,
Fixture, Goods, Inventory, Instrument, Investment Property, Security, Security
Entitlement and Uncertificated Security have the respective meanings assigned
thereto in the Code (as defined below); (b) capitalized terms which are not
otherwise defined have the respective meanings assigned thereto in the
Indenture; and (c) the following terms have the following meanings (such
definitions to be applicable to both the singular and plural forms of such
terms):
<PAGE>
Account Debtor means the party who is obligated on or under any
--------------
Account Receivable, Contract Right or General Intangible.
Account Receivable means, with respect to any Debtor, any right of
------------------
such Debtor to payment for goods sold or leased or for services rendered.
Code means the Uniform Commercial Code as in effect in the State of
----
New York on the date of this Agreement; provided that, if by reason of mandatory
-------- ----
provisions of law, the perfection or the effect of perfection or non-perfection
of the security interests in any Collateral is governed by the Uniform
Commercial Code as in effect in any jurisdiction other than the State of New
York, "Code" means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such perfection
or the effect of perfection or non-perfection.
Collateral means, with respect to any Debtor, all property and rights
----------
of such Debtor in which a security interest is granted hereunder.
Computer Hardware and Software means, with respect to any Debtor, all
------------------------------
of such Debtor's rights (including rights as licensee and lessee) with respect
to (i) computer and other electronic data processing hardware, including all
integrated computer systems, central processing units, memory units, display
terminals, printers, computer elements, card readers, tape drives, hard and soft
disk drives, cables, electrical supply hardware, generators, power equalizers,
accessories, peripheral devices and other related computer hardware; (ii) all
software programs designed for use on the computers and electronic data
processing hardware described in clause (i) above, including all operating
----------
system software, utilities and application programs in whatsoever form (source
code and object code in magnetic tape, disk or hard copy format or any other
listings whatsoever); (iii) any firmware associated with any of the foregoing;
and (iv) any documentation for hardware, software and firmware described in
clauses (i), (ii) and (iii) above, including flow charts, logic diagrams,
- ----------- ---- -----
manuals, specifications, training materials, charts and pseudo codes.
Contract Rights means, with respect to any Debtor, any rights of such
---------------
Debtor (including, without limitation, all rights to payment) under each
Contract.
Contracts means, with respect to any Debtor, all contracts or other
---------
agreements between such Debtor and one or more additional parties, including,
without limitation, all of the contracts described on Exhibit C attached hereto.
---------
Event of Default has the meaning set forth in Section 6.01 hereof.
----------------
General Intangibles means, with respect to any Debtor, all of such
-------------------
Debtor's "general intangibles" as defined in the Code and, in any event,
includes (without limitation) all of Debtor's trademarks and goodwill of the
business relating thereto, trade names, patents, copyrights, trade secrets,
customer lists, inventions, designs, software programs, mask works,
registrations, licenses, franchises, tax refund claims, guarantee claims,
security interests, rights to indemnification, all contractual rights and
obligations or indebtedness owing to such Debtor from
2
<PAGE>
whatever source arising, all things in action, rights represented by judgments,
claims arising out of tort and other claims relating to the Collateral
(including the right to assert and otherwise be the proper party of interest to
commence and prosecute actions), and all rights in respect of any pension plan
or similar arrangement maintained for employees of such Debtor.
Intellectual Property means all past, present and future: trade
---------------------
secrets and other proprietary information; trademarks, service marks, business
names, designs, logos, indicia and other source and/or business identifiers, and
the goodwill of the business relating thereto and all registrations or
applications for registrations which have heretofore been or may hereafter be
issued thereon throughout the world; copyrights (including copyrights for
computer programs) and copyright registrations or applications for registrations
which have heretofore been or may hereafter be issued throughout the world and
all tangible property embodying the copyrights; unpatented inventions (whether
or not patentable); patent applications and patents; industrial designs,
industrial design applications and registered industrial designs; license
agreements related to any of the foregoing and income therefrom; books, records,
writings, computer tapes or disks, flow diagrams, specification sheets, source
codes, object codes and other physical manifestations, embodiments or
incorporations of any of the foregoing; the right to sue for all past, present
and future infringements of any of the foregoing; and all common law and other
rights throughout the world in and to all of the foregoing.
Non-Tangible Collateral means, with respect to any Debtor,
-----------------------
collectively, such Debtor's Accounts Receivable, Contract Rights and General
Intangibles.
Obligations means (i) the payment when due of indebtedness evidenced
-----------
by the Notes in the principal sum not to exceed at any time outstanding of
$150,000,000, interest (including post-petition interest) as set forth in the
Indenture and the Notes, and premiums, penalties, and late charges thereon; (ii)
all other indebtedness and other sums (including, without limitation, all
expenses, attorneys' fees, other fees, indemnifications, reimbursements,
damages, other monetary liabilities, and other charges) and obligations that may
or shall become due hereunder or under the Notes, the Guarantees, the Indenture
or the other Collateral Documents; and (iii) any and all renewals,
modifications, amendments, extensions for any period, supplements or
restatements of any of the foregoing.
Obligor means any Person, other than Debtor, liable (whether directly
-------
or indirectly, primarily or secondarily) for the payment or performance of any
of the Obligations whether as maker, co-maker, endorser, guarantor,
accommodation party, general partner or otherwise.
ARTICLE 2
SECURITY INTEREST
-----------------
Section 2.01 Grant of Security Interest. As security for the prompt and
--------------------------
complete payment and performance of the Obligations, each Debtor grants to
Secured Party a continuing security interest in, Lien upon, and right of set-off
against the following, whether now or hereafter existing or acquired:
3
<PAGE>
All of such Debtor's right, title and interest in, to and under the
following:
(i) Accounts Receivable;
(ii) Certificated Securities;
(iii) Chattel Paper;
(iv) Computer Hardware and Software and all rights with respect
thereto, including, any and all licenses, options,
warranties, service contracts, program services, test rights,
maintenance rights, support rights, improvement rights,
renewal rights and indemnifications, and any substitutions,
replacements, additions or model conversions of any of the
foregoing;
(v) all Contracts, together with all Contract Rights arising
thereunder;
(vi) Deposit Accounts;
(vii) Documents;
(viii) Financial Assets;
(ix) General Intangibles;
(x) Goods (including all of its Equipment, Fixtures and
Inventory) and all accessions, additions, attachments,
improvements, substitutions and replacements thereto and
therefor;
(xi) Instruments;
(xii) Intellectual Property;
(xiii) Investment Property;
(xiv) money (of every jurisdiction whatsoever);
(xv) Security Entitlements;
(xvi) Uncertificated Securities; and
(xvii) to the extent not included in the foregoing, other personal
property of any kind or description;
together with all books, records, writings, data bases, information
and other property relating to, used or useful in connection with, or
evidencing, embodying, incorporating or referring to any of the
foregoing, and all proceeds, products, offspring, rents, issues,
profits and returns of and from any of the foregoing;
4
<PAGE>
provided that to the extent that the provisions of any lease or
--------
license of Computer Hardware and Software or Intellectual Property
expressly prohibit (which prohibition is enforceable under applicable
law) the grant of a security interest therein, Debtor's rights in such
lease or license shall be excluded from the foregoing grant for so
long as such prohibition continues, it being understood that upon
-------------------
request of the Trustee, Debtor will in good faith use reasonable
efforts to obtain consent for the creation of a security interest in
favor of the Trustee in Debtor's rights under such lease or license.
Notwithstanding the foregoing provisions of this Section 2.01, such
grant of security interest shall not extend to, and the term
"Collateral" shall not include any of the foregoing property that is,
pursuant to restrictions enforceable under applicable law, prohibited
from being pledged as security; provided that, upon the termination of
--------
such prohibitions for any reason whatsoever or in the event such
prohibitions are or become unenforceable under applicable law, such
foregoing property shall automatically become Collateral hereunder
and, provided, further, that upon request of the Trustee, Debtor will
-------- -------
in good faith use reasonable efforts to obtain consent for the
creation of a security interest in favor of the Trustee in Debtor's
rights under such lease or license. Notwithstanding the foregoing, so
long as no Event of Default shall have occurred and be continuing, all
dividends, distributions, interest and principal payments, cash,
instruments, and other property and proceeds made upon or with respect
to or of the Collateral may be used by such Debtor subject to the
terms and conditions of the Indenture. Upon the occurrence and during
the continuance of an Event of Default, all rights of such Debtor to
receive all such dividends, distributions, interest and principal
payments, cash, instruments and other property and proceeds shall
cease, and such dividends, distributions, interest and principal
payments, cash, instruments and other property and proceeds shall be
paid or otherwise delivered to the Secured Party. It is expressly
contemplated that additional property may from time to time be
pledged, assigned or granted to Secured Party as additional security
for the Obligations, and the term "Collateral" as used herein shall be
deemed for all purposes hereof to include all such additional
property, together with all other property of the types described
above related thereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce Secured Party to accept this Agreement, each Debtor
represents and warrants to Secured Party (which representations and warranties
will survive the creation and payment of the Obligations) that:
Section 3.01 Ownership of Collateral; Absence of Encumbrances and
----------------------------------------------------
Restrictions. After giving effect to the use of the proceeds of the Notes, such
- ------------
Debtor is, and in the case of property acquired after the date hereof, will be,
the sole legal and beneficial owner of the Collateral holding good and
indefeasible title to the same, free and clear of all Liens except for
5
<PAGE>
Permitted Liens and such Debtor has full right, power and authority to assign
and grant a security interest in the Collateral to Secured Party.
Section 3.02 No Required Consent. Except for such authorizations,
-------------------
consents or approvals previously obtained and in effect, no authorization,
consent, approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body (other than the filing of financing
statements and the other documents required to perfect or maintain the
perfection of the Liens granted hereby) is required for (i) the due execution,
delivery and performance by such Debtor of this Agreement, (ii) the grant by
such Debtor of the security interest granted by this Agreement, (iii) the
perfection of such security interest or (iv) the exercise by Secured Party of
its rights and remedies under this Agreement, except as may be required by
applicable gaming laws or in connection with the disposition of Collateral or by
federal or state securities laws or antitrust laws.
Section 3.03 Security Interest. After giving effect to the use of
-----------------
proceeds of the Notes, the grant of the security interest in and Lien on the
Collateral pursuant to this Agreement creates a valid and continuing security
interest in and Lien on the Collateral, enforceable against Debtor, and, upon
the filing of financing statements in the appropriate office for the locations
of the Collateral listed on Exhibit A hereof, the security interests granted
---------
hereby will be perfected, prior to all other Liens except Permitted Liens,
enforceable against third parties and securing payment of the Obligations.
Section 3.04 No Filings By Third Parties. After giving effect to the use
---------------------------
of proceeds of the Notes, and other than any financing statement or other public
notice or recording naming Secured Party as the secured party therein or
financing statements with respect to Permitted Liens, no financing statement or
other public notice or recording covering the Collateral is on file in any
public office and such Debtor has not signed any document or agreement
authorizing the filing of any such financing statement or other public notice or
recording so long as any of the Obligations are outstanding.
Section 3.05 Name; No Name Changes. The name of such Debtor set forth on
---------------------
Exhibit A hereto is the true and correct legal name of such Debtor, and, except
- ---------
as described on Exhibit A hereto, such Debtor has not, during the preceding five
---------
(5) years, entered into any contract, agreement, security instrument or other
document using a name other than, or been known by or otherwise used any name
other than, the name used by such Debtor herein.
Section 3.06 Location of Debtor and Collateral; Intellectual Property.
--------------------------------------------------------
Such Debtor's chief executive office, principal place of business and the
locations of such Debtor's records concerning the Collateral are set forth on
Exhibit A hereto. Any Collateral not at such location(s) nevertheless remains
- ---------
subject to Secured Party's security interest. Except as disclosed on Exhibit A
---------
hereto, all tangible Collateral of such Debtor are located at the locations set
forth on Exhibit A hereto. Exhibit B hereto contains a true, correct and
--------- ---------
complete listing of all of such Debtor's Intellectual Property which have been
registered or for which applications for registration are pending.
6
<PAGE>
Section 3.07 Collateral. All statements or other information provided by
----------
such Debtor to Secured Party describing or with respect to the Collateral is
(or, in the case of subsequently furnished information, will be when provided)
correct and complete in all material respects. The delivery at any time by such
Debtor to Secured Party of additional descriptions of Collateral shall
constitute a representation and warranty by such Debtor to Secured Party
hereunder that the representations and warranties of this Article 3 are correct
in all material respects insofar as they would pertain to such Collateral or the
descriptions thereof, except as indicated therein.
Section 3.08 Delivery of Documents. With respect to any Collateral
---------------------
covered by one or more certificates of title or other documents of title
evidencing ownership or possession thereof, each of such certificates or
documents of title shall, after the occurrence and during the continuance of an
Event of Default and upon the request of the Secured Party, be delivered to
Secured Party (provided that all certificates of title and documents of title
referred to in Article 2 hereof shall be subject to the security interest
created by this Agreement irrespective of whether or not such delivery shall
have been made).
Section 3.09 Taxpayer Identification Number. The federal taxpayer
------------------------------
identification number of each Debtor is set forth on Exhibit A hereto.
---------
ARTICLE 4
COVENANTS AND AGREEMENTS
------------------------
Each Debtor will at all times comply with the covenants and agreements
contained in this Article 4, from the date hereof and for so long as any part of
the Obligations are outstanding.
Section 4.01 Change in Location of Collateral or Debtor. Except with
------------------------------------------
respect to Collateral under repair or temporarily in transit between locations
(and in any such case, for a period not to exceed four (4) months), no Debtor
will change the location of the Collateral (except for (a) Collateral held by
the Trustee, (b) motor vehicles and rolling stock, and (c) Collateral
temporarily in transit between locations) to any state, county or other
jurisdiction in which Secured Party has not already filed a financing statement
or taken other necessary steps to perfect or maintain its security interests in
the Collateral without Secured Party's prior written consent and the delivery of
such new financing statements or other documentation as may be reasonably
necessary or required by Secured Party to ensure the continued perfection and
priority of its security interest in the Collateral. No Debtor will change the
location of such Debtor's chief executive office, principal place of business or
the locations of such Debtor's records concerning the Collateral unless such
Debtor shall have given Secured Party at least thirty (30) days prior written
notice thereof and shall have delivered to Secured Party such new financing
statements or other documentation as may be reasonably necessary or required by
Secured Party to ensure the continued perfection and priority of its security
interest in the Collateral.
Section 4.02 Change in Debtor's Name or Corporate Structure. No Debtor
----------------------------------------------
will change its name, identity or corporate structure (including, without
limitation, any merger, consolidation or sale of substantially all of its
assets) unless such Debtor shall have given Secured Party at least thirty (30)
days prior written notice thereof and shall have delivered to Secured Party such
new
7
<PAGE>
financing statements or other documentation as may be reasonably necessary
or required by Secured Party to ensure the continued perfection and priority of
its security interest on the Collateral.
Section 4.03 Documents; Collateral in Possession of Third Parties. If
----------------------------------------------------
certificates of title or other documents evidencing ownership or possession of
the Collateral are issued or outstanding, such Debtor will, after the occurrence
and during the continuance of an Event of Default and upon the request of the
Secured Party, cause the interest of Secured Party to be properly noted thereon
and will, forthwith upon receipt, deliver same to Secured Party. If any
material portion of the Collateral is at any time in the possession or control
of any warehouseman, bailee, agent or independent contractor, such Debtor shall
notify such Person of Secured Party's security interest in such Collateral.
Upon Secured Party's request, such Debtor shall instruct any such Person to hold
all such Collateral for Secured Party's account subject to such Debtor's
instructions, or, if an Event of Default shall have occurred, subject to Secured
Party's instructions.
Section 4.04 Delivery of Letters of Credit and Instruments. After the
---------------------------------------------
occurrence and during the continuance of an Event of Default and upon the
request of the Secured Party, each Debtor will deliver each letter of credit, if
any, included in the Collateral to Secured Party, in each case forthwith upon
receipt by or for the account of such Debtor. After the occurrence and during
the continuance of an Event of Default and upon the request of the Secured
Party, if any Non-Tangible Collateral becomes evidenced by a promissory note,
trade acceptance or any other instrument for the payment of money (other than
checks or drafts in payment of Non-Tangible Collateral collected by such Debtor
in the ordinary course of business prior to notification by Secured Party under
Section 6.02(g)), such Debtor will immediately deliver such instrument to
Secured Party appropriately endorsed and, regardless of the form of presentment,
demand, notice of dishonor, protest and notice of protest with respect thereto,
such Debtor will remain liable thereon until such instrument is paid in full.
Section 4.05 Sale, Disposition or Encumbrance of Collateral. Except as
----------------------------------------------
permitted pursuant to the provisions of the Indenture and by Section 4.09 of
this Agreement or with Secured Party's prior written consent, no Debtor will in
any way encumber any of the Collateral (or permit or suffer any of the
Collateral to be encumbered) or sell, assign, lend, rent, lease or otherwise
dispose of or transfer any of the Collateral to or in favor of any Person other
than Secured Party.
Section 4.06 Records and Information. Each Debtor shall keep accurate and
-----------------------
complete records of the Collateral (including proceeds). Secured Party may at
any time upon reasonable prior notice have access during normal business hours
to examine, audit, make extracts from and inspect without hindrance or delay
such Debtor's records, files and the Collateral. Each Debtor will promptly
provide written notice to Secured Party of all information which in any way
relates to or affects the filing of any financing statement or other public
notices or recordings, or the delivery and possession of items of Collateral,
for the purpose of perfecting a security interest in the Collateral. Each
Debtor will also promptly furnish such information as Secured Party may from
time to time reasonably request regarding the Collateral or Secured Party's
rights or remedies with respect thereto.
8
<PAGE>
Section 4.07 Reimbursement of Expenses. Each Debtor hereby assumes all
-------------------------
liability for the Collateral, the security interests created hereunder and any
use, possession, maintenance, management, enforcement or collection of any or
all of the Collateral. Each Debtor agrees to indemnify and hold Secured Party
harmless from and against and covenants to defend Secured Party against any and
all losses, damages, claims, costs, penalties, liabilities and expenses,
including, without limitation, court costs and reasonable attorneys' fees,
incurred because of, incident to, or with respect to the Collateral (including,
without limitation, any use, possession, maintenance or management thereof, or
any injuries to or deaths of Persons or damage to property, except to the extent
caused by the gross negligence or willful misconduct of the Secured Party). All
amounts for which each Debtor is liable pursuant to this Section 4.07 shall be
due and payable by Debtor to Secured Party upon demand. If any such Debtor
fails to make such payment upon demand (or if demand is not made due to an
injunction or stay arising from bankruptcy or other proceedings) and Secured
Party pays such amount, the same shall be due and payable by such Debtor to
Secured Party, plus interest thereon from the date of Secured Party's demand (or
from the date of Secured Party's payment if demand is not made due to such
proceedings) at the interest rate applicable to overdue principal as provided in
the Notes.
Section 4.08 Further Assurances. Upon the request of Secured Party, each
------------------
Debtor shall (at such Debtor's expense) execute and deliver all such
assignments, certificates, financing statements or other documents and give
further assurances and do all other acts and things as Secured Party may
reasonably request to perfect Secured Party's interest in the Collateral or to
protect, enforce or otherwise effect Secured Party's rights and remedies
hereunder.
Section 4.09 Inventory. Each Debtor may use the Inventory in any lawful
---------
manner not inconsistent with this Agreement and the Indenture and with the terms
of insurance thereon.
Section 4.10 Use of Collateral. No Debtor will use any Collateral in
-----------------
violation in any material respect of any law, statute, ordinance, regulation or
administrative order, or suffer it to be so used.
Section 4.11 Collateral Attached to Other Property. In the event that the
-------------------------------------
Collateral is to be attached or affixed to any real property, each Debtor hereby
agrees that this Agreement may be filed for record in any appropriate real
estate records as a financing statement which is a fixture filing. In
connection therewith, each Debtor will take whatever action is required by
Section 4.08. If such Debtor is not the record owner of such real property,
such Debtor will provide Secured Party with any additional security agreements
or financing statements necessary for the perfection of Secured Party's security
interest in the Collateral. If the Collateral is wholly or partly affixed to
real estate or installed in or affixed to other goods, such Debtor will, on
demand of Secured Party, use its commercially reasonable efforts to furnish
Secured Party with landlord's waivers, signed by all Persons having an interest
in the real estate or other goods to which the Collateral may have become
affixed, permitting the Secured Party to have access to the Collateral at all
reasonable times and granting the Secured Party a reasonable period of time in
which to remove the Collateral after the occurrence and during the continuance
of an Event of Default.
9
<PAGE>
ARTICLE 5
RIGHTS, DUTIES AND POWERS OF SECURED PARTY
------------------------------------------
Secured Party shall have the following rights, duties and powers:
Section 5.01 Discharge Encumbrances. After the occurrence and during the
----------------------
continuance of an Event of Default, Secured Party may, at its option, discharge
any taxes, Liens, security interests or other encumbrances at any time levied or
placed on the Collateral, and may pay for insurance on the Collateral to the
extent required by this Agreement or the Indenture and not obtained by any
Debtor. Each Debtor agrees to reimburse Secured Party upon demand for any
payment so made, plus interest thereon from the date of Secured Party's demand
at the interest rate applicable to overdue principal as provided in the Notes.
Section 5.02 Licenses and Rights to Use Collateral. After the occurrence
-------------------------------------
and during the continuance of an Event of Default, in connection with any
transfer or sale (to Secured Party or any other Person) of the Collateral,
Secured Party is hereby granted a transferable license or other right to use,
without any charge, any of any Debtor's Intellectual Property in completing
production, advertising or selling such Collateral except any of the foregoing
property which is expressly prohibited by its terms from being assigned or
licensed. After the occurrence and during the continuance of an Event of
Default, each Debtor's rights under all licenses and franchise agreements shall
inure to the benefit of Secured Party and any transferee of all or any part of
the Collateral.
Section 5.03 Cumulative and Other Rights. The rights, powers and remedies
---------------------------
of Secured Party hereunder are in addition to all rights, powers and remedies
given by law or in equity. The exercise by Secured Party of any one or more of
the rights, powers and remedies herein shall not be construed as a waiver of any
other rights, powers and remedies, including, without limitation, any other
rights of set-off (which set-off rights may be exercised only after the
occurrence and during the continuance of an Event of Default). If any of the
Obligations are given in renewal, extension for any period or rearrangement, or
applied toward the payment of debt secured by any Lien, Secured Party shall be,
and is hereby, subrogated to all the rights, titles, interests and liens
securing the debt so renewed, extended, rearranged or paid.
Section 5.04 Disclaimer of Certain Duties.
----------------------------
(a) The powers conferred upon Secured Party by this Agreement are to
protect its interest in the Collateral and shall not impose any duty upon
Secured Party to exercise any such powers. Each Debtor hereby agrees that
Secured Party shall not be liable for, nor shall the indebtedness evidenced
by the Obligations be diminished by, Secured Party's delay or failure to
collect upon, foreclose, sell, take possession of or otherwise obtain value
for the Collateral. Nothing herein shall affect any obligation of Secured
Party to the Holders under the Indenture or under applicable law.
(b) Except as may be required by the Indenture, and to the fullest
extent permitted by applicable law, Secured Party shall be under no duty
whatsoever to make or give any presentment, notice of dishonor, protest,
demand for performance, notice of
10
<PAGE>
non-performance, notice of intent to accelerate, notice of acceleration, or
other notice or demand in connection with any Collateral or the
Obligations, or to take any steps reasonably necessary to preserve any
rights against any Obligor, Account Debtor or other Person. Each Debtor
waives any right of marshaling in respect of any and all Collateral, and
waives any right to require Secured Party to proceed against any Obligor,
Account Debtor or other Person, exhaust any Collateral or enforce any other
remedy which Secured Party now has or may hereafter have against any
Obligor or other Person.
Section 5.05 Modification of Obligations; Other Security. Except as
-------------------------------------------
specifically provided for in the Indenture, each Debtor waives (i) any and all
notice of acceptance, creation, modification, rearrangement, renewal or
extension for any period of any instrument executed by any Obligor in connection
with the Obligations and (ii) any defense of any Obligor by reason of
disability, lack of authorization, cessation of the liability of any Obligor or
for any other reason. Each Debtor authorizes Secured Party, without notice or
demand and without any reservation of rights against such Debtor and without
affecting such Debtor's liability hereunder or on the Obligations, from time to
time to (x) after the occurrence and during the continuance of an Event of
Default and after the acceleration of the Notes, apply the Collateral in the
manner permitted by this Agreement or Indenture and (y) after the occurrence and
during the continuance of an Event of Default and after the acceleration of the
Notes, renew, extend for any period, accelerate, amend or modify, supplement,
enforce, compromise, settle, waive or release the obligations of any Obligor or
any instrument or agreement of such other Person with respect to any or all of
the Obligations or Collateral.
ARTICLE 6
EVENTS OF DEFAULT
-----------------
Section 6.01 Events of Default. It shall constitute an Event of Default
-----------------
under this Agreement if an Event of Default occurs and is continuing under the
Indenture.
Section 6.02 Remedies. Upon the occurrence and during the continuance of
--------
an Event of Default, Secured Party may take any or all of the following actions
without notice (except where expressly required below or in the Indenture) or
demand to the Debtors:
(a) Take possession of the Collateral, or at Secured Party's request
each Debtor shall, at such Debtor's cost, assemble the Collateral and make
it available at a location to be specified by Secured Party which is
reasonably convenient to such Debtor and Secured Party. In any event, each
Debtor shall bear the risk of accidental loss or damage to or diminution in
value of the Collateral, and Secured Party shall have no liability
whatsoever for failure to obtain or maintain insurance, nor to determine
whether any insurance ever in force is adequate as to amount or as to risk
insured.
(b) Sell, in one or more sales and in one or more parcels, or
otherwise dispose of any or all of the Collateral in its then condition or
in any other commercially reasonable manner as Secured Party may elect, in
a public or private transaction, at any location as deemed reasonable by
Secured Party (including, without limitation, the applicable Debtor's
premises), for cash at such price as Secured Party may deem fair, and
11
<PAGE>
(unless prohibited by the Code, as adopted in any applicable jurisdiction)
Secured Party may be the purchaser of any or all Collateral so sold and may
apply upon the purchase price therefor any Obligations secured hereby. Any
such sale or transfer by Secured Party either to itself or to any other
Person shall be absolutely free from any claim of right by any Debtor,
including any equity or right of redemption, stay or appraisal which such
Debtor has or may have under any rule of law, regulation or statute now
existing or hereafter adopted. Upon any such sale or transfer, Secured
Party shall have the right to deliver, assign and transfer to the purchaser
or transferee thereof the Collateral so sold or transferred. It shall not
be necessary that the Collateral or any part thereof be present at the
location of any such sale or transfer. Secured Party may, at its
discretion, provide for a public sale, and any such public sale shall be
held at such time or times within ordinary business hours and at such place
or places as Secured Party may fix in the notice of such sale. Secured
Party shall not be obligated to make any sale pursuant to any such notice.
Secured Party may, without notice or publication, adjourn any public or
private sale by announcement at any time and place fixed for such sale, and
such sale may be made at any time or place to which the same may be so
adjourned. In the event any sale or transfer hereunder is not completed or
is defective in the opinion of Secured Party, such sale or transfer shall
not exhaust the rights of Secured Party hereunder, and Secured Party shall
have the right to cause one or more subsequent sales or transfers to be
made hereunder. If only part of the Collateral is sold or transferred such
that the Obligations remain outstanding (in whole or in part), Secured
Party's rights and remedies hereunder shall not be exhausted, waived or
modified, and Secured Party is specifically empowered to make one or more
successive sales or transfers until all the Collateral shall be sold or
transferred and all the Obligations are paid. In the event that Secured
Party elects not to sell the Collateral, Secured Party retains its rights
to lease or otherwise dispose of or utilize the Collateral or any part or
parts thereof in any manner authorized or permitted by law or in equity,
and to apply the proceeds of the same towards payment of the Obligations.
Each and every method of disposition of the Collateral described in this
subsection or in subsection (e) shall constitute disposition in a
commercially reasonable manner.
(c) Take possession of all books and records of each Debtor
pertaining to the Collateral. Secured Party shall have the authority to
enter upon any real property or improvements thereon in order to obtain any
such books or records, or any Collateral located thereon, and remove the
same therefrom without liability.
(d) Apply proceeds of the disposition of the Collateral to the
Obligations in any manner elected by Secured Party and permitted by the
Code or otherwise permitted by law or in equity and in accordance with the
provisions of the Indenture. Such application may include, without
limitation, the reasonable expenses of retaking, holding, preparing for
sale or other disposition, and the reasonable attorneys' fees and legal
expenses incurred by Secured Party.
(e) Appoint any Person as agent to perform any act or acts necessary
or incident to any sale or transfer by Secured Party of the Collateral.
Additionally, any sale
12
<PAGE>
or transfer hereunder may be conducted by an auctioneer or any officer or
agent of Secured Party.
(f) Execute, assign and endorse negotiable and other instruments for
the payment of money, documents of title or other evidences of payment,
shipment or storage for any form of Collateral on behalf of and in the name
of the applicable Debtor.
(g) Notify or require the applicable Debtor to notify Account Debtors
that the Non-Tangible Collateral been assigned to Secured Party and direct
such Account Debtors to make payments on the Non-Tangible Collateral
directly to Secured Party. To the extent Secured Party does not so elect,
each Debtor shall continue to collect the Non-Tangible Collateral. Secured
Party or its designee shall also have the right, in its own name or in the
name of the applicable Debtor, to do any of the following: (i) to demand,
collect, receipt for, settle, compromise any amounts due, give acquittances
for, prosecute or defend any action which may be in relation to any monies
due, or to become due by virtue of, the Non-Tangible Collateral; (ii) to
sell, transfer or assign or otherwise deal in the Non-Tangible Collateral
or the proceeds thereof or the related goods, as fully and effectively as
if Secured Party were the absolute owner thereof; (iii) to extend the time
of payment of any of the Non-Tangible Collateral, to grant waivers and make
any allowance or other adjustment with reference thereto; (iv) to take
control of cash and other proceeds of any Collateral; (v) to send a request
for verification of the Non-Tangible Collateral to any Account Debtor; and
(vi) to do all other acts and things necessary to carry out the intent of
this Agreement.
(h) The Secured Party, instead of exercising the power of sale herein
conferred upon it, may proceed by a suit or suits to foreclose the security
interest and sell the Collateral or any portion thereof under a judgment of
a court or courts of competent jurisdiction. For purposes of Louisiana
executory process procedures, each Debtor acknowledges the Obligations and
does hereby confess judgment in favor of the Secured Party for the full
amount of the Obligations. Each Debtor agrees that upon the occurrence of
an Event of Default the Secured Party may cause the Collateral to be seized
and sold under executory or ordinary process, at the Secured Party's sole
option, without appraisement, appraisement hereby being expressly waived,
as an entirety or in parcels as the Secured Party may determine, to the
highest bidder for cash, and otherwise exercise the rights, powers and
remedies afforded herein and under applicable Louisiana law. Any and all
declarations of fact made by authentic act before a Notary Public in the
presence of two witnesses by a person declaring that such facts lie within
his knowledge shall constitute authentic evidence of such facts for the
purpose of executory process. Each Debtor hereby waives in favor of the
Secured Party: (i) the benefit of appraisement as provided in Louisiana
Code of Civil Procedure Articles 2332, 2336, 2723 and 2724, and all other
laws conferring the same; (ii) the demand and three (3) days delay accorded
by Louisiana Code of Civil Procedure Articles 2639 and 2721; (iii) the
notice of seizure required by Louisiana Code of Civil Procedure Articles
2293 and 2721; (iv) the three (3) days delay provided by Louisiana Code of
Civil Procedure Articles 2331 and 2722; and (v) the benefit of the other
provisions of Louisiana Code of Civil Procedure Articles 2331, 2722 and
2723 not specifically mentioned above. In the event the Collateral or any
13
<PAGE>
part thereof is seized as an incident to an action for the recognition or
enforcement of this Agreement by executory process, ordinary process,
sequestration, writ of fieri facias, or otherwise, each Debtor and Secured
Party agree that the court issuing such order shall, if petitioned for by
Secured Party, direct the applicable sheriff to appoint as a keeper of the
Collateral the Secured Party or any agent designated by the Secured Party
at the time such seizure is effected. This designation is pursuant to
Louisiana Revised Statutes 9:5136-9:5140.2 and the Secured Party shall be
entitled to all of the rights and benefits afforded thereunder, as the same
may be amended. It is hereby agreed that the keeper shall be entitled to
receive as compensation, in excess of its costs and expenses incurred in
the administration or preservation of the Collateral, an amount equal to
$250.00 per day, which shall be payable monthly on the first day of each
month. The designation of keeper made herein shall not be deemed to require
the Secured Party to provoke the appointment of such a keeper.
(i) Exercise all other rights and remedies permitted by law or in
equity.
Section 6.03 Attorney-in-Fact. Each Debtor hereby irrevocably appoints
----------------
Secured Party as Debtor's attorney-in-fact, with full authority in the place and
stead of such Debtor and in the name of such Debtor or otherwise, from time to
time in Secured Party's discretion upon the occurrence and during the
continuance of an Event of Default, but at such Debtor's cost and expense and
without notice to such Debtor:
(a) To obtain, adjust, sell and cancel any insurance with respect to
the Collateral, and endorse any draft drawn by insurers of the Collateral.
Secured Party may apply any proceeds or unearned premiums of such insurance
to the Obligations (whether or not due).
(b) To take any action and to execute any assignment, certificate,
financing statement, notification, document or instrument which Secured
Party may reasonably deem necessary or advisable to accomplish the purposes
of this Agreement, including, without limitation, to receive, endorse and
collect all instruments made payable to such Debtor representing any
payment or other distribution in respect of the Collateral or any part
thereof and to give full discharge for the same.
Section 6.04 Account Debtors. Any payment or settlement of Non-Tangible
---------------
Collateral made by an Account Debtor will be, to the extent of such payment or
to the extent provided under such settlement, a release, discharge and
acquittance of the Account Debtor with respect to such Non-Tangible Collateral,
and each Debtor shall take any action as may reasonably be required by Secured
Party in connection therewith. No Account Debtor on any Non-Tangible Collateral
will ever be bound to make inquiry as to the termination of this Agreement or
the rights of Secured Party to act hereunder, but shall be fully protected by
such Debtor in making payment directly to Secured Party.
Section 6.05 Liability for Deficiency. If any sale or other disposition
------------------------
of Collateral by Secured Party or any other action of Secured Party hereunder
results in reduction of the Obligations, such action will not release any Debtor
from its liability to Secured Party for any
14
<PAGE>
unpaid Obligations, including costs, charges and expenses incurred in the
liquidation of Collateral, together with interest thereon at the rate then
applicable under the Indenture, and the same shall be immediately due and
payable to Secured Party at Secured Party's address set forth in the Indenture.
Section 6.06 Reasonable Notice. If any applicable provision of any law
-----------------
requires Secured Party to give reasonable notice of any sale or disposition or
other action, each Debtor hereby agrees that ten days' prior written notice
shall constitute reasonable notice thereof. Such notice, in the case of public
sale, shall state the time and place fixed for such sale and in the case of
private sale, the time after which such sale is to be made.
Section 6.07 Non-judicial Enforcement. Secured Party may enforce its
------------------------
rights hereunder without prior judicial process or judicial hearing, and to the
extent permitted by law each Debtor expressly waives any and all legal rights
which might otherwise require Secured Party to enforce its rights by judicial
process.
ARTICLE 7
MISCELLANEOUS PROVISIONS
------------------------
Section 7.01 Notices. Any notice required or permitted to be given under
-------
or in connection with this Agreement shall be given in accordance with the
notice provisions of the Indenture.
Section 7.02 Amendments and Waivers. Secured Party's acceptance of
----------------------
partial or delinquent payments or any forbearance, failure or delay by Secured
Party in exercising any right, power or remedy hereunder shall not be deemed a
waiver of any obligation of any Debtor or any Obligor, or of any right, power or
remedy of Secured Party, and no partial exercise of any right, power or remedy
shall preclude any other or further exercise thereof Secured Party may remedy
any Event of Default hereunder or in connection with the Obligations without
waiving the Event of Default so remedied. Each Debtor hereby agrees that if
Secured Party agrees to a waiver of any provision hereunder, or an exchange of
or release of the Collateral or the addition or release of any Obligor or other
Person, any such action shall not constitute a waiver of any of Secured Party's
other rights or of such Debtor's obligations hereunder. This Agreement may be
amended only by an instrument in writing executed jointly by each Debtor and
Secured Party and may be supplemented only by documents delivered or to be
delivered in accordance with the express terms hereof.
Section 7.03 Copy as Financing Statement. A photocopy or other
---------------------------
reproduction of this Agreement or any financing statement covering the
Collateral is sufficient as a financing statement, and the same may be filed
with any appropriate filing authority for the purpose of perfecting Secured
Party's security interest in the Collateral.
Section 7.04 Possession of Collateral. Secured Party shall be deemed to
------------------------
have possession of any Collateral in transit to it or set apart for it (or, in
either case, any of its agents, affiliates or correspondents).
15
<PAGE>
Section 7.05 Redelivery of Collateral. If any sale or transfer of
------------------------
Collateral by Secured Party results in full satisfaction of the Obligations, and
after such sale or transfer and discharge there remains a surplus of proceeds,
Secured Party will deliver to each Debtor such excess proceeds in a commercially
reasonable time; provided, however, that Secured Party shall not be liable for
any interest, cost or expense in connection with any reasonable delay in
delivering such proceeds to such Debtor.
Section 7.06 Governing Law; Jurisdiction. This Agreement and the security
---------------------------
interest granted hereby shall be construed in accordance with and governed by
the laws of the State of New York (except to the extent that the laws of any
other jurisdiction govern the perfection and priority of the security interests
granted hereby).
Section 7.07 Gaming Laws and Regulations. 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 Louisiana Riverboat
Economic Development and Gaming Control Act, La. R.S. 27:41, et seq., and the
-- ----
Louisiana Gaming Control Law, La. R.S. 27:1, and the regulations promulgated
pursuant to each such law, all as amended from time to time. The Gaming License
held by the Partnership is not part of the Collateral of this Agreement and,
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 Agreement under the defaults and remedies
provisions of this Agreement. 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
Gaming Authority approval.
Section 7.08 Continuing Security Agreement
-----------------------------
(a) Except as may be expressly applicable pursuant to Section 9-505
of the Code, no action taken or omission to act by Secured Party hereunder,
including, without limitation, any action taken or inaction pursuant to
Section 6.02 hereof, shall be deemed to constitute a retention of the
Collateral in satisfaction of the Obligations or otherwise to be in full
satisfaction of the Obligations, and the Obligations shall remain in full
force and effect, until Secured Party shall have applied payments
(including, without limitation, collections from Collateral) towards the
Obligations in the full amount then outstanding or until such subsequent
time as is hereinafter provided in subsection (b) below.
(b) To the extent that any payments on the Obligations or proceeds of
the Collateral are subsequently invalidated, declared to be fraudulent or
preferential set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law
or equitable cause, then to such extent the Obligations so satisfied shall
be revived and continue as if such payment or proceeds had not been
received by Secured Party, and Secured Party's security interests, rights,
powers and remedies hereunder shall continue in full force and effect. In
such event, this Agreement shall be automatically reinstated if it shall
theretofore have been terminated pursuant to Section 7.09.
16
<PAGE>
Section 7.09 Termination. The grant of a security interest hereunder and
-----------
all of Secured Party's rights, powers and remedies in connection therewith shall
unless otherwise provided in the Indenture or this Agreement, remain in full
force and effect until payment in full of (A) the Notes under the terms of the
Indenture, (B) all obligations then due and owing under the Indenture, the Notes
and the Collateral Documents and (C) all other Obligations; provided, however,
-------- -------
that after receipt from the Debtor by the Trustee of a request for a release of
any Collateral permitted under the Indenture upon the sale, transfer,
assignment, exchange or other disposition of such Collateral not prohibited by
the Indenture (and upon receipt by the Trustee of all proceeds of such sale,
transfer, assignment, exchange or other disposition to the extent required to be
remitted to the Trustee under the Indenture or otherwise), such Collateral shall
be released from the lien and security interest created hereunder in accordance
with the provisions of the Indenture and shall no longer constitute Collateral.
Upon the payment in full of (A) the Notes under the terms of the Indenture (B)
all obligations then due and owing under the Indenture and the Collateral
Documents, and (C) all other Obligations, each Debtor shall be entitled to the
return, upon its request and at its expense, of such of the Collateral pledged
by it as shall not have been sold or otherwise applied pursuant to the terms
hereof. Notwithstanding the foregoing, the reimbursement and indemnification
provisions of Section 4.07 and the provisions of subsection 7.08(b) shall
survive the termination of this Agreement.
Upon any termination of this Agreement or release of any Collateral as
permitted by the Indenture the Trustee will, at the expense of the Debtors,
execute and deliver to each such Debtor such documents and take such other
actions as each Debtor shall reasonably request to evidence the termination of
this Agreement or the release of such Collateral, as the case may be. Any such
action taken by the Trustee shall be without warranty by or recourse to the
Trustee, except as to the absence of any prior assignments by the Trustee of its
interests in the Collateral, and shall be at the expense of each such Debtor.
The Trustee may conclusively rely on any certificate delivered to it by any
Debtor stating that the execution of such documents and release of the
Collateral is in accordance with and permitted by the terms of the Indenture and
this Agreement.
Section 7.10 Counterparts; Effectiveness. This Agreement may be executed
---------------------------
in two or more counterparts. Each counterpart is deemed an original, but all
such counterparts taken together constitute one and the same instrument. This
Agreement becomes effective upon the execution hereof by each Debtor and
delivery of the same to Secured Party, and it is not necessary for Secured Party
to execute any acceptance hereof or otherwise signify or express its acceptance
hereof.
Section 7.11 Indenture. This Agreement is subject to the terms,
---------
conditions and provisions of the Indenture. To the extent a term or provision of
this Agreement conflicts with the Indenture, the Indenture shall control with
respect to the subject matter of such term or provision.
Section 7.12 Rights of Noteholders. No Holder of a Note shall have any
---------------------
independent rights hereunder other than those rights granted to individual
Holders of Notes pursuant to Section 6.07 of the Indenture; provided that
nothing in this Section 7.12 shall limit any rights granted to the Trustee under
the Notes, the Indenture or the Collateral Documents.
17
<PAGE>
Section 7.13 No Personal Liability of Directors, Officers, Employees and
-----------------------------------------------------------
Stockholders. No past, present or future director, officer, employee,
- ------------
incorporator or stockholder of the Debtor as such or any successor Person, as
such, shall have any liability for any obligations of the Debtor under the
Notes, the Collateral Documents, this Agreement or for any claim based on, in
respect of, or by reason of, such obligations or their creation.
Section 7.14 Trustee. State Street Bank and Trust Company is acting
-------
hereunder solely in its capacity as Trustee under the Indenture, and all of the
rights of Trustee set forth in the Indenture shall apply to Trustee's actions
hereunder. To the extent this agreement contemplates payments by the Secured
Party, the Trustee shall have no liability therefor, such liability continuing
to be the liability of Debtor or realized through the value of any collateral
for the Obligations.
Section 7.15 Fraudulent Conveyance Savings Clause. Notwithstanding any
------------------------------------
provision of this Agreement to the contrary, it is intended that neither this
Agreement nor any Lien granted by any Debtor to secure the Obligations shall
constitute a "Fraudulent Conveyance" (as defined below). Consequently, each
Debtor agrees that if the Agreement or any Liens securing this Agreement, would,
but for the application of this sentence, constitute a Fraudulent Conveyance,
this Agreement and each such Lien shall be valid and enforceable only to the
maximum extent that would not cause this Agreement or such Lien to constitute a
Fraudulent Conveyance, and this Agreement shall automatically be deemed to have
been amended accordingly at all relevant times. For purposes hereof, a
"Fraudulent Conveyance" means a fraudulent conveyance under Section 548 of Title
11, United States Code, as amended (or any successor section) or a fraudulent
conveyance or fraudulent transfer under the provisions of any applicable
fraudulent conveyance or fraudulent transfer law or similar law of any state,
nation or other governmental unit, as in effect from time to time.
[SIGNATURE PAGE FOLLOWS]
18
<PAGE>
IN WITNESS WHEREOF, each Debtor has caused this Security Agreement to
be executed and delivered as of the date first set forth above.
DEBTOR: SHREVEPORT CAPITAL CORPORATION, a
- ------ Louisiana corporation
By: /s/ PAUL C. YATES
--------------------------------------
Name: Paul C. Yates
-------------------------------------
Title: Exec VP & CFO
------------------------------------
HWCC LOUISIANA, INC., a Louisiana
corporation
By: /s/ PAUL C. YATES
--------------------------------------
Name: Paul C. Yates
-------------------------------------
Title: Exec VP & CFO
------------------------------------
HCS I, INC., a Louisiana corporation
By: /s/ PAUL C. YATES
--------------------------------------
Name: Paul C. Yates
-------------------------------------
Title: Exec VP & CFO
------------------------------------
HCS II, INC., a Louisiana corporation
By: /s/ PAUL C. YATES
--------------------------------------
Name: Paul C. Yates
-------------------------------------
Title: Exec VP & CFO
------------------------------------
[Signature Page to Security Agreement (Guarantors and Co-Issuer)]
<PAGE>
EXHIBIT A
---------
PERFECTION
----------
SHREVEPORT CAPITAL CORPORATION
- ------------------------------
(a) Legal Name of Debtor:
--------------------
Shreveport Capital Corporation, a Louisiana corporation
(b) Other Names:
-----------
None
(c)(i) Chief Executive Office and Principal Place of Business of Debtor:
----------------------------------------------------------------
Chief Executive Office: Dallas County, Texas
Principal Place of Business: Dallas County, Texas
(ii) Other Premises at which Collateral is Stored or Located:
-------------------------------------------------------
None
(iii) Locations of Records Concerning Collateral:
------------------------------------------
Dallas County, Texas
(d) Federal Taxpayer Identification Number:
--------------------------------------
75-2830167
HWCC LOUISIANA, INC.
- --------------------
(a) Legal Name of Debtor:
--------------------
HWCC Louisiana, Inc., a Louisiana corporation
(b) Other Names:
-----------
Hollywood Casino Lake Charles, Inc.
A-1
<PAGE>
(c)(i) Executive Office and Principal Place of Business of Debtor:
----------------------------------------------------------------
Chief Executive Office: Dallas County, Texas
Principal Place of Business: Dallas County, Texas
(ii) Other Premises at which Collateral is Stored or Located:
-------------------------------------------------------
None
(iii) Locations of Records Concerning Collateral:
------------------------------------------
Dallas County, Texas
(d) Federal Taxpayer Identification Number:
--------------------------------------
75-2478868
HCS I, INC.
- -----------
(a) Legal Name of Debtor:
--------------------
HCS I, Inc., a Louisiana corporation
(b) Other Names:
-----------
None
(c)(i) Chief Executive Office and Principal Place of Business of Debtor:
----------------------------------------------------------------
Chief Executive Office: Dallas County, Texas
Principal Place of Business: Dallas County, Texas
(ii) Other Premises at which Collateral is Stored or Located:
-------------------------------------------------------
None
(iii) Locations of Records Concerning Collateral:
------------------------------------------
Dallas County, Texas
2
<PAGE>
(d) Federal Taxpayer Identification Number:
--------------------------------------
75-2830161
HCS II, INC.
- ------------
(a) Legal Name of Debtor:
--------------------
HCS II, Inc., a Louisiana corporation
(b) Other Names:
-----------
None
(c)(i) Chief Executive Office and Principal Place of Business of Debtor:
----------------------------------------------------------------
Chief Executive Office: Dallas County, Texas
Principal Place of Business: Dallas County, Texas
(ii) Other Premises at which Collateral is Stored or Located:
-------------------------------------------------------
None
(iii) Locations of Records Concerning Collateral:
------------------------------------------
Dallas County, Texas
(d) Federal Taxpayer Identification Number:
--------------------------------------
75-2830163
3
<PAGE>
EXHIBIT B
---------
INTELLECTUAL PROPERTY
---------------------
None
B-1
<PAGE>
EXHIBIT C
---------
CONTRACTS
---------
None
C-1
<PAGE>
EXHIBIT 4.9
SECURITY AGREEMENT - VESSEL CONSTRUCTION
----------------------------------------
THIS SECURITY AGREEMENT - VESSEL CONSTRUCTION ("Agreement"), dated as of
August 10, 1999, is made between HOLLYWOOD CASINO SHREVEPORT, a Louisiana
general partnership ("Debtor"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, Trustee under the Indenture (hereinafter defined)
for the Persons that now or in the future are holders (the "Holders") of the
Notes (hereinafter defined) issued under the Indenture (in such capacity,
together with its successors and assigns in such capacity, "Secured Party"), who
agree as follows:
RECITALS
A. Debtor, Shreveport Capital Corporation, a Louisiana corporation
("Shreveport Capital", and together with the Debtor, the "Issuers"), HCS I,
Inc., a Louisiana corporation, HCS II, Inc., a Louisiana corporation, and HWCC-
Louisiana, Inc., a Louisiana corporation, each as a Guarantor, have entered into
an Indenture dated as of the date hereof (as amended, supplemented, restated or
otherwise modified from time to time, the "Indenture") with the Secured Party,
pursuant to which the Issuers will issue up to $150,000,000 of their 13% First
Mortgage Notes due 2006 with Contingent Interest (as the same may be amended,
supplemented, restated, exchanged, replaced or otherwise modified from time to
time, collectively, the "Notes").
B. It is a condition precedent to the purchase of the Notes under the
Indenture that Debtor shall have executed and delivered this Agreement.
C. Leevac Shipyards, Inc., a Louisiana corporation (the "Contractor"), is
performing the construction of the Vessel for the Debtor in accordance with and
pursuant to the Construction Contract (hereinafter defined).
D. Therefore, in order to comply with the terms and conditions of the
Indenture and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Debtor hereby agrees with Secured
Party as follows:
AGREEMENT
ARTICLE 1
GENERAL TERMS
Section 1.1 Terms Defined Above or Elsewhere. Terms not otherwise defined
--------------------------------
in this Agreement shall have the meanings provided in the Indenture.
<PAGE>
Section 1.2 Certain Definitions. As used in this Agreement, the
-------------------
following additional terms shall have the meanings indicated:
"Collateral" has the meaning set forth in Section 2.1 of this
Agreement.
"Components" means all parts and components of the Vessel which are
fabricated by the Contractor for use in the construction or
modification of the Vessel, which will, when so used, form a part of
the Vessel, and the fabrication of which is commenced at the Shipyard.
"Construction Contract" means the Vessel Construction Agreement dated
as of July16, 1999 between the Debtor and the Contractor relative to
the construction of the Vessel, as it may from time to time be
amended, modified or supplemented.
"Equipment" means all "equipment" (as defined in the UCC) now owned or
hereafter acquired by the Debtor and now or hereafter used or to be
used in the construction, design or furnishing of the Vessel
(including, without limitation, Components, Materials, and Work, to
the extent such items are not Pre-Existing Inventory or Inventory),
together with all additions, accessories, parts, attachments, special
tools and accessions now and hereafter affixed thereto or used in
connection therewith, and all replacements thereof and substitutions
therefor, and shall include without limitation all machinery, tools,
fire sprinklers, alarm, air conditioning, heating, refrigerating and
electronic monitoring systems and equipment, window or structural
cleaning rigs, maintenance equipment, equipment for the exclusion of
vermin or insects or the removal of dust, refuse or garbage, lobby and
all other indoor and outdoor furniture (including without limitation
tables, chairs, planters, desks, sofas, shelves, lockers and
cabinets), wall beds, wall safes, furnishings, appliances (including
ice boxes, refrigerators, fans, heaters, stoves, water heaters and
incinerators), rugs, carpets and other floor coverings, draperies and
drapery rods and brackets, awnings, window shades, venetian blinds,
curtains, wall hangings, lamps, chandeliers and other lighting
fixtures and office maintenance and other supplies, together with all
additions, accessories, parts, attachments, special tools and
accessions now or hereafter affixed thereto or used in connection
therewith, and all replacements thereof and substitutions therefor.
"Excluded Collateral" means (i) all such items of personal property
(of the type in which a security interest may be perfected under the
UCC) constituting furniture, fixtures or equipment of the Debtor, the
acquisition of which has been financed pursuant to FF&E Financing,
which items shall constitute "Excluded Collateral" for so long as such
items are subject to a lien in favor of the lender or lenders (or one
or more agents therefore) providing such FF&E Financing, and (ii) the
Equity Escrow Account.
2
<PAGE>
"General Intangibles" means all "general intangibles" (as defined in
the UCC) now owned or hereafter acquired by the Debtor, but in any
event relative to the Vessel under construction, including without
limitation (i) all contractual rights of and obligations or
indebtedness owing to the Debtor, including without limitation all
contract rights of, and obligations or indebtedness owing to, the
Debtor under the Construction Contract, (ii) all things in action,
rights represented by judgments, claims arising out of tort, warranty
or contract and other claims relating to the Vessel or the other
Collateral (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), (iii) rights under
service, maintenance or warranty contracts, and other warranties,
guaranties and bonds, including, without limitation, the performance
and payment bond provided pursuant to the Construction Contract, with
regard to the Vessel and the other Collateral, (iv) the right to
receive proceeds attributable to insurance loss of the Vessel and the
other Collateral, and (v) all goodwill, patents, patent licenses,
trademarks, trademark licenses, trade names, service marks, trade
secrets, rights in intellectual property, copyrights, permits and
licenses relating to the design, construction, and/or delivery of the
Vessel.
"Inventory" means all "inventory" (as defined in the UCC) now owned or
hereafter acquired by the Debtor and now or hereafter located at the
Shipyard to be furnished in connection with the design or construction
of the Vessel (including, without limitation, Components, Materials
and Work), and shall also mean and include, without limitation (but in
any event relative to the design or construction of the Vessel), (i)
all raw materials and other supplies, work in process and finished
goods and any products assembled, compiled or processed therefrom and
all substances, if any, commingled therewith or added thereto, and
(ii) to the extent the same are not Equipment, all machinery, tools,
fire sprinklers, alarm, air conditioning, heating, refrigerating and
electronic monitoring systems and equipment, window or structural
cleaning rigs, maintenance equipment, equipment for the exclusion of
vermin or insects or the removal of dust, refuse or garbage, lobby and
all other indoor and outdoor furniture (including without limitation
tables, chairs, planters, desks, sofas, shelves, lockers and
cabinets), wall beds, wall safes, furnishings, appliances (including
ice boxes, refrigerators, fans, heaters, stoves, water heaters and
incinerators), rugs, carpets and other floor coverings, draperies and
drapery rods and brackets, awnings, window shades, venetian blinds,
curtains, wall hangings, lamps, chandeliers and other lighting
fixtures and office maintenance and other supplies.
"Materials" means all materials, all items of machinery, and all items
of equipment which are purchased or acquired for use in the
construction of
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the Vessel, or related modifications of the Vessel, which will, when
so used, form a part of the Vessel.
"Obligations" means (i) the payment when due of indebtedness evidenced
by the Notes in the principal sum not to exceed at any time
outstanding of $150,000,000, interest (including post-petition
interest) as set forth in the Indenture and the Notes, and premiums,
penalties, and late charges thereon; (ii) all other indebtedness and
other sums (including, without limitation, all expenses, attorneys'
fees, other fees, indemnifications, reimbursements, damages, other
monetary liabilities, and other charges) and obligations that may or
shall become due hereunder or under the Notes, the Guarantees, the
Indenture or the other Collateral Documents; and (iii) any and all
renewals, modifications, amendments, extensions for any period,
supplements or restatements of any of the foregoing.
"Pre-Existing Inventory" means any and all items or types of property
other than Materials and Components which are incorporated into or
affixed to the Work, including without limitations all piping, cable,
fittings and other materials and equipment which are taken out of the
Contractor's stock.
"Proceeds" means all cash and non-cash proceeds, in whatever form,
arising from the collection, sale, lease, exchange, assignment or
other disposition of, or realization upon, Collateral, and, to the
extent not otherwise included, all payments under insurance (whether
or not the Secured Party is the loss payee thereof), or any indemnity,
warranty or guaranty payable by reason of loss or damage to or
otherwise with respect to any of the Collateral, and including
proceeds of all such proceeds, in each case whether now existing or
hereafter arising.
"Security Interests" means the security interests in the Collateral
granted hereunder securing the Obligations.
"Shipyard" means any of the Contractor's shipyards located at
Jefferson Davis Parish or St. Mary's Parish or any temporary yard in
Bossier or Caddo Parish, Louisiana and any and all warehouses or other
shipyards of the Contractor.
"UCC" means the Uniform Commercial Code, Commercial Laws - Secured
Transactions (Louisiana Revised Statutes 10:9-101 through 9-605) in
the State of Louisiana, as amended from time to time; provided, that
if by reason of mandatory provisions of law, the perfection or the
effect of perfection or non-perfection of the Security Interests in
any Collateral is governed by the Uniform Commercial Code as in effect
in a jurisdiction other than Louisiana, "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes
of the provisions hereof relating to such perfection or effect of
perfection or non-perfection.
4
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"Vessel" means the riverboat, being 242' in length and 114' in breadth
and bearing the Contractor's Hull Number 327, to be constructed and
being constructed pursuant to the Construction Contract at the
Shipyard, and all improvements and structures from time to time
thereon, and all equipment and appurtenances from time to time thereon
or thereof, including without limitation all engines, machinery,
masts, spars, boats, cables, motors, tools, anchors, chains, booms,
cranes, rigs, pumps, pipes, tanks, tackle, rigging, supplies, fittings
and all other property located thereon, derived therefrom or used in
connection therewith.
"Work" means, in the case of a ship having a keel, the keel, and in
the case of a ship not having a keel, the bottom plates, and in
addition to the foregoing, all Materials, machinery, Equipment, Pre-
Existing Inventory, Inventory, Components, tackle, appurtenances, and
fabrications, including but not limited to engines, gears, piping,
cables and fittings, forming a part of the Vessel when permanently
installed in place.
ARTICLE 2
SECURITY INTEREST
Section 2.1 The Security Interests. In order to secure the full and
----------------------
punctual payment and performance of all present and future Obligations, the
Debtor hereby grants to the Secured Party, for itself and the ratable benefit of
the Holders, a continuing security interest in and to all right, title and
interest of the Debtor in, to or under the following property, whether now owned
or existing or hereafter acquired or arising and regardless of where located:
(i) the Vessel and all Materials, Components, Pre-Existing
Inventory and Work relating thereto, and all other materials,
equipment and accessories installed thereon, and any
substitutions therefor, whether now existing or hereafter
acquired;
(ii) the Inventory;
(iii) the Equipment;
(iv) the General Intangibles;
(v) the Plans;
(vi) all books and records (including, without limitation, computer
programs, tapes, disks, punch cards, data processing software,
transaction files, master files, printouts and other computer
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materials and records) of the Debtor pertaining to any of the
Collateral; and
(vii) all Proceeds of all or any of the Collateral described in
clauses (i) through (vi) hereof.
The term "Collateral" means each and all of the items and property rights
described in clauses (i) - (vii) above.
Notwithstanding the foregoing provisions of this Section 2.1, such
grant of security interest shall not extend to, and the term "Collateral" shall
not include (i) any of the Excluded Collateral, and (ii) any of the foregoing
property that is, pursuant to restrictions enforceable under applicable law,
prohibited from being pledged as security; provided that, with respect to this
clause (ii), upon the termination of such prohibitions for any reason whatsoever
or in the event such prohibitions are or become unenforceable under applicable
law, such foregoing property shall automatically become Collateral hereunder, it
being understood that upon request of the Secured Party, Debtor will in good
faith use reasonable efforts to obtain consent for the creation of a security
interest in favor of the Secured Party in Debtor's rights in such property
referred to in this clause (ii). Notwithstanding the foregoing, so long as no
Event of Default shall have occurred and be continuing, all dividends,
distributions, interest and principal payments, cash, instruments and other
property and proceeds made upon or with respect to or of the Collateral may be
used by the Debtor subject to the terms and conditions of the Indenture. Upon
the occurrence and during the continuance of an Event of Default, all rights of
the Debtor to receive all such dividends, distributions, interest and principal
payments, cash, instruments and other property and proceeds shall cease, and
such dividends, distributions, interest and principal payments, cash,
instruments and other property and proceeds shall constitute Collateral, and
shall be paid or otherwise delivered to the Secured Party. It is expressly
contemplated that additional property may from time to time be pledged, assigned
or granted to Secured Party as additional security for the Obligations, and the
term "Collateral" as used herein shall be deemed for all purposes hereof to
include all such additional property, together with all other property of the
types described above related thereto.
Section 2.2 No Liability. The Security Interests are granted as
------------
security only and shall not subject the Secured Party to, or transfer or in any
way affect or modify, any obligation or liability of the Debtor with respect to
any of the Collateral or any transaction in connection therewith.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
The Debtor represents and warrants to the Secured Party that:
6
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Section 3.1 No Liens. Other than financing statements or other
--------
similar or equivalent documents or instruments with respect to the Security
Interests and Permitted Liens, no financing statement, mortgage, security
agreement or similar or equivalent document or instrument covering all or any
part of the Collateral is on file or of record in any jurisdiction in which such
filing or recording would be effective to perfect a Lien on such Collateral. No
Collateral is in the possession of any Person (other than the Debtor) asserting
any claim thereto or security interest therein, except that the Contractor and
the Contractor's designees or subcontractors may have possession of Collateral.
Section 3.2 Name. The name of the Debtor is as it appears on page 1
----
of this Agreement. Set forth on Exhibit A attached hereto is every other name
the Debtor has had since its organization, together with the date of the
relevant change. Also set forth on Exhibit A is a list of all other names
(including trade names or similar appellations) used by the Debtor or any of its
divisions or other business units at any time during the past five years.
Section 3.3 Taxpayer Identification Number. The federal taxpayer
------------------------------
identification number of the Debtor is 72-1225563.
Section 3.4 Chief Executive Office. The chief executive office of
----------------------
the Debtor is located at Two Galleria Tower, Suite 2200, 13455 Noel Road, LB 48,
Dallas, Texas 75240.
Section 3.5 Records Location. Set forth on Exhibit A are all of the
----------------
locations where the Debtor maintains any books or records relating to any
Collateral.
Section 3.6 Business Locations. Set forth on ExhibitA are all of the
------------------
places of business of the Debtor, including all the places (including without
limitation names and addresses) where any of the Components, Equipment,
Inventory, Materials, Pre-Existing Inventory or Work is maintained.
Section 3.7 Filing Location. When UCC financing statements have been
---------------
filed in the office of a Louisiana Clerk of Court (or, if in Orleans Parish,
then with the Recorder of Mortgages) and with the Texas Secretary of State, the
Security Interests shall constitute perfected security interests in the
Collateral (except Inventory and Materials in transit from outside the state of
Louisiana) to the extent that a security interest therein may be perfected by
filing pursuant to the UCC, prior to all other Liens thereon and rights of
others therein except for Permitted Liens, if any, arising by operation of law.
Section 3.8 No Inconsistent Agreements. The Debtor has not performed
--------------------------
any acts or signed any agreements which might prevent the Secured Party from
enforcing any of the terms of this Agreement or which would limit the Secured
Party in any such enforcement.
Section 3.9 Title. Pursuant to the Construction Contract, (i) the
-----
Debtor is and shall be the owner of the Vessel during the construction thereof,
(ii) title to the Work
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<PAGE>
shall vest in the Debtor as and when performed, (iii) title to the Materials
shall vest in the Debtor as and when delivered to the Shipyard, and (iv) title
to the Components shall vest in the Debtor as and when fabricated. The Debtor
has good and valid title to all Collateral, except the portion thereof
consisting of after-acquired property, free of Liens except Permitted Liens, and
the Debtor will have good and merchantable title to such after-acquired
Collateral, free of Liens except Permitted Liens. Furthermore, the Debtor has
not heretofore conveyed or agreed to convey or encumber any Collateral in any
way, except in favor of the Secured Party and with respect to Permitted Liens.
Section 3.10 Hull Number. The hull number of the Vessel shall
-----------
be 327.
Section 3.11 Components, Equipment, Inventory, Materials, Pre-
------------------------------------------------
Existing Inventory and Work. The Components, Equipment, Inventory, Materials,
- ---------------------------
Pre-Existing Inventory and Work as to the Vessel are in good condition and are
free of damage caused by fire or other casualty.
Section 3.12 Construction Contract. The Construction Contract is in
---------------------
full force and effect, and has not been amended or modified in any way.
ARTICLE 4
COVENANTS
Section 4.1 Change in Location of Collateral or Debtor. Except with
------------------------------------------
respect to Collateral under repair or temporarily in transit between locations
(and in any such case, for a period not to exceed four (4) months), Debtor will
not change the location of the Collateral (except for (a) Collateral held by the
Trustee, and (b) motor vehicles and rolling stock), to any state, county or
other jurisdiction in which Secured Party has not already filed a financing
statement or taken other necessary steps to perfect or maintain its security
interests in the Collateral without Secured Party's prior written consent and
the delivery of such new financing statements or other documentation as may be
reasonably necessary or required by Secured Party to ensure the continued
perfection and priority of its security interest in the Collateral. Debtor will
not change the location of Debtor's chief executive office, principal place of
business or the locations of Debtor's records concerning the Collateral unless
Debtor shall have given Secured Party at least thirty (30) days prior written
notice thereof and shall have delivered to Secured Party such new financing
statements or other documentation as may be reasonably necessary or required by
Secured Party to ensure the continued perfection and priority of its security
interest in the Collateral.
Section 4.2 Change in Debtor's Name or Corporate Structure. Debtor
----------------------------------------------
will not change its name, identity or corporate structure (including, without
limitation, any merger, consolidation or sale of substantially all of its
assets) unless Debtor shall have given Secured Party at least thirty (30) days
prior written notice thereof and shall have delivered to Secured Party such new
financing statements or other documentation as
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<PAGE>
may be reasonably necessary or required by Secured Party to ensure the continued
perfection and priority of its security interest on the Collateral.
Section 4.3 Filing. The Debtor agrees that a carbon, photographic,
------
facsimile, photostatic or other reproduction of this Agreement or of a financing
statement is sufficient as a financing statement. The Debtor shall pay all
costs of or incidental to the recording or filing of any financing, amendment,
continuation, termination or other statements concerning the Collateral.
Section 4.4 Sale, Disposition or Encumbrance of Collateral. Except
----------------------------------------------
as permitted pursuant to the provisions of the Indenture or with Secured Party's
prior written consent, Debtor will not in any way encumber any of the Collateral
(or permit or suffer any of the Collateral to be encumbered) or sell, assign,
lend, rent, lease or otherwise dispose of or transfer any of the Collateral to
or in favor of any Person other than Secured Party.
Section 4.5 Condition of Components, Equipment, Inventory,
----------------------------------------------
Materials, Pre-Existing Inventory and Work. The Debtor will, and will cause the
- ------------------------------------------
Contractor and the Contractor's designees and subcontractors to, maintain,
preserve and keep the Components, Equipment, Inventory, Materials, Pre-Existing
Inventory and Work as to the Vessel at all times in thorough repair and good
working order and condition, and from time to time make all needful repairs,
renewals and additions so that its value and the Security Interests shall at no
time become impaired in any material respect. The Debtor will not do or permit
anything to be done to the Collateral that may violate the terms of any
insurance covering the Collateral or any part thereof.
Section 4.6 Insurance. Reference is hereby made to Section 4.28 of
---------
the Indenture, which contains the requirements as to insurance to be maintained
on the Collateral.
Section 4.7 Right of Inspection and Information. Debtor, at all
-----------------------------------
reasonable times and upon reasonable prior notice, will permit Secured Party and
its agents, representatives and employees to inspect the Collateral. Without
limiting the generality of the foregoing, the Debtor will furnish to the Secured
Party promptly upon request and in the form and content specified by the Secured
Party such data and information concerning the Collateral as the Secured Party
may from time to time reasonably specify.
Section 4.8 Further Assurances. On request of the Secured Party,
------------------
the Debtor will promptly (i) correct any defect, error or omission which may be
discovered in the contents of this Agreement or any financing statement relating
thereto or in the execution or acknowledgment of this Agreement or any financing
statement; (ii) execute, acknowledge, deliver and record such further
instruments (including, without limitation, further security agreements,
financing statements, continuation statements, general intangibles and proceeds)
and do such further acts as may be reasonably necessary, desirable or proper to
carry out more effectively the purposes of this Agreement and to more fully
identify and subject to the Security Interests hereof any property intended to
9
<PAGE>
be covered hereby, including without limitation any renewals, additions,
substitutions, replacements or accessions to the Collateral; and (iii) execute,
acknowledge, deliver and record any document or instrument (including
specifically any financing statement) reasonably necessary, desirable or proper
to protect the Lien and Security Interests hereunder against the rights or
interests of third persons. The Debtor shall pay all costs connected with any
of the foregoing.
Section 4.9 Collateral Indemnity. If the validity or priority of
--------------------
this Agreement or any rights, security interests or other interests created or
evidenced hereby shall be attacked, endangered or questioned or if any legal
proceedings are instituted with respect thereto, the Debtor will give prompt
written notice thereof to the Secured Party and at the Debtor's own cost and
expense will diligently endeavor to cure any defect that may be developed or
claimed, and will take all necessary and proper steps for the defense of such
legal proceedings, and the Secured Party (whether or not named as a party to
legal proceedings with respect thereto) is hereby authorized and empowered to
take such additional steps as in its judgment and discretion may be necessary or
proper for the defense of any such legal proceedings or the protection of the
validity or priority of this Agreement and the rights, security interests and
other interests created or evidenced hereby, and all expenses so incurred of
every kind and character shall be a demand obligation owing by the Debtor to the
Secured Party and shall be a part of the Obligations.
Section 4.10 Non-Liability. The Debtor hereby agrees to indemnify
-------------
and hold the Secured Party harmless from and against any and all liability, loss
or damage which the Secured Party may incur under or by reason of this
Agreement, and from any and all claims, costs, expenses and demands whatsoever
which may be asserted against the Secured Party by reason of any act of the
Secured Party under this Agreement or otherwise incurred by the Secured Party in
connection with the enforcement of its rights under this Agreement, except to
the extent caused by the gross negligence or willful misconduct of the Secured
Party.
Section 4.11 Vessel Documentation; Ship Mortgage. Once the Vessel
-----------------------------------
is completed, Debtor will have the Vessel documented with the United States
Coast Guard as promptly as possible. Immediately after the Vessel is so
documented, Debtor will execute and deliver to the Secured Party a first
preferred ship mortgage covering the Vessel, in the form attached as Exhibit L
to the Indenture. Debtor will take all such other acts and deliver all such
other documents or instruments that the Secured Party may reasonably require in
connection with the granting of said first preferred ship mortgage. Without
limiting the foregoing, the Debtor shall not take delivery of the Vessel without
having granted such first preferred ship mortgage.
10
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ARTICLE 5
DEFAULT
Section 5.1 General Authority. Debtor hereby irrevocably appoints
-----------------
Secured Party as Debtor's attorney-in-fact, with full authority in the place and
stead of Debtor and in the name of Debtor or otherwise, either directly or
through an agent, from time to time in Secured Party's discretion upon the
occurrence and during the continuance of an Event of Default, but at Debtor's
cost and expense and without notice to Debtor:
(a) To obtain, adjust, sell and cancel any insurance with
respect to the Collateral, and endorse any draft drawn by insurers of
the Collateral. Secured party may apply any proceeds or unearned
premiums of such insurance to the Obligations (whether or not due).
(b) To take any action and to execute any assignment,
certificate, financing statement, notification, document or instrument
which Secured Party may reasonably deem necessary or advisable to
accomplish the purposes of this Agreement, including, without
limitation, to receive, endorse and collect all instruments may
payable to Debtor representing any payment or other distribution in
respect of the Collateral or any part thereof and to give full
discharge for the same.
The aforesaid mandate and power of attorney, being coupled with an interest, is
irrevocable so long as any of the Obligations remains outstanding.
Section 5.2 Sale. Upon the occurrence and during the continuance of
----
an Event of Default, the Secured Party may exercise all rights of a secured
party under the UCC and other applicable law (including without limitation such
rights under the UCC or other applicable law authorizing the taking of self-help
remedies by a secured party in protecting its rights in, to and under
collateral) and, in addition, the Secured Party may, without being required to
give any notice, except as herein provided or as may be required by mandatory
provisions of law, sell the Collateral or any part thereof at public or private
sale, for cash, upon credit or for future delivery, and at such price or prices
as the Secured Party may deem satisfactory. The Secured Party may be the
purchaser of any or all of the Collateral so sold at any public sale (or, if the
Collateral is of a type customarily sold in a recognized market or is of a type
which is the subject of widely distributed standard price quotations, at any
private sale). The Debtor will execute and deliver such documents and take such
other action as the Secured Party deems necessary or advisable in order that any
such sale may be made in compliance with law. Upon any such sale the Secured
Party shall have the right to deliver, assign and transfer to the purchaser
thereof the Collateral so sold. Each purchaser at any such sale shall hold the
Collateral so sold to it absolutely and free from any claim or right of
whatsoever kind,
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<PAGE>
including any equity or right of redemption of the Debtor which may be waived,
and the Debtor, to the extent permitted by law, hereby specifically waives all
rights of redemption, stay or appraisal which it has or may have under any law
now existing or hereafter adopted. The Debtor agrees that ten (10) days prior
written notice of the time and place of any sale or other intended disposition
of any of the Collateral constitutes "reasonable notification" within the
meaning of Section 9-504(3) (or any comparable section in any other
jurisdiction) of the UCC, except that shorter or no notice shall be reasonable
as to any Collateral which is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market. The notice (if
any) of such sale shall (l) in case of a public sale, state the time and place
fixed for such sale, and (2) in the case of a private sale, state the day after
which such sale may be consummated. Any such public sale shall be held at such
time or times within ordinary business hours and at such place or places as the
Secured Party may fix in the notice of such sale. At any such sale the
Collateral may be sold in one lot as an entirety or in separate parcels or
portions, as the Secured Party may determine. The Secured Party shall not be
obligated to make any such sale pursuant to any such notice. The Secured Party
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 the sale, and such sale may be made at any time or place to which the
same may be so adjourned. In case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Secured Party until the selling price is paid by the purchaser
thereof, but the Secured Party shall not incur any liability in case of the
failure of such purchaser to take up and pay for the Collateral so sold and, in
case of any such failure, such Collateral may again be sold upon like notice.
Section 5.3 Remedies. The provisions of this Section shall, without
--------
limiting the generality of any other provision of this Agreement, be applicable
in the event any foreclosure shall take place in Louisiana on any Collateral.
The Secured Party, instead of exercising the power of sale herein conferred upon
it, may proceed by a suit or suits at law or in equity to foreclose the Security
Interests and sell the Collateral, or any portion thereof, under a judgment or
decree of a court or courts of competent jurisdiction. For the purposes of
Louisiana executory process procedures, the Debtor does hereby acknowledge the
Obligations and confess judgment in favor of the Secured Party for the full
amount of the Obligations. The Debtor does by these presents consent and agree
that upon and during the continuance of the occurrence of an Event of Default it
shall be lawful for the Secured Party to cause all and singular the Collateral
to be seized and sold under executory or ordinary process, at the Secured
Party's sole option, without appraisement, appraisement being hereby expressly
waived, in one lot as an entirety or in separate parcels or portions as the
Secured Party may determine, to the highest bidder, and otherwise exercise the
rights, powers and remedies afforded herein and under applicable Louisiana law.
Any and all declarations of fact made by authentic act before a Notary Public in
the presence of two witnesses by a person declaring that such facts lie within
his knowledge shall constitute authentic evidence of such facts for the purpose
of executory process. The Debtor hereby waives in favor of the Secured Party:
(a) the benefit of appraisement as provided in Louisiana Code of Civil Procedure
Articles 2332, 2336, 2723 and 2724, and all other laws conferring the same; (b)
the demand and three
12
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days delay accorded by Louisiana Code of Civil Procedure Articles 2639 and 2721;
(c) the notice of seizure required by Louisiana Code of Civil Procedure Articles
2293 and 2721; (d) the three days delay provided by Louisiana Code of Civil
Procedure Articles 2331 and 2722; and (e) the benefit of the other provisions of
Louisiana Code of Civil Procedure Articles 2331, 2722 and 2723, not specifically
mentioned above. In the event the Collateral or any part thereof is seized as an
incident to an action for the recognition or enforcement of this Agreement by
executory process, ordinary process, sequestration, writ of fieri facias, or
otherwise, the Debtor and the Secured Party agree that the court issuing any
such order shall, if petitioned for by the Secured Party, direct the applicable
sheriff to appoint as a keeper of the Collateral, the Secured Party or any agent
designated by the Secured Party or any person named by the Secured Party at the
time such seizure is effected. This designation is pursuant to Louisiana Revised
Statutes 9:5136-9:5140.2 and the Secured Party shall be entitled to all the
rights and benefits afforded thereunder as the same may be amended. It is hereby
agreed that the keeper shall be entitled to receive as compensation, in excess
of its reasonable costs and expenses incurred in the administration or
preservation of the Collateral, an amount equal to $250.00 per day payable on a
monthly basis. The designation of keeper made herein shall not be deemed to
require the Secured Party to provoke the appointment of such a keeper.
Section 5.4 Assemble Collateral. For the purpose of enforcing any
-------------------
and all rights and remedies under this Agreement the Secured Party may (i)
require the Debtor to, and the Debtor agrees that it will, at its expense and
upon the request of the Secured Party, forthwith assemble all or any part of the
Collateral (not otherwise in the possession or control of the Secured Party) as
directed by the Secured Party and make it available at a place designated by the
Secured Party which is, in its opinion, reasonably convenient to the Secured
Party and the Debtor, whether at the Shipyard or otherwise, and the Secured
Party shall be entitled to specific performance of this obligation, (ii) to the
extent permitted by applicable law of this or any other state, enter, with or
without process of law and without breach of the peace, any premise where any of
the Collateral is or may be located, and without charge or liability to it seize
and remove such Collateral from such premises, (iii) have access to and use the
Debtor's books and records relating to the Collateral and (iv) prior to the
disposition of the Collateral, store or transfer it without charge in or by
means of any storage or transportation facility owned or leased by the Debtor,
process, repair, recondition or complete construction of it or otherwise prepare
it for disposition in any manner and to the extent the Secured Party deems
appropriate and, in connection with such preparation and disposition, use
without charge any trademark, trade name, copyright, patent or technical process
used by the Debtor.
Section 5.5 Limitation on Duty of Secured Party. Beyond the exercise
-----------------------------------
of reasonable care in the custody thereof, the Secured Party shall have no duty
as to any Collateral in its possession or control or in the possession or
control of any agent or bailee or any income thereon. The Secured Party shall
be deemed to have exercised reasonable care in the custody of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which it accords its own property, and shall not be liable or responsible
for any loss or damage to any of the Collateral, or for any diminution in the
value thereof, by reason of the act or omission of any warehouseman,
13
<PAGE>
carrier, forwarding agency, consignee or other agent or bailee selected by the
Secured Party in good faith. The Debtor agrees that the Secured Party shall not
be obligated to preserve rights against prior parties obligated on any
Collateral. The powers conferred upon Secured Party by this Agreement are to
protect its interest in the Collateral and shall not impose any duty upon
Secured Party to exercise any such powers. Debtor hereby agrees that Secured
Party shall not be liable for, nor shall the indebtedness evidenced by the
Obligations be diminished by, Secured Party's delay or failure to collect upon,
foreclose, sell, take possession of or otherwise obtain value for the
Collateral. Nothing herein shall affect any obligation of Secured Party to the
Holders under the Indenture or under applicable law. Except as may be required
by the Indenture, and to the fullest extent permitted by applicable law, Secured
Party shall be under no duty whatsoever to make or give any presentment, notice
of dishonor, protest, demand for performance, notice of non-performance, notice
of intent to accelerate, notice of acceleration, or other notice or demand in
connection with any Collateral or the Obligations, or to take any steps
reasonably necessary to preserve any rights against Debtor or any other Person.
Debtor waives any right of marshaling in respect of any and all Collateral, and
waives any right to require Secured Party to proceed against Debtor or any other
Person, exhaust any Collateral or enforce any other remedy which Secured Party
now has or may hereafter have against Debtor or any other Person.
Section 5.6 Appointment of Agent. At any time or times, in order to
--------------------
comply with any legal requirement in any jurisdiction, the Secured Party may
appoint, to act on its behalf, a bank or trust company or one or more other
Persons with such power and authority as may be necessary for the effectual
operation of the provisions hereof as may be specified in the instrument of
appointment. Upon the occurrence and during the continuance of an Event of
Default, the Secured Party may retain, to act on its behalf, one or more Persons
for the effectual operation of the provisions hereof. The Debtor shall bear the
expenses incurred with the appointment or retention of any such agents.
Section 5.7 Expenses. Debtor hereby assumes all liability for the
--------
Collateral, the security interests created hereunder and any use, possession,
maintenance, management, enforcement or collection of any or all of the
Collateral. Debtor agrees to indemnify and hold Secured Party harmless from and
against and covenants to defend Secured Party against any and all losses,
damages, claims, costs, penalties, liabilities and expenses, including, without
limitation, court costs and reasonable attorneys' fees, incurred because of,
incident to, or with respect to the Collateral (including, without limitation,
any use, possession, maintenance or management thereof, or any injuries to or
deaths of Persons or damage to property, except to the extent caused by the
gross negligence or willful misconduct of the Secured Party). All amounts for
which Debtor is liable pursuant to this Section 5.7 shall be due and payable by
Debtor to Secured Party upon demand. If Debtor fails to make such payment upon
demand (or if demand is not made due to an injunction or stay arising from
bankruptcy or other proceedings) and Secured Party pays such amount, the same
shall be due and payable by Debtor to Secured Party, plus interest thereon from
the date of Secured Party's demand (or from the date of Secured party's payment
if demand is not made due to such proceedings) at the interest rate applicable
to overdue principal as provided in the Notes. All amounts for which
14
<PAGE>
Debtor is liable pursuant to this Section 5.7 shall be additional Indebtedness
under the Indenture.
ARTICLE 6
MISCELLANEOUS
Section 6.1 Attachment of Security Interest. The parties hereto
-------------------------------
understand and acknowledge that, pursuant to La. R.S. 9:5525.A, the Security
Interests created by this Agreement shall attach to the Work as and when
performed, the Materials as and when delivered to the Shipyard and the
Components as and when fabricated and to the Vessel upon completion thereof.
The parties hereto understand and further acknowledge that the Security
Interests created by this Agreement shall attach to all other Collateral in
accordance with and pursuant to the UCC.
Section 6.2 Notices. Any notice required or permitted to be given
-------
under or in connection with this Agreement shall be given in accordance with the
notice provisions in the Indenture.
Section 6.3 Amendment. Neither this Agreement nor any provisions
---------
thereof may be changed, waived, discharged or terminated orally or in any manner
other than by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought, but in
any event in accordance with the terms and conditions of the Indenture.
Section 6.4 Waivers. No course of dealing on the part of the
-------
Secured Party or the Holders, their respective officers, employees, consultants
or agents, nor any failure or delay by the Secured Party with respect to
exercising any of its or their rights, powers or privileges under this Agreement
shall operate as a waiver thereof.
Section 6.5 Cumulative Rights. The rights and remedies of the
-----------------
Secured Party (and the Holders) under this Agreement and the other Collateral
Documents shall be cumulative, and the exercise or partial exercise of any such
right or remedy shall not preclude the exercise of any other right or remedy.
Section 6.6 Titles of Articles, Sections and Subsections. All
--------------------------------------------
titles or headings to articles, sections, subsections or other divisions of this
Agreement or the exhibits hereto are only for the convenience of the parties and
shall not be construed to have any effect or meaning with respect to the other
content of such articles, sections, subsections or other divisions, such other
content being controlling as to the agreement between the parties hereto.
Section 6.7 Singular and Plural. Words used herein in the
-------------------
singular, where the context so permits, shall be deemed to include the plural
and vice versa. The
15
<PAGE>
definitions of words in the singular herein shall apply to such words when used
in the plural where the context so permits and vice versa.
Section 6.8 Governing Law. This Agreement is a contract made under
-------------
and shall be construed in accordance with and governed by the laws of the State
of Louisiana.
Section 6.9 Successors and Assigns. (a) All covenants and
----------------------
agreements contained by or on behalf of the Debtor in this Agreement shall bind
its successors and assigns and shall inure to the benefit of the Secured Party
and its successors and assigns.
(b) This Agreement is for the benefit of the Secured Party, for itself
and the ratable benefit of the Holders, and for such other Person or Persons as
may from time to time become or be the holders of any of the Obligations, and
this Agreement shall be transferrable and negotiable, with the same force and
effect and to the same extent as the Obligations may be transferrable.
Section 6.10 Gaming Laws and Regulations. Debtor and Secured Party
---------------------------
acknowledge 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 Louisiana Riverboat Economic Development and Gaming
Control Act, La. R.S. 27:41 et seq., the Louisiana Gaming Control Law, La. R.S.
27:1 et seq., and the rules and regulations thereunder, all as amended from time
to time (collectively, the "Louisiana Gaming Regulations"). Debtor and Secured
Party further acknowledge that the riverboat gaming license held by Debtor is
not part of the Collateral and that, under the Louisiana Gaming Regulations,
Secured Party may be precluded from or otherwise limited in taking possession of
or selling the Collateral pursuant to the remedies provisions of this Agreement.
Debtor and Secured Party also acknowledge that due to various requirements under
the Louisiana Gaming Restrictions, including without limitation, requirements
relating to the licensing of operators of gaming facilities and the prior
approval of the sale or disposition of certain assets of a licensed gaming
operation, the sale of certain Collateral may be denied by the Louisiana Gaming
Control Board or delayed pending Louisiana Gaming Control Board approval.
Section 6.11 Termination. The grant of a security interest
-----------
hereunder and all of Secured Party's rights, power and remedies in connection
therewith shall unless otherwise provided in the Indenture or this Agreement,
remain in full force and effect until payment in full of (A) the Notes under the
terms of the Indenture, (B) all obligations then due and owing under the
Indenture, the Notes and the Collateral Documents and (C) all other Obligations;
provided, however, that after receipt from the Debtor by the Secured Party of a
request for a release of any Collateral permitted under the Indenture upon the
sale, transfer, assignment, exchange or other disposition of such Collateral not
prohibited by the Indenture (and upon receipt by the Secured Party of all
proceeds of such sale, transfer, assignment, exchange or other disposition to
the extent required to be remitted to the Secured Party under the Indenture or
otherwise), such Collateral shall be released from the lien and security
interest created hereunder in accordance with
16
<PAGE>
the provisions of the Indenture and shall no longer constitute Collateral. Upon
the payment in full of (A) the Notes under the terms of the Indenture (B) all
obligations then due and owing under the Indenture and the Collateral Documents,
and (C) all other Obligations, the Debtor shall be entitled to the return, upon
its request and at its expense, of such of the Collateral pledged by it as shall
not have been sold or otherwise applied pursuant to the terms hereof.
Notwithstanding the foregoing, the reimbursement and indemnification provisions
of Section 5.7 shall survive the termination of this Agreement.
Upon any termination of this Agreement or release of any Collateral as
permitted by the Indenture the Secured Party will, at the expense of the Debtor,
execute and deliver to the Debtor such documents and take such other actions as
the Debtor shall reasonably request to evidence the termination of this
Agreement or the release of such Collateral, as the case may be. Any such
action taken by the Secured Party 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 interests in the Collateral, and shall be at the expense of
the Debtor. The Secured Party may conclusively rely on any certificate
delivered to it by the Debtor stating that the execution of such documents and
release of the Collateral is in accordance with and permitted by the terms of
the Indenture and this Agreement.
Section 6.12 Counterparts. This Agreement may be executed in two or
------------
more counterparts, and it shall not be necessary that the signatures of all
parties hereto be contained on any one counterpart hereof; each counterpart
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
Section 6.13 Trustee. State Street Bank and Trust Company is acting
-------
hereunder solely in its capacity as Trustee under the Indenture, and all of the
rights of Trustee set forth in the Indenture shall apply to Trustee's actions
hereunder. To the extent this Agreement contemplates payments by the Secured
Party, the Trustee shall have no liability therefor, such liability continuing
to be the liability of Debtor or realized through the value of any collateral
for the Obligations.
[signature page follows]
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
Debtor:
HOLLYWOOD CASINO SHREVEPORT
BY: HCS I, INC., a Louisiana corporation
Its Managing General Partner
By: /s/ PAUL C. YATES
-------------------------------------------
Name: Paul C. Yates
Title: Executive Vice President and
Chief Financial Officer
Secured Party:
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/ ROBERT J. DUNN
-------------------------------------------
Name: Robert J. Dunn
Title: Vice President
18
<PAGE>
EXHIBIT A
TO
SECURITY AGREEMENT
1. (A) Prior Names.
Name Date of Change
Queen of New Orleans September 1998
at the Hilton Joint Venture
QNOV May 1999
(B) Trade Names
None
2. Business Locations.
(a) Address of Office Containing Books and Records
Dallas County, Texas
Caddo Parish, Louisiana
Bossier Parish, Louisiana
(b) Other Business Locations
None
19
<PAGE>
EXHIBIT 4.10
MORTGAGE, LEASE HOLD MORTGAGE * UNITED STATES OF AMERICA
AND ASSIGNMENTS OF
LEASES AND RENTS * STATE OF CALIFORNIA
BY * COUNTY OF LOS ANGELES
HOLLYWOOD CASINO SHREVEPORT
*******************************************
BE IT KNOWN, that on this 9th day of August, 1999, but effective as of
August 10, 1999, before the undersigned Notary Public commissioned and
qualified, and in the presence of the undersigned witnesses, personally came and
appeared:
HOLLYWOOD CASINO SHREVEPORT, a Louisiana general partnership, having a
mailing address of Two Galleria Tower, Suite 2200, 13455 Noel Road,
Dallas, Texas 75240 and a federal taxpayer identification number of
72-1225563, appearing herein through its undersigned representative,
duly authorized hereunto pursuant to a resolution of its managing
general partner, HCS I, Inc., a Louisiana corporation, a certified
extract of which is attached hereto as Exhibit "A",
(the "Mortgagor"), who declared that Mortgagor does by these presents declare
and acknowledge an indebtedness unto:
STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, as
trustee for the benefit of the holders of the Notes (as hereinafter
defined) issued pursuant to that certain Indenture dated as of August
10, 1999 (as amended, supplemented, restated or otherwise modified
from time to time, the "Indenture"), by and among Mortgagor and
Shreveport Capital Corporation, as issuers, HWCC-Louisiana, Inc., HCS
I, Inc. and HCS II, Inc., as guarantors, and Mortgagee (as hereinafter
defined), as trustee, having a mailing address of Two Avenue De
Lafayette, Boston, Massachusetts 02111-1724, Attention: Corporate
Trust Administration, and a federal taxpayer identification number of
04-1867445,
(in such capacity, and together with any successor in such capacity, the
"Mortgagee"), as Mortgagee for the benefit of the holders of those certain
$150,000,000 13% First Mortgage Notes with Contingent Interest due 2006 (the
"Series A Notes," and together with any Series B Notes issued in exchange
therefor, as either of the same may be amended, supplemented, restated,
exchanged, replaced or otherwise modified from time to time, the "Notes," and
such holders the "Noteholders") issued pursuant to the Indenture, which accepts
this Mortgage (as hereinafter defined).
RECITALS
A. Mortgagor is an issuer of the Notes pursuant to the Indenture.
B. As a material inducement to the Noteholders to purchase the Notes and
to Mortgagee to enter into the Indenture and in order to secure the full and
punctual payment and performance of the Obligations (as hereinafter defined),
Mortgagor has agreed to execute and deliver this Mortgage and to grant a
mortgage lien and assignment in and to the collateral described herein.
<PAGE>
ARTICLE 1
PURPOSES: DEFINITIONS
---------------------
1.1 Purposes. Mortgagor declares that this Mortgage is granted to secure
---------
the due and punctual payment and performance of the Obligations (as hereinafter
defined). This Mortgage may be construed and enforced variously simultaneously
as a mortgage, assignment, pledge or contract as may be appropriate under
applicable law from time to time in order to effectuate fully the purposes and
agreements set forth herein.
The maximum amount of the Obligations that may be outstanding at any
time and from time to time that this Mortgage secures, including, without
limitation, as an assignment of Space Leases (as hereinafter defined) and Rents
(as hereinafter defined), is $250,000,000.00, including all principal plus
interest and any expenses and advances incurred by Mortgagee and all other
amounts included within the indebtedness secured hereunder. This Mortgage is and
shall remain effective, even though the amount of the Obligations secured
hereunder may now be zero or may be reduced to zero, until all of the amounts,
liabilities and obligations, present and future, comprising the Obligations have
been incurred and are extinguished. When no Obligations exist and Mortgagee is
not bound to permit any Obligations to be incurred, this Mortgage may be
terminated by Mortgagor in any manner permitted by this Mortgage or the
Indenture.
1.2 Definitions. As used in this Mortgage, the following terms have the
------------
meanings hereinafter set forth:
"Appurtenant Rights" means all single tenements, hereditaments, rights
(including all batture rights, rights of accretion and riparian rights),
reversions, remainders, development rights, privileges, benefits, servitudes
(including, without limitation, that certain Grant of Right of Use (Personal
Servitude) by the City of Shreveport in favor of Mortgagor dated as of May __,
1999, recorded in the Conveyance Records of Caddo Parish, Louisiana on
_____________, 1999 in Book _____, Page _____, the "Personal Servitude"),
easements (in gross or appurtenant), rights-of-way, privileges, prescriptions,
advantages, strips of land, streets, ways, alleys, passages, sewer rights, water
courses, water rights and powers, and all appurtenances whatsoever and claims or
demands of Mortgagor at law or in equity in any way belonging, benefitting,
relating, attaching or appertaining to the Land, the airspace over the Land, the
Improvements or any of the Mortgaged Property encumbered by this Mortgage, or
which hereafter shall in any way belong, relate or be appurtenant thereto,
whether now owned or hereafter acquired by Mortgagor.
"Bankruptcy" means any proceeding under Bankruptcy Law.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Casino Ground Lease" means that certain Ground Lease dated as of May
19, 1999 by and between the City of Shreveport, as landlord, and Mortgagor
(formerly known as QNOV), as tenant, recorded on July 13, 1999, under Registry
No. 1663803 of the records of Caddo Parish, Louisiana, and under Registry No.
683243 of the records of Bossier Parish, Louisiana.
"Environmental Laws" means any and all laws and Legal Requirements
relating to environmental matters, pollution, or hazardous substances,
including: the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. (S)(S) 9601-9657; the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. (S)(S) 6901 et seq.; the Hazardous Materials
Transportation Act (49 U.S.C. (S)(S) 1801 et seq.); the Louisiana Environmental
Quality Act, La. R.S. 30:2001-2376; the Louisiana Air Control Law, La. R.S.
30:2051-2063, the Louisiana Water Control Law, La. R.S. 30: 2071-2088; the
Louisiana Hazardous Waste Control Law, La. R.S. 30:2171-2207; the Louisiana
Inactive and Abandoned Hazardous Waste Site Law, La. R.S. 30:2221-2226; the
Liability for Hazardous Substance Remedial Action, La. R.S. 30:2271-2290; any
other laws that may form the basis of any claim, action, demand, suit,
proceeding, hearing, or notice of violation that is based on or related to the
generation, manufacture, processing, distribution, use, existence, treatment,
storage, disposal, transport, or
2
<PAGE>
handling, or the emission, discharge, release, or threatened
release into the environment, of any hazardous substance, or other threat to the
environment.
"Event of Default" has the meaning set forth in Section 7.1 hereof.
"Excluded Collateral" means (i) all such items of personal property
(of the type in which a security interest can be perfected under the UCC)
constituting furniture, fixtures or equipment of the Mortgagor, the acquisition
of which has been financed pursuant to the FF&E Financing, which items shall
constitute "Excluded Collateral" for so long as such items are subject to a lien
in favor of the lender or lenders (or one or more agents therefor) providing
such FF&E Financing, and (ii) the Equity Escrow Account.
"FF&E" means furniture, fixtures or equipment used in the ordinary
course of the business of Mortgagor and its Restricted Subsidiaries.
"FF&E Financing" means the incurrence of Indebtedness, the proceeds of
which are utilized solely to finance the acquisition of (or entry into a capital
lease by Mortgagor or a Restricted Subsidiary with respect to) FF&E.
"Governmental Authority" means any agency, authority, board, bureau,
commission, department, office, public entity, or instrumentality of any nature
whatsoever of the United State federal or foreign government, any state,
province or any city or other political subdivision or otherwise, whether now or
hereafter in existence, or any officer or official thereof, including, without
limitation, any Gaming Authority.
"Hazardous Materials" means hazardous wastes, hazardous substances,
hazardous constituents, toxic substances or related materials, whether solids,
liquids or gases, including but not limited to substances defined as "hazardous
wastes," "hazardous substances," "toxic substances," "pollutants,"
"contaminants," chemicals known to cause cancer or reproductive toxicity,
"radioactive materials," or other similar designations in, or otherwise subject
to regulation under any Environmental Laws now or hereafter in effect.
"Holder" means a Person in whose name a Note is registered.
"Hollywood Riverboat" means that certain riverboat gaming vessel
bearing Hull Number 327, to be purchased by Mortgagor from Leevac Shipyards,
Inc. pursuant to that certain Vessel Construction Contract dated July 16, 1999.
"Imposition" means any taxes, assessments, water rates, sewer rates,
maintenance charges, other governmental impositions and other charges now or
hereafter levied or assessed or imposed against the Mortgaged Property or any
part thereof.
"Improvements" means (1) all the buildings, structures, other
constructions, facilities and improvements of every nature whatsoever now or
hereafter situated on the Land or on any real or immovable property encumbered
hereby, and (2) all fixtures, machinery, appliances, goods, building or other
materials, equipment, including without limitation all gaming equipment and
devices, and all machinery, equipment, engines, appliances and fixtures for
generating or distributing air, water, heat, electricity, light, fuel or
refrigeration, or for ventilating or sanitary purposes, or for the exclusion of
vermin or insects, or for the removal of dust, refuse or garbage; all wall-beds,
wall-safes, built-in furniture and installations, shelving, lockers, partitions,
doorstops, vaults, motors, elevators, dumb-waiters, awnings, window shades,
venetian blinds, light fixtures, fire hoses and brackets and boxes for the same,
fire sprinklers, alarm, surveillance and security system, computers, drapes,
drapery rods and brackets, mirrors, mantels, screens, linoleum, carpets and
carpeting, plumbing, bathtubs, sinks, basins, pipes, faucets, water closets,
laundry equipment, washers, dryers, ice-boxes and heating units; all kitchen and
restaurant equipment, including but not limited to silverware, dishes, menus,
cooking utensils, stoves, refrigerators, ovens, ranges, dishwashers, disposals,
water heaters, incinerators, furniture, fixtures and furnishings, communication
systems, and equipment; all cocktail lounge supplies, including but not limited
to bars, glassware, bottles and tables used in connection with the Land; all
chaise lounges, hot tubs, swimming pool heaters and equipment and all other
recreational equipment (computerized and otherwise), beauty and barber
equipment, and maintenance supplies used in connection with the Land; all
amusement rides and attractions
3
<PAGE>
attached to the Land, all specifically designed installations and furnishings,
and all furniture, furnishings and personal property of every nature whatsoever
now or hereafter owned or leased by Mortgagor or in which Mortgagor has any
rights or interest and located in or on, or attached to, or used or intended to
be used or which are now or may hereafter be appropriated for use on or in
connection with the operation of the Land or any real or personal property
encumbered hereby or any other Improvements, or in connection with any
construction being conducted or which may be conducted thereon, and all
extensions, additions, accessions, improvements, betterments, renewals,
substitutions, and replacements to any of the foregoing, and all of the right,
title and interest of Mortgagor in and to any such property, which, to the
fullest extent permitted by law, shall be conclusively deemed fixtures and
improvements and a part of the real or immovable property hereby encumbered.
Without limiting the generality of the foregoing, Improvements shall include:
(i) any Vessel and its now existing or hereafter arising components and
appurtenances, including, without limitation, the Hollywood Riverboat, to the
extent such Vessel is or may be deemed to be a building or a component part of a
building, or otherwise to be an improvement to or on the Land or any other real
or immovable property encumbered hereby; and (ii) all buildings, improvements
and other constructions situated on the Land, and all component parts of the
Land, and all component parts of any building, improvement or other construction
located on the Land, now or hereafter a part of or attached to the foregoing or
used in connection therewith.
"Indemnified Parties" means Mortgagee, the Noteholders and their
respective officers, directors, employees, agents, and attorneys.
"Insolvent" means with respect to any Person or entity, that such
Person or entity shall be deemed to be insolvent if he or it is unable to pay
his or its debts a they become due and/or if the fair market value of his or its
assets does not exceed his or its aggregate liabilities.
"Land" means the real property situated in the State of Louisiana,
Parish of Bossier and/or Parish of Caddo, more specifically described in
"Exhibit B" attached hereto and incorporated herein by this reference, including
any after acquired title thereto.
"Legal Requirements" means all applicable restrictive covenants,
applicable zoning and subdivision ordinances and building codes, all applicable
health and Environmental Laws and regulations, all applicable gaming laws and
regulations, and all other applicable laws, ordinances, rules, regulations,
judicial decisions, administrative orders, and other requirements of any
Governmental Authority having jurisdiction over Mortgagor, the Mortgaged
Property and/or any Affiliate of Mortgagor, in effect either at the time of
execution of this Mortgage or at any time during the term hereof, including,
without limitation, all Environmental Laws and Gaming Laws.
"Mortgage" means this Mortgage, Leasehold Mortgage and Assignment of
Leases and Rents, as it may be increased, amended, restated, supplemented or
modified from time to time.
"Mortgaged Property" means all of the property described in Section
2.1 hereof, excluding the Excluded Collateral.
"Mortgagee" means State Street Bank and Trust Company, a Massachusetts
trust company, as trustee under the Indenture, and any substitute trustee
designated from time to time under the Indenture.
"Mortgagor" means Hollywood Casino Shreveport, a Louisiana general
partnership, and includes not only the original Mortgagor hereunder, but also
any successors or assigns of the Mortgaged Property, or any part thereof, at any
time and from time to time, as the case requires.
"Noteholders" means the holders of the Notes.
"Obligations" means (i) the payment when due of indebtedness evidenced
by the Notes in the principal sum not to exceed at any time outstanding of
$150,000,000.00, interest (including post-petition interest) as set forth in the
Indenture and the Notes, and premiums, penalties, and late charges thereon; (ii)
all other indebtedness and other sums (including, without
4
<PAGE>
limitation, all expenses, attorneys' fees, other fees, indemnifications,
reimbursements, damages, other monetary liabilities, and other charges) and
obligations that may or shall become due hereunder or under the Notes, the
Guarantees, the Indenture or the other Collateral Documents; and (iii) any and
all renewals, modifications, amendments, extensions for any period, supplements
or restatements of any of the foregoing.
"Permits" means all applicable authorizations, consents, licenses,
approvals, identification numbers and permits required under Legal Requirements
(including, without limitation, Environmental Laws) required for construction,
operation and occupancy of the Mortgaged Property.
"Proceeds" has the meaning assigned to it under the UCC and, in any
event, shall include but not be limited to (i) any and all proceeds of any
insurance (including without limitation property casualty and title insurance),
indemnity, warranty or guaranty payable from time to time with respect to any of
the Mortgaged Property (including without limitation, proceeds attributable to
the insurance loss of the Land, the Improvements and the Appurtenant Rights as
provided under La. R.S. 9:5386); (ii) any and all proceeds in the form of
accounts, security deposits, tax escrows (if any), down payments (to the extent
the same may be pledged under applicable law), collections, contract rights,
documents, instruments, chattel paper, liens and security instruments,
guarantees or general intangibles relating in whole or in part to the Shreveport
Resort and all rights and remedies of whatever kind or nature Mortgagor may hold
or acquire for the purpose of securing or enforcing any obligation due Mortgagor
thereunder; (iii) any and all payments in any form whatsoever made or due and
payable from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Mortgaged Property
by any Governmental Authority; (iv) subject to the absolute assignment contained
herein, the Rents or other benefits arising out of, in connection with or
pursuant to any Space Lease of the Mortgaged Property; and (v) any and all other
amounts from time to time paid or payable in connection with any of the
Mortgaged Property.
"Rents" means all rents, room revenues, income, receipts, issues,
profits, revenues and maintenance fees, room, food and beverage revenues,
license and concession fees, proceeds and other benefits to which Mortgagor may
now or hereafter be entitled from the Land, the Improvements, the Space Lease or
any property encumbered hereby or any business or other activity conducted by
Mortgagor at the Land or the Improvements.
"Security Agreement" means that certain Security Agreement dated as of
the date hereof by and between Mortgagor and Mortgagee.
"Space Leases" means any and all present and future leases, subleases
(including without limitation, that certain Retail Space Lease by and between
Mortgagor, as landlord, and Red River Entertainment Company, L.L.C., as tenant,
dated as of June 3, 1999, a memorandum of which was recorded in the records of
Caddo Parish, Louisiana on ____________, 1999 as Registry No. _____, and in the
records of Bossier Parish, Louisiana on _____________, 1999 as Registry No.
______), lettings, licenses, concessions, operating agreements, management
agreements, and all other agreements affecting the Mortgaged Property that
Mortgagor has entered into, taken by assignment, taken subject to, or assumed,
or has otherwise become bound by, now or in the future, that give any Person the
right to conduct its business on, or otherwise use, operate or occupy, all or
any portion of the Land or Improvements, and all guaranties, letters of credit
or other credit enhancement documents of any of the foregoing, and any leases,
agreements or arrangements permitting anyone to enter upon or use any of the
Mortgaged Property to extract or remove natural resources of any kind, together
with all amendments, extensions, and renewals of the foregoing entered into in
compliance with this Mortgage, together with all rental, occupancy, service,
maintenance or any other similar agreements pertaining to use or occupation of,
or the rendering of services of the Land, the Improvements or any part thereof.
"Space Lessee(s)" means any and all present and future tenants,
licensees, or other grantees of the Space Leases and any and all guarantors,
sureties, endorsers or others having primary or secondary liability with respect
to such Space Lease.
"UCC" means Uniform Commercial Code, Commercial Laws - Secured
Transactions La. R.S. 10:9-101-9-605) in the State of Louisiana, as amended from
time to time.
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"Vessel" means any vessel and its now existing or hereafter arising
components and appurtenances, including, without limitation, Hollywood
Riverboat, and all other riverboat gaming vessels or other vessels now or
hereafter owned by Mortgagor.
1.3 Undefined Terms. Any capitalized terms used in this Mortgage which
----------------
are not otherwise defined herein shall have the meaning ascribed to such terms
in the Indenture.
1.4 Amendment of Defined Instruments. Unless the context otherwise
---------------------------------
requires or unless otherwise provided herein, references in this Mortgage to a
particular agreement, instrument or document also refer to and include all
renewals, extensions, amendments, modifications, supplements or restatements of
any such agreement, instrument or document, provided that nothing contained in
this Section shall be construed to authorize any Person to execute or enter into
any such renewal, extension, amendment, modification, supplement or restatement.
ARTICLE 2
LIENS AND SECURITY INTEREST
---------------------------
2.1 Hypothecation. FOR THE PURPOSE OF SECURING in favor of Mortgagee and
--------------
its successors and assigns for the benefit of the Noteholders the due and
punctual payment and performance of the Obligations, Mortgagor, in consideration
of the premises, and for the purposes aforesaid, does hereby MORTGAGE, ASSIGN,
BARGAIN, PLEDGE, RELEASE, HYPOTHECATE AND WARRANT UNTO MORTGAGEE AND ITS
SUCCESSORS AND ASSIGNS FOR THE BENEFIT OF THE NOTEHOLDERS all of Mortgagor's
estate, right, title and interest whether now owned or hereafter acquired,
whether as owner, lessor, lessee, or otherwise, and whether vested or
contingent, and including all of Mortgagor's rights to perform all obligations
under and to receive the benefits of any leases, in and to all of the following
described land (immovable property) and interests in land (immovable property),
leases, leasehold interests, estates, servitudes, rights, buildings, other
constructions, improvements, property, fixtures, component parts, machinery and
equipment to the full extent that such property is susceptible of mortgage under
the Louisiana Civil Code, Louisiana Revised Statutes, and other provisions of
Louisiana law; grants a continuing security interest in favor of Mortgagee and
its successors and assigns, as secured party for the benefit of the Noteholders,
in all property and rights described below, whether now owned or hereafter
acquired that are susceptible of a security interest under the UCC or any other
provision of Louisiana law; and does further affect, hypothecate, pledge and
assign unto and in favor of Mortgagee and its successors and assigns, for the
benefit of the Noteholders, all present and future leases and rents, as well as
all other property and rights described below, whether now owned or hereafter
acquired, that are susceptible of assignment under the UCC or any other
provision of Louisiana law:
(A) The entire Casino Ground Lease, including without limitation, all
of Mortgagor's present and future right, title and interest, as such may be
amended from time to time, in, to and under the Casino Ground Lease, and any
other lease and sublease agreements and amendments thereof, affecting the Land,
together with Mortgagor's right, title, and interest in the buildings and other
constructions and improvements on the leased premises and the component parts
thereof;
(B) TOGETHER WITH the Improvements;
(C) TOGETHER WITH all Appurtenant Rights;
(D) TOGETHER WITH (1) all the estate, right, title and interest of
Mortgagor of, in and to all judgments and decrees, insurance proceeds (including
without limitation, the right to receive proceeds attributable to the insurance
loss of the Land, the Improvements and the Appurtenant Rights, all as provided
in La. R.S. 9:5386), awards of damages and settlements hereafter made resulting
from condemnation proceedings or the taking of any of the property described in
Granting Clauses (A), (B) and (C) hereof or any part thereof under the power of
eminent domain, or for any damage (whether caused by such taking or otherwise)
to the property described in Granting Clauses (A), (B) and (C) hereof or any
part thereof, or to any Appurtenant
6
<PAGE>
Rights thereto, and Mortgagee is hereby authorized, subject to the provisions
and limitations contained in the Indenture, to collect and receive said awards
and proceeds and to give proper receipts and acquittance therefor, and (subject
to the terms hereof) to apply the same toward the payment of the Obligations,
notwithstanding the fact that the amount owing thereon may not then be due and
payable; (ii) 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 Granting Clause (A), (B) and (C) hereof 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; and (iii) subject to the provisions and
limitations contained in the Indenture, whether arising from any voluntary or
involuntary disposition of the property described in Granting Clauses (A), (B)
and (C), all Proceeds, products, replacements, additions, substitutions,
renewals and accessions, remainders, reversions and after-acquired interest in,
of and to such property;
(E) TOGETHER WITH the absolute assignment of any Space Leases or any
part thereof that Mortgagor has entered into, taken by assignment, taken subject
to, or assumed, or has otherwise become bound by, now or in the future, together
with all of the following (including all "Cash Collateral" within the meaning of
the Bankruptcy Law) arising from the Space Leases: (a) Rents (subject, however,
to the aforesaid absolute assignment to Mortgagee and the conditional permission
hereinbelow given to Mortgagor to collect the Rents), (b) all security deposits,
and (c) all of Mortgagor's right, title, and interest under the Space Leases,
including the following: (i) the right to receive and collect the Rents from the
lessee, sublessee, guarantors or licensee, or their Successor(s), under any
Space Lease(s) and (ii) the right to enforce against any tenants thereunder and
otherwise any and all remedies under the Space Leases, including Mortgagor's
right to evict from possession any tenant thereunder or to retain, apply, use,
draw upon, pursue, enforce or realize upon any guaranty of any Space Lease; to
terminate, modify, or amend the Space Leases; to obtain possession of, use, or
occupy, any of the real or personal property subject to the Space Leases; and to
enforce or exercise, whether at law or in equity or by any other means, all
provisions of the Space Leases and all obligations of the tenants thereunder and
guarantors thereof based upon (A) any breach by any such tenant or guarantor
under the applicable Space Lease (including any claim that Mortgagor may have by
reason of a termination, rejection, or disaffirmance of such Space Lease
pursuant to any Bankruptcy Law) and (B) the use and occupancy of the premises
demised, whether or not pursuant to the applicable Space Lease (including any
claim for use and occupancy arising under landlord-tenant law of the State of
Louisiana or any Bankruptcy Law);
Notwithstanding anything to the contrary contained herein, the
foregoing provisions of this Paragraph (E) shall not constitute an assignment
for purposes of security but shall constitute an absolute and present assignment
of the Rents to Mortgagee, subject, however, to the conditional license given to
Mortgagor to collect and use the Rents as hereinabove provided; and the
existence or exercise of such right of Mortgagor shall not operate to
subordinate this assignment to any subsequent assignment, in whole or in part,
by Mortgagor;
(F) TOGETHER WITH, to the extent permitted by applicable law, all of
Mortgagor'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 Mortgagor from any Governmental Authority having or claiming
jurisdiction over the Land, the FF&E, the Shreveport Resort, or any other
element of the Mortgaged Property or providing access thereto, or the operation
of any business on, at, or from the Land;
(G) TOGETHER WITH all of Mortgagor's right, title and interest in and
to all water stock, water permits and other water or riparian rights relating to
the Land;
(H) TOGETHER WITH all of Mortgagor's rights, title and interest in and
to oil and gas and other mineral rights, if any, in or pertaining to the Land
and all royalty, leasehold and other rights of Mortgagor pertaining thereto;
(I) TOGETHER WITH any and all monies and other property, real or
personal, which may from time to time be subjected to the lien hereof by
Mortgagor or by anyone on its behalf or with its consent, or which may come into
the possession or be subject to
7
<PAGE>
the control of Mortgagee pursuant to this Mortgage or any Collateral Document,
including, without limitation, any protective advances under this Mortgage
(provided that the maximum amount of principal secured does not exceed the
amount set forth in Section 1.1 hereof); and all of the Mortgagor's right,
title, and interest in and to all extensions, improvements, betterments,
renewals, substitutes for and replacements of, and all additions, accessions,
and appurtenances to, any of the foregoing that Mortgagor may subsequently
acquire or obtain by any means, or construct, assemble, or otherwise place on
any of the Mortgaged Property, and all conversions of any of the foregoing; it
being the intention of Mortgagor that all property hereafter acquired by
Mortgagor and required by any Collateral Document or this Mortgage to be subject
to the lien of this Mortgage or intended so to be shall forthwith upon the
acquisition thereof by Mortgagor be subject to the lien of this Mortgage as if
such property were now owned by Mortgagor and were specifically described in
this Mortgage and granted hereby or pursuant hereto, and Mortgagee is hereby
authorized, subject to Gaming Laws, to receive any and all such property as and
for additional security for the obligations secured or intended to be secured
hereby. Mortgagor agrees to take any action as may reasonably be necessary to
evidence and perfect such liens or security interests, including, without
limitation, the execution of any documents necessary to evidence and perfect
such liens or security interests;
(J) TOGETHER WITH Proceeds of the foregoing property described in
Granting Clauses (A) through (I) and Proceeds of any and all Gaming Licenses
even if such Gaming Licenses are not subject to the liens granted hereunder;
(K) TOGETHER WITH (i) Mortgagor's rights further to assign, sell,
lease, encumber or otherwise transfer or dispose of the property described in
Granting Clause (A) through (J) inclusive, above, for debt or otherwise, except
to the extent expressly reserved by Mortgagor pursuant to the Indenture; and
(L) EXPRESSLY EXCLUDING, HOWEVER, (1) the Excluded Collateral and (2)
any of the foregoing property that is, pursuant to restrictions enforceable
under applicable law, prohibited from being pledged as security or mortgaged
property; provided that, with respect to this clause (2), upon the termination
of such prohibitions for any reason whatsoever or in the event such prohibitions
are or become unenforceable under applicable law, such foregoing property shall
automatically become "Mortgaged Property" hereunder, it being understood that
upon request of Mortgagee, Mortgagor will in good faith use reasonable efforts
to obtain consent for the creation of a mortgage and security interest in favor
of Mortgagee in Mortgagor's rights in such property referred to in this clause
(2).
So long as no Event of Default shall occur and be continuing, all
dividends, distributions, interest and principal payments, cash, instruments,
and other property and proceeds made upon or with respect to or of the Mortgaged
Property (including Rents) may be used by the Mortgagor subject to the terms and
conditions of the Indenture. Upon the occurrence and during the continuance of
an Event of Default, all rights of the Mortgagor to receive all dividends,
distributions, interest or principal payments, cash, instruments and other
property and proceeds (including Rents) shall cease and such dividends,
distributions, interest and principal payments, cash, instruments and other
property and proceeds (including Rents) shall be paid or otherwise delivered to
the Mortgagee. As used in this Mortgage, the term "Mortgaged Property" shall be
expressly defined as meaning all or, where the context permits or requires, any
portion of the above, and all or, where the context permits or requires, any
interest therein.
Mortgagor, for itself and its successors and assigns, covenants and
agrees to and with Mortgagee that, at the time or times of the execution of and
delivery of these presents or any instrument of further assurance with respect
thereto, Mortgagor has good right, full power and lawful authority to assign,
grant, convey, warrant, transfer, bargain or sell its interests in the Mortgaged
Property in the manner and form as aforesaid, and that the Mortgaged Property is
free and clear of all liens and encumbrances whatsoever, except the Permitted
Liens, and Mortgagor shall warrant and forever defend the Mortgaged Property in
the quiet and peaceable possession of Mortgagee 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. Mortgagor
agrees that any greater title to the Mortgaged Property hereafter acquired by
Mortgagor during the term hereof, including without limitation, the acquisition
of the lessor's interest under the Casino Ground Lease (if permitted by
Mortgagee and the Indenture), or any
8
<PAGE>
other estate, title or interest in the premises covered by such lease, shall be
automatically subject hereto without the need for any further mortgage,
assignment, amendment, supplement, or other writing.
2.2 Mortgagor's License to Collect Rents Until Default. Mortgagor and
---------------------------------------------------
Mortgagee agree that this Mortgage is an absolute and present assignment of
Space Leases and Rents. Prior to the occurrence and continuance of an Event of
Default, Mortgagor shall have the right under a license granted hereby and
Mortgagee hereby grants to Mortgagor a license (but limited by the remedies of
Mortgagee set forth herein and in the Indenture) to collect, but not more than
one (1) month in advance, all of the Rents due or to become due under the Space
Leases, and, subject to the restrictions set forth in the Indenture, if any, to
exercise the rights of landlord under the Space Leases. The license granted
hereby may be revoked at Mortgagee's option upon written notice from Mortgagee
to Mortgagor after the occurrence and during the continuance of an Event of
Default. Mortgagor hereby agrees with Mortgagee that the other parties under
the Space Leases may, upon notice from Mortgagee of the occurrence of an Event
of Default that is then continuing, thereafter pay direct to Mortgagee the Rents
due and to become due under the Space Leases and attorney all other obligations
thereunder directly to Mortgagee without any obligation on their part to
determine whether an Event of Default does in fact exist. Additionally, upon
the occurrence and during the continuance of an Event of Default, Mortgagor
hereby constitutes and appoints Mortgagee its true and lawful attorney-in-fact
with full power of substitution to collect Rents and other sums due and to
become due under the Space Leases and to endorse, either in the name of
Mortgagor or in the name of Mortgagee, any check made payable to Mortgagor or
any assumed business name of Mortgagor representing Rents and other sums due and
to become due under the Space Leases. Following the occurrence and during the
continuance of an Event of Default and the acceleration of the Notes, any such
Rent and other sums shall be applied in accordance with the provisions of the
Indenture. It is understood and agreed that this power is coupled with an
interest which cannot be revoked.
ARTICLE 3
REPRESENTATIONS AND, WARRANTIES OF MORTGAGOR
--------------------------------------------
Mortgagor hereby unconditionally represents and warrants to Mortgagee as
follows:
3.1 General Representations and Warranties. Mortgagor represents and
---------------------------------------
warrants that: (a) pursuant to the Casino Ground Lease, Mortgagor has a valid
and enforceable leasehold interest in and to the Land, the Appurtenant Rights
and other immovable property covered by the Casino Ground Lease and has or will
have good and valid title to the Improvements constructed or to be constructed
thereon so long as such Casino Ground Lease is in full force and effect, subject
to the Permitted Liens; (b) the Space Leases, the Rents and the other Mortgaged
Property, are free and clear of all encumbrances except Permitted Liens, and
that it has the right to hold, occupy and enjoy its interest in the Mortgaged
Property, and has good right, full power and lawful authority to subject the
Mortgaged Property to the Lien of this Mortgage and pledge the same as provided
herein and Mortgagee may at all times peaceably and quietly enter upon, hold,
occupy and enjoy the entire Mortgaged Property in accordance with the terms
hereof; (c) Mortgagor is not Insolvent and no bankruptcy proceedings are pending
or contemplated by or, to the best of Mortgagor's knowledge, against Mortgagor;
(d) the Land has frontage on, and direct access for ingress and egress to
dedicated street(s); (e) no material part of the Mortgaged Property has been
damaged, destroyed, condemned or abandoned; (f) no part of the Mortgaged
Property is the subject of condemnation proceedings, and Mortgagor has no
knowledge of any contemplated or pending condemnation proceeding with respect to
any portion of the Mortgaged Property; (g) the Mortgaged Property and all
activities thereon are in compliance in all material respects with all
applicable zoning and land use ordinances and regulations, building codes, and
fire codes; and (h) the execution delivery and performance of this Mortgage does
not require any consent under, and will not contravene any provision of or cause
a default under, the Casino Ground Lease.
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3.2 Space Leases.
-------------
Mortgagor represents and warrants that
(i) Mortgagor has delivered to Mortgagee true, correct and complete
copies of all Space Leases, including all amendments and modifications, written
or oral existing of the date hereof;
(ii) Mortgagor has not executed or entered into any modifications or
amendments of the Space Leases, either orally or in writing, other than
amendments that have been disclosed to Mortgagee in writing;
(iii) to the best of its knowledge, no material default now exists
under any Space Lease;
(iv) to the best of its knowledge, no event has occurred that, with
the giving of notice or the passage of time or both, would constitute such a
material default or would entitle Mortgagor or any other party under such Space
Lease to cancel the same or otherwise avoid its obligation;
(v) Mortgagor has not accepted prepayments of installments of Rent
under any Space Leases, except for security deposits not in excess of one
month's Rent;
(vi) except for the assignment effected hereby, Mortgagor has not
executed any assignment or pledge of any of Space Leases, the Rents, or of
Mortgagor's right, title and interest in the same; and
(vii) this Mortgage conforms and complies with all Space Leases, does
not constitute a violation or default under any Space Lease, and is and shall at
all times constitute a valid lien on Mortgagor's interests in the Space Leases.
ARTICLE 4
AFFIRMATIVE COVENANTS
---------------------
Mortgagor hereby unconditionally covenants and agrees with Mortgagee as
follows:
4.1 Compliance with Legal Requirements. Mortgagor shall promptly, fully,
-----------------------------------
and faithfully comply in all material respects with all Legal Requirements and
shall cause all portions of the Mortgaged Property and its use and occupancy to
fully comply in all material respects with Legal Requirements at all times.
4.2 Condemnation. Mortgagee is hereby authorized, at its option, to
-------------
commence, appear in and prosecute in its own or Mortgagor's name any action or
proceeding relating to any condemnation, seizure or taking by the exercise of
the power of eminent domain of any of the Mortgaged Property and to settle or
compromise any claim in connection therewith, and Mortgagor hereby appoints
Mortgagee as its attorney-in-fact to take any action in Mortgagor's name
pursuant to Mortgagee's rights hereunder. Immediately upon obtaining knowledge
of the institution of any proceedings for the condemnation of the Mortgaged
Property or any portion thereof, Mortgagor shall notify Mortgagee of the
pendency of such proceedings. Mortgagor from time to time shall execute and
deliver to Mortgagee all instruments requested by it to permit such
participation; provided, however, that such instruments shall be deemed as
supplemental to the foregoing grant of permission to Mortgagee, and unless
otherwise required, the foregoing permission shall, without more, be deemed
sufficient to permit Mortgagee to participate in such proceedings on behalf of
Mortgagor. All such compensation awards, damages, claims, rights of action and
Proceeds, and any other payments or relief, and the right thereto, are included
in the Mortgaged Property. To the extent such condemnation, seizure or taking
constitutes an Event of Loss, Mortgagee, after deducting therefrom all its
expenses, including reasonable attorneys fees, shall, or shall authorize
Mortgagor to apply such Proceeds in accordance with the provisions of the
Indenture.
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4.3 Lien Status. Mortgagor will protect the first Lien and security
------------
interest status (subject to Permitted Liens) of this Mortgage and, except to the
extent permitted by the provisions of the Indenture or hereunder, will not
place, or permit to be placed, or otherwise mortgage, hypothecate or encumber
the Mortgaged Property with, any other Lien or security interest of any nature
whatsoever (statutory, constitutional or contractual) regardless of whether same
is allegedly or expressly inferior to the Lien and security interest created by
this Mortgage, and, if any such Lien or security interest is asserted against
the Mortgaged Property (unless such Lien or encumbrance constitutes a Permitted
Lien), Mortgagor will promptly, at its own cost and expense, (a) pay the
underlying claim in full or take such other action so as to cause same to be
released or bonded around and (b) within five (5) days from the date such Lien
or security interest is so asserted, give Mortgagee notice of such Lien or
security interest. Such notice shall specify who is asserting such Lien or
security interest and shall detail the origin and nature of the underlying claim
giving rise to such asserted Lien or security interest.
4.4. Payment of Impositions. Mortgagor will duly pay and discharge, or
-----------------------
cause to be paid and discharged, all material Impositions not later than the day
any fine or penalty may be added thereto or imposed, 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 Noteholders;
provided, however, that Mortgagor may, if permitted by law and if such
installment payment would not create or permit the filing of a Lien against the
Mortgaged Property, pay such Impositions in installments whether or not interest
shall accrue on the unpaid balance of such Impositions.
4.5. Repair. Mortgagor will keep the Mortgaged Property in good
-------
condition, ordinary wear and tear excepted, and will make all necessary repairs,
replacements, renewals, betterments and improvements and alterations thereof and
thereto, interior and exterior, structural and non-structural, ordinary and
extraordinary, foreseen and unforeseen all as in the judgment of the Mortgagor
may be reasonably necessary for the proper conduct of the business carried in
connection therewith, provided that nothing in this Section 4.5 shall prevent
the Mortgagor from discontinuing the maintenance of any of such properties if
such discontinuance is, in the judgment of the Mortgagor, desirable in the
conduct of the business of the Mortgagor and its Subsidiaries taken as a whole.
Notwithstanding the foregoing, nothing contained in this Section 4.5 shall limit
the right of the Mortgagor to dispose of properties in any manner otherwise
permitted by the Indenture.
4.6. Insurance. Mortgagor will obtain and maintain insurance upon and
----------
relating to the Mortgaged Property insuring against personal injury and death,
loss by fire and such other hazards, casualties and contingencies (including
business interruptions insurance and builder's all risk coverage) in accordance
with the Indenture.
4.7. Application of Insurance Proceeds. The proceeds of the insurance of
----------------------------------
Mortgagor shall be applied in accordance with the provisions of the Indenture.
4.8. Performance of Leases. Mortgagor covenants (a) not to assign or
----------------------
grant a security interest in and to any of the Space Leases to any party other
than Mortgagee without the prior written consent of Mortgagee, (b) at the
request of Mortgagee, to execute and deliver all such further assurances and
assignments in and to the Mortgaged Property as Mortgagee shall from time to
time reasonably require, and (c) to deliver to Mortgagee copies of all Space
Leases, regardless of whether such Space Leases were or are executed before or
after the date hereof.
4.9. Inspection. Mortgagor, at all reasonable times and upon reasonable
-----------
prior notice, will permit the Mortgagee and its agents, representatives and
employees to inspect the Mortgaged Property.
4.10. Books and Records. Mortgagor will maintain full and accurate books
------------------
of account and other records reflecting in all material respects the results of
its operations of the Mortgaged Property. At any time and from time to time
Mortgagor shall deliver to Mortgagee such other financial data as Mortgagee
shall reasonably request with respect to the ownership, maintenance, use and
operation of the Mortgaged Property, and Mortgagee shall have the right, at
reasonable times and upon reasonable notice, to examine and make copies or
extracts of Mortgagor's books of account and records relating to the Mortgaged
Property.
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4.11. Maintenance of Rights of Way, Servitudes, and Licenses. Mortgagor
-------------------------------------------------------
will maintain, preserve and renew all rights of way, servitudes, easements,
grants, privileges, licenses and franchises reasonably necessary for the use of
the Mortgaged Property from time to time. Mortgagor shall comply in all
material respects with all restrictive covenants which may at any time affect
the Mortgaged Property, zoning ordinances and other public or private
restrictions as to the use of the Mortgaged Property.
(a) Mortgagor shall (i) comply in all material respects with all
applicable Environmental Laws and obtain, keep and comply with Permits
applicable to the operations of Mortgagor and the ownership, lease, or use of
any Mortgaged Property; (ii) use commercially reasonable efforts to cause all
Persons occupying any Mortgaged Property to comply with all such Environmental
Laws and Permits; (iii) keep or cause to be kept all such Mortgaged Property
free and clear of any Liens imposed pursuant to such Environmental Laws; and
(iv) obtain and renew all material Permits required for ownership or use of any
Mortgaged Property.
(b) Mortgagor shall conduct any investigation, study, sampling and
testing, and undertake any cleanup, removal, remedial or other action necessary
to remove and cleanup all Hazardous Materials from any Mortgaged Property in
accordance in all material respects with the requirements of all applicable
Environmental Laws and any Legal Requirements.
4.12. Environmental Indemnification and Hold Harmless.
------------------------------------------------
(a) Mortgagor agrees to defend, indemnify and hold harmless the Indemnified
Parties from and against any and all claims, demands, judgments, settlements,
damages, actions, causes of action, injuries, administrative orders, consent
agreements and orders, liabilities, penalties, costs, including but not limited
to any cleanup costs, mediation costs, response costs, and all expenses of any
kind whatsoever, including claims arising out of loss of life, injury to
persons, property, or business or damage to natural resources in connection with
the activities of Mortgagor, its predecessors in interest, third parties who
have trespassed on the Mortgaged Property, or parties in a contractual
relationship with Mortgagor, or any of them, whether or not occasioned wholly or
in part by any condition, accident or event caused by any act or omission of
Indemnified Parties, which:
(i) Arises out of the actual, alleged or threatened migration,
spill, leach, pour, empty, inject, discharge, dispersal, release, storage,
treatment, generation, disposal or escape of pollutants or other toxic or
hazardous substances, including any solid, liquid, gaseous or thermal irritant
or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals,
and waste (including materials to be recycled, reconditioned or reclaimed); or
(ii) Actually or allegedly arises out of the use, specification, or
inclusion of any product, material or process containing chemicals, the failure
to detect the existence or proportion of chemicals in the soil, air, surface
water or ground water, or the performance or failure to perform the abatement of
any pollution source or the replacement or removal of any soil, water, surface
water, or ground water containing chemicals;
(iii) Arises out of the breach of any covenant, warranty, or
representation of Mortgagor as it relates to the provisions of this Section
4.12; or
(iv) Arises out of a judicial or administrative action brought
pursuant to any Environmental Law that relates to the Mortgaged Property.
(b) Mortgagor, its successors and assigns, shall bear, pay and discharge
when and as the same become due and payable, any and all such judgments or
claims for damages, penalties or otherwise against Indemnified Parties, shall
hold Indemnified Parties harmless for those judgments or claims, and shall
assume the burden and expense of defending all suits, administrative
proceedings, and negotiations of any description with any and all persons,
political subdivisions or Governmental Authorities arising out of indemnified
matters as set forth in Section 4.12(a) above.
(c) Mortgagor's indemnifications and representations made herein shall
survive any termination or expiration of the documents relating to the Notes
and/or the repayment of the Obligations, including, but not limited to, any
foreclosure under this Mortgage
12
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or deed-in-lieu of foreclosure, it being
understood and agreed that the indemnity given herein is independent of the
Obligations and the Notes, the Indenture, the Guarantees or any of the
Collateral Documents.
4.13 Further Assurances.
-------------------
(a) At its sole cost and without expense to Mortgagee, Mortgagor
shall do, execute, acknowledge and deliver any and all such further reasonable
acts, deeds, conveyances, notices, requests for notices, financing statements,
continuation statements, certificates, assignments, notices of assignments,
agreements, instruments and further assurances, and shall mark any chattel
paper, deliver any chattel paper or instruments to Mortgagee and take any other
actions that are reasonably necessary, prudent, or requested by Mortgagee to
perfect or continue the perfection and first priority of Mortgagee's security
interest in the Mortgaged Property, to protect the Mortgaged Property against
the rights, claims, or interests of third Persons other than holders of
Permitted Liens or to effect the purposes of this Mortgage, including the
security agreement and the absolute assignment of Rents contained herein, or for
the filing, registering or recording thereof.
(b) Mortgagor shall forthwith upon the execution and delivery of this
Mortgage, and thereafter from time to time, cause this Mortgage and each
instrument of further assurance to be filed, indexed, registered, recorded,
given or delivered in such manner and in such places as may be required by any
present or future law in order to publish notice of and fully to protect the
lien hereof upon, and the title of Mortgagee to, the Mortgaged Property.
4.14 Mortgagee's Cure of Mortgagor's Default. If Mortgagor defaults in
----------------------------------------
the payment of any tax, assessment, lien, encumbrance or other Imposition, in
its obligation to furnish insurance hereunder, or in the performance or
observance of any other covenant, condition or term of this Mortgage or any
Collateral Document, unless Mortgagor is contesting such Imposition in
accordance with the Indenture, Mortgagee may, but is not obligated to, in order
to preserve its interest in the Mortgaged Property, perform or observe the same,
and all payments made (whether such payments are regular or accelerated
payments) and reasonable costs and expenses incurred or paid by Mortgagee in
connection therewith shall become due and payable immediately. The amounts so
incurred or paid by Mortgagee, together with interest thereon at the rate
applicable to overdue principal pursuant to the Indenture from the date incurred
until paid by Mortgagor, shall be added to the Obligations and secured by the
lien of this Mortgage. Mortgagee is hereby empowered to enter and to authorize
others to enter upon the Land or any part thereof for the purpose of performing
or observing any such defaulted covenant, condition or term, without thereby
becoming liable to Mortgagor or any Person in possession holding under
Mortgagor. No exercise of any rights under this Section by Mortgagee shall cure
or waive any Default or Event of Default or notice of default hereunder or
invalidate any act done pursuant hereto or to any such notice, but shall be
cumulative of all other rights and remedies.
4.15 Defense of Actions. Mortgagor shall appear in and defend any action
-------------------
or proceeding affecting or purporting to affect the security hereof or the
rights or powers of Mortgagee, and shall pay all costs and expenses, including
cost of title search and insurance or other evidence of title, preparation of
survey, and reasonable attorneys' fees in any such action or proceeding in which
Mortgagee may appear or may be joined as a party and in any suit brought by
Mortgagee based upon or in connection with this Mortgage or any Collateral
Document. Nothing contained in this section shall, however, limit the right of
Mortgagee to appear in such action or proceeding with counsel of its own choice,
either on its own behalf or on behalf of Mortgagor, and all payments made and
reasonable costs incurred or paid by Mortgagee in connection therewith
(including without limitation, attorneys' fees and expenses) shall be payable by
Mortgagor on demand, accruing interest thereon from the date(s) incurred until
paid at the rate applicable to overdue principal pursuant to the Indenture, and
such amounts shall be included in the Obligations secured hereby.
4.16 Performance of Lease Obligations; Indemnification. Mortgagee shall
--------------------------------------------------
not be obligated to perform or discharge, nor does it hereby undertake to
perform or discharge, any obligation, duty or liability under the Casino Ground
Lease or any Space Lease. Mortgagor shall and does hereby agree to indemnify
and to hold Mortgagee harmless of and from all liability, loss or damage which
Mortgagee might incur under said leases or under or by reason of the
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assignment of any subleases, and of and from any and all claims or demands
whatsoever which may be asserted against Mortgagee by reason of any alleged
obligations or undertakings to perform or discharge any of the terms, covenants
or agreements contained in said leases, including without limitation any claims
arising out of Mortgagee's negligence or strict liability, but excluding any
such claims arising out of Mortgagee's gross negligence or willful misconduct.
Should Mortgagee incur any such liability, loss or damage under any of said
leases, or under or by reason of the assignment thereof, or in the defense of
any claims or demands, the amount thereof, including costs, expenses and
reasonable attorneys' fees and costs, including reasonable attorneys' fees and
costs on appeal, shall be secured hereby and Mortgagor shall reimburse Mortgagee
therefor promptly upon demand, together with interest at the rate applicable to
overdue principal pursuant to the Indenture.
4.17 Consents. Mortgagor will use commercially reasonable efforts to
---------
obtain and deliver to Mortgagee as promptly as possible, (i) a written consent
from Red River Entertainment of Shreveport Partnership in Commendum pursuant to
Section 3.2 of the Personal Servitude consenting to the mortgage of the Personal
Servitude to this Mortgage, and (ii) a written acknowledgment from the City of
Shreveport pursuant to the provisions of Exhibit G to the Casino Ground Lease
confirming that Mortgagee has all of the rights of a "Leasehold Mortgagee" under
(and as defined in) the Casino Ground Lease.
ARTICLE 5
NEGATIVE COVENANTS
------------------
Mortgagor hereby covenants and agrees with Mortgagee that, until the entire
Obligations shall have been paid in full and shall have been fully performed and
discharged:
5.01. Alterations. Mortgagor will not commit or permit any waste of the
------------
Mortgaged Property that materially impairs Mortgagee's security hereunder.
5.02. Replacement of Improvements. Except as permitted by this Mortgage
----------------------------
and the Indenture and except in the ordinary course of its business, Mortgagor
will not, without the prior written consent of Mortgagee, permit any of the
Improvements to be removed at any time from the Land unless the removed item is
removed temporarily for maintenance and repair or, if removed permanently, such
removal and disposition does not affect materially and adversely the value of
Mortgagor's casino and the Mortgaged Property taken as a whole or the removed
item is replaced by an article of substantially equal utility and value, owned
by Mortgagor and subject to the Liens created hereby, and free and clear of any
other Lien or security interest except Permitted Liens or such as may be first
approved in writing by Mortgagee.
5.03. No Further Encumbrances. Except to the extent permitted by the
------------------------
provisions of the Indenture, Mortgagor will not, without the prior written
consent of Mortgagee, create, place or permit to be created or placed, or
through any act or failure to act, acquiesce in the placing of, or allow to
remain, any mortgage, pledge, Lien (statutory, constitutional or contractual),
security interest, encumbrance or charge on, or conditional sale or other title
retention agreement (regardless of whether same are expressly subordinate to the
Liens of this Mortgage) with respect to the Mortgaged Property, other than the
Permitted Liens.
ARTICLE 6
CORPORATE LOAN PROVISIONS
-------------------------
6.1 Interaction with Indenture. Notwithstanding any other provision of
---------------------------
this Mortgage, the terms and provisions of this Mortgage shall be subject and
subordinate to the terms of the Indenture. To the extent that the Indenture
provides Mortgagor with a particular cure or notice period, or establishes any
limitations or conditions on Mortgagee's actions with regard to a particular set
of facts, Mortgagor shall be entitled to the same cure periods and notice
periods, and Mortgagee shall be subject to the same limitations and conditions,
under this Mortgage, as under the Indenture, in place of the cure periods,
notice periods, limitations and conditions provided for under this Mortgage;
provided, however, that such cure periods, notice periods, limitations and
conditions shall not be cumulative as between the Indenture and this
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Mortgage. In the event of any conflict or inconsistency between the provisions
of this Mortgage 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.
6.2 Other Collateral. This Mortgage is one of a number of security
-----------------
agreements to secure the debt delivered by or on behalf of Mortgagor 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 Mortgagor and Mortgagee), other collateral
for the Obligations secured hereunder (i.e., collateral other than the Mortgaged
Property) may, under certain circumstances, be released without a corresponding
reduction in the total principal amount secured by this Mortgage. Such a
release would decrease the amount of collateral securing the same indebtedness,
thereby increasing the burden on the remaining Mortgaged Property created and
continued by this Mortgage. No such release shall impair the priority of the
lien of this Mortgage. By accepting its interest in the Mortgaged 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 Mortgagee.
ARTICLE 7
DEFAULTS AND REMEDIES
---------------------
7.1 Event of Default. The terms "Default" and "Event of Default,"
-----------------
wherever used in this Mortgage, shall mean any one or more of the defaults or
events of default listed in the Indenture, subject to such cure rights as may be
expressly set forth in the Indenture.
7.2 Acceleration of Maturity. If an Event of Default occurs and is
-------------------------
continuing, Mortgagee may, in accordance with the Indenture, declare the Notes
and all indebtedness or sums secured hereby, to be due and payable immediately,
and upon such declaration such principal and interest and other sums shall
immediately become due and payable without demand, presentment, notice or other
requirements of any kind (all of which Mortgagor waives) notwithstanding
anything in this Mortgage or any Collateral Document or applicable law to the
contrary.
7.3 Institution of Equity Proceedings. If an Event of Default occurs and
----------------------------------
is continuing, Mortgagee may institute an action, suit or proceeding in equity
for specific performance of this Mortgage, the Notes or any Collateral Document,
all of which shall be specifically enforceable by injunction or other equitable
remedy. Mortgagor waives any defense based on laches or any applicable statute
of limitations.
7.4 Mortgagee's Power of Enforcement.
---------------------------------
(a) If any Event of Default occurs and is continuing, Mortgagee may,
without regard to whether or not the Obligations secured hereby shall be due and
without prejudice to the right of Mortgagee thereafter to bring an action or
proceeding to foreclose or any other action for any default existing at the time
such earlier action was commenced, proceed by any appropriate action or
proceeding: (1) to enforce payment of the Notes, to the extent permitted by law,
or the performance of any term hereof or any other right; (2) to foreclose this
Mortgage in any manner provided by law for the foreclosure of mortgages or deeds
of trust on real property or security agreements concerning personal property
and to sell, as an entirety or in separate lots or parcels, the Mortgaged
Property or any portion thereof pursuant to the laws of the State of Louisiana
or under the judgment or decree of a court or courts of competent jurisdiction,
and Mortgagee shall be entitled to recover in any such proceeding all costs and
expenses incident thereto, including reasonable attorneys' fees in such amount
as shall be awarded by the court; (3) to exercise any or all of the rights and
remedies available to it under the Indenture; and (4) to pursue any other remedy
available to it. Mortgagee shall take action either by such proceedings or by
the exercise of its powers with respect to entry or taking possession, or both,
as Mortgagee may determine.
(b) It shall be lawful for Mortgagee (and Mortgagor does hereby
authorize Mortgagee without notice or putting in default, a putting in default
being hereby expressly waived), to cause all or singular the Mortgaged Property
to be seized and sold under executory or
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other legal process, issued by any court of competent jurisdiction, without
appraisement, and to the highest bidder for cash or on such terms as Mortgagee
may direct; and Mortgagor consents that the Mortgaged Property may be sold,
either as a whole or in such lots or parcels as Mortgagee may direct in any such
proceedings.
7.5 Mortgagee's Right to Enter and Take Possession, Operate and Apply
-----------------------------------------------------------------
Income.
- -------
(a) If an Event of Default occurs and is continuing, (i) Mortgagor,
upon demand of Mortgagee, shall forthwith surrender to Mortgagee the actual
possession and, if and to the extent permitted by law, Mortgagee itself, or such
officers or agents as it may appoint, may enter and take possession of all the
Mortgaged Property, without liability for trespass, damages or otherwise, and
may exclude Mortgagor and its agent sand employees wholly therefrom and may have
joint access with Mortgagor to the books, papers and accounts of Mortgagor; and
(ii) Mortgagor shall pay monthly in advance to Mortgagee on Mortgagee's entry
into possession, or to any receiver appointed to collect the Rents, all Rents
then due and payable.
(b) If Mortgagor shall for any reason fail to surrender or deliver
the Mortgaged Property or any part there of after Mortgagee's demand, Mortgagee
may obtain a judgment or decree conferring on Mortgagee the right to immediate
possession or requiring Mortgagor to deliver immediate possession of all or part
of such property to Mortgagee and Mortgagor hereby specifically consents to the
entry of such judgment or decree. Mortgagor shall pay to Mortgagee, upon demand,
all costs and expenses of obtaining such judgment or decree and reasonable
compensation to Mortgagee, their attorneys and agents, and all such costs,
expenses and compensation shall, until paid, be secured by the lien of this
Mortgage.
(c) Upon every such entering upon or taking of possession, Mortgagee
may hold, store, use, operate, manage and control the Mortgaged Property and
conduct the business thereof, and, from time to time in its sole and absolute
discretion and without being under any duty to so act:
(i) make any necessary and proper maintenance, repairs,
renewals, replacements, additions, betterments and improvements thereto and
thereon and purchase or otherwise acquire additional fixtures personalty and
other property;
(ii) insure or keep the Mortgaged Property insured;
(iii) manage and operate the Mortgaged Property and exercise all
the rights and powers of Mortgagor in their name or otherwise with respect to
the same;
(iv) enter into agreements with others to exercise the powers
herein granted Mortgagee, all as Mortgagee from time to time may determine; and,
subject to the absolute assignment of the Space Leases and Rents to Mortgagee,
Mortgagee may collect and receive all the Rents, including those past due as
well as those accruing thereafter (and in connection therewith, further
reference is made hereby to Section 2.2 hereof); and shall apply the monies so
received by Mortgagee in such priority as Mortgagee may determine to (1) the
payment of interest and principal due and payable on the Notes; (2) the deposits
for taxes and assessments and insurance premiums due; (3) the cost of insurance,
taxes, assessments and other proper charges upon the Mortgaged Property or any
part thereof; (4) the compensation, expenses and disbursements of the agents,
attorneys and other representatives of Mortgagee; and (5) any other charges or
costs required to be paid by Mortgagor under the terms hereof; or
(v) rent or sublet the Mortgaged Property or any portion
thereof for any purposes permitted by this Mortgage.
Mortgagee shall surrender possession of the Mortgaged Property to
Mortgagor only when all that is due upon such interest and principal, tax and
insurance deposits, and all amounts under any of the terms of the Indenture or
this Mortgage, shall have been paid and all defaults made good. The same right
of taking possession, however, shall exist if any subsequent Event of Default
shall occur and be continuing.
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<PAGE>
7.6 Waiver of Appraisement, Valuation, Stay, Extension and Redemption
-----------------------------------------------------------------
Laws. Mortgagor agrees to the full extent permitted by law that if an Event of
- -----
Default occurs and is continuing, neither Mortgagor nor anyone claiming through
or under it shall or will set up, claim or seek to take advantage of any
appraisement, valuation, stay, extension or redemption laws now or hereafter in
force. Mortgagor hereby waives the benefit of appraisement as provided in
Louisiana Code of Civil Procedure Articles 2332, 2336, 2723 and 2724 and all
other laws conferring the same, the demand and three (3) days delay accorded by
Louisiana Code of Civil Procedure Articles 2639 and 2721, the notice of seizure
required by Louisiana Code of Civil Procedure Articles 2293 and 2721, the three
(3) days delay provided by Louisiana Code of Civil Procedure Articles 2331 and
2722, and the benefits of the other provisions of Louisiana Code of Civil
Procedure Article 2331, 2722 and 2723 not specifically mentioned above, in order
to prevent or hinder the enforcement or foreclosure of this Mortgage or the
absolute sale of the Mortgaged Property or any portion thereof or the final and
absolute putting into possession thereof, immediately after such sale, of the
purchasers thereof, and Mortgagor for itself and all who may at any time claim
through or under it, hereby waives, to the full extent that it may lawfully so
do, the benefit of all such laws, and any and all right to have the assets
comprising the Mortgaged Property marshaled upon any foreclosure of the lien
hereof and agrees that Mortgagee or any court having jurisdiction to foreclose
such lien may sell the Managed Property in part or as an entirety.
7.7 Confession of Judgment. Solely for purposes of executory process
-----------------------
under Louisiana law, Mortgagor does hereby acknowledge the Obligations and
CONFESS JUDGMENT in favor of Mortgagee for the full amount of the Obligations.
7.8 Space Leases. Mortgagee is authorized to foreclose this Mortgage
-------------
subject to the rights, if any, of any tenants of the Mortgaged Property, and the
failure to make any such tenants parties defendant to any such foreclosure
proceedings and to foreclose their rights shall not be, nor be asserted by
Mortgagor to be, a defense to any proceedings instituted by Mortgagee to collect
the sums secured hereby or to collect any deficiency remaining unpaid after the
foreclosure sale of the Mortgaged Property, or any portion thereof. Unless
otherwise agreed by Mortgagee in writing, all Space Leases executed subsequent
to the date hereof, or any part thereof, shall be subordinate and inferior to
the lien of this Mortgage; provided, however, that (i) Mortgagee may execute a
non-disturbance and attornment agreement in connection with certain lease
transactions in form and substance satisfactory to Mortgagee; and (ii) from time
to time Mortgagee may execute and record among the conveyance records of the
jurisdiction where this Mortgage is recorded, subordination statements with
respect to such of said Space Leases as Mortgagee may designate in its sole
discretion, whereby the Space Leases so designated by Mortgagee shall be made
superior to the lien of this Mortgage for the term set forth in such
subordination statement. From and after the recordation of such subordination
statements, and for the respective periods as may be set forth therein, the
Space Leases therein referred to shall be superior to the lien of this Mortgage
and shall not be affected by any foreclosure hereof. All such Space Leases
shall contain a provision to the effect that the Mortgagor and Space Lessee
recognize the right of Mortgagee to elect and to effect such subordination of
this Mortgage and each of them consents thereto.
7.9 Purchase by Mortgagee. Upon any foreclosure sale (whether judicial
----------------------
or nonjudicial), Mortgagee may bid for and purchase the property subject to such
sale and, upon compliance with the terms of sale, may hold, retain and possess
and dispose of such property in its own absolute right without further
accountability.
7.10 Suits to Protect the Mortgaged Property. Mortgagee shall have the
----------------------------------------
power and authority to institute and maintain any suits and proceedings as
Mortgagee, in its reasonable discretion, may deem advisable (a) to prevent any
impairment of the Mortgaged Property by any acts which may be unlawful or any
violation of this Mortgage, (b) to preserve or protect its interest in the
Mortgaged Property, or (c) to restrain the enforcement of or compliance with any
legislation or other Legal Requirement that may be unconstitutional or otherwise
invalid, if the enforcement of or compliance with such enactment, rule or order
might impair the security hereunder or be prejudicial to Mortgagee's interest.
7.11 Proofs of Claim. In the case of any receivership, Bankruptcy,
----------------
reorganization, arrangement, adjustment, composition or other judicial
proceedings affecting Mortgagor, any Affiliate or any guarantor, co-maker or
endorser of any of Mortgagor's obligations, its creditors
17
<PAGE>
or its property, Mortgagee, to the extent permitted by law, shall be entitled to
file such proofs of claim or other documents as it may deem be necessary or
advisable in order to have its claims allowed in such proceedings for the entire
amount due and payable by Mortgagor under the Notes or any other Collateral
Document, at the date of the institution of such proceedings, and for any
additional amounts which may become due and payable by Mortgagor after such
date.
7.12 Mortgagor to Pay the Notes on Any Default in Payment; Application of
--------------------------------------------------------------------
Monies by Mortgagee.
- --------------------
(a) In case of a foreclosure sale of all or any part of the Mortgaged
Property and of the application of the proceeds of sale to the payment of the
sums secured hereby, Mortgagee shall be entitled to enforce payment from
Mortgagor of any additional amounts then remaining due and unpaid and to recover
judgment against Mortgagor for any portion thereof remaining unpaid, with
interest at the interest rate on the Notes.
(b) Mortgagor hereby agrees to the extent permitted by law, that no
recovery of any such judgment by Mortgagee or other action by Mortgagee and no
attachment or levy of any execution upon any of the Mortgaged Property or any
other property shall in any way affect the Lien and security interest of this
Mortgage upon the Mortgaged Property or any part thereof or any Lien, rights,
powers or remedies of Mortgagee hereunder, but such Lien, rights, powers and
remedies shall continue unimpaired as before.
(c) Any monies collected or received by Mortgagee under this Section
7.12 shall be first applied to the payment of compensation, expenses and
disbursements of the agents, attorneys and other representatives of Mortgagee,
and the balance remaining shall be applied to the payment of amounts due and
unpaid under the Notes.
(d) The provisions of this Section shall not be deemed to limit or
otherwise modify the provisions of any guaranty of the indebtedness evidenced by
the Notes.
7.13 Delay or Omission; No Waiver. No delay or omission of Mortgagee or
-----------------------------
Noteholder to exercise any right, power or remedy upon any Default or Event of
Default shall exhaust or impair any such right, power or remedy or shall be
construed to waive any such Default or Event of Default or to constitute
acquiescence therein. Every right, power and remedy given to Mortgagee whether
contained herein or in the Indenture or otherwise available to Mortgagee may be
exercised from time to time and as often as may be deemed expedient by
Mortgagee.
7.14 No Waiver of One Default to Affect Another. No waiver of any Default
-------------------------------------------
or Event of Default hereunder shall extend to or affect any subsequent or any
other Default or Event of Default then existing, or impair any rights, powers or
remedies consequent thereon. If Mortgagee or a majority of Noteholders, to the
extent applicable under the Indenture, (a) grants forbearance or an extension of
time for the payment of any sums secured hereby; (b) takes other or additional
security for the payment thereof; (c) waives or does not exercise any right
granted in the Notes, the Indenture, this Mortgage or any other Collateral
Document; (d) releases any part of the Mortgaged Property from the lien or
security interest of this Mortgage or any other instrument securing the Notes;
(e) makes or consents to any agreement changing the terms of this Mortgage or
any Collateral Document subordinating the lien or any charge hereof, no such act
or omission shall release, discharge, modify, change or affect the original
liability under the Notes, this Mortgage or any other Collateral Document or
otherwise of Mortgagor, or any subsequent purchaser of the Mortgaged Property or
any part thereof or any maker, co-signer, surety or guarantor. No such act or
omission shall preclude Mortgagee from exercising any right, power or privilege
herein granted or intended to be granted in case of Default or Event of Default
then existing or of any subsequent Default or Event of Default, nor, except as
otherwise expressly provided in an instrument or instruments executed by
Mortgagee, shall the lien or security interest of this Mortgage be altered
thereby, except to the extent expressly provided in any releases, or
subordinations described in clause (d) or (e) above of this Section 7.14. In
the event of the sale or transfer by operation of law or otherwise of all or any
part of the Mortgaged Property, Mortgagee, without notice to any Person, firm or
corporation, is hereby authorized and empowered to deal with any such vendee or
transferee with reference to the Mortgaged Property or the Obligations secured
hereby, or with reference to any of the terms or conditions hereof, as fully and
to the same extent as it might deal with the original parties hereto and without
in any
18
<PAGE>
way releasing or discharging any of the liabilities or undertakings hereunder,
or waiving its right to declare such sale or transfer a Default or an Event of
Default as provided herein.
7.15 Discontinuance of Proceedings; Position of Parties Restored. If
------------------------------------------------------------
Mortgagee shall have proceeded to enforce any right or remedy under this
Mortgage by foreclosure, entry of judgment or otherwise and such proceedings
shall have been discontinued or abandoned for any reason, or such proceedings
shall have resulted in a final determination adverse to Mortgagee, then and in
every such case Mortgagor and Mortgagee shall be restored to their former
positions and rights hereunder, and all rights, powers and remedies of Mortgagee
shall continue as if no such proceedings had occurred or had been taken.
7.16 Remedies Cumulative. No right, power or remedy, including without
--------------------
limitation remedies with respect to any security for the Notes, conferred upon
or reserved to Mortgagee by the Guarantees, this Mortgage or any other
Collateral Document is exclusive of any other right, power or remedy, but each
and every such right, power and remedy shall be cumulative and concurrent and
shall be in addition to any other right, power and remedy given hereunder or
under any Collateral Document, now or hereafter existing at law, in equity or by
statute, and Mortgagee shall be entitled to resort to such rights, powers,
remedies or security as Mortgagee shall in its sole and absolute discretion deem
advisable. The rights and remedies of Mortgagee upon the occurrence of one or
more defaults by Mortgagor may be exercised by Mortgagee, in the sole discretion
of Mortgagee, either alternatively, concurrently, or consecutively in any order.
The exercise by Mortgagee of any one or more of such rights and remedies shall
not be construed to be an election of remedies nor a waiver of any other rights
and remedies Mortgagee might have unless, and limited to the extent that,
Mortgagee shall so elect. Without limiting the generality of the foregoing, to
the extent that this Mortgage or any other Collateral Document covers the real
property and personal property, Mortgagee may, in the sole discretion of
Mortgagee, either alternatively, concurrently or consecutively in any order:
(a) Proceed as to both the real property, the personal property and
other collateral in accordance with Mortgagee's rights and remedies in respect
to the real property; or
(b) Proceed as to the real property in accordance with Mortgagee's
rights and remedies in respect to the real property and proceed as to the
personal property and other collateral in accordance with Mortgagee's rights and
remedies in respect to the personal property and other collateral.
If Mortgagee should elect to proceed as to both the real property,
the personal property and other collateral in accordance with Mortgagee's rights
and remedies in respect to real property:
(x) All the real property and all the personal property and other
collateral may be sold, in the manner and at the time and place provided in this
Mortgage or in any other Collateral Document, as the case may be, in one lot, or
in separate lots consisting of any combination or combinations of the real
property, the personal property and other collateral, as Mortgagee may elect, in
the sole discretion of Mortgagee; and
(y) Mortgagor acknowledges and agrees that a disposition of the
personal property and other collateral in accordance with Mortgagee's rights and
remedies in respect to real property, as hereinabove provided, is a commercially
reasonable disposition of the collateral.
If Mortgagee should elect to proceed as to the personal property and
other collateral in accordance with Mortgagee's rights and remedies in respect
to personal property and other collateral, Mortgagee shall have all the rights
and remedies conferred on a secured party by any Collateral Document relating
thereto or otherwise by applicable law.
7.17 Foreclosure; Expense of Litigation. If Mortgagee forecloses,
-----------------------------------
reasonable attorneys' fees for services in the supervision of said foreclosure
proceeding shall be allowed to Mortgagee as part of the foreclosure costs. In
the event of foreclosure of the lien hereof, there shall be allowed and included
as additional indebtedness all reasonable expenditures and expenses which may be
paid or incurred by or on behalf of Mortgagee for attorneys' fees, appraiser's
fees, outlays for documentary and expert evidence, stenographers' charges,
publication costs, and costs (which may be estimated as to items to be expended
after foreclosure
19
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sale or entry of the decree) of procuring all such abstracts of title, title
searches and examinations, title insurance policies and guarantees, and similar
data and assurances with respect to title as Mortgagee may deem reasonably
advisable either to prosecute such suit or to evidence to a bidder at any sale
which may be had pursuant to such decree the true condition of the title to or
the value of the Mortgaged Property or any portion thereof. All expenditures and
expenses of the nature in this section mentioned, and such expenses and fees as
may be incurred in the protection of the Mortgaged Property and the maintenance
of the lien and security interest of this Mortgage, including the fees of any
attorney employed by Mortgagee in any litigation or proceeding affecting this
Mortgage or any Collateral Document, the Mortgaged Property or any portion
thereof, including, without limitation, civil, probate, appellate and bankruptcy
proceedings, or in preparation for the commencement or defense of any proceeding
or threatened suit or proceeding, shall be immediately due and payable by
Mortgagor, with interest thereon at the interest rate on the Notes, and shall be
secured by this Mortgage. Mortgagee waives its right to any statutory fee in
connection with any judicial or nonjudicial foreclosure of the lien hereof and
agrees to accept a reasonable fee for such services.
7.18 Deficiency Judgments. If after foreclosure of this Mortgage or
---------------------
Mortgagee's sale hereunder, there shall remain any deficiency with respect to
any amounts payable under the Notes or hereunder or any amounts secured hereby,
and Mortgagee shall institute any proceedings to recover such deficiency or
deficiencies, all such amounts shall continue to bear interest at the rate
applicable to overdue principal pursuant to the Indenture. Mortgagor waives any
defense to Mortgagee's recovery against Mortgagor of any deficiency after any
foreclosure sale of the Mortgaged Property. Mortgagor expressly waives any
defense or benefits that may be derived from any statute granting Mortgagor any
defense to any such recovery by Mortgagee. In addition, Mortgagee shall be
entitled to recovery of all of its reasonable costs and expenditures (including
without limitation any court imposed costs) in connection with such proceedings,
including its reasonable attorneys' fees, appraisal fees and the other costs,
fees and expenditures referred to in Section 7.17 above. This provision shall
survive any foreclosure or sale of the Mortgaged Property, any portion thereof
and/or the extinguishment of the lien hereof.
7.19 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY LAW,
---------------------
MORTGAGEE AND MORTGAGOR 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 THE NOTES, THIS MORTGAGE OR ANY OTHER COLLATERAL
DOCUMENT ANY SUCH DISPUTES SHALL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
7.20 Exculpation of Mortgagee. The acceptance by Mortgagee of the
-------------------------
assignment contained herein with all of the rights, powers, privileges and
authority created hereby shall not, prior to entry upon and taking possession of
the Mortgaged Property by Mortgagee, be deemed or construed to make Mortgagee a
"mortgagee in possession"; nor thereafter or at any time or in any event
obligate Mortgagee to appear in or defend any action or proceeding relating to
the Casino Ground Lease, the Space Leases, the Rents or the Mortgaged Property,
or to take any action hereunder or to expend any money or incur any expenses or
perform or discharge any obligation, duty or liability under any Space Lease or
the Casino Ground Lease or to assume any obligation or responsibility for any
security deposits or other deposits except to the extent such deposits are
actually received by Mortgagee, nor shall Mortgagee, prior to such entry and
taking, be liable in any way for any injury or damage to person or property
sustained by any Person in or about the Mortgaged Property.
7.21 Keeper. In the event the Mortgaged Property, or any part thereof, is
-------
seized as an incident to an action for the recognition or enforcement of this
Mortgage by executory process, ordinary process, sequestration writ of fieri
facias or otherwise, Mortgagor and the Mortgagee agree that the court issuing
any such order shall if petitioned for by Mortgagee, direct the applicable
sheriff to appoint as a keeper of the Mortgaged Property, the Mortgagee or any
agent designated by Mortgagee or any person named by Mortgagee at the time such
seizure is effected. This designation is pursuant to Louisiana revised Statues
9:5136 through 5140.2, inclusive, as the same may be amended, and the Mortgagee
shall be entitled to all the rights and benefits afforded thereunder. It is
hereby agreed that the keeper shall be entitled to receive as compensation, in
excess of its reasonable costs and expenses incurred in the administration or
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<PAGE>
preservation of the Mortgaged Property, an amount equal to $250.00 per day,
which shall be payable monthly on the first day of each month and shall be
included as Obligations secured by this Mortgage. The designation of keeper made
herein shall not be deemed to require the Mortgagee to provoke the appointment
of such a keeper.
7.22 Authentic Evidence. Any and all declarations of fact made by
-------------------
authentic act before a notary public in the presence of two (2) witnesses by a
person declaring that such facts lie within his knowledge, shall constitute
authentic evidence of such facts for the purpose of executory process.
Mortgagor specifically agrees that such an affidavit by a representative of
Mortgagee as to the existence, amount, terms and maturity of the Obligations
secured hereunder and of a Default or an Event of Default hereunder shall
constitute authentic evidence of such fact for the purpose of executory process.
7.23 Reinscription of Mortgage. Mortgagor shall reinscribe this Mortgage
--------------------------
prior to the date on which the lien of this Mortgage may prescribe by any
applicable prescriptive period.
During the term of this Mortgage, Mortgagor shall cause this Mortgage to be
reinscribed in the manner provided by law in the records of the Recorder of
Mortgages for the Parish of Caddo and the Recorder of Mortgages for the Parish
of Bossier at least forty-five (45) days prior to the tenth (10th) anniversary
of the date of this Mortgage and within the reinscription or continuation period
provided in La. R.S. (S)9:4401 and Louisiana Civil Code Article 3328, as the
same may be amended from time to time.
The parties to this Mortgage hereby waive the production of mortgage,
conveyance, tax, assignment of accounts receivable and other certificates and
relieve and release the Notary before whom this Mortgage was passed from all
responsibilities and liabilities in connection therewith.
7.24. Environmental Matters. Mortgagee, in its sole discretion, may
----------------------
require, as a prerequisite to the commencement of any proceeding or the exercise
of any remedy with respect to the Mortgaged Property, that it be provided
evidence reasonably satisfactory to Mortgagee that the Mortgaged Property is not
contaminated by Hazardous Materials and that Mortgagee shall not be subject to
any material liability for any contamination if it undertakes such proceeding or
remedy. Mortgagee shall have the authority (but shall not be required) to (i)
conduct environmental assessments, audits and site monitoring to determine
compliance with Environmental Laws; (ii) take all appropriate remedial action to
contain, clean up and remove any Hazardous Materials either on its own or in
response to an actual violation of any Environmental Laws or proceeding with
respect thereto; (iii) institute legal proceedings concerning environmental
damage or contest and settle proceedings brought by any local, state or federal
agency litigant; (iv) comply with any local, state or federal agency or court
order directing an assessment, abatement or cleanup of Hazardous Materials; and
(v) employ agents, consultants and legal counsel to assist or perform the above
undertakings or actions. Mortgagor shall indemnify Mortgagee for all reasonable
costs, expenses and liabilities reasonably incurred by Mortgagee in connection
with any such undertaking or action unless such costs, expenses and liabilities
are caused by the gross negligence or willful misconduct of the Mortgagee.
7.25 Disclaimer of Certain Duties.
------------------------------
(a) The powers conferred upon Mortgagee by this Mortgage are to
protect its interests in the Mortgaged Property and shall not impose any duty
upon Mortgagee to exercise any such powers. Mortgagor hereby agrees that
Mortgagee shall not be liable for, nor shall the indebtedness evidenced by the
Obligations be diminished by, Mortgagee's delay or failure to collect upon,
foreclose, sell, take possession of or otherwise obtain value for the Mortgaged
Property. Nothing herein shall affect any obligation of Mortgagee to the
Noteholders under the Indenture or under applicable law.
(b) Except as may be required by the Indenture, and to the fullest
extent permitted by applicable law, Mortgagee shall be under no duty whatsoever
to make or give any presentment, notice or dishonor, protest, demand for
performance, notice of non-performance, notice of intent to accelerate, notice
of acceleration, or other notice or demand in connection with any Mortgaged
Property or the Obligations, or to take any steps reasonably necessary to
preserve any rights against any Person. Mortgagor waives any right of marshaling
in respect of any and
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all Mortgaged Property, and waives any right to require Mortgagee to proceed
against Mortgagor or any other Person, exhaust any Mortgaged Property or enforce
any other remedy which Mortgagee now has or may hereafter have against Mortgagor
or any other Person.
ARTICLE 8
MISCELLANEOUS PROVISIONS
------------------------
8.1 Heirs, Successors and Assigns Included in Parties. Whenever one of
--------------------------------------------------
the parties hereto is named or referred to herein the heirs, successors and
assigns of such party shall be included, and all covenants and agreements
contained in this Mortgage, by or on behalf of Mortgagor or Mortgagee shall bind
and inure to the benefits of their respective heirs, successors and assigns,
whether so expressed or not.
8.2 Notices. Any notice required or permitted to be given under or in
--------
connection with this Mortgage shall be given in accordance with the notice
provisions of the Indenture.
8.3 Headings. The headings of the articles, sections, paragraphs and
---------
subdivisions of this Mortgage are for convenience of reference only, are not to
be considered a part hereof, and shall not limit or expand or otherwise affect
any of the terms hereof.
8.4 Invalid Provisions to Affect No Others. In the event that any of the
---------------------------------------
covenants, agreements, terms or provisions contained herein or in the Notes, the
Indenture or any other Collateral Document shall be invalid, illegal or
unenforceable in any respect, the validity of the lien hereof and the remaining
covenants, agreements, terms or provisions contained herein or in the Notes, the
Indenture, or any other Collateral Document shall be in no way affected,
prejudiced or disturbed thereby. To the extent permitted by law, Mortgagor
waives any provision of law which renders any provisions hereof prohibited or
unenforceable in any respect.
8.5 Changes and Priority Over Intervening Liens. Neither this Mortgage
--------------------------------------------
nor any terms hereof may be changed, waived, discharged or terminated orally, or
by any action or inaction, but only by an instrument in writing signed by the
party against which enforcement of the change, waiver, discharge or termination
is sought pursuant to the provisions of the Indenture. Any agreement hereafter
made by Mortgagor and Mortgagee relating to this Mortgage shall be superior to
the rights of the holder of any intervening lien or encumbrance.
8.6 Governing Law. This Mortgage shall be construed, interpreted,
--------------
enforced and governed by and in accordance with the laws of the State of
Louisiana, without regard to its choice of law provisions.
8.7 Prescription. To the fullest extent allowed by the law, the right to
-------------
plead, use or assert any statute of limitations or defense of prescription 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 Mortgage or any rights hereunder, is hereby waived by Mortgagor.
8.8 Subrogation. Should the Obligations, repayment of which is hereby
------------
secured, or any part thereof, be used directly or indirectly to pay off,
discharge, or satisfy, in whole or in part, any prior or superior lien or
encumbrance upon the Mortgaged Property, or any part thereof, then, as
additional security hereunder, Mortgagee shall be subrogated to any and all
rights, superior titles, liens, and equities owned or claimed by any owner or
holder of said outstanding liens, charges, and indebtedness, however remote,
regardless of whether said liens, charges, and indebtedness are acquired by
assignment or have been released of record by the holder thereof upon payment.
8.9 Joint and Several Liability. All obligations of Mortgagor hereunder,
----------------------------
if more than one, are joint and several (i.e., solidary). Recourse for
deficiency after sale hereunder may be had against the property of Mortgagor,
without, however, creating a present or other lien or charge thereon.
22
<PAGE>
8.10 Context. In this Mortgage, whenever the context so requires, the
---------
neuter includes the masculine and feminine, and the singular including the
plural, and vice versa.
8.11 Time. Time is of the essence of each and every term, covenant and
-----
condition hereof. Unless otherwise specified herein, any reference to "days" in
this Mortgage shall be deemed to mean "calendar days."
8.12 Interpretation. As used in this Mortgage unless the context clearly
---------------
requires otherwise: the terms "herein" or "hereunder" and similar terms without
reference to a particular section shall refer to the entire Mortgage and not
just to the section in which such terms appear; the term "lien" shall also mean
a security interest, and the term "security interest" shall also mean a lien.
8.13 Gaming Laws and Regulations. Mortgagor and Mortgagee acknowledge
----------------------------
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 Louisiana Riverboat Economic Development and Gaming Control Act,
La. R.S. 27:41 et seq., the Louisiana Gaming Control Law, La. R.S. 27:1 et seq.,
and the regulations promulgated pursuant to each such law, all as amended from
time to time. Mortgagor and Mortgagee further acknowledge that the Gaming
License held by Mortgagor is not part of the collateral of this Mortgage and
that, under the above described legislation and rules promulgated thereunder,
the Mortgagee may be precluded from or otherwise limited in taking possession of
or selling the collateral of this Mortgage under the Defaults and Remedies
provisions of this Mortgage. Mortgagor and Mortgagee 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 Gaming Authority approval.
8.14 Leasehold Provisions
--------------------
(a) Mortgagor and the City of Shreveport ("Lessor") are parties to
the Casino Ground Lease. Mortgagor will at all times fully perform and comply in
all material respects with all agreements, covenants, terms and conditions
imposed upon or assumed by it as lessee under the Casino Ground Lease and
Mortgagor further covenants that it will not do or permit anything to be done,
the doing of which, or refrain from doing anything, the omission of which, will
impair or would reasonably be expected to impair the security of this Mortgage.
If Mortgagor shall fail so to do Mortgagee may (but shall not be obligated to)
take any action Mortgagee deems reasonably necessary or desirable to prevent or
to cure any default by Mortgagor in the performance of or compliance with any of
Mortgagor's covenants or obligations under said Casino Ground Lease after
reasonable prior notice to Mortgagor. Upon receipt by Mortgagee from the Lessor
of any written notice of default by the lessee thereunder, Mortgagee may rely
thereon and take any action as aforesaid after reasonable prior notice to
Mortgagor to cure such default even though the existence of such default or the
nature thereof be questioned or denied by Mortgagor or by any party on behalf of
Mortgagor. Mortgagor hereby expressly grants to Mortgagee, and agrees that
Mortgagee shall have, the absolute and immediate right to enter in and upon the
real property described herein or any part thereof to such extent and as often
as Mortgagee in its sole discretion deems reasonably necessary or desirable in
order to prevent or to cure any such default by Mortgagor. Mortgagee may pay and
expend such sums of money as Mortgagee in its sole discretion deems reasonably
necessary for any such purpose, and Mortgagor hereby agrees to pay to Mortgagee,
immediately and without demand, all such sums so paid and expended by Mortgagee,
together with interest thereon from the date of each such payment at the rate
applicable to overdue principal pursuant to the Indenture. All sums so paid and
expended by Mortgagee and the interest thereon shall be added to the Obligations
and be secured by the Lien of this Mortgage.
(b) Except as permitted by the Indenture, Mortgagor will not
surrender the leasehold estate and interest hereinabove described or terminate
or cancel the Casino Ground Lease. If the Casino Ground Lease is for any reason
terminated prior to the natural expiration of its term, and if, pursuant to any
provision of the Casino Ground Lease or otherwise, Mortgagee or its designee
shall acquire from the Lessor a new lease of all of any portion of the Land,
Mortgagor shall have no right, title or interest in or to such new lease or the
leasehold estate created thereof.
23
<PAGE>
(c) Mortgagee, by accepting this Mortgage, consents to the terms and
provisions of the Casino Ground Lease, and the rights, titles and interests
created in favor of the Lessor thereunder shall not constitute a default under
any provisions of this Mortgage.
(d) Except as specifically provided in the Indenture, and as would
not be adverse in any material respect to Mortgagee or the Noteholders,
Mortgagor also covenants that it will not waive, modify or in any way alter the
material terms of the Casino Ground Lease or cancel or surrender the Casino
Ground Lease, or waive, excuse, condone or in any way release or discharge
Lessor of or from the material obligations, covenants, conditions and agreements
to be done and performed by Lessor under the terms of the Casino Ground Lease;
and Mortgagor does by these presents expressly release, relinquish and surrender
unto Mortgagee all its right, power and authority to cancel, surrender, amend,
modify, waive or alter in any material way the terms and provisions of the
Casino Ground Lease and any attempt on the part of Mortgagor to exercise any
such right without the written authority and consent of Mortgagee thereto being
first had and obtained (which consent shall not unreasonably be withheld,
conditioned or delayed) shall constitute an Event of Default hereunder.
(e) Mortgagor hereby covenants (i) to give Mortgagee prompt notice in
writing of any receipt by it of any notice of default from Lessor; (ii) to
furnish to Mortgagee any and all information which it may reasonably request
concerning the performance by Mortgagor of the material covenants imposed on
Mortgagor under the Casino Ground Lease promptly after such request; and (iii)
to permit forthwith Mortgagee or its representative at all reasonable times on
reasonable notice and so long as the same shall not unreasonably interfere with
the use or business at the Mortgaged Property by Mortgagor, to make
investigation or examination concerning such performance.
(f) The following shall apply to any Bankruptcy in which Lessor is
the debtor:
(i) Mortgagor shall notify Mortgagee promptly after learning
of the commencement or threat of commencement of any Bankruptcy affecting
Lessor. Mortgagor promptly shall deliver to Mortgagee copies of any and all
material notices, summonses, pleadings, applications, and other documents that
Mortgagor receives in connection with any such Bankruptcy and any related
proceedings.
(ii) If Lessor rejects or disaffirms, or seeks or purports to
reject or disaffirm, the Casino Ground Lease pursuant to any Bankruptcy Law,
then Mortgagor shall not exercise its right to treat the Casino Ground Lease as
terminated under (S) 365(h) of the Federal Bankruptcy Code or any similar
Bankruptcy Law, or any comparable right provided under any other Bankruptcy Law
without Mortgagee's prior written consent, such consent not to be unreasonably
withheld. Mortgagor's right under such circumstances to elect either to treat
the Casino Ground Lease as terminated or to retain its rights under the Casino
Ground Lease pursuant to Section 365(h) of the Federal Bankruptcy Code or any
similar Bankruptcy Law, or any comparable right provided under any other
Bankruptcy Law, shall be hereinafter referred to as the "365(h) Election".
(iii) Unless Mortgagee directs otherwise in writing, Mortgagor
shall exercise the 365(h) Election in favor of Mortgagor's remaining in
possession under the Casino Ground Lease at least five (5) Business Days prior
to the last day on which the 365(h) Election may be exercised. Mortgagor hereby
constitutes and appoints Mortgagee the true and lawful attorney-in-fact, coupled
with an interest, of Mortgagor, empowered and authorized in the name, place and
stead of Mortgagor to exercise the 365(h) Election in favor of Mortgagor's
remaining in possession under the Casino Ground Lease in the event Mortgagor
fails to do so within the time period set forth above. The foregoing appointment
is irrevocable and continuing and such rights, powers and privileges shall be
exclusive in Mortgagee, its successors and permitted assigns, so long as any
part of the Obligations secured hereby remain unpaid or undischarged. Mortgagor
acknowledges that Mortgagor's resulting occupancy and other rights, as adjusted
by the effect of Federal Bankruptcy Code Section 365, are part of the Mortgaged
Property and subject to the Lien of this Mortgage. Mortgagor further
acknowledges that exercise of the 365(h) Election in favor of terminating the
Casino Ground Lease would constitute waste prohibited by this Mortgage unless
Mortgagee shall have consented to such termination, such consent not to be
24
<PAGE>
unreasonably withheld. Mortgagor acknowledges and agrees that the 365(h)
Election is in the nature of a remedy available to Mortgagor under the Casino
Ground Lease and is not a property interest that Mortgagor can separate from the
Casino Ground Lease as to which it arises. Therefore, Mortgagor agrees and
acknowledges that exercise of the 365(h) Election in favor of preserving the
right to possession under the Casino Ground Lease shall not be deemed to
constitute Mortgagee's taking or sale of the Mortgaged Property (or any element
thereof) and shall not entitle Mortgagor to any credit against the Obligations
secured hereby or otherwise impair Mortgagee's remedies hereunder or under the
Indenture.
(iv) If Lessor rejects or disaffirms the Casino Ground Lease or
purports or seeks to disaffirm the Casino Ground Lease pursuant to any
Bankruptcy Law, then: (1) Mortgagor shall remain in possession of the premises
demised under the Casino Ground Lease and shall perform all acts necessary for
Mortgagor to remain in such possession for the unexpired term of the Casino
Ground Lease (including all renewals available at the sole option of Mortgagor);
and (2) all terms and provisions of this Mortgage and the Lien created hereby
shall remain in full force and effect and shall extend automatically to all of
Mortgagor's rights and remedies arising at any time under, or pursuant to,
Federal Bankruptcy Code (S) 365(h), including all of Mortgagor's rights to
remain in possession of the premises demised under the Casino Ground Lease.
(v) Following the occurrence and during the continuance of an
Event of Default, if pursuant to Federal Bankruptcy Code (S) 365(h), or any
other similar Bankruptcy Law, Mortgagor seeks to offset against rent owing under
the Casino Ground Lease ("Ground Rent") the amount of any claim for the payment
of damages from Lessor's failure to perform under the Casino Ground Lease, or
rejection of the Casino Ground Lease under any Bankruptcy Law (a "Lease Damage
Claim"), then Mortgagor shall notify Mortgagee of its intent to do so at least
twenty (20) days before effecting such offset. Such notice shall set forth the
amounts proposed to be so offset and the basis for such offset. If Mortgagee
reasonably believes that such offset is likely to materially adversely affect
the security interest of Mortgagee in the Casino Ground Lease or otherwise
materially adversely affect the Mortgaged Property, Mortgagee may object to all
or any part of such offset, in which event Mortgagor shall not effect any offset
of the amounts to which Mortgagee objects. If Mortgagee fails to object within
such twenty (20) day period to such offset, then Mortgagor may effect such
offset as set forth in Mortgagor's notice. Mortgagor shall indemnify Mortgagee
against any loss or damage suffered by Mortgagee with respect to any offset by
Mortgagor against Ground Rent, except to the extent of any loss or damage
resulting from Mortgagee's gross negligence or willful misconduct.
(g) Mortgagor hereby irrevocably appoints Mortgagee, during the
existence of an Event of Default, as its true and lawful attorney-in-fact, to
do, in its name or otherwise, any and all acts and to execute any and all
documents which are necessary to preserve any rights of Mortgagee under or with
respect to the Casino Ground Lease, including, without limitation, the right to
effect any extension or renewal of the Casino Ground Lease, or to preserve any
rights of Mortgagee whatsoever in respect of any part of the Casino Ground Lease
(and the above powers granted to Mortgagee are coupled with an interest and
shall be irrevocable.)
The generality of the provisions of this Section 8.14 relating to the
Casino Ground Lease shall not be limited by other provisions of this Mortgage
and the Indenture setting forth particular obligations of Mortgagor which are
also required of Mortgagor with respect to the Casino Ground Lease, the
Improvements, or the Land.
8.15 Trustee. State Street Bank and Trust Company is acting hereunder
--------
solely in its capacity as Trustee under the Indenture, and all of the rights of
Trustee set forth in the Indenture shall apply to Trustee's actions hereunder.
To the extent this Mortgage contemplates payments by the Mortgagee, the Trustee
shall have no liability therefor, such liability continuing to be the liability
of Mortgagor or realized through the value of any collateral for the
Obligations.
25
<PAGE>
ARTICLE 9
POWER OF ATTORNEY
-----------------
9.1 Grant of Power. Mortgagor irrevocably appoints Mortgagee and any
---------------
successor thereto as its attorney-in-fact, with full power and authority,
including the power of substitution, exercisable only during the occurrence and
continuance of an Event of Default to act for Mortgagor in its name, place and
stead as hereinafter provided:
(a) Possession and Completion. To take possession of the Land under
the Casino Ground Lease and the Shreveport Resort, remove all employees,
contractors and agents of Mortgagor therefrom, complete or attempt to complete
the work of construction of the Shreveport Resort, and market, sell or sublease
the Land and the Shreveport Resort.
(b) Plans. To make such additions, changes and corrections in the
current Plans as may be necessary or desirable, in Mortgagee's reasonable
discretion, or as it deems proper to complete the restoration of the Shreveport
Resort.
(c) Employment of Others. To employ such contractors, subcontractors,
suppliers, architects, inspectors, consultants, property managers and other
agents as Mortgagee, in its discretion, deems proper for the restoration of the
Shreveport Resort, for the protection or clearance of title to the Land or for
the protection of Mortgagee's interests with respect thereto.
(d) Security Guards. To employ watchmen to protect the Shreveport
Resort from injury.
(e) Compromise Claims. To pay, settle or compromise all bills and
claims then existing or thereafter arising against Mortgagor, which Mortgagee,
in its discretion, deems proper for the protection or clearance of title to the
Land or for the protection of Mortgagee's interests with respect thereto.
(f) Legal Proceedings. To prosecute and defend all actions and
proceedings in connection with the land or the Shreveport Resort.
(g) Other Acts. To execute, acknowledge and deliver all other
instruments and documents in the name of Mortgagor that are necessary or
desirable, to exercise Mortgagor's rights under all contracts concerning the
Land or the Shreveport Resort, including, without limitation, under the Casino
Ground Lease or any Space Leases, and to do all other acts with respect to the
Land or the Shreveport Resort that Mortgagor might do on its own behalf, as
Mortgagee, in its reasonable discretion, deems proper.
[signature page follows]
26
<PAGE>
THIS DONE AND PASSED, in multiple originals, on the day and in the month
and year hereinabove first written, in the presence of the undersigned competent
witnesses who hereunto sign their names with Mortgagor and me, Notary, after due
reading of the whole.
WITNESSES: MORTGAGOR:
HOLLYWOOD CASINO SHREVEPORT
- ------------------------------
BY: HCS I, INC., a Louisiana corporation
its Managing General Partner
- ------------------------------
By: /s/ PAUL C. YATES
-----------------------------------
Name: Paul C. Yates
Title: Executive Vice President
and Chief Financial Officer
------------------------------
NOTARY PUBLIC
27
<PAGE>
EXHIBIT "A"
RESOLUTIONS OF MORTGAGOR AUTHORIZING TRANSACTION
28
<PAGE>
EXHIBIT "B"
DESCRIPTION OF THE LAND
29
<PAGE>
EXHIBIT 4.11
PARTNERSHIP INTEREST PLEDGE AGREEMENT
MADE BY
HCS II, INC.
in favor of
STATE STREET BANK AND TRUST COMPANY,
AS TRUSTEE AND SECURED PARTY
August 10, 1999
<PAGE>
PARTNERSHIP INTEREST PLEDGE AGREEMENT
THIS PARTNERSHIP INTEREST PLEDGE AGREEMENT (this "Agreement") is made as of
August 10, 1999 by HCS II, INC., Louisiana corporation, with principal offices
at Two Galleria Tower, Suite 2200, 13455 Noel Road, LB 48, Dallas, Texas 75240
("Pledgor"), in favor of STATE STREET BANK AND TRUST COMPANY, Massachusetts
chartered trust company, with offices at Two Avenue De Lafayette, Boston,
Massachusetts 02111-1724, as Trustee acting on behalf of the Holders of the
Notes under (and as defined in) the Indenture described below ("Secured Party").
RECITALS
A. Hollywood Casino Shreveport, a Louisiana general partnership
("Hollywood Casino Shreveport"), Shreveport Capital Corporation, a Louisiana
corporation ("Shreveport Capital", and together with Hollywood Casino
Shreveport, the "Issuers"), HWCC-Louisiana, Inc., a Louisiana corporation, HCS
I, Inc., a Louisiana corporation, and Pledgor, each as a Guarantor, and Secured
Party, as Trustee, have entered into an Indenture dated as of August 10, 1999
(as the same may be amended, supplemented, restated or otherwise modified from
time to time, the "Indenture"), pursuant to which the Issuers will issue up to
$150,000,000 of their 13% First Mortgage Notes due 2006 with Contingent Interest
(as the same may be amended, supplemented, restated, exchanged, replaced or
otherwise modified from time to time, collectively, the "Notes").
B. Pledgor is a general partner of Hollywood Casino Shreveport and
holds a general partnership interest in Hollywood Casino Shreveport.
C. It is a condition to the issuance of the Notes that Pledgor execute
and deliver this Agreement, and Pledgor has agreed to enter into this Agreement.
D. Therefore, in order to comply with the terms and conditions of the
Indenture and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Pledgor hereby agrees with Secured
Party as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Terms Defined Above or in the Indenture. As used in this
Agreement, the terms defined herein shall have the meanings respectively
assigned to them. Other capitalized terms which are defined in the Indenture but
which are not defined herein shall have the same meanings as defined in the
Indenture.
Section 1.02 Certain Definitions. As used in this Agreement, the
following terms shall have the following meanings, unless the context otherwise
requires:
"Code" shall mean the Uniform Commercial Code as presently in effect
in the State of New York. Unless otherwise indicated by the context
herein, all uncapitalized
<PAGE>
terms which are defined in the Code shall have their respective meanings as
used in Articles 8 and 9 of the Code; provided that, if by reason of
mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interests in any Collateral is governed by
the Uniform Commercial Code as in effect in any jurisdiction other than the
State of New York, "Code" means the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to
such perfection or the effect of perfection or non-perfection.
"Collateral" shall mean the following types or items of property,
whether now owned or hereafter acquired:
(a) Pledgor's rights in any and all specific property of Hollywood
Casino Shreveport;
(b) Pledgor's interests in Hollywood Casino Shreveport, including all
general partnership interests, all of Pledgor's right, title and interest
in, to and under the Third Amended and Restated Joint Venture Agreement of
Hollywood Casino Shreveport dated as of July 21, 1999 (as heretofore
amended and as further amended, supplemented or otherwise modified from
time to time) (the "Partnership Agreement") and Pledgor's "JV Interests"
(as defined in the Partnership Agreement), and all options or other rights
to acquire such interests, now owned or hereafter acquired by Pledgor in
Hollywood Casino Shreveport, and including all of the rights of Pledgor in
and to the distributions, capital, profits and surplus of Hollywood Casino
Shreveport; and
(c) All other property hereinafter owned by, delivered to, or in the
possession or in the custody of, Pledgor, in substitution for or in
addition to the foregoing and all proceeds of the foregoing (excluding
distributions permitted under Section 4.02 hereof).
"Event of Default" shall mean any event specified in Section 6.01
hereof.
"Obligations" shall mean: (i) the payment when due of indebtedness
evidenced by the Notes in the aggregate principal sum not to exceed at any
time outstanding of $150,000,000, interest as set forth in the Indenture
and the Notes, and premiums, penalties, and late charges thereon; (ii) all
other indebtedness and other sums (including, without limitation, all
expenses, attorneys' fees, other fees, indemnifications, reimbursements,
damages, other monetary liabilities, and other charges) and obligations
that may or shall become due hereunder or under the Notes, the Guarantees,
the Indenture, or the other Collateral Documents, and (iii) any and all
renewals, modifications, amendments, extensions for any period, supplements
or restatements of any of the foregoing.
"Obligor" shall mean any Person, other than Pledgor, liable (whether
directly or indirectly, primarily or secondarily) for the payment or
performance of any of the Obligations whether as maker, co-maker, endorser,
guarantor, accommodation party, general partner or otherwise.
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ARTICLE II
SECURITY INTEREST
Section 2.01 Pledge. Pledgor hereby assigns, endorses, delivers,
pledges, and grants to Secured Party a continuing security interest in and Lien
upon, the Collateral to secure the prompt and complete payment and performance
of the Obligations and the performance by Pledgor of this Agreement. This
security interest is granted as security only and shall not subject Secured
Party to, or transfer or in any way affect or modify, any obligation or
liability of the Pledgor or any Obligor with respect to any of the Collateral,
the Obligations or any transaction in connection therewith.
Section 2.02 Ratable Benefit of Holders of the Notes. Pledgor and
Secured Party agree that the security interest and lien granted hereby are for
the benefit of the Trustee for the equal and ratable benefit of the Holders of
the Notes.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
In order to induce Secured Party to accept this Agreement, Pledgor
represents and warrants to Secured Party (which representations and warranties
will survive the creation and payment of the Obligations) that:
Section 3.01 Ownership of Collateral; Location of Pledgor; Absence of
Encumbrances and Restrictions. Pledgor is a general partner of Hollywood Casino
Shreveport and owns the general partnership interest in Hollywood Casino
Shreveport described in the Partnership Agreement as in effect on the date
hereof. After giving effect to the use of proceeds of the Notes, Pledgor is, and
in the case of Collateral acquired after the date hereof, will be, the legal and
sole holder of record and the sole beneficial owner of the Collateral, free and
clear of all Liens except for Permitted Liens, and Pledgor has full right, power
and authority to pledge, assign and grant a security interest in the Collateral
to Secured Party. Pledgor's tax identification number, chief executive office,
principal place of business and the locations of Pledgor's records concerning
the Collateral are set forth on Exhibit A attached hereto. The Partnership
Agreement contains no restrictions preventing the pledge, assignment and grant
of a security interest in the Collateral to Secured Party as contemplated
herein. The exercise of remedies hereunder by the Secured Party does not violate
the Partnership Agreement, nor will such exercise give additional rights to or
allow exercise of rights by any other party to the Partnership Agreement. No
Collateral is evidenced by any certificate or instrument. All of the partnership
interests included in the Collateral have been duly and validly issued in
compliance with all applicable laws and regulations. Pledgor has not performed
any acts that might prevent Secured Party from enforcing any of the terms of
this Agreement or that would limit Secured Party in any such enforcement.
Section 3.02 No Required Consent. Except for such authorizations,
consents and other actions as shall have been obtained and shall be in effect,
no authorization, consent, approval or other action by, and no notice to or
registration, recordation or filing with, any
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Governmental Authority or third party is required for (i) the due execution,
delivery and performance by Pledgor of this Agreement, (ii) the grant by Pledgor
of the security interest granted by this Agreement, (iii) the perfection of such
security interest (except for the filing of any appropriate financing
statements) or (iv) except as may be required by applicable gaming laws or
except as may be required in connection with the disposition of Collateral by
federal and state securities laws or antitrust laws and the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, the exercise by Secured Party of its rights
and remedies under this Agreement. Pledgor has not performed nor will perform
any acts which might prevent Secured Party from enforcing any of the terms and
conditions of this Agreement or which would limit Secured Party in any such
enforcement.
Section 3.03 First Priority Security Interest. The pledge, assignment
and delivery of the Collateral pursuant to this Agreement creates and grants a
valid first lien and perfected first priority security interest in the
Collateral, subject to Permitted Liens, enforceable against Pledgor and all
third parties and securing payment of the Obligations, except that (a) the
enforceability of any rights to indemnity and contribution hereunder may be
limited by federal or state securities laws or principles of public policy, (b)
the enforceability hereof may be subject to applicable bankruptcy, insolvency,
fraudulent conveyance or transfer, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and (c) the enforceability
hereof may be subject to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
ARTICLE IV
COVENANTS AND AGREEMENTS
Pledgor will at all times comply with the covenants and agreements
contained in this Article IV from the date hereof and for so long as any part of
the Obligations are outstanding.
Section 4.01 Sale, Disposition or Encumbrance of Collateral. Except as
may be permitted by the provisions hereof or of the Indenture, Pledgor will not
in any way encumber any of its rights in or to any of the Collateral (or permit
or suffer any of the Collateral to be encumbered) or sell, pledge, assign, lend
or otherwise dispose of or transfer any of the Collateral to or in favor of any
Person other than Secured Party. The Pledgor is not, and will not become, a
party to or be otherwise bound by any agreement, other than this Agreement or as
permitted by the Indenture, which restricts in any manner the rights of any
present or future holder of any of the Collateral. Except as may be permitted by
the Indenture, Pledgor shall not consent to or approve the issuance to any
person of any additional partnership interests of any type in Hollywood Casino
Shreveport, or any other interest in the assets of, or rights to distributions
from, Hollywood Casino Shreveport.
Section 4.02 Distributions. So long as no Event of Default shall have
occurred and be continuing, Pledgor shall be entitled to receive and retain free
and clear of the Lien of this Agreement any and all distributions, interest and
principal payments, cash, instruments and other property and proceeds made upon
or with respect to the Collateral, which shall not constitute Collateral and may
be used by Pledgor subject to the terms and conditions of the Indenture;
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provided, however, that in the event Pledgor now is or hereafter becomes
entitled to distributions paid or payable in securities of Hollywood Casino
Shreveport, including all securities convertible into any Collateral, and
warrants, options or other rights to purchase stock or equity interests, in
Hollywood Casino Shreveport, receivable or otherwise distributed in respect of,
or in exchange for (including, without limitation, any certificate or share
purchased or exchanged in connection with a tender offer or merger agreement)
any Collateral, shall be, and shall be forthwith delivered to Secured Party to
hold as, Collateral and shall, if received by Pledgor, be received in trust for
the benefit of Secured Party, be segregated from the other Property or funds of
Pledgor, and be forthwith delivered to Secured Party as Collateral in the same
form as so received (with any necessary endorsement). Pledgor shall execute and
deliver all documents, and if required, certificates, necessary to perfect
Secured Party's Lien on such Collateral. Upon the occurrence and during the
continuance of an Event of Default, all rights of Pledgor to receive all
distributions, interest and principal payments, cash, instruments and other
property and proceeds shall cease, and such distributions, interests and
principal payments, cash, instruments and other property and proceeds shall
constitute Collateral and shall be paid or otherwise delivered to the Secured
Party.
Section 4.03 Records and Information. Pledgor shall keep accurate and
complete records of the Collateral (including proceeds, payments, distributions,
income and profits). Upon reasonable notice and without undue interference with
the Pledgor's business, Secured Party may at any time have access to, examine,
audit, make extracts from and inspect without hindrance or delay Pledgor's
records, files and the Collateral.
Section 4.04 Further Assurances. Upon the request of Secured Party,
Pledgor shall (at Pledgor's expense) execute and deliver all such assignments,
financing statements or other documents and give further assurances and do all
other acts and things as Secured Party may reasonably request to perfect Secured
Party's interest in the Collateral or which is necessary to protect, enforce or
otherwise effect Secured Party's rights and remedies hereunder.
Section 4.05 Certificates or Instruments; Change in Location of
Pledgor. Pledgor shall not cause or permit its general partnership interest in
the Collateral to be evidenced by any certificate or instrument. Pledgor will
not change the location of Pledgor's chief executive office, principal place of
business or the locations of Pledgor's records concerning the Collateral unless
Pledgor shall have given Secured Party at least thirty (30) days prior written
notice thereof and shall have delivered to Secured Party such new financing
statements or other documentation as may be reasonably necessary or required by
Secured Party to ensure the continued perfection and priority of its security
interest in the Collateral.
Section 4.06 Rights to Sell.
(a) If Secured Party shall determine to exercise its rights to sell all
or any of the Collateral pursuant to its rights hereunder, Pledgor agrees
that, upon request of the Secured Party, Pledgor will, at its own expense,
use its commercially reasonable best efforts to do or cause to be done all
such other acts and things as may be necessary to make such sale of the
Collateral or any part thereof valid and binding and in compliance with
applicable law and the Partnership Agreement.
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(b) Pledgor further acknowledges the impossibility of ascertaining the
amount of damages which would be suffered by Secured Party and the Holders
of the Notes by reason of the failure by Pledgor to perform any of the
covenants contained in this Section 4.06 and consequently agrees that if
Pledgor shall fail to perform any of such covenants, it shall be subject to
a suit for specific performance of such covenants.
Section 4.07 Voting and Other Consensual Rights. Except to the extent
otherwise provided in Section 6.06(d) hereof, Pledgor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Collateral or any part thereof for any purpose not inconsistent with the terms
of this Agreement or the Indenture or any other Collateral Document.
ARTICLE V
RIGHT, DUTIES, AND POWERS OF SECURED PARTY
Secured Party shall have the following rights, duties and powers:
Section 5.01 Discharge Encumbrances. After the occurrence and during
the continuance of an Event of Default, Secured Party may, at its option,
discharge any taxes, Liens, security interests or other encumbrances at any time
levied or placed on the Collateral. Pledgor agrees to reimburse Secured Party as
provided in the Indenture.
Section 5.02 Cumulative and Other Rights. The rights, powers and
remedies of Secured Party hereunder are in addition to all rights, powers and
remedies given by law or in equity. The exercise by Secured Party of any one or
more of the rights, powers and remedies herein shall not be construed as a
waiver of any other rights, powers and remedies, including, without limitation,
any other rights of set-off (provided that set-off rights may not be exercised
prior to the acceleration of the Notes).
Section 5.03 Disclaimer of Certain Duties.
(a) The powers conferred upon Secured Party by this Agreement are to
protect its interest in the Collateral and shall not impose any duty upon
Secured Party to exercise any such powers. Pledgor hereby agrees that
Secured Party shall not be liable for, nor shall the indebtedness evidenced
by the Obligations be diminished by, Secured Party's delay or failure to
collect upon, foreclose, sell, take possession of or otherwise obtain value
for the Collateral.
(b) Except as may be required by the provisions of the Indenture, and
to the fullest extent permitted by applicable law, Secured Party shall be
under no duty whatsoever to make or give any presentment, notice of
dishonor, protest, demand for performance, notice of non-performance,
notice of intent to accelerate, notice of acceleration, or other notice or
demand in connection with any Collateral or the Obligations, or to take any
steps necessary to preserve any rights against any Obligor or other Person.
Pledgor waives any right of marshaling in respect of any and all
Collateral, and waives any right to require Secured Party to proceed
against any
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Obligor or other Person, exhaust any Collateral or enforce any other remedy
which Secured Party now has or may hereafter have against any Obligor or
other Person.
(c) The security interests are granted as security only and shall not
subject Secured Party to, or transfer or in any way affect or modify, any
obligation or liability of the Pledgor with respect to any of the
Collateral or any transaction in connection therewith. The Pledgor shall
remain liable under the Partnership Agreement to the extent set forth
therein to perform its duties and obligations thereunder to the same extent
as if this Agreement had not been executed. The exercise by Secured Party
of any of its rights hereunder shall not release the Pledgor from any of
its duties or obligations under the Partnership Agreement and Secured Party
shall not have any obligation or liability under the Partnership Agreement
by reason of this Agreement or otherwise, nor shall Secured Party be
obligated to perform any of the obligations or duties of the Pledgor
thereunder, to make any payment, to make any inquiry as to the nature or
sufficiency of any payment received by the Pledgor or Secured Party or the
sufficiency of any performance by any party under the Partnership Agreement
or to take any action to collect or enforce any claim for payment assigned
hereunder. Secured Party shall not by reason of this Agreement or the
exercise of any remedies hereunder become responsible or liable in any
manner or to any extent for the obligations and liabilities of Hollywood
Casino Shreveport, whether now existing or hereafter incurred, except as a
result of obligations and liabilities of Hollywood Casino Shreveport first
arising after Secured Party's admission as a general partner in Hollywood
Casino Shreveport. The Pledgor specifically understands and agrees that
Secured Party shall have no responsibility for (i) collecting or protecting
any income, earnings, or proceeds with regard to the Collateral, (ii)
preserving any of the Pledgor's rights against parties to the Collateral or
against third persons, (iii) ascertaining any maturities, calls, conversion
rights, exchanges, offers, tenders or similar matters relating to the
Collateral, or (iv) informing the Pledgor about any of these matters,
whether or not Secured Party actually has or is deemed to have knowledge
thereof. Beyond the exercise of reasonable care in the custody thereof,
Secured Party shall have no duty as to any Collateral in its possession or
control or in the possession or control of any agent or bailee or any
income thereon. The Pledgor hereby agrees to indemnify and hold harmless
Secured Party and its directors, officers, employees and agents against any
and all claims, actions, liabilities, costs and expenses of any kind or
nature whatsoever (including reasonable fees and disbursements of counsel)
that may be imposed on, incurred by, or asserted against any of them, in
any way relating to or arising out of this Agreement or any action taken or
omitted by them hereunder (including such obligations and liabilities of
Hollywood Casino Shreveport), except to the extent that they directly
resulted from the gross negligence or willful misconduct of such persons.
Section 5.04 Modification of Obligations; Other Security. Except as
specifically provided for in the Indenture, Pledgor waives (i) any and all
notice of acceptance, creation, modification, rearrangement, renewal or
extension for any period of any instrument executed by any Obligor in connection
with the Obligations, and (ii) to the fullest extent permitted by applicable
law, any defense of any Obligor by reason of disability, lack of authorization,
cessation of the liability of any Obligor or for any other reason. Pledgor
authorizes Secured Party, without notice or demand and without any reservation
of rights against Pledgor and without affecting Pledgor's liability hereunder or
on the Obligations, from time to time after the
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occurrence and during the continuance of an Event of Default, to (x) apply the
Collateral in the manner permitted by this Agreement, and (y) after the
occurrence and during the continuance of an Event of Default, renew, extend for
any period, accelerate, amend or modify, supplement, enforce, compromise,
settle, waive or release the obligations of any Obligor or any instrument or
agreement of such other Person with respect to any or all of the Obligations or
Collateral.
Section 5.05 Custody and Preservation of the Collateral. Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which comparable secured parties accord
comparable collateral, it being understood and agreed, however, that Secured
Party shall not have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Collateral, whether or not Secured Party has or is deemed to
have knowledge of such matters, or (ii) taking any necessary steps to preserve
rights against Persons or entities with respect to any Collateral.
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01 Events. It shall constitute an Event of Default under this
Agreement if an "Event of Default" occurs and is continuing under the Indenture.
Section 6.02 Remedies. Upon the occurrence and during the continuance
of any Event of Default, Secured Party may take any or all of the following
actions without notice (except where expressly required below or in the
Indenture) or demand to Pledgor:
(a) Sell, in one or more sales and in one or more parcels, or otherwise
dispose of any or all of the Collateral in any commercially reasonable
manner as Secured Party may elect, in a public or private transaction, at
any location as deemed reasonable by Secured Party for cash at such price
as Secured Party may deem fair; and (unless prohibited by the Code, as
adopted in any applicable jurisdiction) Secured Party may be the purchaser
of any or all Collateral so sold and may apply upon the purchase price
therefor any Obligations secured hereby. Any such sale or transfer by
Secured Party either to itself or to any other Person shall be absolutely
free from any claim of right by Pledgor, including any equity or right of
redemption, stay or appraisal which Pledgor has or may have under any rule
of law, regulation or statute now existing or hereafter adopted. Upon any
such sale or transfer, Secured Party shall have the right to deliver,
assign and transfer to the purchaser or transferee thereof the Collateral
so sold or transferred. If Secured Party deems it advisable to do so, it
may restrict the bidders or purchasers of any such sale or transfer to
Persons or entities who will represent and agree that they are purchasing
the Collateral for their own account and not with the view to the
distribution or resale of any of the Collateral. Secured Party may, at its
discretion, provide for a public sale, and any such public sale shall be
held at such time or times within ordinary business hours and at such place
or places as Secured Party may fix in the notice of such sale. Secured
Party shall not be obligated to make any sale pursuant to any such notice.
Secured Party may, without notice or publication, adjourn any public or
private sale by announcement at any time and place fixed for such sale, and
such sale may be made at any time or place to which the same may be so
adjourned. In the event any
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sale or transfer hereunder is not completed or is defective in the opinion
of Secured Party, such sale or transfer shall not exhaust the rights of
Secured Party hereunder, and Secured Party shall have the right to cause
one or more subsequent sales or transfers to be made hereunder. If only
part of the Collateral is sold or transferred such that the Obligations
remain outstanding (in whole or in part), Secured Party's rights and
remedies hereunder shall not be exhausted, waived or modified, and Secured
Party is specifically empowered to make one or more successive sales or
transfers until all the Collateral shall be sold or transferred and all the
Obligations are paid. In the event that Secured Party elects not to sell
the Collateral, Secured Party retains its rights to dispose of or utilize
the Collateral or any part or parts thereof in any manner authorized or
permitted by law or in equity, and to apply the proceeds of the same
towards payment of the Obligations. Each and every method of disposition of
the Collateral described in this Section 6.02 shall constitute disposition
in a commercially reasonable manner.
(b) Apply proceeds of the disposition of the Collateral to the
Obligations as provided by the Indenture. Such application may include,
without limitation, the reasonable attorneys' fees and legal expenses
incurred by Secured Party.
(c) Appoint any Person as agent to perform any act or acts necessary or
incident to any sale or transfer by Secured Party of the Collateral.
(d) Execute, assign and endorse negotiable and other instruments for
the payment of money, documents of title or other evidences of payment,
shipment or storage for any form of Collateral on behalf of and in the name
of Pledgor.
(e) Secured Party, instead of exercising the power of sale herein
conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the security interests and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or course of competent
jurisdiction. For the purposes of Louisiana executory process procedures,
the Pledgor does hereby acknowledge the Obligations and does hereby confess
judgment in favor of Secured Party for the full amount of the Obligations.
The Pledgor does by these presents, consent, agree and stipulate that
during the continuance of an Event of Default it shall be lawful for
Secured Party, and the Pledgor does hereby authorize Secured Party, to
cause all and singular the Collateral to be seized and sold under executory
or ordinary process, at Secured Party's sole option, without appraisement,
appraisement being hereby expressly waived, in one lot as an entirety or in
separate portions or parcels as Secured Party may determine, to the highest
bidder, and otherwise exercise the rights, powers and remedies afforded
herein and under applicable Louisiana law. Any and all declarations of fact
made by authentic act before a Notary Public in the presence of two
witnesses by a person declaring that such facts lie within his knowledge
shall constitute authentic evidence of such facts for the purpose of
executory process. The Pledgor hereby waives in favor of Secured Party: (i)
the benefit of appraisement as provided in Louisiana Code of Civil
Procedure Articles 2332, 2336, 2723 and 2724, and all other laws conferring
the same; (ii) the demand and three days delay accorded by Louisiana Code
of Civil Procedure Articles 2639 and 2721; (iii) the notice of seizure
required by Louisiana Code of Civil Procedure Articles 2293 and 2721; (iv)
the three days delay provided by Louisiana Code of Civil Procedure Articles
2331 and 2722; and (v) the benefit of the other provisions of Louisiana
Code of Civil Procedure Articles 2331, 2722 and 2723, not specifically
mentioned above.
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(f) Exercise all other rights and remedies permitted by law or in
equity.
Section 6.03 Attorney-in-Fact. Pledgor hereby irrevocably appoints
Secured Party as Pledgor's attorney-in-fact, with full authority in the place
and stead of Pledgor and in the name of Pledgor or otherwise, from time to time
in Secured Party's reasonable discretion upon the occurrence and during the
continuance of an Event of Default, but at Pledgor's cost and expense, to take
any action and to execute any assignment, certificate, financing statement,
stock power, notification, document or instrument which Secured Party may
reasonably deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, to receive, endorse and collect all
instruments made payable to Pledgor representing any dividend, interest payment
or other distribution in respect of the Collateral or any part thereof and to
give full discharge for the same.
Section 6.04 Liability for Deficiency. If any sale or other disposition
of Collateral by Secured Party or any other action of Secured Party hereunder
results in reduction of the Obligations, such action will not release Pledgor
from its liability to Secured Party for any unpaid Obligations, including
reasonable costs, charges and expenses incurred in the liquidation of Collateral
and the same shall be immediately due and payable to Secured Party at Secured
Party's address set forth in the opening paragraph hereof.
Section 6.05 Reasonable Notice. If any applicable provision of any law
requires Secured Party to give reasonable notice of any sale or disposition or
other action, Pledgor hereby agrees that ten (10) days' prior written notice
shall constitute reasonable notice thereof. Such notice, in the case of public
sale, shall state the time and place fixed for such sale and, in the case of
private sale, the time after which such sale is to be made.
Section 6.06 Collateral. Upon the occurrence and during the continuance
of an Event of Default:
(a) All rights of Pledgor to receive the property which it would
otherwise be authorized to receive and retain pursuant to Section 4.02
hereof shall cease, and all such rights shall thereupon become vested in
Secured Party who shall thereupon have the sole right to receive and hold
as Collateral such property, but Secured Party shall have no duty to
receive and hold such property and shall not be responsible for any failure
to do so or delay in so doing.
(b) All property which is received by Pledgor contrary to the
provisions of this Section 6.06 shall be received in trust for the benefit
of Secured Party, shall be segregated from other funds of Pledgor and shall
be forthwith paid over to Secured Party as Collateral in the same form as
so received (with any necessary endorsement).
(c) Secured Party may exercise any and all rights of conversion,
exchange, or any other rights, privileges or options pertaining to any of
the Collateral as if it were the absolute owner thereof, including without
limitation, the right to exchange at its discretion, any and all of the
Collateral upon the merger, consolidation, reorganization, recapitalization
or other readjustment of Hollywood Casino Shreveport or upon the exercise
by Hollywood Casino Shreveport or Secured Party of any right, privilege or
option pertaining to any of the Collateral,
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and in connection therewith, to deposit and deliver any and all of the
Collateral with any committee, depository, transfer agent, registrar or
other designated agency upon such terms and conditions as it may determine,
all without liability except to account for property actually received by
it, but Secured Party shall have no duty to exercise any of the aforesaid
rights, privileges or options and shall not be responsible for any failure
to do so or delay in so doing.
(d) All rights of Pledgor to exercise the voting and other consensual
rights which Pledgor would otherwise be entitled to exercise pursuant to
Section 4.07 hereof with respect to the Collateral shall cease, and all
such rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right to exercise such voting and other consensual
rights, but Secured Party shall have no duty to exercise any such voting or
other consensual rights and shall not be responsible for any failure to do
so or delay in so doing. Notwithstanding the foregoing, Secured Party's
ability to exercise voting rights is subject to Secured Party foreclosing
on or acquiring the Collateral hereunder and being admitted as a partner of
Hollywood Casino Shreveport in accordance with the Partnership Agreement,
and therefore, during the continuance of an Event of Default, if Secured
Party shall not be entitled under the Partnership Agreement to exercise
voting or other consensual rights regarding the Collateral, then until
Secured Party shall be so entitled in accordance with the Partnership
Agreement to exercise such voting or other consensual rights, the Pledgor
shall be permitted to exercise such voting or other consensual rights, but
only at the sole direction of Secured Party.
Section 6.07 Non-judicial Enforcement. Secured Party may enforce its
rights hereunder without prior judicial process or judicial hearing, and to the
extent permitted by law, Pledgor expressly waives any and all legal rights which
might otherwise require Secured Party to enforce its rights by judicial process.
Section 6.08 Private Sale of Collateral. Pledgor recognizes that
Secured Party may deem it impracticable to effect a public sale of all or any
part of the Collateral and that Secured Party may, therefore, determine to make
one or more private sales of any such Collateral to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire such
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. Pledgor acknowledges that any such private sale
may be at prices and on terms less favorable to the seller than the prices and
other terms which might have been obtained at a public sale and, notwithstanding
the foregoing, agrees that such private sale shall be deemed to have been made
in a commercially reasonably manner and that Secured Party shall have no
obligation to delay sale of any such securities for the period of time necessary
to permit Pledgor to register such Collateral for public sale under the
Securities Act of 1933, as amended (the "Securities Act"). Pledgor further
acknowledges and agrees that any offer to sell such Collateral which has been
(i) publicly advertised on a bona fide basis in a newspaper or other publication
of general circulation in the financial community of New York, New York (to the
extent that such an offer may be so advertised without prior registration under
the Securities Act), or (ii) made privately in the manner described above to not
less than fifteen (15) bona fide offerees shall be deemed to involve a "public
sale" for the purposes of Section 9-504(c) of the Code (or any successor or
similar, applicable statutory provision) as then in effect in the State of New
York, notwithstanding that such sale may not constitute a "public offering"
under the Securities Act and that Secured Party may, in such event, bid for the
purchase of such Collateral.
11
<PAGE>
ARTICLE VII
MISCELLANEOUS
Section 7.01 Notices. Any notice required or permitted to be given
under or in connection with this Agreement shall be given in accordance with the
notice provisions of the Indenture.
Section 7.02 Amendments and Waivers. Secured Party's acceptance of
partial or delinquent payments or any forbearance, failure or delay by Secured
Party in exercising any right, power or remedy hereunder shall not be deemed a
waiver of any obligation of Pledgor or any Obligor, or of any right, power or
remedy of Secured Party, and no partial exercise of any right, power or remedy
shall preclude any other or further exercise thereof. Secured Party may remedy
any Event of Default hereunder or in connection with the Obligations without
waiving the Event of Default so remedied. Pledgor hereby agrees that if Secured
Party and the Holders of the Notes agree to a waiver of any provision hereunder,
as provided by the Indenture, or an exchange of or release of the Collateral, or
the addition or release of any Obligor or other Person, any such action shall
not constitute a waiver of any of Secured Party's other rights or of Pledgor's
obligations hereunder. This Agreement may be amended only by an instrument in
writing in the manner set forth in the Indenture and may be supplemented only by
documents delivered or to be delivered in accordance with the express terms
hereof.
Section 7.03 Redelivery of Collateral. If any sale or transfer of
Collateral by Secured Party results in full satisfaction of the Obligations, and
after such sale or transfer and discharge there remains a surplus of proceeds,
Secured Party will deliver to Pledgor or such other Person as may be required by
a Governmental Authority such excess proceeds in a commercially reasonable time;
provided, however, that neither Secured Party nor any Holders of the Notes shall
have any liability for any interest, cost or expense in connection with any
reasonable delay in delivering such proceeds to Pledgor.
Section 7.04 Gaming Laws and Regulations. 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 Louisiana Riverboat
Economic Development and Gaming Control Act, La. R.S. 27:41, et seq., and the
Louisiana Gaming Control Law, La. R.S. 27:1, and the regulations promulgated
pursuant to each such law, all as amended from time to time. The Gaming License
held by Hollywood Casino Shreveport is not part of the Collateral of this
Agreement and, 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 Agreement under the defaults
and remedies provisions of this Agreement. 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 Gaming Authority approval.
12
<PAGE>
Section 7.05 Governing Law; Jurisdiction. This Agreement and the
security interest granted hereby shall be construed in accordance with and
governed by the laws of the State of New York (except to the extent that the
laws of any other jurisdiction govern the perfection and priority of the
security interests granted hereby).
Section 7.06 Continuing Security Agreement.
(a) Except as may be expressly applicable pursuant to Section 9-505 of
the Code, no action taken or omission to act by Secured Party hereunder,
including, without limitation, any exercise of voting or consensual rights
pursuant to Section 6.06(d) hereof or any other action taken or inaction
pursuant to Section 6.02 hereof, shall be deemed to constitute a retention
of the Collateral in satisfaction of the Obligations or otherwise to be in
full satisfaction of the Obligations, and the Obligations shall remain in
full force and effect until Secured Party shall have applied payments
(including, without limitation, collections from Collateral) towards the
Obligations in the full amount then outstanding or until such subsequent
time as is hereinafter provided in Section 7.06(b) hereof.
(b) To the extent that any payments on the Obligations or proceeds of
the Collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other Person under any bankruptcy law, common law
or equitable cause, then to such extent the Obligations so satisfied shall
be revived and continue as if such payment or proceeds had not been
received by Secured Party, and Secured Party's security interests, rights,
powers and remedies hereunder shall continue in full force and effect. In
such event, this Agreement shall be automatically reinstated if it shall
theretofore have been terminated pursuant to Section 7.07 or Section 7.08
hereof.
Section 7.07 Termination. The grant of a security interest hereunder
and all of Secured Party's rights, powers and remedies in connection therewith
shall, unless otherwise provided in the Indenture or in this Agreement, remain
in full force and effect until the payment in full of (a) the Notes under the
terms of the Indenture and (b) all Obligations then due and owing under the
Indenture, the Notes and the Collateral Documents; provided, however, that after
receipt from the Pledgor by the Secured Party of a request for a release of any
Collateral permitted under the Indenture upon the sale, transfer, assignment,
exchange or other disposition of the Collateral not prohibited by the Indenture
(and upon receipt by the Secured Party of all proceeds of such sale, transfer,
assignment, exchange or other disposition to the extent required to be remitted
to the Secured Party under the Indenture), such Collateral shall be released
from the Lien and security interest created hereunder in accordance with the
provisions of the Indenture and no longer constitute Collateral. Notwithstanding
the foregoing, the provisions of Section 7.06(b) hereof shall survive the
termination of this Agreement.
Section 7.08 Release. Subject to the provisions of Section 7.06(b)
hereof, this Agreement shall terminate upon payment in full of (a) the Notes
under the terms of the Indenture and (b) all Obligations then due and owing
under the Indenture, the Notes and the Collateral Documents. At such time, the
Secured Party shall, at the request of the Pledgor, reassign and redeliver to
the Pledgor all of the Collateral hereunder that has not been sold, disposed of,
retained or applied by the Secured Party in accordance with the terms of the
Indenture or the
13
<PAGE>
Collateral Documents. Such reassignment and redelivery 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 Collateral, and shall be
at the expense of the Pledgor. Notwithstanding the foregoing, the provisions of
Section 7.06(b) hereof shall survive the termination of this Agreement.
Section 7.09 Counterparts, Effectiveness. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument. This Agreement becomes effective upon the execution hereof by
Pledgor and delivery of the same to Secured Party, and it is not necessary for
Secured Party to execute any acceptance hereof or otherwise signify or express
its acceptance hereof.
Section 7.10 Interpretation of Agreement. To the extent a term or
provision of this Agreement conflicts with the Indenture, the Indenture shall
control with respect to the subject matter of such term or provision.
Section 7.11 Rights of Holders. No Holder of Notes shall have any
independent rights hereunder other than those rights granted to individual
Holders of Notes pursuant to the Indenture; provided that, nothing in this
Section 7.11 shall limit any rights granted to the Secured Party under the
Notes, the Indenture or the Collateral Documents.
Section 7.12 No Personal Liability of Directors, Officer, Employees,
and Stockholders. Other than as set forth in the Indenture or the documents
executed and delivered pursuant thereto, no past, present or future director,
officer, employee, incorporator or stockholder of the Pledgor, as such or any
successor Person, as such, shall have any liability for any obligations of the
Pledgor under this Agreement or for any claim based on, in respect of, or by
reason of, such Obligations or their creation.
Section 7.13 Trustee. State Street Bank and Trust Company is acting
hereunder solely in its capacity as Trustee under the Indenture, and all of the
rights of Trustee set forth in the Indenture shall apply to Trustee's actions
hereunder. To the extent this Agreement contemplates payments by the Secured
Party, the Trustee shall have no liability therefor, such liability continuing
to be the liability of Pledgor or realized through the value of any collateral
for the obligations under the Indenture.
[SIGNATURE PAGE FOLLOWS]
14
<PAGE>
IN WITNESS WHEREOF, Pledgor has caused this Partnership Interest
Pledge Agreement to be executed as of the date first above written.
Pledgor: HCS II, INC., a Louisiana corporation
By: /s/ PAUL C. YATES
----------------------------------
Name: Paul C. Yates
--------------------------------
Title: Executive Vice President and
-------------------------------
Chief Financial Officer
-------------------------------
[SIGNATURE PAGE TO PARTNERSHIP PLEDGE AGREEMENT (HCS II, INC.)]
S-1
<PAGE>
EXHIBIT A
PERFECTION
(a) Legal Name of Pledgor:
HCS II, Inc.
(b) Other Names:
None
(c) (i) Chief Executive Office and Principal Place of Business of Pledgor:
Chief Executive Office: Dallas County, Texas
Principal Place of Business: Dallas County, Texas
(ii) Other Premises at which Collateral is Stored or Located:
Caddo Parish, Louisiana
Bossier Parish, Louisiana
(iii) Locations of Records Concerning Collateral:
Dallas County, Texas
(d) Tax Identification Number:
75-2830163
A-1
<PAGE>
ACKNOWLEDGMENT OF HOLLYWOOD CASINO SHREVEPORT
The undersigned hereby:
(a) acknowledges receipt of a copy of the foregoing Partnership
Interest Pledge Agreement (the "Agreement") and that such receipt
constitutes notice to it of the Pledgor's authorization and direction to it
to comply with the terms and provisions hereof and of the Agreement and of
the Partnership Agreement (as defined in the Agreement), and accepts,
consents to, confirms and agrees to be bound by such terms and provisions;
(b) acknowledges that, pursuant to the Agreement, and as permitted by
the Partnership Agreement, the Pledgor has pledged and assigned to Secured
Party, and granted to Secured Party a continuing first-priority security
interest in, all right, title and interest of the Pledgor, whether now
existing or hereafter arising or acquired, in, to and under the Collateral,
and hereby consents to such assignment;
(c) agrees, upon notice from Secured Party, to make direct payment to
Secured Party of any amounts due or to become due to the Pledgor in respect
of the Collateral, and to do every act and thing necessary or appropriate
to carry out the terms and provisions hereof and of the Agreement and of
the Partnership Agreement, and agrees to make no payments or distributions
contrary to such terms and provisions; and
(d) waives notice of acceptance of the Agreement by Secured Party.
DELIVERED on August 10, 1999.
HOLLYWOOD CASINO SHREVEPORT, a
Louisiana general partnership
By: HCS I, Inc., a Louisiana
corporation, its managing
general partner
By: /s/ PAUL C. YATES
-----------------------------
Name: Paul C. Yates
Title: Executive Vice President
and Chief Financial Officer
<PAGE>
ACKNOWLEDGMENT OF GENERAL PARTNER
The undersigned, in its capacity as a General Partner of Hollywood
Casino Shreveport, hereby:
(a) acknowledges receipt of a copy of the foregoing Partnership Interest
Pledge Agreement (the "Agreement");
(b) consents to the pledge and assignment by the Pledgor to Secured Party,
and the grant by the Pledgor to Secured Party of a continuing first-priority
security interest in, all right, title and interest of the Pledgor, whether now
existing or hereafter arising or acquired, in, to and under the Collateral, and
the exercise by Secured Party of its rights and remedies pursuant to the
Agreement (including any sale or transfer of the Collateral in accordance with
the Agreement), and agrees to do every act and thing necessary or appropriate to
carry out the terms and provisions hereof and of the Agreement, including
without limitation, upon request of Secured Party or any transferee of the
Collateral, confirming and ratifying the admission of such transferee as a
partner in Hollywood Casino Shreveport, and electing any transferee of the
Collateral as the Managing General Partner, under Hollywood Casino Shreveport's
partnership agreement.
DELIVERED on August 10, 1999.
HCS I, INC., a Louisiana corporation
By: /s/ PAUL C. YATES
---------------------------------
Name: Paul C. Yates
Title: Executive Vice President
and Chief Financial Officer
<PAGE>
Exhibit 4.12
FIRST AMENDMENT TO SECURITY AGREEMENT
This First Amendment to Security Agreement (this "Amendment") is made and
entered into as of August 10, 1999 by and between HWCC-Shreveport, Inc., a
Louisiana corporation (the "Company"), and State Street Bank and Trust Company,
a Massachusetts chartered trust company (the "Trustee").
RECITALS:
WHEREAS, the Company and the Trustee, pursuant to Section 9.01(a) of that
certain Indenture dated as of May 19, 1999, among Hollywood Casino Corporation,
as issuer, and the Company and HWCC-Tunica, Inc., a Texas corporation, as
guarantors, and the Trustee (the "Indenture"), desire to amend that certain
Security Agreement dated May 19, 1999, made by the Company, as debtor, to the
Trustee, as trustee and secured party acting on behalf of the holders of the
notes (the "Security Agreement"), as provided in this Amendment to cure an
ambiguity, defect and inconsistency in the Security Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Amendment of Security Agreement. The Company and the Trustee hereby
-------------------------------
acknowledge and agree that:
(a) Paragraph B of the Recitals is hereby deleted and is replaced in its
entirety by the following paragraph:
B. Debtor will manage that certain casino, hotel complex and
related facilities located in Shreveport, Louisiana (the "Shreveport
----------
Casino") pursuant to that certain Management Services Agreement,
------
dated as of September 22, 1998, as amended and as may be from time
to time amended (the "Management Agreement") by and between Debtor
--------------------
and QNOV, a Louisiana general partnership ("QNOV").
----
(b) A new Section 4.09 is hereby added as follows:
Section 4.09. Amendment of Management Agreement.
---------------------------------
Notwithstanding anything herein to the contrary, Debtor and QNOV may
from time to time, directly or indirectly through ancillary
documents, amend the terms and provisions of the Management
Agreement to, among other things, limit the ability of QNOV to pay
Debtor management fees under the Management Agreement in connection
with obtaining financing to develop, construct, equip and operate
the Shreveport Casino.
<PAGE>
2. Trustee. The Trustee shall not be responsible in any manner whatsoever
-------
for or in respect of the validity or sufficiency of this First Amendment to
Security Agreement, or for or in respect of the recital contained herein, which
recital is made solely by the Company.
3. Governing Law. This Amendment shall be construed in accordance with
-------------
and governed by the laws of the State of New York.
4. Counterparts. The parties hereto may sign any number of copies or
------------
counterparts of this Amendment. Each signed copy or counterpart shall be an
original, but each of them together shall represent the same agreement.
[The remainder of this page is intentionally left blank]
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
HWCC-SHREVEPORT, INC.
By: /s/ Paul C. Yates
------------------------------
Name: Paul C. Yates
Title: Chief Financial Officer
STATE STREET BANK AND TRUST COMPANY
By: /s/ Robert J. Dunn
------------------------------
Name: Robert J. Dunn
Title: Vice President
Acknowledged by:
HOLLYWOOD CASINO SHREVEPORT
(formerly QNOV)
By: HCS I, Inc.,
its managing general partner
By: /s/ Charles F. LaFrano
------------------------------
Name: Charles F. LaFrano
Title: Vice President
3
<PAGE>
Exhibit 10.6
TECHNICAL SERVICES AGREEMENT
----------------------------
THIS TECHNICAL SERVICES AGREEMENT (the "Agreement") is executed as of the
22nd day of September, 1998, by and between QNOV, a Louisiana joint venture
("Owner") and HWCC-SHREVEPORT, INC., a Louisiana corporation ("HWCC").
RECITALS:
---------
A. Owner is or will become (i) the lessee of those certain premises located
on or adjacent to the Red River in the City of Shreveport, State of Louisiana
owned by the City of Shreveport and more particularly described on Exhibit "A"
-----------
which is attached hereto and made a part hereby by reference (the "Property"),
and (ii) owner in fee of a pavilion, hotel, parking garages and other facilities
to be located on the Property and a riverboat to be located in a coffer dam on
the Property which shall be licensed to conduct gaming activity thereon
(collectively referred to as the "Project"); and
B. The Owner has undertaken to construct, develop and operate the
Project; and
C. The Owner wishes to be advised by HWCC in regard to the planning and
project coordination during the construction of the Project and the pre-opening
period as described herein, pursuant to the terms and provisions hereof; and
D. The Project must be built in accordance with fixed plans and
specifications, in accordance with minimum standards recommended by HWCC and set
by the Owner (the "Standards"); and
E. HWCC and its affiliates have ample experience in the planning and
overall project coordination during the construction and pre-opening of casino
properties in accordance with the Standards and desire to undertake the duties
described herein pursuant to the terms and provisions hereof. Sodak Gaming,
Inc. ("Sodak") has experience in casino design and layout, gaming equipment and
the purchasing and expediting of all furniture and equipment and desires to have
an opportunity to consult with HWCC with respect thereto.
AGREEMENTS
----------
In consideration of the premises and the mutual agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Technical Services. During the Pre-Opening Period (as hereinafter
------------------
defined), HWCC shall perform the following services for the Owner (the
"Technical Services"):
(a) Advising the Owner in the selection of the architects and other
consultants to prepare
<PAGE>
the plans and specifications and in the planning and general coordination of the
Project in accordance with the plans and specifications and the Standards;
(b) Assisting in the completion of the necessary financial and legal
documentation for securing the financing for the Project from the appropriate
institutions;
(c) Representing the Owner to the architects in the design and planning of
the Project;
(d) Guiding the architects in their coordination of the interrelationship
between the engineering, civil engineering, interior design, equipping and, in
general, overall coordination of the work on the Project;
(e) Supervising the equipping of the Project, including, without
limitation, the preparation of budgets, quantities and specifications, and the
procurement and installation thereof;
(f) Supervising the furnishing of the Project, including, without
limitation, the formation of budgets, and the coordination of the installation
of furnishings in accordance with the requirements and the Standards;
(g) Coordinating the work of the contractors, architects, designers and
suppliers named by the Owner;
(h) Making available to the Owner, on a regular basis, information that
HWCC has with respect to prices of equipment, provisions and supplies for the
Project and the progress of construction; and
(i) Purchasing, or causing to be purchased, furniture, fixtures and
equipment for the Project. It is agreed that HWCC may contract with third
parties for such purchases; provided, however, that the Owner shall be obligated
to pay such fees or charges under such contracts. Sodak shall be afforded the
opportunity by HWCC to present a proposal for providing and/or financing gaming
related equipment and other furniture, fixtures and equipment for the Project
and HWCC agrees to consult with Sodak with respect to such proposal.
2. Place of Performance of Technical Services. It is anticipated that
------------------------------------------
the Technical Services will be performed at HWCC's headquarters in Dallas, Texas
or otherwise in the United States. It is anticipated, however, in order to
perform certain aspects of the Technical Services, that HWCC personnel may
travel to the Project periodically during the Pre-Opening Period. During visits
to the Project, HWCC will perform inspections during construction as it
considers appropriate in order to determine whether the Project is being
constructed in accordance with the Standards and, upon substantial completion of
the Project, HWCC will participate in the final acceptance inspection of the
Project with other appropriate consultants and contractors, and will assist such
consultants and contractors in the preparation of a list of deficiencies that
require correction.
2
<PAGE>
3. Pre-Opening Period. As used herein, the term"Pre-Opening Period"
------------------
shall mean the period commencing on the effective date hereof (the "Effective
Date") and continuing until the date of substantial completion of the Project
(including the installation of all equipment, accessories and supplies) to the
satisfaction of the Owner and HWCC (the "Project Completion Date").
4. Remuneration. As remuneration for services rendered by HWCC for the
------------
Owner as described herein, the Owner shall reimburse HWCC on a monthly basis for
all bona-fide expenses incurred by HWCC during the Pre-Opening Period as
enumerated and approved in the Pre-Opening Budget (as defined in the Management
Services Agreement of even date herewith between Owner and HWCC) or any other
budget provided by HWCC and approved by Owner (including, without limitation,
communication expenses, travel expenses (including transportation, lodging,
food, tips, business meals, etc.), office lease expenses, secretarial services,
and all other reasonable incidental expenses directly relating to the
performance of this Agreement) (collectively, the "Reimbursable Expenses");
provided, however, that all such expenses must be justified by the appropriate
records. The following shall not be included as Reimbursable Expenses: (i) any
loss which occurs and which would normally be covered by standard form fire and
extended coverage insurance if such loss is, in fact, recovered by HWCC through
its or the Owner's insurance carrier; (ii) salaries of officers of HWCC; and
(iii) administrative or general overhead expenses of HWCC's main office. Trade
discounts, rebates and refunds and returns from the sale of surplus materials
and equipment shall accrue to the Owner, and HWCC shall make provisions so that
they can be secured.
5. No Guaranty. It is specifically agreed that HWCC shall neither
-----------
guarantee nor assume responsibility for prices, delivery dates, the supplies of
third parties, the quality of supplies, goods, equipment or services, budgets,
or completion dates or plans, and that HWCC is acting as agent of the Owner
hereunder to coordinate the work on the Project. However, HWCC shall use its
best efforts to obtain the best results for the Owner which may be feasible or
practical.
6. Termination. Unless earlier terminated according to the terms of the
-----------
succeeding sentence, this Agreement shall remain in effect through the
expiration of the Pre-Opening Period. Notwithstanding any other provision of
this Agreement to the contrary, each party shall have the right to terminate
this Agreement on forty-five (45) days prior written notice to the other in the
event such other party shall cause, commit or suffer to exist with respect to:
(a) A material breach of this Agreement which is not cured within the
period of written notice thereof; or
(b) The institution of any statute, regulation, rule or ruling rendering
the conduct of gaming in the United States or at the Complex illegal.
7. Indemnification. The Owner shall indemnify and hold HWCC harmless
---------------
with respect to any claim, demand, expense or litigation relating to or arising
from the provision of services hereunder (including labor claims) and for damage
to or destruction of property, or injury or death to persons which may relate to
or arise out of HWCC's rendering services under this Agreement, unless such
damage, destruction, injury or death is caused solely by the gross negligence or
willful
3
<PAGE>
misconduct of HWCC. The Owner and HWCC shall each name the other party, its
officers, directors, employees and agents, as a co-insured in any insurance
which the Owner may procure with respect to work on the Project and operation of
the Complex, and shall obtain a waiver of subrogation against the other party,
its officers, directors, employees and agents.
8. Notice of Non-Compliance. HWCC shall have the responsibility of
------------------------
notifying the Owner in writing within a reasonable time of any material
deficiencies or non-compliance of any third party of which HWCC becomes aware
with respect to the design, engineering and construction requirements and the
furniture, fixture and equipment installations of the Project, and HWCC shall
implement the Owner's directives with respect thereto.
9. Execution of Contracts by Owner. Except as provided in Paragraph 1(i)
-------------------------------
above, the Owner shall execute all contracts and agreements with third parties
relating to the performance by HWCC of its duties hereunder.
10. Storage. The Owner agrees, at its own expense, to provide adequate
-------
facilities and personnel as necessary for the temporary safe storage of
furniture, fixtures and equipment, and/or the receipt and installation thereof.
11. Assignments. Owner's consent shall not be required for HWCC to
-----------
assign this Agreement to any entity in which Hollywood Casino Corporation, a
Delaware corporation, either directly or indirectly maintains a controlling
interest and such assignment shall serve to fully relieve and discharge HWCC
from any further duties or obligations pursuant to this Agreement. In addition,
Owner's consent shall not be required for HWCC to collaterally assign this
Agreement or its rights and interest in the operation of the Complex to any
entity as security for indebtedness. Except as hereinabove provided, neither
HWCC nor Owner shall assign this Agreement or in any manner sell, assign or
transfer its rights and interests in the Complex without the prior written
consent of the non-assigning party. It is understood and agreed that any consent
granted by the non-assigning party to any such assignment shall not be deemed a
waiver of the covenant herein contained against assignment in any subsequent
case. Subject to the provisions of this Agreement regarding and/or restricting
sale or assignments as set forth elsewhere in this Agreement, the terms,
provisions, covenants, undertakings, agreements, obligations and conditions of
this Agreement shall be binding upon and shall inure to the benefit of the
successors in interest and the assigns of the parties hereto with the same
effect as if mentioned in each instance where the party hereto is named or
referred to, except that no assignment, transfer pledge, mortgage, lease or
sublease by or through HWCC or by or through Owner, as the case may be, in
violation of the provision of this Agreement shall vest any rights in the
assignee, transferee, mortgagee, pledge, lessee, sublessee or occupant.
12. Agency. In taking any action pursuant to this Agreement, HWCC shall
------
act only as the appointed agent or representative of the Owner; and nothing in
this Agreement shall be construed as creating a tenancy, partnership, joint
venture or any other relationship between the parties hereto, except that of
principal and agent. All debts and liabilities incurred by HWCC in the course of
performing its duties hereunder shall be the debts and obligations of the Owner
only, and HWCC shall not be liable therefor, except as specifically stated to
the contrary herein. All costs, expenses,
4
<PAGE>
obligations and liabilities hereunder shall be the sole and exclusive
responsibility and obligation of the Owner, except for those instances herein
where it is expressly and specifically stated that such item shall be for the
account of HWCC. It is understood that statements herein indicating that HWCC
shall "furnish," "provide" or otherwise supply, present or contribute items or
services hereunder shall not be interpreted or construed to mean that HWCC is
liable or responsible to fund or pay for such items or services, except in those
instances mentioned above.
13. Final Agreement. This Agreement and any attached exhibits, schedules
---------------
or riders set forth all the promises, agreements, conditions and understandings
between the parties hereto with respect to the subject matter hereof. There are
no other oral or written promises, agreements, conditions or understandings
between them. Except as otherwise provided herein, no subsequent alteration,
amendment, change or addition to this Agreement shall be binding upon the
parties unless in writing and signed by them.
14. No Waiver. No delay or failure by any party to exercise any right
---------
under this Agreement, and no partial or single exercise thereof, shall
constitute a waiver of that or any other right unless otherwise expressly
provided herein.
15. Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
16. Partial Invalidity. If any provision of this Agreement or the
------------------
application hereof to any person or circumstances shall to any extent be held
void, unenforceable or invalid, then the remainder of this Agreement or the
application of such provision to persons or circumstances other than those as to
which it is held void, unenforceable or invalid shall not be affected thereby,
and each provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
17. Notices. All notices, requests, consents and other communications
-------
required or permitted under this Agreement shall be in writing and shall be: (a)
personally delivered; (b) transmitted by United States certified or registered
mail, postage prepaid, return receipt requested, or by commercial courier or
express service; or (c) transmitted by telecopier, telegraphic, telex or cable
communication to the party to whom such notice, request, consent or other
communication is being given at the address of such party set forth below, or at
such other address as any party may designate by written notice to the other
parties:
(i) If to the Owner, to it at:
Shreveport Paddlewheels, L.L.C.
New Orleans Paddlewheels, Inc.
610 South Peters Street
New Orleans, Louisiana
Attention: Warren L. Reuther, Jr., Chief Executive Officer
Telecopier No. (504) 587-1740
5
<PAGE>
Sodak Louisiana, L.L.C.
5301 South Highway 16
Rapid City, South Dakota 57701
Attention: General Counsel
Telecopier No. (605) 355-4976
HWCC-Louisiana, Inc.
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, Texas 75240
Attention: President
Telecopier No. (972) 386-7411
(ii) If to HWCC, to it at:
HWCC-Shreveport, Inc.
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, Texas 75240
Attention: President
All notices, requests, consents and other communications shall be effective
or deemed delivered upon (A) the date of receipt if delivered personally, (B)
the earlier to occur of the actual receipt thereof by the addressee or three (3)
days after the date of deposit if transmitted by mail or commercial courier or
express service or (C) the date of transmission with confirmed answerback if
transmitted by telecopier, telegraphic, telex or cable communication.
18. Attorneys' Fees. In any action or proceeding brought by any party
---------------
against any other party under this Agreement, the prevailing party shall be
entitled to recover from the other party attorneys' fees, investigation costs,
and other legal expenses and court costs incurred by such party in such action
or proceeding as the court may find to be reasonable.
19. Governing Law. This Agreement shall be governed by the terms and
-------------
provisions hereof and the internal laws of the State of Louisiana, as the same
may exist from time to time.
20. Time of the Essence. Time is and shall be of the essence of this
-------------------
Agreement and of each term and provision hereof.
21. Gender, etc. Unless the context otherwise requires, words of any
------------
gender used in this Agreement shall be held and construed to include any other
gender, and words in the singular shall be held and construed to include the
plural.
IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement
to be duly
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<PAGE>
executed by its duly authorized officers as of the day and year first above
written.
OWNER
-----
QNOV
By: /s/ JACK E. PRATT
-----------------------------
Name: Jack E. Pratt
-----------------------------
Title: Chairman and President
-----------------------------
By: SODAK LOUISIANA, L.L.C.
By: /s/ KEVIN L. BLONTILOCK
-----------------------------
Name: Kevin L. Blontilock
-----------------------------
Title: Manager
-----------------------------
HWCC
----
HWCC-SHREVEPORT, INC.
By: /s/ JACK E. PRATT
-----------------------------
Name: Jack E. Pratt
-----------------------------
Title: Chairman and President
-----------------------------
7
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EXHIBIT "A"
LEGAL DESCRIPTION OF COMPLEX
[Map of Property]
8
<PAGE>
Exhibit 10.7
VESSEL CONSTRUCTION CONTRACT
BY AND BETWEEN
BUILDER: LEEVAC SHIPYARDS, INC.
AND
OWNER: HOLLYWOOD CASINO SHREVEPORT
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS 1
ARTICLE 2 - SCOPE 4
ARTICLE 3 - DELIVERY 7
ARTICLE 4 - PAYMENT 8
ARTICLE 5 - CONSTRUCTION SCHEDULE 10
ARTICLE 6 - FORCE MAJEURE 10
ARTICLE 7 - LIQUIDATED DAMAGES AND BONUS PROVISIONS 12
ARTICLE 8 - CHANGES IN SPECIFICATIONS AND CONTRACT DRAWINGS 12
ARTICLE 9 - RISKS AND INSURANCE 13
ARTICLE 10 - WARRANTY 18
ARTICLE 11 - DEFAULT AND TERMINATION 20
ARTICLE 12 - APPLICABLE LAW 22
ARTICLE 13 - CONTRACT 22
ARTICLE 14 - INSPECTION, ACCESS, TESTS AND OFFICIAL CERTIFICATES 23
ARTICLE 15 - ASSIGNMENT; CONSTRUCTION FINANCING 24
ARTICLE 16 - COMPLIANCE WITH REGULATIONS 25
ARTICLE 17 - PATENTS 25
ARTICLE 18 - USE OF THE CONTRACT DRAWINGS AND SPECIFICATIONS 25
ARTICLE 19 - NOTICES AND COMMUNICATIONS 26
ARTICLE 20 - TITLE 26
ARTICLE 21 - INDEMNIFICATION 27
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ARTICLE 22 - DISPUTE RESOLUTION 28
ARTICLE 23 - GENERAL 29
LIST OF EXHIBITS
Exhibit A - Certificate of Completion & Delivery (Form)
Exhibit B - Schedule of Values Certificate (Form)
Exhibit C - Change Order (Form)
LIST OF SCHEDULES
Schedule 2.1 - Specifications and Contract Drawings
Schedule 13.1 - Builder's Bid
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<PAGE>
VESSEL CONSTRUCTION CONTRACT
This Agreement is made as of the 16th day of July, 1999 (hereinafter, "this
Agreement"), between the Builder, Leevac Shipyards, Inc., a corporation
organized and existing under and by virtue of the laws of the State of Louisiana
(hereinafter, "Builder"), whose mailing address, is P. O. Box 1190, Highway 90
E., Jennings, LA 70546, and Owner, Hollywood Casino Shreveport, a general
partnership organized and existing under and by virtue of the laws of the State
of Louisiana (hereinafter "Owner"), whose mailing address is c/o HWCC-Louisiana,
Inc., Two Galleria Tower, Suite 2200, 13455 Noel Road, LB 48, Dallas, TX 75240.
The project is the construction of the Vessel at the Shipyards and at Owner's
facility in Shreveport, Louisiana. The price to be paid by Owner for the
construction of the Vessel is THIRTY-FOUR MILLION, THREE HUNDRED EIGHTY-SIX
THOUSAND ($34,386,000.00) DOLLARS as adjusted to reflect all agreed upon Change
Orders executed in accordance with the provisions of this Agreement (the
"Contract Sum").
The Vessel shall be assigned Builder's Hull Number 327.
The Builder and Owner agree as set forth below.
WITNESSETH:
ARTICLE 1 - DEFINITIONS
1.1 Agreement - As defined in the Preamble.
Application for Payment - As defined in Paragraph 4.1.
Builder - As defined in the Preamble.
Builder's Indemnitees - As defined in Paragraph 21.2.
Certificate of Completion and Delivery - As defined in Paragraph 3.1.
Change Order - As used herein, the term "Change Order" shall mean a written
instrument prepared by the Builder and signed by the Owner and Builder,
stating their agreement upon: (1) a change in the Work; (2) the amount of
the adjustment in the Contract Sum, if any; and (3) the extent of the
adjustment in the Contract Time and either of the Delivery Dates, if any.
Commencement Notice - As defined in Paragraph 2.8.
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Completed Vessel - As defined in Paragraph 3.1.
Completion Date - As used herein "Completion Date" is October 2, 2000,
assuming Owner issues the Commencement Notice on August 7, 1999. If Owner
fails to issue the Commencement Notice on or before August 7, 1999, such
date shall be extended by the number of days elapsing after August 7, 1999
through the date that the Commencement Notice is issued.
Components - As used herein, the term "Components" shall mean all parts and
components of the Vessel which are fabricated by Builder for the use of the
construction of the Vessel, which will, when so used, form a part of the
Vessel and the fabrication of which is commenced at any of the Shipyards.
Construction Schedule - As defined in Paragraph 5.1.
Contract - As defined in Paragraph 13.1.
Contract Documents - As defined in Paragraph 13.1.
Contract Time - As used herein, the term "Contract Time" is the time
elapsed between execution of this Agreement and the date of issuance of the
Delivery and Acceptance Certificate.
Completed Vessel - As defined in Paragraph 3.1.
Contract Sum - As defined in the Preamble.
Cut-Off Date - As defined in Paragraph 4.1.
Delivery and Acceptance - As defined in Paragraph 3.3.
Delivery and Acceptance Certificate - As defined in Paragraph 3.3.
Delivery Dates - As used herein, the term "Delivery Dates" are the
combination of the Site Delivery Date and the Completion Date.
Down Payment - As defined in Paragraph 4.1.1.
Extended Delivery Date - As defined in Paragraph 3.2.
Final Inspection - As defined in Paragraph 3.3
FF&E - As used herein, the term FF&E is furniture, fixtures and equipment.
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Force Majeure - As defined in Paragraph 6.1.
Good Shipbuilding Practices - As defined in Paragraph 2.6.
Hull Number - As used herein, the term "Hull Number" means the number
assigned to the Vessel by the Builder.
Invoice Due Date - As defined in Paragraph 4.1.
Louisiana Authorities - As used herein, the term "Louisiana Authorities"
shall mean the Louisiana Gaming Control Board and the Louisiana State
Police, Riverboat Gaming Division.
Materials - As used herein, the term "Materials" shall mean all materials,
all items of machinery, and all items of equipment, including any Owner
furnished equipment, including but not limited to, engines and gears which
are purchased or acquired for use in the construction of the Vessel which
will, when so used, form a part of the Vessel and which have been delivered
to any of the Shipyards.
Modification - As defined in Paragraph 13.1.
Other Authorities - As used herein, the term "Other Authorities" whether
used singularly or together, shall mean all such entities promulgating
regulations or standards applicable to the Work, including but not limited
to those identified in the Contract.
Owner - as defined in the Preamble.
Owner's Indemnitees -As defined in Paragraph 21.1.
Owner's Representative - As defined in Paragraph 14.3.
Payment Due Date - As defined in Paragraph 4.1.2.
Regulatory Agencies or Bodies - As used herein, the term "Regulatory
Agencies or Bodies" whether used singularly or together, shall mean the
United States Coast Guard and any successor thereto.
Schedule of Values - As defined in Paragraph 4.3.
Shipyards - As used herein, the term "Shipyards" shall mean Builder's yards
in Jefferson Davis Parish, St. Mary's Parish and at any temporary yard in
Bossier or Caddo Parish used by Builder in connection with construction of
the Vessel.
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Site Delivery Date - As used herein, the term "Site Delivery Date" shall
mean June 15, 2000, assuming Owner issues the Commencement Notice on
August 7, 1999. If Owner fails to issue the Commencement Notice on or
before August 7, 1999, such date shall be extended by the number of days
elapsing after August 7, 1999 through the date that the Commencement Notice
is issued.
Site Delivery Point - As used herein, the "Site Delivery Point" is within
Owner's cofferdam on the Red River, north of the Texas Street Bridge,
Shreveport, Louisiana.
Specifications and Contract Drawings - As used herein, the term
"Specifications and Contract Drawings" shall mean the specifications and
contract drawings attached as Schedule 2.1.
Subcontractor - As used herein, the term "Subcontractor" shall mean any
subcontractor of Builder who performs any of the Work.
Vessel -As used herein, the term "Vessel" shall mean the casino gaming
vessel to be constructed by Builder at the Shipyards and the Site Delivery
Point in accordance with the Work.
Warranty Deficiency - As defined in Paragraph 10.5.
Work - As used herein, the term "Work"shall mean, in the case of a Vessel
having a keel, the keel, and in the case of a Vessel not having a keel, the
bottom plates, and all Materials, machinery, equipment, Components, and
fabrications, including, but not limited to, engines and gears forming a
part of the Vessel when permanently installed in place and all such others
labor, Materials, Components, equipment and services provided or to be
provided by Builder at the Shipyards or the Site Delivery Point to fulfill
the Builder's obligations under the Contract.
Working Drawings - As defined in Paragraph 2.10.
ARTICLE 2 - SCOPE
2.1 For the Contract Sum, Builder agrees, at its own risk and expense, to
build, complete and deliver to Owner, as hereinafter provided, the Vessel
having overall hull dimensions of 242 x 114 x 14 feet, constructed,
outfitted and tested in accordance with the Builder's Bid attached hereto
as Schedule 13.1 and the Specifications and Contract Drawings labeled as
follows:
Specifications
For the construction of a Casino Vessel
Prepared by: Rodney E. Lay & Associates
Project
4
<PAGE>
Rev. 2
Contract Drawings
Outboard Profile
Hold Arrangement
Main Deck Arrangement
2/nd/ Deck Arrangement
3/rd/ Deck Arrangement
The Specification and Contract Drawings are hereby made a part of this
Agreement.
2.2 Builder agrees to furnish suitable locations at the Shipyards and all
labor, tools, equipment, materials, services and fees necessary for the
Work, except as otherwise indicated herein or in the other Contract
Documents.
2.3 Builder shall comply with all laws, rules, regulations and requirements of
any Regulatory Agencies or Bodies affecting the Work and shall procure at
its own expense such permits from the United States, state and local
authorities as may be necessary in connection with beginning or carrying on
to completion of the Work and shall at all times comply with all United
States, state and local laws in any way effecting the Work. Builder has
conducted a detailed and thorough review of the Specifications and Contract
Drawings and is unaware of any item which does not comply with the
requirements of any RegulatoryAgencies or Bodies. In the event Builder
becomes aware that any portion of any of the Contract Documents violate or
do not comply with any rule or regulation of any Regulatory Agencies or
Bodies promulgated after execution of this Agreement ("Enforced Change"),
Builder shall immediately notify Owner of said Enforced Change prior to the
implementation of same which Enforced Change shall not be made absent the
prior written consent of Owner. If Owner does not give its prior written
consent to such Enforced Change, then either party shall have the right to
terminate this Contract on written notice to the other. In the event of
such termination, (a) Builder shall discontinue all Work and use its best
efforts to cancel all orders for Materials and Components which have not
been delivered to any of the Shipyards; (b) Owner shall pay Builder for all
Work performed and Materials and Components purchased by Builder to
complete the Vessel; (c) Builder shall deliver to Owner at the Shipyards
the Materials and Components; and (d) within thirty (30) days after such
delivery, Owner shall remove all such Materials and Components from such
Shipyards.
2.4 Builder will provide and/or install ready for use all parts, equipment and
appurtenances shown in the Contract Documents (including Owner furnished
items, except those items to be installed by Owner or its separate
contractors and not Builder or its subcontractors). Builder shall store,
safe keep and handle Owner's equipment and supplies, including Owner
furnished items, that are to be installed by Builder both prior to and
after placement on the Vessel.
2.5 Builder will allow Owner and/or its representatives at all reasonable times
to examine the Work during construction.
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2.6 The Builder accepts the relationship of trust and confidence established
between him and the Owner by this Agreement. Builder agrees to perform the
Work in accordance with the Contract, and all materials and equipment shall
be in accordance with the Contract. Builder acknowledges that the subject
Vessel is being constructed as a riverboat gaming vessel for the carriage
of passengers in the tourism/gaming industry. Additionally, Builder agrees
to perform the Work in accordance with Good Shipbuilding Practices in order
to meet the appropriate standards of construction and levels of finish for
the class and type of vessel required herein and by any Regulatory Agencies
or Bodies. Builder agrees to cooperate with the Owner in furthering the
interests of the Owner. Builder agrees to furnish efficient business
administration and superintendence and to make all reasonable efforts to
furnish at all times an adequate supply of workmen and materials, and to
perform the Work in a manner consistent with the interests of the Owner and
with Good Shipbuilding Practices. "Good Shipbuilding Practices" for
purposes of the Contract means the construction of a ship or vessel, with
due consideration to standard of high quality, incorporating the specified
components in order to meet requirements of the Contract, utilizing
construction and testing methods to insure that the completed Vessel will
conform to the intended design required for use in the tourism/gaming
industry.
2.7 All portions of the Work that Builder does not perform shall be performed
under subcontracts or by other appropriate agreement with Builder. Nothing
contained in the Contract shall create any contractual relationship
between Owner and any Subcontractor. Builder shall furnish to Owner a copy
of each subcontract it enters into in connection with the Work within ten
(10) days after execution of such subcontract.
2.8 Builder shall not commence Work of any nature or cause any Subcontractor to
commence Work of any nature until such time as Builder has received from
Owner written instructions to commence construction (the "Commencement
Notice).
2.9 Builder shall include in all written agreements it enters into with any
Subcontractor for the performance of any portion of the Work a clause
providing that, if this Contract is terminated for any reason, such
contract with a Subcontractor shall be, by its terms, at Owner's sole
option and election, assigned to and assumed by Owner or a person
designated by Owner, without any need for action by Builder or such
Subcontractor or materialman, and such Subcontractor or materialman shall
continue to be bound by the terms and conditions of such contract. This
provision shall survive the termination of the Contract.
2.10 Upon delivery by Owner or Owner's representative of any Owner furnished
documents, materials and equipment as called for by the Contract, Builder
shall take possession of such items and adequately and properly store and
maintain those items. Any costs of repair to or replacement of such items
necessitated by any damage to or loss of such items which occurs after
delivery by the Owner of the items to Builder and which is not covered by
the Builder's Risk Policy required in Paragraph 9.1.1 shall be borne
entirely by Builder, provided that the damage or loss is not solely caused
by an error or omission of Owner.
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2.11 Based on the Specifications and Contract Drawings and any further
adjustments in the scope of quality of the Work authorized by Owner, and in
accordance with the Construction Schedule, Builder shall prepare and revise
as appropriate, for approval by the Owner, working drawings consisting of
drawings and specifications setting forth in detail the final requirements
for the construction of the Vessel (the "Working Drawings").
2.12 Except for those matters and areas for which Builder is responsible as
described in the Specifications and Contract Drawings, Owner or his design
agents, shall be responsible for the adequacy and accuracy of the
Specifications and Contract Drawings with regard to compliance with any
requirements or classifications mandated by the U.S. Coast Guard or any
other governmental or regulatory body for the intended or actual use of the
Work.
ARTICLE 3 - DELIVERY
3.1 Builder agrees, subject to the other provisions of this Agreement, to
deliver the Vessel to Owner in a structurally complete condition, free and
clear of all known liens, claims and encumbrances, and Owner agrees to
accept delivery to Owner's satisfaction at the Site Delivery Point on or
before the Site Delivery Date. Thereafter Builder shall complete all
necessary Work, including Owner's FF&E for which Builder is responsible, so
that the Vessel is substantially complete and ready for gaming operations
by the Completion Date (the "Completed Vessel"). Upon delivery by Builder
to Owner of the Completed Vessel, Builder shall issue a Certificate of
Completion and Delivery which shall state (i) that the Vessel has been
completed; (ii) that all trials and tests have been satisfactorily
completed, (iii) that the Vessel complies with the Contract, and is free
from defects in materials and workmanship; (iv) that there are no liens or
claims upon said Vessel or Materials, Components, equipment or labor for
said Vessel, except those created or incurred by the Owner, its
subcontractors, vendors or employees.
3.2 Builder agrees to deliver the Vessel to Owner safely afloat at Site
Delivery Point in accordance with the Contract on or before the Site
Delivery Date specified, or on or before such later date as may be required
by reason of any Change Order executed in accordance with the provisions of
this Agreement or by reason of Force Majeure delays as that term is defined
in Article 6 (the "Extended Delivery Date".)
3.3 Upon completion of all Work relating to the Vessel, including, but not
limited to, Specification-required tests and trials, witnessed and accepted
by Owner's Representative, and approved by the United States Coast Guard, a
final inspection of the Vessel shall be performed by Owner (the "Final
Inspection"). If the Final Inspection discloses any of the Work as being
unsatisfactory or incomplete, Owner will so advise Builder in writing.
Builder immediately shall take appropriate action to correct or complete
the Work in accordance with the Contract. When all physical work and clean-
up relating to the Vessel, including all punch list work, is found by Owner
(or Owner's Representative) to be completed to the satisfaction of the
Owner and the Builder has furnished releases of liens acceptable to the
Owner, a delivery and acceptance certificate (the "Delivery and Acceptance
Certificate") shall be issued by Owner ("Delivery and Acceptance").
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3.4 Builder shall furnish Owner on Delivery and Acceptance of the Vessel: a
Bill of Sale and a Builder's Certificate, together with whatever other
documents may be required by law or by any Regulatory Agencies or Bodies in
order for Owner to document the Vessel with the United States Coast Guard.
Builder will also assist Owner, or its agent, in acquiring all required
information to enable Owner to obtain all documentation necessary to
operate the Vessel as intended by Owner. It is understood that Builder
shall furnish any and all required U.S. Coast Guard approved drawings
(i.e., "as built" drawings) based on the Specifications and Contract
Drawings and other Contract Documents, which drawings are the sole
responsibility of the Builder. Any Coast Guard fees in connection with
documentation of the Vessel shall be the responsibility of Owner. Within
thirty (30) days after Delivery and Acceptance of the Vessel, Builder shall
furnish Owner with a complete set of as-built drawings of the Vessel and on
Autocad 14 or such other format as shall be subsequently in use by Builder.
ARTICLE 4 - PAYMENT
4.1 Owner agrees to pay Builder according to the following payment schedule for
the Work (the "Payment Schedule"):
4.1.1 Within one (1) business day of Owner's delivery of the
Commencement Notice, Owner will pay to Builder an amount equal to
Three Million Four Hundred Thirty-Eight Thousand Six Hundred
($3,438,600.00) Dollars, representing an initial payment of the
Contract Sum (the "Down Payment").
4.1.2 Builder shall submit an application for payment in a form
satisfactory to Owner (an "Application for Payment") to Owner monthly
for unbilled Work by the Builder through the cut-off date which shall
be the Twenty-Fifth (25th) day of each month (individually, a "Cut-
Off Date"). An Application for Payment prepared through a particular
Cut-Off Date must be received by Owner no later than the First (1st)
day of the following month (individually, an "Invoice Due Date"). An
Application for Payment through a particular Cut-Off Date shall cover
the period commencing on the day following the immediately preceding
Cut-Off Date and ending on the Cut-Off Date for such Application for
Payment. All Applications for Payments for Work properly executed by
Builder which are submitted to Owner by the relevant Invoice Due Date,
together with the lien waivers in a form satisfactory to Owner from
all Subcontractors and any others requested by Owner, shall be paid by
Owner on or before the Twentieth (20th) day of the calendar month
following the calendar month in which the Cut-Off Date for the
submitted Application for Payment occurs (the "Payment Due Date").
The lien waivers shall encompass all previous Applications for Payment
which have been paid and shall also include a waiver of statutory
claims, liens and privileges for the amount included in the
Application for Payment submitted therewith which shall be contingent
and effective only upon receipt by Builder of such payment.
Applications for Payments unpaid thirty (30) days after the date
payment is due thereon shall bear interest at the rate of twelve
percent (12%) per annum from the date due until paid.
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4.1.3 The amount due under each Application for Payment shall be
reduced by $245,614.28, representing 1/14 of the Down Payment (each a
"Down Payment Reduction").
4.1.4 Other than the Down Payment, Owner shall retain ten (10%)
percent of the sum of such payment to Builder plus the Down Payment
Reduction through the date that 50% of the Work has been completed and
five (5%) per cent of the sum of each such payment plus the Down
Payment Reduction thereafter. The retainage shall be released upon
Delivery and Acceptance, except for such amount mutually agreed to by
Builder and Owner necessary to complete all punch-list items or, if a
dispute arises, under the provisions of Article 22.
4.3 The Builder shall furnish a schedule of values ("Schedule of Values") with
each Application for Payment which shall state (i) the percentage of
completion of each portion of the Work; (ii) that the Work completed
complies with the Contract; and (iii) that there are no liens or claims,
including those of any Subcontractor upon the Work for labor, Materials,
Components or equipment for the Work, except those created by Owner, its
subcontractors, vendors or employees. The Schedule of Values shall be
executed and certified by the President or Assistant Secretary/Treasurer of
Builder. If a lien exists on the Work, Owner shall not be obligated to
make payment in the amount of such lien until such lien is discharged or
bonded to Owner's reasonable satisfaction.
4.4 If Owner objects upon receipt of the Schedule of Values on grounds that any
of the Work described therein has not been performed, or for any other
reason, the dispute will be submitted to dispute resolution pursuant to
Article 22 hereof.
4.5 It is agreed that time is of the essence of this Contract and that the
failure of Owner to timely pay to Builder the sums of money agreed to be
paid hereunder, at the times and in the manner above set forth, shall
automatically extend the agreed Delivery Dates by the number of days equal
to the number of days from the Payment Due Date to the actual date of
payment, provided Builder has complied with Paragraph 4.1.2.
4.6 In the event that Owner does not object to a Schedule of Values as provided
in Paragraph 4.7 and fails to timely make the payment and such default
shall not be cured within twenty (20) days' notice thereof, then in such
event, Builder, in addition to any other legal remedies and recourse
available at the time, at its option, may terminate and cancel the Contract
by giving Owner written notice thereof.
4.7 If the Work as contemplated by the Construction Schedule falls behind more
than three (3) days beyond that anticipated (as adjusted by reason of
Change Orders and Force Majeure), Builder shall immediately provide a
revised Construction Schedule (as defined hereinafter) to Owner. If the
revised Construction Schedule evidences that completion of the Work prior
to the Completion Date will not occur, Builder shall, within three (3) days
thereafter, provide a plan to Owner, which plan must set forth a revised
Construction Schedule with a resequencing and/or
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acceleration of elements of the Work in order to complete the Work in the
shortest possible time.
4.8 The making of any payment with respect to the Work shall not stop, impair
or otherwise preclude the Owner from thereafter asserting any right or
remedy accruing to it because of the failure of the Builder to deliver the
completed Vessel in accordance with the terms of the Contract.
4.9 For purposes of this Agreement, wire transfer to Builder in accordance with
instructions delivered to Owner shall constitute payment hereunder or as
otherwise mutually agreed to by the parties.
ARTICLE 5 - CONSTRUCTION SCHEDULE
5.1 Within fifteen (15) days after execution of this Agreement, Builder shall
submit for Owner's approval a detailed construction schedule (the
"Construction Schedule") for completion of the Work prior to the Site
Delivery Date, the Completion Date and the other milestone dates set forth
therein. Such Construction Schedule shall indicate dates for commencement
and completion of the various parts of the Work. All points of interface
between Owner and Builder (i.e., all instances where performance of
Builder's Work depends upon Owner or its subcontractors) and appropriate
restraints shall be included in the Construction Schedule. In particular,
but not by way of limitation, the required delivery date of each item of
Owner furnished material and equipment shall be included.
5.2 When reasonably requested by Owner, the Construction Schedule shall be
revised to show the current progress of the Work and shall be submitted to
Owner. The Construction Schedule, as revised, also must be provided with
each monthly Application for Payment.
ARTICLE 6 - FORCE MAJEURE
6.1 All agreements of the Builder contained in this contract respecting the
Delivery Dates shall be subject to extension by reason of "Force Majeure,"
which term is hereby declared to be any delay caused by nature forces,
fire, explosion, or person not under the control of Builder and not caused,
or contributed to, by Builder or any Subcontractor, including non-delivery
of Owner furnished equipment, subject to the further terms hereinafter set
forth.
6.2 Delays in receiving supplies, Materials, Components and equipment shall not
be considered Force Majeure unless (a) caused by strikes or lockouts of
workmen or (b) Builder establishes to the reasonable satisfaction of Owner
that (1) Builder timely ordered such supplies, Materials, Components and
equipment and (2) Builder exercised due diligence to obtain delivery and
(3) no other source of supply was reasonably available (relative price
being a factor to be considered). Notwithstanding the foregoing, delays in
receiving supplies, Materials, Components and equipment, the vendor of
which is expressly set forth in the Specifications, shall be considered
Force Majeure, as long as (1) Builder timely ordered such supplies,
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Materials, Components and equipment and (2) Builder exercised due diligence
to obtain delivery. Shortages of skilled labor shall not be considered
Force Majeure.
6.3 Delays caused by late receipt of Owner furnished equipment shall not be
considered Force Majeure if Builder has failed to notify Owner of the date
by which each such item of Owner furnished equipment must be delivered to
the Shipyard in time to allow Owner by exercise of due diligence to cause
timely delivery. Builder shall provide Owner with a schedule indicating
the latest on-site arrival date for each Owner furnished component.
6.4 Delays caused by weather conditions shall not be Force Majeure except where
caused by lightning, flood, windstorm, hurricane, tornado or extraordinary
rains which prevent the Work from being performed for three (3) consecutive
days. Delays due to non-navigable waterways (low or high water), lock
closures and river closures shall be considered Force Majeure hereunder.
6.5 Builder shall have no responsibility for Force Majeure delays, other than
to inform the Owner of the occurrence of a Force Majeure within three (3)
business days of its occurrence and to include with that notice (i) a
description of the event and (ii) its expected duration. Failing such
notice Builder shall not have the benefit of the Force Majeure clause for
said event. Builder shall inform Owner of the end of a Force Majeure event
within five (5) business days of its cessation and include an estimate of
the delay to the Delivery Dates, if any, caused by that event. Failure of
Builder to provide notice of the cessation of the Force Majeure event shall
not effect the benefit to Builder of such Force Majeure event. The Builder
shall maintain records of such delays and allow Owner to inspect same upon
request at all reasonable times. In the event of Force Majeure, the
Delivery Dates shall automatically be extended by a period of time equal to
the total number of days of said delay relating to the Vessel unless the
Owner, within ten (10) days after receiving the aforesaid notice of a
Force Majeure event, shall state its objection in writing to treating same
as a Force Majeure event, in which case, the dispute will be submitted to
dispute resolution pursuant to Article 22 hereof.
6.6 Should Builder seek to extend either of the Delivery Dates for three (3) or
more days in the aggregate for reasons related to Force Majeure events
(excluding Force Majeure events recognized by Paragraph 6.3, above and any
other cause of delay solely attributable to Owner), the Owner, in its sole
option and discretion, shall have the right to terminate the Contract by
giving seven (7) days' prior written notice to Builder of Owner's intent to
terminate under this Paragraph 6.6. In such event, Owner will pay Builder
for the portion of the Contract Sum allocable to the Work completed as of
the effective date of termination, less the aggregate of previous payments.
Owner shall not under any circumstances be responsible or liable to
Builder, or any suppliers or Subcontractor, for any incidental,
consequential or special damages or expenses of any type or kind,
including, but not limited to, loss of time, loss of profit or earnings, or
losses related to detrimental reliance upon the existence of the Contract,
whether or not such losses directly or indirectly arise out of the
Contract, or from any actions taken by Owner at any time to terminate the
Contract.
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6.7 Owner shall provide Builder with access for Builder's employees, Materials
and Subcontractors at the Site Delivery Point in order for Builder to
complete the Vessel. Failure to provide such access shall extend the
Completion Date on a day for day basis. Builder acknowledges that, after
delivery of the Vessel to the Site Delivery Point, Builder shall have
limited access to the Site Delivery Point, little or no nearby parking for
Builder's employees and Subcontractors' employees and little or no space
for the Materials.
ARTICLE 7 - LIQUIDATED DAMAGES
7.1 In the event Builder does not deliver the Vessel as provided herein on
either of the Delivery Dates, Builder shall pay to Owner as liquidated
damages in the form of a reduction in the Contract Sum the amount of Fifty
Thousand ($50,000.00) Dollars per day for each and every day that the
actual applicable Delivery Date is exceeded. The maximum Builder shall pay
as liquidated damages under this Agreement is Six Hundred Thousand
($600,000.00) Dollars.
7.2 In the event that Builder fails to perform in accordance with the
Construction Schedule for a period of fourteen days, Builder shall be in
default and in addition to the liquidated damages, if any, due, Owner may
terminate this Contract under Article 11.
7.3 Owner and Builder agree that the Delivery Dates shall be adjusted to
reflect (i) any and all agreed upon Change Orders executed in accordance
with the provisions of this Agreement or (ii) any event of Force Majeure as
provided in Article 6 of this Agreement.
ARTICLE 8 - CHANGES IN SPECIFICATIONS AND CONTRACT DRAWINGS
8.1 Owner reserves the right to make any deductions from or additions to the
Work on giving due notice in writing to Builder, the cost of any such
changes to be agreed upon in advance by Owner and Builder, and added to, or
deducted from the total Contract Sum. If any such change shall delay the
completion of the Work, and increase the Contract Time, Builder shall be
allowed reasonable additional time sufficient to cover such delay, if any.
A statement of the increased or reduced amount of the Contract Sum, and/or
any Contract Time required, as aforesaid, shall be submitted in Change
Order form to Owner by Builder, and must be approved by Owner in writing
before any such change is made. Said Change Order shall be acted upon by
Owner within five (5) business days of Owner's receipt of Builder's
submittal. The Change Order form to be utilized is attached hereto as
Exhibit "C".
8.2 Changes in the Work shall be performed under applicable provisions of the
Contract Documents, and Builder shall proceed promptly on those, unless
otherwise provided in the Change Order.
8.3 When Owner and Builder agree on adjustments in the Contract Sum and
Contract Time, or otherwise reach agreement upon the adjustments, such
agreement shall be effective immediately and shall be recorded by
preparation and execution of an appropriate Change Order.
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8.4 If Builder wishes to make a claim for an increase in the Contract Sum for
any part of the Work, he shall give Owner written notice thereof in the
form of a proposed Change Order. This proposed Change Order shall be given
by Builder before proceeding to execute the relevant portion of the Work.
No such claim shall be valid unless so made, and approved in writing by the
Owner, in advance of the commencement of said portion of the Work, in the
form of an approved Change Order. If Owner and Builder cannot agree on the
amount of the adjustment in the Contract Sum, the dispute will be submitted
to dispute resolution pursuant to Article 22 hereof.
8.5 Cost of any change considered an addition or a deletion shall be on a labor
and Materials basis, unless some other pricing has been previously agreed
by Builder and Owner. Cost of any change considered a substitution shall
be the difference between the cost of addition and cost of deletion.
8.6 For purposes of Paragraph 8.5 only "Labor" is agreed to mean the hourly
rates set forth in Schedule 13.1 to the particular task and "Materials"
means the actual cost of materials, plus freight charges, plus the markup
set forth in Schedule 13.1 for obtaining such materials.
8.7 Changes required by the U.S. Coast Guard shall be subject to the same
Change Order procedure, provided they are not based on laws, rules or
regulations of the U.S. Coast Guard in force prior to date of execution of
this Agreement.
8.8 Notwithstanding anything to the contrary herein, no change in the Work
under this Agreement, whether by way of alteration or addition to the Work,
shall be the basis of an addition to the Contract Sum or a change in the
Contract Time unless and until such alteration or addition has been
authorized by a Change Order executed and issued in accordance with and in
strict compliance with the requirements of the Contract.
ARTICLE 9 - RISKS AND INSURANCE
9.1 BUILDER'S RISK AND LIABILITY INSURANCE
9.1.1 Until Delivery and Acceptance of the Vessel, Owner shall, at its own
expense, insure the Vessel and all Materials, Components and
equipment to be used therein, and the Owner furnished Materials,
Components and equipment from time to time delivered to either of
the Shipyards. The amount of insurance, shall be at least equal to
the Contract Sum plus the value of all Owner furnished Materials,
Components and equipment.
The Builder and each Subcontractor shall purchase and maintain
insurance covering the type of claims set forth below which may
arise out of or result from the Builder's operations under the
Contract, whether such operations be by Builder or by any
Subcontractor or by anyone directly or indirectly employed by any of
them or by anyone for whose acts any of them may be liable:
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9.1.1.1 Claims under workers' or Worker's Compensation, disability
benefit and other similar employee benefit acts which are
applicable to the Work to be performed.
9.1.1.2 Claims for damages because of bodily injury occupational
sickness or disease, or death of the Builder's employees;
9.1.1.3 Claims for damages because of bodily injury, sickness or
disease, or death of any person other than the Builder's
employees;
9.1.1.4 Claims for damages insured by usual personal injury liability
coverage which are sustained (1) by a person as a result of
an offense directly or indirectly related to employment of
such person by the Builder, or (2) by another person;
9.1.1.5 Claims for damages, other than to the Work itself, because of
injury to or destruction of tangible property including loss
of use resulting therefrom;
9.1.1.6 Claims for damages because of bodily injury, death of a
person or property damage arising out of ownership,
maintenance or use of a motor vehicle;
9.1.1.7 Claims involving contractual liability insurance applicable
to the Builder's obligations under Article 21.
9.1.1.8 Claims involving damage to the Work itself.
9.1.2 All insurance policies obtained by Builder pursuant to its
obligations under this Article 9, shall contain waivers of subrogation
in favor of the Owner and Owner's Indemnitees, and in the event that
Owner obtains financing, any lender or lenders, all without liability
for the payment of any premium and shall name Owner, Owner's
Indemnitees and Owner's lender or lenders as additional assureds.
9.1.3 The insurance required by this Article 9 hereof shall include the
following types and amounts of insurance.
9.1.3.1 Builder's Risk
Until the Vessel has been completed, physically delivered and
Delivery and Acceptance by Owner has occurred, the Vessel and all
Materials, Components, outfitting, equipment, and appliances to
be installed in the Vessel, including all Materials, Components,
outfitting, equipment and appliances provided by Owner and
delivered to any of the Shipyards for and to be used in the
construction thereof, shall be declared under the Builder's Risk
Policy in force and effect at the time the Vessel's keel or
bottom plate is laid, with an assigned value equal to the
Contract Sum plus the value of all such Owner furnished
Materials, Components and equipment.
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Such Builder's Risk Policy shall be on a form substantially
similar to AIG's all risk form including hull and machinery
and protection and indemnity with limits of $25,000,000,
including United States longshoreman and harbor workers and
Jones Act with a deductible not greater than $25,000,
including movement of the Work between the Shipyards and the
Site Delivery Point.
Builder and its Subcontractors shall be named as additional
assureds under the Builder's Risk Policy, with waivers of
subrogation. The Builder's Risk Policy shall not provide
coverage to Builder's or Subcontractors' machinery, tools or
equipment.
Any loss insured under Owner's Builder's Risk Policy or any
other property insurance shall be adjusted by Owner as
fiduciary and made payable to Owner as fiduciary for any
insured thereunder, as their interests appear. Any dispute as
to Owner's adjustment or intended payment shall be resolved
in accordance with Article 22.
9.1.3.2 Other Insurance
The Builder shall be responsible for initiating, maintaining
and supervising all safety precautions and programs in
connection with the performance of the Contract.
Builder shall also purchase and maintain, at its expense,
during the performance of Builder's obligation under the
Contract, Workmen's Compensation Insurance, at statutory
amounts, with Longshoreman & Harbor Workers Compensation Act
coverage endorsement, Employer's Liability Insurance in the
amount of at least One Million ($1,000,000.00) Dollars and
Commercial General Liability Insurance against property
damage, death, personal injury and maintain completed
operations coverage, in the amount of not less than One
Million ($1,000,000.00) Dollars per occurrence, endorsed to
provide specific coverage for the Builder's obligations to
Owner under the Contract, including but not limited to those
under Article 21 of the Agreement and any "watercraft
exclusion" for non-owned vessels deleted.
Each Subcontractor shall also purchase and maintain, at its
expense, during the performance of Builder's obligation under
the Contract, Workmen's Compensation Insurance, at statutory
amounts, with Longshoreman & Harbor Workers Compensation Act
coverage endorsement, Employer's Liability Insurance in the
amount of at least One Million ($1,000,000.00) Dollars and
Commercial General Liability Insurance against property
damage, death, personal injury and completed operations
coverage in the amount of not less than One Million
($1,000,000.00) Dollars per occurrence, endorsed to provide
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specific coverage for the Builder's obligations to Owner
under the Contract, including but not limited to those under
Article 21 of the Agreement and any "watercraft exclusion"
for non-owned vessels deleted .
Additionally, Builder shall purchase and maintain at its
expense, during the performance of the Contract the
following:
(a) Protection and Indemnity Insurance only as to Builder's
vessels, including Jones Act coverage, with a limit of
no less than One Million ($1,000,000.00) Dollars;
(b) Automobile Liability Insurance covering the use of all
owned, non-owned and hired vehicles with a bodily
injury and property limit of no less than One Million
($1,000,000.00) Dollars;
(c) Pollution Liability Insurance with a limit of no less
than Five Million ($5,000,000.00); and
(d) Umbrella Liability coverage with a limit of not less
than Fifty Million ($50,000,000.00) Dollars excess over
and above the primary insurance limits stated above.
All umbrella coverage will include blanket contractual
liability - all written and oral contracts; premises
operations liability; explosion, collapse; personal
injury liability; independent contractors coverage;
broad form property damage liability; cross-liability
coverage and products and operations coverage with
watercraft exclusion removed.
Additionally, each Subcontractor shall purchase and maintain
at its expense, during the performance of the Contract the
following:
(a) If furnishing any vessel, Protection and Indemnity
Insurance, including Jones Act coverage, with a limit
of no less than One Million ($1,000,000.00) Dollars;
and
(b) Automobile Liability Insurance covering the use of all
owned, non-owned and hired vehicles with a bodily
injury and property limit of no less than One Million
($1,000,000.00) Dollars;
9.1.3.3 Insurers' Form and Proof
(i) Certificates of Insurance acceptable to Owner shall be
delivered to Owner prior to the commencement of the
Work. These Certificates and the insurance policies
required by this Article 9 shall contain a provision
that the coverages afforded under the policies will not
be canceled or
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allowed to expire until at least thirty (30) days
written notice has been given to the Owner. If any of
the foregoing insurance coverages are required to
remain in force after final payment and are reasonably
available, an additional certificate evidencing
continuation of such coverage shall be submitted.
Information concerning reduction of coverage shall be
furnished by the Builder with reasonable promptness.
(ii) The Owner and the Builder shall cooperate in connection
with the collection of any insurance monies that may be
due in the event of loss and the Owner and the Builder
shall execute and deliver such proofs of loss and other
instruments which may be required for the purpose of
obtaining recovery of any such insurance monies.
9.1.3.4 Subcontractor Insurance
Builder shall additionally require that (i) Subcontractors
whose contracts are valued at Two Million ($2,000,000.00)
Dollars or more carry commercial general liability insurance
in the amount of Five Million ($5,000,000.00) Dollars and
(ii) Subcontractors whose contracts are valued at less than
Two Million ($2,000,000.00) Dollars carry no less than One
Million ($1,000,000.00) in commercial general liability
insurance.
9.1.5 Maintenance of insurance by the Builder as specified in this
Article 9 shall in no way be interpreted as relieving the
Builder of any responsibility whatever and the Builder may
carry, at his own expense, such additional insurance as it
deems necessary.
9.2 PERFORMANCE BOND AND PAYMENT BOND
9.2.1 Within three (3) business days after Owner's receipt of the proceeds
of the financing necessary to construct its riverboat casino complex
in Shreveport, Builder shall deliver to Owner a payment and
performance bond of a surety company licensed to do business in the
State of Louisiana, conditioned on completion of the Work in
accordance with the contract, free and clear of all mechanics and
other liens. Such bond shall be written to 100% of the Contract Sum,
executed on a form and by such company as Owner shall approve. The
cost of the bond shall be included in the Contract Sum. The Builder
shall furnish the bond to Owner. Upon the request of any person or
entity appearing to be a potential beneficiary of such bond, the
Builder shall promptly furnish a copy of the bond or permit a copy
to be made.
9.3 Notwithstanding any of the provisions of this Agreement with respect to any
contractual obligation of the Builder and any Subcontractor to provide
insurance on behalf of Owner, any other insurance maintained by Owner shall
be excess and non-contributing with such insurance required by Builder and
any Subcontractor.
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9.4 The Owner reserves the right to change the insurance program if the Owner
deems such change to provide more coverage and/or be more cost effective.
The Owner may determine a prearranged insurance program, in which the Owner
provides all insurance, to be most efficient. If a prearranged insurance
program is deemed most efficient, the Owner will request that the
Contractor and each Subcontractor deduct the insurance costs required by
this Article Nine from their respective bids. In order to make this
determination, the Contractor shall supply an itemization of its insurance
costs and require its Subcontractors to do likewise. The Owner reserves the
right to verify such costs.
9.5 All insurance specified in this Article 9 shall be limited in scope,
coverage and amount to the liabilities and risk specifically assigned and
assumed by each party and, where applicable, the "additional assureds" and
"waiver of subrogation" endorsements shall be subject to, limited by and
shall afford no coverage greater than that required by the indemnification
contained in Article 21.
ARTICLE 10 - WARRANTY
10.1 The Builder warrants to the Owner that all Materials, Components,
equipment and the Work will be of good and sound quality, free from faults
and defects and in conformance with the Contract. Builder warrants that the
Vessel will meet the requirements of the Regulatory Agencies and Bodies
relating to vessels.
10.2 With respect to Builder's failure to construct the Vessel in accordance
with the Contract, Builder will make appropriate modifications to the
Vessel to bring it into compliance with this warranty at no cost to the
Owner. If Builder is not able to modify the Vessel so that it meets the
requirements of the Contract, the Owner, at its sole discretion, may
negotiate a reduction in the Contract Sum or may require the Builder to
refund to the Owner all payments made to the Builder and cancel the
Contract provided Owner conveys to Builder title to the Vessel free and
clear of all liens and encumbrances created by Owner.
10.3 Builder warrants that the Work done will be done in accordance with the
Specifications and Contract Drawings and Good Shipbuilding Practices, and
that all labor and installations made shall meet the requirements and
standards described in the Contract, and all Materials and Components used
by the Builder shall be of the quality set forth in the Contract and all
such Materials and Components will be free from defects.
10.4 In addition to the warranty being provided by Builder hereunder on the
Vessel and the Work, including but not limited to the Materials and
Components, but not in lieu thereof, the Builder shall use all reasonable
efforts to obtain warranties from its Subcontractors equivalent in scope
and duration to the warranty being provided by Builder. All such
warranties shall be made for the benefit of the Owner and the Builder.
10.5 With respect to the warranties made by Builder under this Contract, such
warranties shall be effective for a period of twelve (12) months after
Delivery and Acceptance of the Vessel.
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Accordingly, if at any time within twelve (12) months after Delivery and
Acceptance of the Vessel, any nonconformity, defect, weakness, deficiency,
failure, breaking down or deterioration shall appear or occur or be
discovered in the Vessel, including, but not limited to, the Materials or
Components, or any failure whatsoever of the Vessel due to the Vessel not
being constructed in accordance with the Contract (any of the foregoing
each being referred to as the "Warranty Deficiency"), then the Builder
shall correct or cause to be corrected such Warranty Deficiency at
Builder's sole cost and expense. Furthermore, in the event that design or
engineering performed by Builder under this Contract shall fail to meet the
Contract, Builder shall, at no cost to Owner, re-design such changes as are
necessary to remedy any defect, including, but not limited to, the
replacement of the defective or damaged Materials or Components.
10.6 Warranty work pursuant to this Article 10 will be performed at a location
of the Owner's choice. All travel expenses, inspection fees and/or
surveying costs that are required to determine whether a Warranty
Deficiency exists shall be the responsibility of Owner provided, however,
that if it is determined that a Warranty Deficiency does exist, then
Builder shall reimburse Owner for such travel expenses, inspection fees and
surveying costs incurred to make such a determination.
10.7 It is understood and agreed by the parties hereto that except as set forth
in the Contract, no other warranty, express or implied, shall be deemed to
have been made by Builder.
10.8 It is understood and agreed by the parties hereto that Builder shall not in
any way be liable or responsible for any incidental or consequential
damages of any kind or nature, including but not limited to loss of profits
and loss of use of the Vessel from any cause of action of any kind or
nature, including but not limited to negligence, contract, warranty or any
other causes of actions, arising out of or in connection with or pertaining
to the Work. The elimination of incidental and consequential damages as
provided herein is an essential condition of this Contract and Owner
acknowledges that Builder would not have entered into this Contract without
said elimination of incidental or consequential damages for the
consideration set forth herein.
ARTICLE 11 - DEFAULT AND TERMINATION
11.1 If any one of the following occurs during the performance by Builder:
11.1.1 There is filed by or against Builder in any court a petition in
bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee of all or a portion of
Builder's property, and a discharge of Builder;
11.1.2 Builder makes an assignment for the behalf of creditors or petitions
for or enters into an agreement or agreements with its creditors,
and by reason of any of these events Builder's obligations under the
Contract are assigned to or are to be are performed by a person
other than Builder;
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11.1.3 The Builder fails to make prompt payment to any Subcontractors or
for Materials, Components, equipment or labor used in the Vessel;
11.1.4 The Builder performs defective work and fails to promptly and
properly correct such defective work;
11.1.5 Builder fails to execute the Work in accordance with the Contract;
11.1.6 Builder fails to cause the removal or bonding of any liens or
privileges filed against the Work;
11.1.7 Builder disregards laws, ordinances, rules, regulations or orders of
any Regulatory Agencies or Bodies or Other Authorities having
jurisdiction over the Work; or,
11.1.8 Builder without limitation, fails to perform or comply with
provision of the Contract; then Owner, by giving five (5) days'
written notice of any such default to Builder, in addition to and
without prejudice to any other remedies it may have, may terminate
the Contract. Any termination of the Contract made pursuant to the
provisions of this Article 11 shall not relieve Builder from any
accrued obligations hereunder due and owing Owner at the time of
such termination and Builder shall be liable for any and all
damages, expenses, losses, costs, including but not limited to,
attorney's fees, subject to the limitations set forth in Paragraph
10.8, which may be sustained by Owner as a result of said default.
In the event of default by Builder, which default is not cured
within five (5) days after written notice thereof, the Owner, or its
nominee, may, but shall not be obligated to, take over the Work,
Vessel, Materials and Components to be incorporated into the Vessel
and Builder's contracts with any Subcontractors, and either (a)
complete the performance of the Contract, or (b) sell the partially
completed Work, Materials, Components and Vessel. If Owner elects to
complete the performance of the Contract, Owner shall be entitled to
do so in Builder's Shipyards, at no additional cost to Owner, or at
Owner's option, move the Work, Materials, Components and Vessel to
another location for completion. If Owner elects to sell the
partially completed Work, Materials, Components and Vessel, Owner
shall be entitled to leave the Work, Materials, Components and
Vessel in Builder's Shipyards for a period not to exceed one hundred
twenty (120) days while it pursues the sale, in which case Builder
agrees to permit prospective buyers access to its Shipyards at
reasonable times to inspect the Work, Materials, Components and
Vessel, or at Owner's option, Owner may remove the Work, Materials,
Components and Vessel to another location for sale. If Owner
completes the Vessel, and the unpaid balance of the Contract Sum
exceeds the expense of finishing the Vessel, only such excess shall
be paid to Builder. If the cost of completing the Vessel, however,
exceeds the unpaid balance of the Contract Sum, Builder shall pay
such excess to Owner. Builder shall not be entitled to any further
payments from Owner. If Owner sells the partially completed Work,
Materials, Components and Vessel, Owner shall be
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entitled to keep the proceeds.
11.2 Owner may terminate this Contract, at any time, without cause by giving
seven (7) days' prior written notice to Builder of Owner's intent to
terminate under this Paragraph. In such event, Owner will pay Builder for
the portion of the Contract Sum allocable to the Work completed as of the
effective date of termination, less the aggregate of previous payments made
by Owner to the Builder. In the event that the aggregate of the previous
payments made by Owner to Builder exceeds the amount due to Builder,
Builder shall promptly refund any overage to Owner. The Owner also will
reimburse the Builder for all verified costs necessarily incurred for
organizing and carrying out the stoppage of the Work and paid directly by
the Builder incurred to date of termination. In any event, such payment
shall not be made unless Builder has furnished Owner with releases of liens
satisfactory to Owner. Owner will not be responsible for any of Builder's
continuing contractual commitments to any Subcontractor. Builder shall use
its best efforts to include in all subcontracts a provision permitting
voluntary termination by Builder without cancellation charge or penalty.
Owner shall not under any circumstances be responsible or liable to
Builder, or any Subcontractor for any incidental, consequential or special
damages or expenses of any type or kind, including, but not limited to,
loss of time, loss of profit or earnings, or losses related to detrimental
reliance upon the existence of the Contract, whether or not such losses
directly or indirectly arise out of the Contract, or from any actions taken
by Owner at any time to terminate the Contract.
11.3 In the event of termination by Owner, Owner may require Builder promptly to
assign and/or deliver to Owner all or any (a) bids or proposals, (b)
subcontracts, (c) construction plans, (d) Materials, Components, tools and
equipment (to the extent paid for by Owner), (e) appliances, (f) rental
agreements, and (g) any other commitments which Owner, in its sole
discretion, chooses to take by assignment, and in the case of assignments
hereunder, Builder shall promptly execute and deliver to Owner written
assignments of same. This provision shall survive the termination of the
Contract.
11.4 Delay by Owner or its representatives in providing to Builder or its agents
any Owner supplied documents and/or goods or materials for the construction
of the Vessel shall not constitute a breach or default of this Agreement by
Owner but shall be covered instead by the appropriate provisions of Article
6 relating to Force Majeure.
11.5 The failure of either party to exercise any rights conferred upon it under
any provision of this Agreement with respect to any breach or default by
the other party shall constitute neither a waiver of its rights under any
other provision of this Agreement with respect to such breach or default,
nor a waiver of its rights under the same or any other provision of this
Agreement with respect to any other breach or default.
11.6 The remedies available to Builder and Owner for default under this Article
11 are in addition to, and not in lieu of, their other remedies available
at law or in equity. The non-defaulting party shall take reasonable
actions to mitigate its damages.
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ARTICLE 12 - APPLICABLE LAW
12.1 This Agreement shall be governed by and construed in accordance with the
laws of the State of Louisiana.
ARTICLE 13 - CONTRACT
13.1 The "Contract Documents" shall mean and consist of this Agreement (and any
general or supplementary conditions thereto), the Specifications and
Contract Drawings, the Contract Schedule, Builder's Bid attached to this
Agreement as Schedule 13.1 and all written Modifications issued after
execution of this Agreement, and represent the entire agreement between
Owner and Builder. These form the Contract, and all are as fully a part of
the Contract as if attached to this Agreement or repeated herein. Any
conflict or inconsistency between other Contract Documents and this
Agreement shall be governed and controlled by this Agreement. The Contract
may be amended or modified only by a written Modification. A
"Modification" is (1) a written amendment to the Contract signed by both
parties, or (2) a Change Order. All Contract Documents shall be signed by
Owner and Builder. Terms used in this Agreement which are defined in the
Contract Documents shall have the meanings designated in those Contract
Documents.
13.2 The intent of the parties as enumerated in the Contract Documents is for
Builder to construct a fully functional vessel in accordance with Contract
Drawings and Specifications for the Contract Sum and prior to the
Completion Date. The Contract Drawings and Specifications are to be
considered as cooperative. All work necessary for the execution of the
Work, if shown or described in the Specifications and Contract Drawings,
shall be considered as a part of the Work and shall be executed by Builder
in the same manner and with the same character of material as other
portions of the contract without extra compensation. Builder shall be
responsible for reviewing the Specifications and Contract Drawings.
Builder shall notify Owner of any errors or omissions in the Specifications
and Contract Drawings and Builder shall be responsible for any such errors
or omissions about which Builder has failed to notify Owner.
13.3 Unless expressly stipulated to the contrary, Builder shall provide and pay
for all services, labor, overtime labor, standby labor, methods, materials,
equipment, transportation, fuel, taxes, permits and fees and all other
facilities and services necessary to complete the Work.
13.4 If there is any conflict or inconsistency between the specifications and
contract drawings comprising the Specifications and Contract Drawings, the
specifications shall control.
ARTICLE 14 - INSPECTION, ACCESS, TESTS AND OFFICIAL CERTIFICATES
14.1 During the construction of the Vessel at the Shipyards, Builder shall
provide Owner, or Owner's Representative, or any representative of any
Regulatory Agencies or Bodies or Louisiana Authorities, facilities and
access to inspect the Vessel, Materials, Components, workmanship, plans,
tests and movements and Builder shall provide a suitable office for Owner
or Owner's
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Representative with access to suitable facilities and conditions such as a
telephone, fax, copy machine, heat and air conditioning. Builder shall
perform all of the tests and trials required of Builder in any of the
Contract Documents, and will give Owner at least ten (10) days' prior
notice of the date thereof.
14.2 All of the Work, Materials, and Components required by the Contract, while
the same is in the process of fabrication, erection, construction,
installation and performance, shall be inspected and approved or rejected,
as the case may be, by the Owner (or Owner's Representative) and by
representatives of Regulatory Agencies or Bodies in accordance with the
Contract. Failure to object will not preclude Owner from later complaining
if Owner establishes that it used reasonable diligence, under the
circumstances, to discover defects, and in any event shall have no effect
on the warranty provided by Builder hereunder.
14.3 Owner shall have the right to appoint an "Owner's Representative" and Owner
shall inform Builder in writing as to the extent of authority Owner has
granted to said Owner's Representative. In the event of a "working
conflict" between Owner's Representative and Builder, Builder shall
promptly inform Owner of the problem and Owner shall make a diligent effort
to promptly resolve the "working conflict" in a manner amenable to both
parties.
14.4 Builder shall provide access to the Vessel while under construction to
inspectors from any Louisiana Authorities or other Regulatory Agencies or
Bodies or Other Authorities upon request of Owner.
14.5 TESTS AND INSPECTIONS
14.5.1 Tests, inspections and approvals of portions of the Work required by
the Contract Documents or by laws, ordinances, rules, regulations or
orders of Regulatory Agencies or Bodies or Other Authorities having
jurisdiction shall be made at an appropriate time. Unless otherwise
provided, the Builder shall make arrangements for such tests,
inspections and approvals with an independent testing service or
entity acceptable to the Owner, or with the appropriate Regulatory
Agencies or Bodies, and Builder shall bear all related costs of
tests, inspections and approvals. The Builder shall give the Owner
and all appropriate Regulatory Agencies or Bodies timely notice of
when and where tests and inspections are to be made so they may
observe such procedures.
14.5.2 If the Owner or Regulatory Agencies or Bodies having jurisdiction
determine that portions of the Work require additional testing,
inspection or approval not included under Subparagraph 14.5.1, the
Owner will instruct the Builder to make arrangements for such
additional testing, inspection or approval by an entity acceptable
to the Owner, and the Builder shall give timely notice to the Owner
and all appropriate Regulatory Agencies or Bodies of when and where
tests and inspection are to be made so the Owner may observe such
procedures.
14.5.3 Required certificates of testing, inspection or approval shall be
secured by the Builder,
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<PAGE>
at Builder's sole cost, and promptly delivered to the Owner.
14.5.4 If the Owner is to observe tests, inspections or approvals required
by the Contract Documents, the Owner will do so promptly and, where
practicable, at the normal place of testing.
14.5.4.1 Neither such observations of the Owner nor inspections,
tests, or approvals by persons other than the Builder
shall relieve the Builder from its obligations to perform
the Work in accordance with the Contract Documents.
14.5.5 Tests or inspections conducted pursuant to the Contract Documents
shall be made promptly to avoid unreasonable delay in the Work.
ARTICLE 15 - ASSIGNMENT; CONSTRUCTION FINANCING
15.1 The Contract shall inure to the benefit of the Builder and Owner and their
successors and assigns and shall be binding upon the Builder and Owner and
their successors and assigns; provided, however, that Builder shall not
assign the Contract or any interest hereunder without the prior written
consent of Owner, and any assignment without said prior written consent
shall be null and void. Owner may at any time sell the Vessel and/or
assign the Contract, but shall at all times remain liable under the
Contract. Builder agrees that such a sale and/or assignment shall not be
grounds for termination of the Contract.
Owner shall not be required to obtain Builder's consent to the collateral
assignment of the Contract in connection with any financing of the Contract
Sum. Builder understands and agrees that Owner will be required to satisfy
its lender's or lenders' security requirements for the financing of the
Contract Sum and agrees that Builder will execute such documents and make
such amendments to the Contract as may be required by Owner in order to
satisfy the requirements of its lender or lenders and to allow such lender
to obtain a perfected first priority security interest in the Contract, the
Vessel, its Materials, the Work and the Components, including, but not
limited to, such documents or amendments to vest Owner with clear title in
the Work, the Vessel, its Materials and the Components. Furthermore,
Builder hereby agrees that its interest in the Contract, the Vessel, the
Materials, the Work and the Components is hereby expressly subordinated and
subject to any first priority security interests in the Contract, the
Vessel, its Materials, the Work and Components granted by Owner to Owner's
lender or lenders.
ARTICLE 16 - COMPLIANCE WITH REGULATIONS
16.1 The Builder shall comply with all laws, rules, regulations and requirements
of any Regulatory Agencies or Bodies affecting the construction of the Work
and the Vessel, and shall procure at its own expense such permits from such
Regulatory Agencies or Bodies, the Louisiana Authorities and any Other
Authorities, as may be necessary for Builder to begin or carry on the
24
<PAGE>
completion of the Work, and shall at all times comply with all United
States, State and local laws, to which Builder is aware, in any way
affecting the Work.
ARTICLE 17 - PATENTS
17.1 Owner agrees to protect and hold harmless Builder against claims of third
persons for damages sustained by reason of the infringement of the patent
rights with respect to materials, processors, machinery, equipment, and
hull form selected and used by Owner in such works; and Owner agrees to
protect and hold harmless Builder against claims of third persons for
damages sustained by reason of infringement of patent rights with respect
to materials, processes, machinery and equipment supplied or specifically
acquired by Owner or required by any Specifications furnished by Owner.
Builder agrees to protect and hold harmless Owner against claims of their
persons for damages sustained by reason of infringement of patent rights
with respect to materials, processes, machinery and equipment supplied or
specifically acquired or applied by Builder.
ARTICLE 18 - USE OF THE CONTRACT DRAWINGS AND SPECIFICATIONS
18.1 The Specifications, Contract Drawings and Builder's Working Drawings of the
Vessel are and shall remain property of the Owner.
18.2 The Builder shall, at no additional cost to Owner, provide "As Built"
drawings of the Vessel.
ARTICLE 19 - NOTICES AND COMMUNICATIONS
19.1 Notices required hereunder shall be sent in accordance with the following
and at the addresses hereinafter set forth. Any notice or communication
required or permitted to be given hereunder shall be given in writing,
shall be effective only if given in one of the following manners, and shall
be deemed given and deemed received: (a) if mailed by United States
Registered or Certified Mail, postage prepaid, return receipt requested, on
the third day after the notice is deposited in an official United States
mail receptacle with postage prepaid; (b) if given by facsimile
transmission, on the date transmitted provided that (1) receipt is
confirmed, and (2) an additional copy of the notice or communication is
sent on the same day by normally utilized overnight courier; or (c) if
given by nationally utilized overnight courier, on the first business day
after it is sent; or (d) if hand delivered, on the date a receipt is
obtained from the person to whom same is delivered. Notices hereunder
shall be addressed as follows:
If to Owner: Hollywood Casino Shreveport
c/o Hollywood-Louisiana, Inc.
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, TX 755240
Attention: General Counsel
Fax: 972-386-7411
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If to Builder: Leevac Shipyards, Inc.
P.O. Box 1190
Highway 90 East
Jennings, LA 70546
Attention: Fred Stokes
Fax: 318-824-2970
The parties expressly agree that any notice or other communication that the
Builder is required to give Owner under the terms and conditions of the Contract
shall also be given to Owner's lender or lenders if any, in the same manner
given to Owner at such address, telex or facsimile number as Owner may specify
by written notice to Builder.
ARTICLE 20 - TITLE
20.1 Title in and to the Vessel to be constructed pursuant to the Contract shall
be vested in Owner. The Work shall be deemed delivered to, and title of the
Work shall be vested in Owner as and when performed; and in addition to the
foregoing, title to the completed Vessel shall be vested in Owner upon
completion thereof; the Materials shall be deemed delivered to Owner, and
title to the Materials shall vest in Owner as and when delivered to the
Shipyard and the Components shall be deemed to have been delivered to Owner
and title to all Components shall vest in Owner upon commencement of
fabrication of the Components. It is understood and agreed and it is the
intent of Builder and Owner that Owner shall have the rights and benefits
afforded a "Purchaser" and that Builder shall have the obligations imposed
on a "Builder" by the Louisiana Ship Mortgage Law, La. R.S. 9:5521. The
Builder shall have the obligation to cause the Vessel, the Materials and
the Components referred to above, to be marked as follows:
20.1.1 Builder shall affix a plaque showing the name of the Builder and
Owner, i.e., Leevac Shipyards, Inc. - Builder; Hollywood Casino
Shreveport - Owner; the Hull Number of such Vessel and the parishes
in which such Vessel is to be constructed to the keel of the Vessel,
if such Vessel has a keel, or to the bottom plates, if such Vessel
does not have a keel, when laid, so as to be clearly visible at all
times during the performance of the Work and until the decking is
laid. At such time as the decking is laid, the aforementioned plaque
shall be removed and permanently affixed to the weather deck of such
Vessel so as to be clearly visible at all times during continuation
of the Work and after completion.
20.1.2 Builder shall mark or stamp on all Materials for the Vessel the name
of the Owner and the Hull Number of the Vessel, upon delivery of
such Materials to the Shipyard, or alternatively, maintain records
which will identify with certainty all such Materials for the Vessel
with the name of the Owner and the Hull Number of the Vessel for
which the Materials will be used.
20.1.3 Builder shall mark or stamp on all Components for the Vessel, the
name of the Owner and the Hull Number of the Vessel for which the
Components will be used upon
26
<PAGE>
commencement of the fabrication thereof, or alternatively, maintain
records which will identify with certainty all such Components for
the Vessel with the name of the purchaser and the Hull Number of the
Vessel for which the Components will be used.
20.2 If any Materials or Components purchased by the Builder for the Vessel are
not utilized for the Vessel, such Materials and Components shall become the
property of the Builder following Delivery and Acceptance of the Vessel.
Any Materials Components furnished by the Owner which are not utilized for
the Vessel shall remain the property of the Owner.
ARTICLE 21 - INDEMNIFICATION
21.1 To the fullest extent permitted by law and subject to the limitation of
Paragraph 8, Builder hereby agrees to and shall indemnify and hold harmless
the Owner and Owner's representatives, and each of their respective
directors, officers, partners, members, agents and employees (collectively,
"Owner's Indemnitees") from and against any and all claims, liabilities,
losses, damages, costs or expenses, including but not limited to reasonable
attorney's fees and court costs in whole or in part, caused by, resulting
from, arising out of, or occurring in connection, with the negligent acts,
errors or omissions, gross negligence or willful and wanton acts of or
breach of contract by the Builder, any Subcontractor, anyone directly or
indirectly employed by any of them or anyone for whose acts any of them may
be legally responsible, which acts, errors, omissions, negligence or breach
of contract has occurred prior to delivery of the Vessel. The above
indemnity includes but is not limited to any such injury resulting from the
use of scaffolding, hoists, cranes, and all such other equipment used in
connection with the Work or from the Builder's failure to properly provide
and maintain the protective measures required by the Contract arising prior
to delivery and acceptance of the Vessel or while warranty work is in
progress provided, however, this right to indemnification shall not apply
to the extent that any such claims, liabilities, losses, damages or
expenses result from the Owner's or the Owner's Indemnitees' negligence.
The Builder agrees to pay on behalf of the Owner and Owner's Indemnitees
upon their demand the amount of any final judgment, including all appeals,
that may be entered against them in any action brought against the Owner
and Owner's Indemnitees upon or by reason of claims arising out of any such
acts or omissions of Builder as well as all costs of defense including
attorney's fees and costs incurred by Owner and Owner's Indemnitees in
connection with such claims
21.2 To the fullest extent permitted by law, Owner hereby agrees to and shall
indemnify and hold harmless the Builder and Builder's representatives, and
each of their respective directors, officers, partners, members, agents and
employees (collectively, "Builder Indemnitees") from and against any and
all claims, liabilities, losses, damages, costs or expenses, including but
not limited to reasonable attorney's fees and court costs in whole or in
part, caused by, resulting from, arising out of, or occurring in connection
with the negligent acts, errors or omissions, gross negligence or willful
and wanton acts of or breach of contract by the Owner, Owner's
subcontractors, anyone directly or indirectly employed by any of them or
anyone for whose acts any of them may be legally responsible, which acts,
errors, omissions. negligence or breach of contract has occurred prior to
delivery of the Vessel. This right to indemnification shall not
27
<PAGE>
apply to the extent that any such claims, liabilities, losses, damages or
expenses result from the Builder's or the Builder's Indemnitees'
negligence. The Owner agrees to pay on behalf of the Builder and Builder's
lndemnitees upon their demand, the amount of any final judgment, including
all appeals, that may be entered against them in any action brought against
the Builder or Builder's Indemnitees upon or by reason of claims arising
out of any such acts or omissions of Owner as well as all costs of defense
including attorney's fees and costs incurred by Builder and Builder's
Indemnitees in connection with such claims.
ARTICLE 22 - DISPUTE RESOLUTION
22.1 In the event a dispute between the parties arises under the terms of the
Contract, either party may send to the other a letter of dispute setting
forth in particular the subject matter of the dispute. The parties shall
meet at a mutually convenient location not later than thirty (30) days
after the date of the receipt of the letter of dispute for the purposes of
negotiating a settlement of the disputed matter or to select an alternate
dispute resolution procedure.
22.2 In the event that either party determines after compliance with Paragraph
22.1 that the disputed matter cannot be resolved by the parties, the
disputed matter shall be submitted to binding arbitration. In any event,
Builder shall continue to pursue all Work required with due diligence as
time is of the essence, and shall not slow down or delay the Work or either
of the Delivery Dates due to any disputes or claims.
22.3 To invoke arbitration under this article, either party shall notify the
other, and the arbitrators, in writing, setting forth:
(a) The issue to be arbitrated; and
(b) That arbitration is demanded.
22.4 With regard to elements of the Work to be performed by the Builder to which
Owner makes objection, refuses to pay or rejects; or disputes relating to
the stage of completion of the Work, Change Orders or Force Majeure, or a
dispute relating to insurance proceeds not exceeding One Hundred Thousand
($100,000.00) Dollars, Builder and Owner agree to be bound by the decision
of the Principal Surveyor of the A B S Technical Services, Inc. in Houston,
Texas or his designee. All costs and fees of the arbitrator shall be borne
equally by Owner and Builder.
22.5 In all matters other than those described in Paragraph 22.4, if arbitration
is invoked, the disputed matter shall be submitted to binding arbitration
before a panel of three (3) arbitrators, one of whom is appointed by the
Owner, one of whom is appointed by the Builder, and the third of whom shall
be selected by the other two arbitrators and will act as chairman. All
shall be Members of the Society of Maritime Arbitrators, of The New Orleans
Board of Trade, Ltd. (the "Society"). The majority of the panel of three
(3) arbitrators may make a binding decision. Each party shall be
responsible for the costs of its appointee and the parties shall be jointly
responsible for the costs of the third appointee.
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<PAGE>
22.6 The parties may follow such rules and procedures as are agreed to between
the parties. If the parties cannot agree to such rules and procedures
within five (5) days of an election to submit the dispute to arbitration,
then the Maritime Arbitration Rules of the Society shall apply.
22.7 Any arbitration under this Article 22 shall take place in New Orleans,
Louisiana or another location mutually agreeable to the parties.
ARTICLE 23 - GENERAL
23.1 This agreement may be executed in several counterparts, all of which may be
taken to be one and the same agreement.
23.2 Builder acknowledges that Owner's lease with the City of Shreveport
contains the following:
"Construction Phase - Prior to the contracting process, Tenant will
------------------
meet with a representative sampling of minority and female
construction related companies in a geographic area no smaller than an
area encompassing Dallas, Texas, New Orleans, Louisiana and Atlanta,
Georgia (the "Subject Area") to ensure that such companies: (1) are
------------
fully aware of the available contract opportunities for construction
projects and (2) have a Tenant contact person available to answer
questions throughout the contracting and construction phase of such
projects. After surveying a representative sampling of minority and
female construction related companies in the Subject Area, Tenant will
establish a goal for the total construction budget to be contracted
with such companies. Any general contractor wanting to do business
with Tenant for construction projects must accept this provision in
order to contract with Tenant. The general contractor will be held
accountable for ensuring compliance with M/WBE goals and will be
required to report on such goal compliance at least quarterly (such
reports will be made available to the Office of the Mayor)."
Builder agrees to act in good faith to assist Owner in complying with its
obligations to the City of Shreveport.
29
<PAGE>
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed by their proper authorized representatives, thereunto duly authorized.
WITNESSES: LEEVAC SHIPYARDS, INC.
/s/ W. F. Stokes
- ------------------------- ------------------------------
Name: W. F. Stokes
- ------------------------- Title: President
Date: July 16, 1999
-------------------------
HOLLYWOOD CASINO SHREVEPORT,
A LOUISIANA PARTNERSHIP
By: HWCC-Louisiana, Inc.,
its general partner
By: /s/ Charles F. LaFrano III
-------------------------
WITNESSES: Name: Charles F. LaFrano III
Title: Vice President
- ------------------------- Date: July 16, 1999
--------------------
- -------------------------
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List of Exhibits
- ----------------
Exhibit "A" - Form of Certificate of Completion and Delivery
Exhibit "B" - Form of Schedule of Values
Exhibit "C" - Form of Change Order
List of Schedules
- -----------------
Schedule 2.1 - Specifications and Contract Drawings
Schedule 13.1 - Builder's Bid
31
<PAGE>
Exhibit A
CERTIFICATE OF COMPLETION AND DELIVERY
Date: Time:
------------------------------ -------------------------
Place:
------------------------------
Pursuant to the Vessel Construction Agreement for the construction of one
_____________ Casino Vessel, Leevac Shipyards, Inc. hereby tenders to
Hollywood Casino Shreveport.
Leevac Shipyards, Inc. warrants (i) that the Vessel has been completed;
(ii) that all trials and tests have been satisfactorily completed; (iii) that
the Vessel complies with the Specifications and Contract Drawings and the
Agreement, and is free from defects in materials and workmanship; and (iv) that
there are no liens or claims upon said Vessel for materials, equipment or labor
for said Vessel, except those created or incurred by the Owner, its
subcontractors, vendors or employees.
LEEVAC SHIPYARDS, INC.
- ------------------------------
By:
---------------------------
Title:
------------------------
HOLLYWOOD CASINO SHREVEPORT
- ------------------------------
By:
---------------------------
Title:
------------------------
32
<PAGE>
Exhibit B
AIA Form G702 Application for Payment
AIA Form G703 Application for Payment Continuation Sheet (Schedule of Values)
33
<PAGE>
Exhibit C
CHANGE ORDER
Vessel: Change Order #_____
Hull # From:
To:
Title:
Description:
Delivery Impact: Added Days:
Pricing Adjustment
Grand Total (Deduct/Add)
Accepted: Accepted:
- ------------------------------ ------------------------------
Date: Date:
------------------------- -------------------------
34
<PAGE>
EXHIBIT 10.8
____________________________________________
EMPLOYMENT AGREEMENT
____________________________________________
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this 4th
day of August, 1999, to be effective as of the Effective Date (as hereafter
defined), by and between HWCC DEVELOPMENT CORPORATION ("Employer") and JURIS
BASENS ("Employee").
W I T N E S S E T E T H:
WHEREAS, Employer is a corporation, duly organized and existing under the
laws of the State of Texas, and whose affiliate, HWCC-Shreveport, Inc., has
entered into an agreement to manage the Hollywood Casino in Shreveport (the
"Casino") and has a need for qualified, experienced personnel;
WHEREAS, Employee is an adult individual currently residing at 1303 Bay
Ridge Drive, Benton, Louisiana.
NOW, THEREFORE, for and in consideration of the foregoing recitals, and in
consideration of the mutual covenants, agreements, understandings, undertakings,
representations, warranties and promises hereinafter set forth, and intending to
be legally bound thereby, Employer and Employee do hereby covenant and agree as
follows:
1. DEFINITIONS. As used in this Agreement, the words and terms
-----------
hereinafter defined have the respective meanings ascribed to them herein, unless
a different meaning clearly appears from the context:
(a) "Cause" means any of the following: (i) Employee's failure (for
-----
any reason other than as the result of a Complete Disability) to
perform Employee's duties under this Agreement with a reasonable
degree of diligence, competence and effectiveness; (ii) Employee's
engagement in any personal misconduct involving dishonesty,
illegality, or moral turpitude which is materially detrimental or
injurious to the business
<PAGE>
interests, reputation or goodwill of Employer or Employer's
Affiliates; (iii) Employee's engagement in any material act of
dishonesty, disloyalty, or infidelity against Employer or Employer's
Affiliates; (iv) Employee's breach of or other failure to perform
under any of the material terms and covenants of this Agreement; (v)
Employee's willful violation of any policy established by Employer
with respect to the operation of Employer's business and affairs, or
the conduct of Employer's employees; (vi) Employee's insubordination
with respect to, or willful failure, in any material respect, to carry
out all reasonable and lawful instructions issued by, the President or
Chief Executive Officer of Employer; and (vii) Employee's failure to
maintain in force and in good standing any and all licenses, permits
and/or approvals required of Employee by the relevant governmental
authorities for the discharge of the obligations of Employee under
this Agreement. All determinations of the existence of "Cause,"
including without limitation any determination with respect to
performance, reasonableness, effectiveness, materiality and injury,
shall be made in good faith by the Employer's Board of Directors and
shall be conclusive as to all parties.
(b) "Complete Disability" means the inability of Employee, due to
-------------------
illness or accident or other mental or physical incapacity, to perform
his obligations under this Agreement for a period of one hundred
eighty (180) calendar days in the aggregate over a period of five
hundred (500) consecutive calendar days, such "Complete Disability" to
become effective upon the expiration of such one hundred eightieth
(180th) day.
(c) "Effective Date" means August 30, 1999.
--------------
(d) "Employee" means Employee as earlier defined in this Agreement.
--------
(e) "Employer" means Employer as earlier defined in this Agreement.
--------
(f) "Employer's Affiliates" means any parent, subsidiary or affiliated
---------------------
corporation or other legal entity of Employer.
(g) "Prior Employment" means any prior employment Employee has had
----------------
with either Employer or Employer's Affiliates.
2. PRIOR EMPLOYMENT. Employee represents and warrants that, as of the
----------------
Effective Date, other than this Agreement Employee is neither a party to nor
subject to any agreement governing or restricting his employment or in any way
limiting his ability to perform fully and completely his duties under, and
comply with the terms set forth in, this Agreement. Employee
2
<PAGE>
further represents and warrants that, in performing his employment duties under
this Agreement, he will not violate any agreement between him and any prior
employer, or any obligation imposed upon him by any federal or state statute or
common-law provision relating to the disclosure of trade secrets and/or
proprietary information. This Agreement supersedes and replaces any and all
prior employment agreements, whether written or oral, by and between Employee,
on the one side, and Employer or Employer's Affiliates, on the other side. From
and after the Effective Date, Employee shall be the employee of Employer solely
under the terms of and pursuant to the conditions set forth in this Agreement.
3. BASIC EMPLOYMENT AGREEMENT. Subject to the terms and conditions
--------------------------
hereinafter set forth, Employer hereby employs Employee during the Term
hereinafter specified to serve in a managerial or executive capacity, under a
title and with such duties not inconsistent with those set forth in Paragraph 4
of this Agreement, as the same may be modified and/or assigned to Employee by
Employer from time to time.
4. DUTIES OF EMPLOYEE. Employee shall perform such duties assigned to
------------------
Employee by Employer as are generally associated with the duties of Vice
President and General Manager, including but not limited to (i) the efficient
and continuous operation of the Casino and its related operations; (ii) the
preparation of relevant budgets and operating plans and the allocation of
relevant funds; (iii) the selection and delegation of duties and
responsibilities of subordinates; (iv) the direction, review and oversight of
all operations and programs under Employee's supervision; and (v) such other and
further duties as are assigned by Employer to Employee.
5. ACCEPTANCE OF EMPLOYMENT. Employee hereby unconditionally accepts the
------------------------
employment set forth hereunder, under the terms and conditions set forth in this
Agreement.
3
<PAGE>
Employee hereby covenants and agrees that, during the Term of this Agreement,
Employee will devote the whole of his normal and customary working time and best
efforts solely to the performance of Employee's duties under this Agreement.
6. TERM. The term of this Agreement (the "Term") shall commence on the
----
Effective Date and, unless sooner terminated as provided herein, expire on
August 30, 2002.
7. SPECIAL TERMINATION PROVISIONS. Notwithstanding the provisions of
------------------------------
Paragraph 6 above, this Agreement and all parties' rights and obligations
hereunder shall terminate upon the occurrence of any of the following events:
(a) the death of Employee;
(b) the giving of written notice from Employer to Employee of the
termination of this Agreement upon the Complete Disability of
Employee;
(c) the giving of written notice by Employer to Employee of the
termination of this Agreement upon the discharge of Employee for
Cause;
(d) the giving of written notice by Employer to Employee of the
termination of this Agreement without Cause; provided, however, that
such notice must be accompanied by Employer's written tender to
Employee of Employer's unconditional commitment to continue to pay to
Employee the compensation set forth in Paragraph 8(a) of this
Agreement, under the terms and conditions of this Agreement;
(e) cause beyond the control of Employer and without its fault or
negligence. Such causes may include, but are not limited to, acts of
god or a public enemy, acts of government in either its sovereign or
contractual capacity, fires, floods, epidemics, quarantine
restrictions, strikes, riots, freight embargoes, power outages or
unusually severe weather conditions.
8. COMPENSATION TO EMPLOYEE. For and in complete consideration of
------------------------
Employee's full and faithful performance of his duties under this Agreement,
Employer hereby covenants and agrees to pay to Employee, and Employee hereby
covenants and agrees to accept from Employer, the following items of
compensation:
4
<PAGE>
(a) Base Salary. Employer hereby covenants and agrees to pay to Employee,
-----------
and Employee hereby covenants and agrees to accept from Employer, an annual base
salary of Two Hundred Twenty-Five Thousand and No/100 Dollars, payable in such
equal regular installments as is Employer's custom and usage. Such base salary
shall be exclusive of and in addition to any other benefits which Employer, in
its sole discretion, may make available to Employee, including, but not limited
to, any pension plans, bonus plans, retirement plans, company life insurance
plan or medical and/or hospitalization plans.
(b) Incentive Compensation Plan. Employee shall be entitled to
---------------------------
participate in the incentive compensation plan of the Corporation. The
incentive compensation will be payable by Employer to Employee in accordance
with the terms of such incentive compensation plan, as such terms may be
modified from time to time by Employer in its sole discretion. Notwithstanding
anything to the contrary set forth in this Paragraph 8(b), (i) Employer's
additional compensation under this Paragraph 8(b) will in no event be less than
$8,333 per month through December 31, 2000 and (ii) for each calendar year
thereafter, Employee's "target bonus" under any such plan will be no less than
$150,000.
(c) Signing Bonus. In consideration of Employee entering into this
-------------
Agreement, Employee shall be entitled to a bonus of $75,000, payable on or
within fourteen (14) days of the Effective Date.
(d) Employee Benefit Plans. Employer hereby covenants and agrees that
----------------------
it shall include Employee, if otherwise eligible, in any pension plans,
retirement plans, company life insurance plans, medical and/or hospitalization
plans, and/or any and all other benefit plans which may be placed in effect by
Employer during the Term of this Agreement, as such plans may be modified by
Employer from time to time in its sole discretion. Nothing in this Agreement
shall require Employer to
5
<PAGE>
establish any employee benefit plan or to maintain any such plan in existence.
(e) Expense Reimbursement. During the Term of this Agreement, Employer
---------------------
shall either pay directly or reimburse Employee for Employee's reasonable
expenses incurred for the benefit of Employer in accordance with Employer's
general policy regarding reimbursement, as the same may be amended, modified or
changed from time to time, provided that Employee timely submits to Employer
appropriate documentation of such expenses.
(f) Licensing Expenses. Employer hereby covenants and agrees that Employer
------------------
shall pay all licensing fees and expenses incurred by Employee in securing and
maintaining such licenses and permits required of Employee in order to perform
his duties under this Agreement.
(g) Vacations and Holidays. Commencing as of the Effective Date of this
----------------------
Agreement, Employee shall be entitled to (i) annual paid vacation leave in
accordance with Employer's standard policy therefor, as such policy may be
modified by Employer from time to time in its sole discretion, to be taken at
such times as selected by Employee and approved by Employer, and (ii) the
following paid holidays (or, at Employer's option, an equivalent number of paid
days off): New Year's Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, Christmas Day and up to three (3) additional floating holidays
which vary from year to year.
(h) Payroll Deductions; Continued Employment Required. All of the
-------------------------------------------------
compensation provided to Employee under this Agreement shall be subject to such
payroll deductions as are required by law. Except to the extent otherwise
provided in Paragraph 7(d) of this Agreement, Employee's right to continue to
receive the compensation set forth in this Agreement shall be expressly
conditioned on Employee's remaining employed by Employer under this Agreement.
6
<PAGE>
9. LICENSING REQUIREMENTS.
----------------------
(a) Employer and Employee hereby covenant and agree that this Agreement
may be subject to the approval of the Louisiana Gaming Control Board and any
other jurisdiction in which Employer or Employer's Affiliates conducts business
(the "Gaming Authorities") pursuant to the provisions of the Louisiana Riverboat
Economic Development and Gaming Control Act and any other applicable law and the
regulations promulgated thereunder (collectively, the "Gaming Acts"). In the
event this Agreement is required to be approved by the Gaming Authorities and is
not so approved by the Gaming Authorities, this Agreement shall immediately
terminate and shall be null and void and of no further force or effect;
provided, however, should this Agreement not be approved by the Gaming
Authorities, Employer and Employee shall hereby covenant and agree that, with
the exception of the provisions of Paragraph 8 of this Agreement, this Agreement
shall be deemed modified and amended so as to receive the appropriate approval
from the Gaming Authorities.
(b) Employer and Employee hereby covenant and agree that, in order for
Employee to discharge the duties required under this Agreement, Employee may be
required to hold casino key employee licenses (the "Licenses") as issued by one
or more of the Gaming Authorities pursuant to the terms of the Gaming Acts and
as otherwise required by this Agreement. In the event that any of the Gaming
Authorities objects to the renewal of Employee's License, or any of the Gaming
Authorities refuses to renew Employee's applicable License, Employer, at
Employer's sole cost and expense, shall promptly defend such action and shall
take such reasonable steps as may be required to secure such Gaming Authority's
approval. The foregoing notwithstanding, if such Gaming Authority's refusal to
renew Employee's License arises as a result of any of the events described in
Paragraph 1(a) of this Agreement, Employer's obligations under this Paragraph 9
shall not be operative and Employee shall promptly reimburse Employer upon
demand for any expenses incurred
7
<PAGE>
by Employer pursuant to this Paragraph 9.
10. CONFIDENTIALITY. Employee hereby warrants, covenants and agrees that,
---------------
without the prior express written approval of Employer, Employee shall hold in
the strictest confidence and shall not disclose to any person, firm, corporation
or other entity, any and all of Employer's confidential information, including,
but not limited to (i) information or other documents concerning Employer's
business, customers or suppliers; (ii) Employer's marketing methods, files and
credit and collection techniques and files; or (iii) Employer's trade secrets
and other "know-how" or information not of a public nature, regardless of how
such information came into the custody of Employee. The warranty, covenant and
agreement set forth in this Paragraph 10 shall not expire, shall survive this
Agreement and shall be binding upon Employee without regard to the passage of
time or other events.
11. RESTRICTIVE COVENANT. Employee hereby covenants and agrees that,
--------------------
during the Term of this Agreement, Employee shall not directly or indirectly,
either as a principal, agent, employee, employer, consultant, partner,
shareholder of a closely held corporation or shareholder in excess of five
percent (5%) of a publicly traded corporation, corporate officer or director, or
in any other individual or representative capacity, engage or otherwise
participate in any manner or fashion in any business that is in competition with
the principal business activity of Employer or Employer's Affiliates in or about
the State of Louisiana, including any navigable waterways which are wholly
within the State of Louisiana, which are partly within the State of Louisiana
and partly outside the State of Louisiana, or which form a boundary between the
State of Louisiana and any other state or body politic. Employee hereby further
acknowledges and agrees that the restrictive covenant contained in this
Paragraph 11 is reasonable as to duration, terms and geographical area and that
the
8
<PAGE>
same protects the legitimate interests of Employer and Employer's Affiliates,
imposes no undue hardship on Employee and is not injurious to the public.
12. BEST EVIDENCE. This Agreement shall be executed in original and
-------------
"Xerox" or photostatic copies and each copy bearing original signatures in ink
shall be deemed an original.
13. SUCCESSION. This Agreement shall be binding upon and inure to the
----------
benefit of Employer and Employee and their respective successors and assigns.
14. ASSIGNMENT. Employee shall not assign this Agreement or delegate his
----------
duties hereunder without the express written prior consent of Employer thereto.
Any purported assignment by Employee in violation of this Paragraph 14 shall be
null and void and of no force or effect. Employer shall have the right to
assign this Agreement freely; provided, however, that in the event of such an
assignment by Employer and the assignee subsequently defaults under the terms of
this Agreement, Employer shall remain liable for compliance with the terms of
Paragraph 8 of this Agreement.
15. AMENDMENT OR MODIFICATION. This Agreement may not be amended,
-------------------------
modified, changed or altered except by a writing signed by both Employer and
Employee.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Louisiana in effect on the Effective
Date of this Agreement.
17. NOTICES. Any and all notices required under this Agreement shall be in
-------
writing and shall either hand-delivered; mailed by certified mail, return
receipt requested; or sent via telecopier addressed to:
9
<PAGE>
TO EMPLOYER: HWCC Development Corporation
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, Texas 75240
Attention: General Counsel
TO EMPLOYEE: Juris Basens
1303 Bay Ridge Drive
Benton, Louisiana 71006
All notices hand-delivered shall be deemed delivered as of the date
actually delivered. All notices mailed shall be deemed delivered as of three (3)
business days after the date postmarked. All notices sent via telecopier shall
be deemed delivered as of the next business day following the date of the
confirmation of delivery. Any changes in any of the addresses listed herein
shall be made by notice as provided in this Paragraph 17.
18. INTERPRETATION. The preamble recitals to this Agreement are
--------------
incorporated into and made a part of this Agreement. Titles of paragraphs are
for convenience only and are not to be considered a part of this Agreement.
19. SEVERABILITY. In the event any one or more provisions of this
------------
Agreement is declared judicially void or otherwise unenforceable, the remainder
of this Agreement shall survive and such provisions shall be deemed modified or
amended so as to fulfill the intent of the parties hereto.
20. DISPUTE RESOLUTION. Except for equitable actions seeking to enforce
------------------
any of the provisions of Paragraphs 10 and 11 of this Agreement, as to which the
parties expressly agree that jurisdiction shall lie solely with the 26/th/
Judicial District Court of Bossier Parish, Louisiana, and agree to submit to the
personal jurisdiction of such court, any and all claims, disputes or
controversies between the parties hereto arising from or otherwise relating to
this Agreement or any
10
<PAGE>
alleged breach thereof, on the written demand of either of the parties hereto,
shall be submitted to and be determined solely by final and binding arbitration
held in New Orleans, Louisiana in accordance with the Employment Dispute
Resolution Rules of the American Arbitration Association. This Agreement to
arbitrate shall be specifically enforceable in any court of competent
jurisdiction, and an arbitrator's award in connection with any such dispute may
be enforced by any court with jurisdiction thereof.
21. WAIVER. None of the terms of this Agreement, including this Paragraph
------
21, 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.
22. PAROL. This Agreement constitutes the entire agreement between
-----
Employer and Employee with respect to the subject matter hereto and this
Agreement supersedes any prior or contemporaneous understandings, agreements or
undertakings by and between Employer and Employee with respect to the subject
matter hereof.
23. CONDITION PRECEDENT. Notwithstanding anything to the contrary set
-------------------
forth in this Agreement, this Agreement and the obligations of the parties
hereto are subject to the successful pricing of the first mortgage notes in the
original principal amount of approximately $150 million to be issued by
Hollywood Casino Shreveport and Shreveport Capital Corporation.
11
<PAGE>
IN WITNESS WHEREOF AND INTENDING TO BE LEGALLY BOUND THEREBY, the parties
hereto have executed and delivered this Agreement as of the year and date first
above written.
HWCC DEVELOPMENT CORPORATION
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
/s/ JURIS BASENS
--------------------------------
Juris Basens
12
<PAGE>
EXHIBIT 10.9
ASSIGNMENT AND ASSUMPTION AGREEMENT
-----------------------------------
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Agreement") is entered
---------
into of the 1/st/ day of September, 1999, by and between HWCC Development
Corporation ("HWCC Development") and HOLLYWOOD CASINO SHREVEPORT ("HCS").
---------------- ---
RECITALS
--------
WHEREAS, HWCC Development and Juris Basens entered into that certain
Employment Agreement dated August 4, 1999 (the "Basens Agreement"), pursuant to
----------------
which HWCC Development agreed to employ Basens;
WHEREAS, Section 14 of the Basens Agreement provides that HWCC Development
may freely assign its rights and obligations in and arising under the Basens
Agreement; and
WHEREAS, HWCC Development desires to assign its rights and obligations in
and under the Basens Agreement to HCS, and HCS desires to assume HWCC
Development's rights and obligations in and arising under the Basens Agreement.
AGREEMENT
---------
NOW, THEREFORE, for good and valuable consideration and ten dollars,
receipt of which is hereby acknowledged, the parties hereto agree as follows:
1.01 Assignment. HWCC Development hereby conveys, transfers and assigns
----------
all of its rights, title, interests and obligations in and arising under the
Basens Agreement to HCS.
1.02 Assumption. HCS hereby assumes all of the rights, title, interests
----------
and obligations of HWCC Development in and arising under the Basens Agreement.
1.03. Miscellaneous. All terms and conditions regarding the
-------------
construction, applicable law and other miscellaneous matter covered in the
Basens Agreement are incorporated hereby by reference.
IN WITNESS HEREOF, this Agreement is executed by the undersigned as of the
first date first written above.
HWCC DEVELOPMENT CORPORATION
By: /s/ JACK E. PRATT
--------------------------------
Name: Jack E. Pratt
Title: Chairman of the Board and
President
<PAGE>
HOLLYWOOD CASINO SHREVEPORT
By: HCS I, Inc., its managing general partner
By: /S/ WILLIAM D. PRATT
------------------------------------
Name: William D. Pratt
Title: Executive Vice President,
General Counsel and Secretary
2
<PAGE>
EXHIBIT 10.10
COMPROMISE AGREEMENT
--------------------
This Compromise Agreement (the "Compromise Agreement") is entered into by
and among Hilton New Orleans Corporation, a Louisiana corporation ("HNOC"), New
Orleans Paddlewheels, Inc., a Louisiana corporation ("NOP"), Queen of New
Orleans at the Hilton Joint Venture, a joint venture of HNOC and NOP organized
under Louisiana law ("QNOV"), and the City of New Orleans ("City").
RECITALS
--------
A. QNOV is the holder of a riverboat gaming license issued and regulated
by the Louisiana Gaming Control Board ("the Board"). Whenever a matter referred
to in this Compromise Agreement requires "Board approval," such approval shall
be evidenced by an order executed by the Board (or, if authorized, by its
Chairman), which order is unconditional as to the subject matter thereof, or
contains conditions which are acceptable to QNOV, HNOC and NOP.
B. HNOC intends to terminate its participation in QNOV and Shreveport
Paddlewheels, L.L.C. ("Shreveport Paddlewheels," an entity with the same
ownership as NOP), HWCC-Louisiana, Inc. ("Hollywood"), a wholly-owned subsidiary
of Hollywood Casino Corporation, and Sodak Louisiana, L.L.C. ("Sodak"), a
wholly-owned subsidiary of Sodak Gaming, Inc., intend to become joint venturers
in QNOV (or a new entity which will succeed to QNOV's rights and obligations) to
operate a riverboat gaming vessel berthed in the City of Shreveport, State of
Louisiana, in conjunction with a project to be approved by the Board (same being
referred to herein as QNOV whether a new successor entity is formed or a new
name is used).
C. On or about October 20, 1997, QNOV filed a petition with the Board
requesting approval of the transfer of interest in QNOV from HNOC to NOP and/or
Shreveport Paddlewheels, Sodak and Hollywood (such request is the "NOP Transfer
Request" and the transfer of such interests is the "Transfer") and approval of
QNOV's Shreveport project both as more fully described in the memorandum
attached to the Petition (the "Shreveport Project Request"). The NOP Transfer
Request and the Shreveport Project Request have been taken under advisement and
shall be decided by the Board in due course. Hollywood and Sodak have agreed to
execute a side agreement relating to the obligations of QNOV to the City.
D. Pursuant to an order of the Board dated October 11, 1996, QNOV
previously established an escrow account in the amount of $6 million. QNOV
requested that the escrow account be terminated at the Board meetings held on
October 21, 1997 and November 18, 1997 ("Escrow Termination Request").
E. City, through its Department of Finance, Bureau of Revenue, and
through Marina H. Kahn, Director of Finance (the "Department of Finance") has
made demands upon QNOV, NOP, HNOC, the Flamingo Casino and others for alleged
sales and use taxes, ad valorem taxes, boarding fees, interest, penalties,
attorneys fees and audit costs in the aggregate sum of THREE MILLION EIGHT
HUNDRED TEN THOUSAND SEVEN HUNDRED EIGHTY FIVE and 46/100
<PAGE>
($3,810,785.46) DOLLARS, as described in the attached Exhibits "A-1" and "A-2,"
all allegedly arising out of the operation of the M/V QUEEN OF NEW ORLEANS
(d/b/a Flamingo Casino), (the "Vessel"), which operated from a berth in the City
of New Orleans through September 30, 1997 (the "Tax Claims").
F. City has also alleged, and QNOV has denied, that QNOV is indebted to
City in the sum of TEN MILLION and no/100ths ($10,000,000) DOLLARS (the "Moving
Claims") pursuant to an Order of the Board dated October 11, 1996.
G. In connection with the Tax Claims, City has caused the seizure of
various assets of QNOV, NOP and HNOC including certain bank deposits and funds
in which QNOV, HNOC and/or NOP have or are alleged to have an ownership or
similar interest ("the Bank Seizure") and the Vessel owned by HNOC ("the
Flamingo Seizure") and the parties have instituted various legal proceedings,
including:
(1) New Orleans Paddlewheels, Inc. v. Marina Kahn, Director of the
Department of Finance, Bureau of Revenue of the City of New Orleans, Orleans
Parish Civil District Court No. 97-16630, and any and all appeals thereof;
(2) Queen of New Orleans at the Hilton Joint Venture and New Orleans
Paddlewheels, Inc. v. Marina Kahn, Director of the Department of Finance, Bureau
of Revenue of the City of New Orleans, Orleans Parish Civil District Court No.
97-16629, and any and all appeals thereof;
(3) Marina Kahn, Director of Finance, City of New Orleans v. Queen of New
Orleans at the Hilton Joint Venture, New Orleans Paddlewheels, Inc. and Hilton
New Orleans Corporation, Orleans Parish Civil District Court No. 97-17222, and
any and all appeals thereof.
Collectively, all of such suits are referred to as the "Tax Litigation."
H. City has also filed the following suits or petitions:
(1) The City of New Orleans v. The Louisiana Gaming Control Board, the
State of Louisiana, The Queen of New Orleans at the Hilton Joint Venture, New
Orleans Paddlewheels, Inc. and Hilton New Orleans Corporation, 19th Judicial
District Docket No. 443,179, and any and all appeals thereof; and
(2) A petition styled "Petition for Rehearing and Clarification of Board
Order" with the Board (the "City Petition").
Collectively, the foregoing suit and petition are referred to as the
"Gaming Litigation."
I. The discontinuance of operations of the Vessel by QNOV has resulted in
the loss of jobs of approximately 362 former employees of QNOV ("the Unemployed
Workers").
2
<PAGE>
J. The parties hereto appeared at public meetings of the Board held on
October 21, 1997 and November 18, 1997, during which the parties entered into
and stipulated on the record a compromise of the Tax Claims and the Moving
Claims that City has asserted or may have asserted against QNOV, HNOC and/or NOP
as well as any and all defenses, counterclaims, and cross-claims that QNOV, HNOC
and/or NOP have or may have against City, whether asserted or unasserted (the
"Counterclaims") arising out of the operation or discontinuance of the operation
of the Vessel and/or the Bank Seizure and/or the Flamingo Seizure.
K. The parties desire to further evidence and establish the terms and
conditions of the compromise reached among them by execution of this Compromise
Agreement.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the payments to be received hereunder
and for additional good and valuable consideration, the parties agree as
follows:
Section 1. RECITALS
1.1 The Recital paragraphs appearing immediately above are
incorporated herein by this reference and the parties hereto acknowledge the
accuracy of the statements made therein.
Section 2. OBLIGATIONS IMPOSED UPON AND UNDERTAKEN BY HNOC
2.1 Upon Board approval of the Escrow Termination Request and the
transfer of the interest of HNOC in QNOV to NOP, Hollywood and Sodak, or their
respective affiliates or designees, HNOC will pay unto City the sum of FIVE
MILLION and no/100ths ($5,000,000.00) in cash, in satisfaction of HNOC's
obligations for the Moving Claims and thereafter HNOC and its affiliates shall
have no further responsibility or liability to City or any other party hereto
with respect to the Moving Claims, and the obligations of QNOV shall
specifically exclude HNOC.
2.2 Intentionally omitted.
2.3 HNOC and its parent, Hilton Hotels Corporation, agree to offer to
the former employees of QNOV comparable employment at its other gaming
properties owned or managed by HNOC, its parent or affiliates, located in
Mississippi, New Jersey, Nevada and Missouri. HNOC and its parent and
affiliates will make available at least 300 such jobs at such properties to
persons that apply for such employment prior to the earlier of October 31, 1998
or the date 90 days after the date that the letter attached hereto as Exhibit
"B" is sent to such persons (the later of such dates is the "Expiration Date").
Any person so applying must meet all licensing and other job criteria and agree
to pay all relocation expenses associated with their new employment. HNOC will
keep the City informed of the responses that it receives to such letter on or
prior to the Expiration Date and the action taken with respect to such
responses. If HNOC and its parent and affiliates are able to place all
qualified former employees that apply on or before the Expiration Date and who
meet the
3
<PAGE>
other requirements set forth above, then all obligations under this Section 2.3
shall be deemed satisfied and fulfilled. Nothing contained herein shall be
construed as an offer of guaranteed employment or employment at any specific
location to any particular person or group of persons.
Section 3. OBLIGATIONS IMPOSED UPON AND UNDERTAKEN BY QNOV
3.1 In partial satisfaction of the Tax Claims, QNOV has previously
delivered to City checks in the amounts of $453,902.34 and $428,955.38 for ad
valorem personal property taxes, and QNOV has also paid to City riverboat gaming
boarding fees for the month of September, 1997 in the amount of $306,650. Upon
the execution hereof QNOV will pay unto City (by check made payable jointly to
the City and its attorneys, Rodney, Bordenave et al.) the sum of NINE HUNDRED
TEN THOUSAND FOUR HUNDRED AND NINETY TWO AND 28/100ths ($910,492.28) DOLLARS in
cash, which, when combined with the prior payments, will constitute payment of
TWO MILLION ONE HUNDRED THOUSAND AND 00/100 ($2,100,000) DOLLARS in full
satisfaction and final settlement of the Tax Claims together with all attorney
fees and related expenses incurred by City in connection with City's efforts to
collect the Tax Claims, the Moving Claims, in negotiating and consummating this
Compromise Agreement, and in connection with the Bank Seizure and the Flamingo
Seizure.
3.2 If the Shreveport Project Request is approved by the Board and
the Transfer occurs, for the remainder of the satisfaction of the Moving Claims,
QNOV hereby agrees to pay to City the sum of FIVE MILLION and no/100ths
($5,000,000.00) DOLLARS immediately following receipt by QNOV of the first
proceeds of the financing, other than equity contributions of the QNOV partners
(whether such financing is through debt, equity, or a combination thereof)
obtained by it for the commencement of construction of landside facilities in
Shreveport, Louisiana representing approximately 70% of the total project cost,
or about $100 million ("the Shreveport Financing"). If the Shreveport Financing
shall not be obtained but the Shreveport Project is nonetheless constructed and
opened for business, then the $5,000,000 payment shall be due on or before the
date of opening. It is expressly understood and agreed that the aforesaid
amount shall become due and payable immediately following receipt of the first
debt or loan proceeds so obtained, and if the Shreveport Financing does not
occur and the Shreveport Project is not otherwise constructed and opened for
business, QNOV shall have no further obligation to the City hereunder or
otherwise. QNOV expressly agrees to provide City with written reports every
thirty (30) calendar days concerning the progress of the Shreveport Financing
and with copies of all applications submitted to any banks or other commercial
lenders to obtain such financing with copies of any Offering Summaries or
similar documents prepared by it to solicit or obtain any equity or bond
financing, whether public or private.
3.3 If the Shreveport Project Request is approved by the Board and
the Transfer occurs, QNOV agrees to provide preferred access to reemployment to
at least 100 Unemployed Workers (or such lesser number as then remain
unemployed) who meet all licensing and other job criteria and who agree to pay
all relocation expenses associated with their new employment, in connection with
the riverboat gaming project in Shreveport. QNOV agrees to provide City with
full
4
<PAGE>
details of the implementation of this reemployment program at least sixty (60)
calendar days prior to commencing operations in Shreveport. Nothing contained
herein shall be construed as an offer of guaranteed employment to any particular
person or group of persons.
Section 4. MUTUAL RELEASES AND INDEMNITIES
4.1 (a) Upon execution of this Compromise Agreement by all parties
and payment of the sums due City as provided in Section 3.1 hereof, City does
hereby release, forgive, acquit, and forever discharge QNOV, HNOC, NOP and their
respective agents, servants, employees, officers, managers, stockholders,
partners, directors, underwriters, insurers, subsidiary, parent and affiliated
corporations, successors, assigns and the M/V QUEEN OF NEW ORLEANS and any other
vessel or vessels which are, or might be involved, and her mastering crew, her
agents, her owners or charterers, her managers and/or her underwriters, and such
vessels shall be fully and finally released from all claims for alleged tax
indebtedness owed by QNOV, NOP and HNOC, including, without limitation, the Tax
Claims and all other claims regarding Amusement Tax, Riverboat Gaming Admission
Fee, Sales and Use Tax, Tobacco Products Special Tax, and Occupational License
Tax, from May 20, 1992 through the date hereof, including all claims, demands,
liens, rights and causes of action of whatsoever kind arising from the
aforementioned Tax Litigation, or the matters referenced therein, whether
pending or that could have been brought in the Tax Litigation, and
(b) Upon (1) execution of this Compromise Agreement by all parties, and
(2) payment to the City of the $5 million as provided in Section 2.1 hereof, for
and in consideration thereof and in consideration of the reciprocal release
contained herein, City does hereby release, forgive, acquit, and forever
discharge QNOV, HNOC, NOP and their respective agents, servants, employees,
officers, managers, stockholders, partners, directors, underwriters, insurers,
subsidiary, parent and affiliated corporations, successors, assigns and the M/V
QUEEN OF NEW ORLEANS and any other vessel or vessels which are, or might be
involved, and her mastering crew, her agents, her owners or charterers, her
managers and/or her underwriters, and such vessels shall be fully and finally
released from the Moving Claims including all claims, demands, liens, rights and
causes of action of whatsoever kind arising from the aforementioned Tax
Litigation and Gaming Litigation, or the matters referenced therein, whether
pending or that could have been brought in the Tax Litigation and Gaming
Litigation. Notwithstanding anything herein to the contrary, the obligations of
the parties under or evidenced by this Agreement, and any rights or claims for a
breach thereof, shall not be waived, released or discharged under this Section
or otherwise.
(c) The matters released and discharged hereby shall include, but not be
limited to, any pending claims and claims that could have been brought for
penalties, attorney's fees, interest, audit or examination costs, and all
costs, fees, expenses or other payments due to City and/or the Civil Sheriff of
the Parish of Orleans, and any and all additional fees, costs, expenses or other
payments due to or incurred by the City or the Civil Sheriff shall be borne by,
and be the sole responsibility of, City.
5
<PAGE>
4.2 For good and valuable consideration, receipt of which is hereby
acknowledged, QNOV, NOP, and HNOC their successors and assigns, and the
officers, directors, agents, employees, and attorneys of any of them, do hereby
release, forgive, acquit, and forever discharge, City, its agencies and
departments, and all officials, agents, employees, and attorneys of any of them,
from any and all further liability whatsoever by virtue of the Counterclaims
arising out of the operation or discontinuance of the operation of the Vessel
and/or the Bank Seizure and/or the Flamingo Seizure. This release shall be
effective as to the Bank Seizure, the Flamingo Seizure and the Tax Claims upon
the execution of this Compromise Agreement and the release by City of the Bank
Seizure and the liens on the accounts subject thereto, and the Flamingo Seizure
and the liens on the M/V Queen of New Orleans, and any other assets seized by
City. This release shall be effective as to the Moving Claims upon receipt by
the City of the $5 million as set forth in Section 2.1.
4.3 Upon the effectiveness of the foregoing releases, each of the
parties agrees to take any and all actions, and to file such pleadings, motions,
petitions or other items as are necessary to dismiss any and all pending law
suits or other litigation between them concerning the Tax Claims, the Moving
Claims, and/or the Counterclaims, including each suit comprising the Tax
Litigation and the Gaming Litigation, and to withdraw the City Petition. All
such suits shall be dismissed with prejudice, each party to bear its own
respective costs. Each party represents and warrants to the other parties that
it knows of no other litigation pending or filed with respect the matters
referenced herein or the business of QNOV.
4.4 NOP and HNOC do hereby agree to indemnify City, its agencies and
departments, and all officials, agents, employees, and attorneys of any of them,
from any and all actual losses by virtue of claims or litigation, presented or
filed by persons or entities who are not parties to this Compromise Agreement,
arising out of the discontinuance of the operation of the Vessel and/or the Bank
Seizure and/or the Flamingo Seizure; provided that the foregoing shall not apply
to any loss, claim, or litigation involving any governmental entity or body
(including, without limitation, the Civil Sheriff of the Parish of Orleans or
any other costs or expenses relating to the Vessel Seizure and the Bank
Seizure).
Section 5. MISCELLANEOUS
5.1 It is expressly agreed, acknowledged and understood that the
payments and other matters and actions referenced herein are made purely by way
of compromise and settlement and are in no way to be construed as an admission
of liability on the part of any party hereto or as an admission of the validity
of any tax or other payment alleged to have been due from any party.
5.2 Any party hereto may specifically waive any breach of this
Compromise Agreement by the other party but no such waiver shall be deemed to
have been given unless the waiver is in writing signed by the waiving party and
specifically designating the breach waived nor shall any such waiver constitute
a continuing waiver of similar or other breaches.
6
<PAGE>
5.3 If, for any reason whatsoever, any one or more of the provisions
of this Compromise 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 Compromise Agreement inoperative, unenforceable or invalid and the
inoperative, unenforceable or invalid provisions shall be construed as if it
were written so as to effectuate, to the maximum extent possible, to parties'
intent.
5.4 The existence, validity, construction, operation and effect of
any and all terms and provisions of this Compromise Agreement shall be
determined in accordance with and governed by the internal laws of the State of
Louisiana.
5.5 This Compromise 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
Compromise Agreement may be amended only by a written signing by duly authorized
representatives for all the parties to this Compromise Agreement.
5.6 (a) Notices Procedure. All notices or other communications
-----------------
required or permitted to be given or delivered pursuant to this Compromise
Agreement shall be in writing and shall be considered as properly given if
mailed by Certified United States mail, postage prepaid, with return receipt
requested, overnight courier service or facsimile transmission with receipt
confirmed. Any party hereto may from time to time, by notice in writing served
upon the other parties hereto pursuant to this Section designate a different
address or person to whose attention notices shall be given. Notices hereunder
shall be deemed given upon receipt.
(b) Addresses. The addresses of the parties hereto for notices
---------
are:
City: City of New Orleans
1300 Perdido Street
City Hall
New Orleans, LA 70112
Attention: City Clerk
and
City Attorney
1300 Perdido Street
City Hall
New Orleans, LA 70112
Attention: Avis Russell
and
7
<PAGE>
Rodney, Bordenave, Boykin, Bennette &
Boyle
400 Poydras Street - Suite 2450
New Orleans, LA 70130
Attention: Roy J. Rodney, Jr.
Hilton New Orleans Corporation: Hilton Hotels Corporation
9336 Civic Center Drive
Beverly Hills, CA 90210
Attention: Thomas J. Baltimore, Jr.
and
Phelps Dunbar, L.L.P.
400 Poydras Street, Thirtieth Floor
New Orleans, LA 70130-3245
Attention: David P. Steiner
New Orleans Paddlewheels, Inc.:
610 South Peters, Suite 202
New Orleans, Louisiana 70130
Attn: Mr. Duane P. Smith
and
McGlinchey Stafford
643 Magazine Street
New Orleans, Louisiana 70130
Attn: Richard P. Richter, Esq.
Notices to the Queen of New Orleans at the Hilton Joint Venture should be sent
to each of the parties listed herein other than the City.
Sodak Gaming, Inc.:
Sodak Gaming, Inc.
5301 South Highway 16
Rapid City, SD 57701
Hollywood Casino Corporation:
8
<PAGE>
Hollywood Casino Corporation
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, Texas 75240
5.7 This Compromise 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.
5.8 Captions in this Compromise Agreement are for convenience only
and shall not be considered or referred to in resolving questions of
interpretation of this Compromise Agreement.
5.9 There shall be no third party beneficiaries to this Compromise
Agreement.
5.10 The release in favor of QNOV, NOP, and HNOC, their successors and
assigns, and the officers, directors, agents, employees, and attorneys of any of
them provided in Section 4.1 above shall be automatically and retroactively
voided and all released obligations shall be automatically reinstated as if such
release had never been given if, at any time, any payment or part thereof to
City with respect to any of the released obligations or claims, or the release
provided in Section 4.2 above to City, is avoided, rescinded, or must otherwise
be restored by City pursuant to any insolvency, bankruptcy, reorganization,
receivership, or an other debt relief granted to QNOV or NOP or HNOC or any of
their successors and assigns or of any other person. In the event that City
shall be obligated to restore any payment or part thereof to City with respect
to any of the released obligations or claims, or the release provided in Section
4.2 above to City is avoided for any reason, the obligations and claims
released under Section 4.1 above shall be renewed, restored, and reinstated and
shall remain in full force and effect to the same degree and extent as if such
release had never been granted. Nothing contained in this Section shall be
deemed an admission of liability by QNOV, NOP, and HNOC, the parties recognizing
and agreeing that all defenses to liability held by all or any of them, if any,
shall be reinstated and restored to the same degree and extent as the
obligations and claims shall be reinstated and restored. Notwithstanding the
above, in the event that the release provided in Section 4.1 shall be voided
pursuant to this Section, the release provided by QNOV, NOP, and HNOC under
Section 4.2 above shall remain in full force and effect. The provisions of this
Section shall apply only to the payments hereunder for which a party is
responsible under this Agreement so that for example, if any payment under
Sections 3.2 hereof is returned by the City, such event shall not affect the
release of HNOC under Section 2.2 hereof.
IN WITNESS WHEREOF, the parties have executed this Compromise Agreement, in
multiple originals, as of the 15th day of September, 1998.
QUEEN OF NEW ORLEANS AT THE HILTON JOINT VENTURE, a
Louisiana Joint venture
9
<PAGE>
By: HILTON NEW ORLEANS CORPORATION, a
Louisiana Corporation
By:
-----------------------------------
Name:
----------------------------------
Title:
--------------------------------
By: NEW ORLEANS PADDLEWHEELS, INC., a
Louisiana Corporation
By:
-----------------------------------
Name:
----------------------------------
Title:
--------------------------------
10
<PAGE>
HILTON NEW ORLEANS CORPORATION, a Louisiana Corporation
By:
-----------------------------------
Name:
----------------------------------
Title:
--------------------------------
NEW ORLEANS PADDLEWHEELS, INC., a Louisiana Corporation
By:
-----------------------------------
Name:
----------------------------------
Title:
--------------------------------
CITY OF NEW ORLEANS
By:
-----------------------------------
Name:
----------------------------------
Title:
--------------------------------
Hilton Hotels Corporation has executed this Compromise Agreement for the
sole and exclusive purpose of Section 2.3 hereof, and each of the parties
acknowledge and agree that Hilton Hotels Corporation shall have no liabilities
or obligations other than those specifically set forth in such Section 2.3.
HILTON HOTELS CORPORATION
By:
-----------------------------------
Name:
----------------------------------
Title:
--------------------------------
11
<PAGE>
EXHIBIT 10.11
LOAN AND SETTLEMENT AGREEMENT
This Agreement is executed as of January 16, 1998 between New Orleans
Paddlewheels, Inc. ("NOP"), Shreveport Paddlewheels, L.L.C. ("Shreveport
Paddlewheels"), HWCC-Louisiana, Inc., ("Hollywood"), Sodak Louisiana, L.L.C.
("Sodak") and Hilton New Orleans Corporation ("HNOC"). Capitalized terms not
defined herein shall have the same meanings ascribed to such terms in that
certain Compromise Agreement of even date herewith among HNOC, NOP, the City of
New Orleans ("City") and Queen of New Orleans at the Hilton Joint Venture
("QNOV").
1. Settlement of Moving Claims and Loan Agreement.
A. Pursuant to an order of the Louisiana Gaming Control Board
("LGCB") (submitted to the LGCB in a form approved by each of the parties
hereto), approving the Compromise Agreement and that certain Escrow
Agreement of even date, and in partial settlement and compromise of the
Moving Claims described therein, HNOC has (i) agreed to pay the City the
sum of $3 million (the "Initial Payment"); and (ii agreed to establish an
escrow account containing $2 million (the "Escrow Funds"). Notwithstanding
anything herein or in any other agreement to the contrary, HNOC hereby
acknowledges that the Initial Payment is the sole responsibility of HNOC,
and that neither QNOV, New QNOV, as hereinafter defined, or any other party
hereto shall have any responsibility or liability to HNOC for the repayment
of the Initial Payment.
B. Under the terms of the Escrow Agreement, the Escrow Funds are to
be (i) paid to the City upon the transfer of HNOC's interest in QNOV (the
"Transfer") to the entity which is proposed to consist of NOP and/or
Shreveport Paddlewheels, Sodak and Hollywood, or their affiliates (such
entity is hereafter "New QNOV", each of its partners a "Venturer", and such
partners collectively the "Venturers"); or (ii returned to HNOC if the
Transfer does not occur. If the Escrow Funds are returned to HNOC, then
neither QNOV nor any of the Venturers shall have any obligation or
liability to HNOC with respect to the Escrow Funds (but this shall not
affect any rights of contribution or other rights that the parties may have
for any liability that the City of New Orleans may allege as a result of
the Escrow Funds not being paid to the City). If the Escrow Funds are paid
to the City pursuant to the Escrow Agreement, then such $2 million payment
shall be treated as a loan by HNOC to New QNOV (the "Loan"), repayable as
set forth herein.
C. Following the Transfer and the receipt by New QNOV of the first
proceeds of the Shreveport Financing (the date of such receipt is the
"Funding Date"), except as provided in Section 1D or 1F, below, New QNOV
shall be obligated to re-pay the Loan to HNOC or its designee in ten
monthly installments of $200,000 each, beginning on the first day of the
month following the date that New QNOV commences gaming operations. In this
instance, the Loan shall not bear interest, shall be non-recourse against
any of the Venturers (except to the extent that they are liable under law
as partners of New QNOV) and shall be repayable solely out of revenues of
New QNOV.
-1-
<PAGE>
D. If at any time after the Funding Date, New QNOV publicly announces
its intent to terminate the project, or the project is otherwise
terminated, the Loan shall be accelerated and become immediately due and
payable by New QNOV. In this instance, the Loan shall not bear any
interest (unless not paid within thirty days after termination) and shall
not be secured by New QNOV or any of the Venturers, but HNOC shall be
repaid the Loan from New QNOV out of any funds or other assets then
belonging to New QNOV.
E. If following the Transfer, the Funding Date does not occur or the
Shreveport project is terminated for any reason then (x) HNOC shall be
entitled to seek repayment of $1.5 million of the Loan, only, from NOP; and
(y) each of Hollywood and Sodak shall be unconditionally released from any
and all liability with respect to the Loan. The Loan shall be repayable by
NOP over a period of 36 months, in equal monthly installments of principal,
plus interest on the unpaid balance at the Chase Manhattan Bank prime rate
of interest plus 2 percent per annum, accruing as of the date of
termination of the project as provided under Section D, above. As security
for the repayment of the same, NOP hereby agrees to provide HNOC on or
before the date of Transfer a perfected first security interest in either
(i) $1.5 million in the form of a certificate of deposit, letter of credit,
or a cash escrow in such amount, or (ii a first preferred ship mortgage in
a form acceptable to the parties and in the amount of $2 million
encumbering one of NOP's vessels having a fair market value in excess of
such amount, as determined by appraisal mutually acceptable to HNOC and
NOP. Any such collateral security shall be extinguished and released on
the Funding Date, after which NOP shall have no liability or responsibility
to HNOC for the repayment of any portion of the Loan other than in its
capacity as a partner of New QNOV.
F. New QNOV or NOP, as applicable, agree to pay any costs, fees, expenses
or other amounts (including reasonable attorneys' fees and costs) expended
by HNOC to collect amounts due hereunder. Any installment or payment due
hereunder and not paid shall bear interest at the prime rate (as determined
from the Southeast edition of The Wall Street Journal on the date such
payment came due) plus two percent per annum until paid, and if any
installment is not timely paid, HNOC shall have the right to accelerate the
full principal and interest and demand immediate payment of the full amount
thereof.
2. Partition of Assets of QNOV. Notwithstanding the foregoing or
anything herein to the contrary, as between NOP, QNOV and HNOC, only, such
parties agree that HNOC shall receive any and all of the assets of QNOV located
on the M/V Flamingo and NOP shall be entitled to receive any and all of the
assets of QNOV located in the Chicory/New Orleans Tours buildings. Any remaining
real or personal assets of QNOV will be partitioned equally among NOP and HNOC
(except for proceeds from the Bright Field recovery, which shall be dealt with
as set forth in Section 4 below), and cash, if any, in QNOV subsequent to the
final accounting, or any other claims or rights attributable to or held by QNOV
arising from or related to events or operations prior to the date of the
Transfer shall be evenly split between HNOC and NOP. The assets of QNOV shall
include the escalators which are currently possessed by QNOV for the benefit of
Rouse Corporation, and any proceeds hereafter derived from the sale thereof.
3. Payment of QNOV Obligations and of Funds Due to QNOV. (a) Attached
hereto is a tabulation of the approximate amount of the obligations which are
due to QNOV by, and from
-2-
<PAGE>
QNOV to, NOP and HNOC and the estimated amount of the obligations which are
currently anticipated to be due by QNOV to others (the "Tabulation"). Upon the
release of the Bank Seizure, each of NOP and HNOC agree to pay to QNOV any
amounts due from such party under the Tabulation, and except for the IRC
Repayment, defined hereinbelow, each of HNOC and NOP agrees when necessary, to
fund one-half of any additional shortfall arising from the payment of any other
of QNOV's debts and obligations to third parties which accrued prior to the date
of the Transfer. The Tabulation is not an agreement or acknowledgment that any
third party listed thereon is due such amount, but only an agreement between NOP
and HNOC that they shall fund the amount set forth thereon in order to meet
obligations of the venture, estimated to be as set forth on the Tabulation, and
that if it is ultimately determined by joint agreement or arbitration) that
additional amounts are due and there is not sufficient cash in QNOV to pay such
amounts, that NOP and HNOC will each pay one-half of the amount necessary to
fund such amount. The amounts set forth on the Tabulation as due to NOP or HNOC
are agreed to at the amount set forth on the Tabulation.
(b) If there arises a claim against QNOV (or HNOC or NOP as partners
thereof) for any additional amounts not set forth on the Tabulation, whether
claimed by NOP, HNOC or a third party, NOP and HNOC shall discuss the issues in
good faith and attempt to resolve any disputes in a manner acceptable to both
parties. If they cannot agree, the matter shall be submitted to arbitration
under the rules of the American Arbitration Association, with the parties
agreeing to one arbitrator with experience in gaming matters to hear such
dispute. If the parties cannot agree on one arbitrator, they shall each choose
one arbitrator, and the two so selected shall choose a third, who shall have
such gaming experience. The decision of the arbitrator(s) shall be final and
binding upon the parties, and the decision so rendered may be enforced by the
parties in any court of competent jurisdiction, including the State and Federal
courts in the State of Louisiana. Costs of the arbitrator(s) shall be split by
the parties, unless the arbitrators determine that a party has acted in bad
faith, in which event the costs and fees of such arbitration shall be charged
against such party.
4. IRC Payment. HNOC has previously paid IRC the sum of $750,000 to
effect a settlement of claims brought against QNOV by IRC for payment of
allegedly due excess rentals. In order to repay HNOC such sum, NOP and HNOC will
cause QNOV to assign to HNOC up to, but not in excess of the initial $750,000
received by QNOV in any recovery of insurance or other proceeds due to QNOV in
connection with the collision of the M/V Bright Field (the "Recovery"). Any
proceeds of the Recovery in excess of $750,000 shall be equally divided between
NOP and HNOC. For purposes of the foregoing, the term "Recovery" shall also
include any recovery which is due to HNOC independently for damages to the M/V
Flamingo, and any such recovery shall be treated as though the same was due to
QNOV alone. Each of NOP and HNOC and, to the extent they become partners of
QNOV, Shreveport Paddlewheels, Hollywood and Sodak, agree that the Recovery
shall be disbursed as aforesaid, and they hereby authorize and direct the
employees, agents, insurers or others responsible for such payments to so
disburse the Recovery.
5. QNOV Lease in Chicory Building. NOP hereby gives QNOV the right to
continue to lease space in the Chicory Building until the date of the Transfer,
upon terms and conditions mutually agreed upon between the parties.
-3-
<PAGE>
6. Mutual Releases. From and after the date hereof (i) NOP and HNOC
shall and do hereby reciprocally release QNOV and each other and their
respective affiliates, officers, directors, agents, representatives and
attorneys (including, without limitation, James E. Smith, Jr. and the firm of
Smith Martin), from any and all claims, causes of action or rights associated
with or related to the QNOV venture, excluding those matters set forth below,
but including, without limitation, all of the matters referenced in any
correspondence between NOP and HNOC or its or their representatives, and (ii
except for the obligations undertaken and agreements made herein or in the
Indemnity Agreement or Compromise Agreement, NOP and, after the Transfer, New
QNOV, will assume from QNOV, NOP and HNOC, and be responsible for, all of the
obligations of QNOV and/or HNOC arising under or related to the October 11, 1996
order of the LGCB, and any modification, extension, amendment, alteration or
replacement thereof, other than any obligation to the City of New Orleans
arising from the relocation of the gaming operations of QNOV to Shreveport,
which shall be the obligation of NOP and HNOC, as the former partners of QNOV,
to the extent not assumed or incurred by a party or parties under the Compromise
Agreement. Notwithstanding the foregoing, the release of claims shall not
include any obligations of either NOP, HNOC or QNOV to the other disclosed in
the final accounting made pursuant to the winding up of business of QNOV prior
to the Transfer; the obligation of any of such parties to continue to wind up
such affairs; any liabilities which arise as the result of the breach of this
Agreement, the Compromise Agreement or the Escrow Agreement or under any
documents or agreements hereafter executed as a result of any of such
agreements; or any obligations of the parties to each other under the Indemnity
Agreement of even date herewith, all of which such obligations not released
herein are hereby reaffirmed and acknowledged by the parties. Further,
notwithstanding anything herein to the contrary, it is expressly acknowledged
and agreed by the parties hereto that if any persons or entities released herein
who are not parties to this Agreement, e.g., affiliates or attorneys of any
signatory hereto (hereinafter a "Released Affiliate"), asserts a claim, demand,
cause or right of action against any party herein who has previously granted a
release in favor of such Released Affiliate, the release previously granted to
such Released Affiliate shall be null, void and of no effect, and treated as
though it had never been given. If a party hereunder breaches this Agreement,
the releases granted hereunder shall be void and of no effect.
7. Counterpart Execution and Assignment. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original and which
shall constitute one and the same Agreement. This Agreement may be executed by
facsimile or similar communication, which shall be a legal, valid and binding
agreement of the parties for all purposes, and the party so signing shall
provide the other party an original signed copy of the Agreement as soon as
practicable. HNOC shall be entitled to assign the debt, the payments due
hereunder and/or all other rights to repayment of the loan hereunder to any
successor or designee. If any party hereto transfers any portion of its interest
in QNOV to another party, or if another party becomes a partner in QNOV, then
such transferee or partner shall also be liable for its ratable share of the
obligations of its transferor or its ratable interest in the partnership, as the
case may be, and the transferror or the other partners shall cause such
transferee or partner to so become obligated.
8. Notices and Loan Payments. Payments of the Loan, notices and other
communications shall be delivered to HNOC addressed to Scott LaPorta, Senior
Vice President and Treasurer, Hilton Hotels Corporation, 9336 Civic Center
Drive, Beverly Hills, California 90210. Notices and other communications shall
be delivered to the other parties as follows:
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<PAGE>
If to NOP:
New Orleans Paddlewheels, Inc.
Suite 202
610 South Peters
New Orleans, La. 70130
with a copy to:
Richard P. Richter, Esq.
McGlinchey Stafford
643 Magazine Street
New Orleans, LA 70130
If to Sodak:
Sodak Louisiana, L.L.C.
5301 South Highway 16
Rapid City, SD 57701
If to Hollywood:
HWCC-Louisiana, Inc.
2200 Two Galleria Tower
13455 Noel Road
Dallas, TX 75240
Attn: General Counsel
Any party may change the foregoing address by delivery of notice to the
other parties of such change.
9. Paramount Agreement. This Agreement shall supersede any prior
agreements among the parties hereto with respect to the subject matter contained
herein.
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<PAGE>
10. Attorneys Fees and Remedies. The parties hereto acknowledge and agree
that time is of the essence under this Agreement, and in addition to any other
remedies provided hereunder, under law or in equity, the parties shall be
entitled to the remedy of specific performance and each party hereby waives any
defense to specific performance based upon the adequacy of damages or the
inability of a party to demonstrate or prove irreparable harm. In addition to
the foregoing, the parties acknowledge and agree that if a party is successful
in asserting a breach or failure to perform under this Agreement, the party that
failed to perform shall pay to the prevailing party all costs, attorneys fees
and other expenses of and relating to the action, suit or proceeding. Further,
the parties acknowledge and agree that any damages that may be awarded for a
breach or failure of or under Sections 1(C), 1(D), 1(E), 1(F), 2, or 4, the
requirement to fund the Tabulation amount or to perform an obligation rendered
by an arbitrator under Section 3, and obligations not released under Section 6,
will not fully compensate the parties for the actual damages and other injury
suffered; therefore, the parties agree that in addition to (and not as a
reduction of) all damages that may be awarded, the party breaching or failing to
perform shall pay to the party asserting such breach or failure the sum of two
hundred thousand dollars and no cents ($200,000) as additional and liquidated
damages. The parties hereto agree that such sum is reasonable and acceptable,
and each has consulted with counsel and agrees to such sum as additional and
liquidated damages.
IN WITNESS WHEREOF, the undersigned have executed and delivered this Loan
and Settlement Agreement as of the date first above written.
New Orleans Paddlewheels, Inc. Hilton New Orleans Corporation
- --------------------------------- ---------------------------------
By: Duane Smith By: Wallace R. Barr
Title: President Title: President
Sodak Louisiana, L.L.C. HWCC-Louisiana, Inc.
- --------------------------------- ---------------------------------
By: By:
------------------------------ ------------------------------
Title: Title:
--------------------------- ---------------------------
Shreveport Paddlewheels, L.L.C.
- ---------------------------------
By: Duane Smith
Title: President
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<PAGE>
EXHIBIT 10.12
Landlord: QNOV
Tenant: RED RIVER ENTERTAINMENT COMPANY, L.L.C.
RETAIL SPACE LEASE
ARTICLE I
ARTICLE I DEFINITIONS AND CERTAIN BASIC PROVISIONS
1.1 The following list sets out certain defined terms and certain
financial and other information pertaining to this Lease:
(a) "Landlord": QNOV
(b) Landlord's address: c/o HWCC-Louisiana, Inc.
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, Texas 75246
Attn.: President
(c) "Tenant": Red River Entertainment Company, L.L.C.
(d) Tenant's address: 2205 West Street
Germantown, TN 38138
Attn.: Joseph J. Rodriguez
with copies to: c/o Performa Entertainment Real Estate
203 Beale Street, Suite 300
Memphis, TN 38103
Attn.: John Elkington
Humphreys, Dunlap, Welford, Acuff & Stanton, P.C.
6000 Poplar Avenue, Suite 401
Memphis, TN 38119
Attn.: David F. Leake
(e) [INTENTIONALLY DELETED]
(f) [INTENTIONALLY DELETED]
(g) "Premises": approximately 40,000 square feet of retail space
(which 40,000 square feet of space includes a rear service corridor for the
retail space) contained in or located on a garage and surface parking lot of
the riverboat gaming development being planned by Landlord in Shreveport,
Louisiana on land to be leased by Landlord from the City of Shreveport, as
more particularly identified on Exhibit "A," incorporated herein and made a
part hereof for all purposes.
(h) "Commencement Date": the earlier of (i) 180 days after the
Premises are deemed "ready for tenant improvements" (as defined in Section
3.1 of this Lease), or (ii) the date the first retailer opens for business
in the Premises.
<PAGE>
(i) "Lease Term": The initial term (the "Initial Term") of this Lease
shall commence on the Commencement Date and continuing through the Initial
Term as set forth and defined in the Ground Lease (defined herein).
Provided an Event of Default (hereinafter defined) has not occurred, or to
the extent an Event of Default has occurred it has been either waived by
Landlord or cured within the applicable cure period set forth in this Lease,
Tenant shall have three (3) five year options to renew this Lease of the
entire Premises in "as is" condition on the same terms and conditions herein
contained except that, from the commencement of the first five-year renewal
term through the remainder of the Lease Term, the Special Allocation
(hereinafter defined) shall not be deducted in determining Net Cash Flow
(hereinafter defined). Notice of Tenant's intention to exercise this option
must be given to Landlord in writing not less than one hundred eighty (180)
prior to the expiration of the Initial Term or the applicable renewal term.
These options shall apply only to Tenant and not to Subtenants of Tenant.
These options shall also be specifically subject to the buyout right of
Landlord described in Section 26.20, and in the event such right is
exercised by Landlord, the remainder of the applicable renewal term shall
terminate in accordance with Section 26.20, and upon such termination
neither party shall have any further rights or obligations hereunder. The
term "Lease Term" shall include the Initial Term and any renewal term at the
time that Tenant's option(s) to renew is properly exercised.
(j) "Minimum Guaranteed Rental": $6.00 per square foot annually,
payable in arrears in twelve (12) monthly installments per year.
(k) "Net Cash Flow": All cash received by Tenant in connection with
its operation of the Premises (excluding leasing commissions received by
Tenant) and premises adjacent thereto, including, without limitation, all
rentals and assessments for maintenance and repair costs received from
Subtenants, less the sum of Minimum Guaranteed Rental paid by Tenant to
Landlord, the Management Fee, the Special Allocation (as each such term is
hereinafter defined), and the actual maintenance, operating (e.g. insurance,
on-site personnel and marketing) and repair costs of Tenant (which shall
mean the documented maintenance, operating and repair costs of Tenant for
the Premises, but in no event shall such amount be greater than $7.00 per
square foot) for the Premises, provided, however, that during any renewal
term of this Lease, Net Cash Flow shall not be reduced by the Special
Allocation.
(l) "Percentage Rental": For each calendar year during the Lease
Term, Percentage Rental shall equal the sum of (i) 50% of Tenant's Net Cash
Flow which does not exceed $550,000 per calendar year, (ii) thereafter, 25%
of Tenant's Net Cash Flow in excess of $550,000 and which does not exceed
$615,000 during the calendar year, and (iii) thereafter, 40% of Tenant's Net
Cash Flow during the calendar year. In the event that either the
Commencement Date is a date other than January 1st, or the termination date
of this lease is other than December 31st, Percentage Rental for each
partial calendar year during the Term shall be prorated. Such proration
shall be made by using the formula set forth in the definition of
"Percentage Rental" except that the numbers $550,000 and $615,000 contained
within the definition of the term "Percentage Rental" shall be replaced with
a number determined by multiplying $550,000 or $615,000, as applicable,
times a fraction (the "Percentage Rent Fraction"), the numerator of which
shall be the number of days that have elapsed in the relevant partial
calendar year and the denominator of which shall be the number of calendar
days i.e, either 365 or 366, in such calendar year. For example, Percentage
Rental for a partial calendar year commencing January 1st and ending August
31st shall be calculated as follows, assuming that Net Cash Flow for the
period is $750,000:
2
<PAGE>
Number of dates between (and including) January 1st and
August 31st in non-leap year = 243
243/365 = 66.58%
$550,000 x 66.58% = $366,190
$615,000 x 66.58% = $409,467
$750,000 - $409,467 = $340,533 x 40% = $136,213.20
$409,467 - $366,190 = $43,277 x 25% = 10,819.25
$366,190 x 50% = $183,095.00
-----------
TOTAL $330,127.45
===========
(m) "Gross Sales" shall have the meaning set forth in Section 4.5 of
this Lease.
(n) "Permitted Use": The operation of retail and other like business
operations similar to what would be seen in urban commercial shopping
centers.
(o) "Subtenants": Any party or parties holding a right of possession
in the Premises, or any portion thereof, by virtue of a sublease or other
agreement with Tenant acting as landlord to said party, said Subtenants and
their respective subleases with Tenant being subject to the prior written
approval of Landlord, which approval shall not be unreasonably withheld.
1.2 This Lease is subject and subordinate to each ground or land
lease which may now or hereafter cover all or any portion of the Premises,
including but not limited to that certain Ground Lease dated May 19, 1999, by
and between the City of Shreveport ("Owner"), as landlord, and Landlord, as
tenant, covering the Premises and other property in the vicinity and underlying
the proposed development area of the aforementioned riverboat gaming project
(the "Ground Lease"). Tenant represents and acknowledges that it has read and
is familiar with the terms of the Ground Lease. Landlord agrees that it will
not, without Tenant's written consent, enter into any amendments or
modifications to the Ground Lease, the effect of which will materially and
adversely affect the rights of Tenant under this Lease. This Section 1.2 shall
be self-operative and no further instrument of subordination need be required by
any ground or land lessor. Tenant shall, however, upon Landlord's request,
promptly execute any appropriate certificate or instrument in confirmation of
such subordination. Within ten (10) days after execution of this Lease by
Landlord and Tenant, Landlord shall request that Owner execute and deliver to
Tenant a Subordination, Attornment and Non-Disturbance Agreement in the form set
forth as Exhibit "E" to the Ground Lease. Notwithstanding the foregoing, the
lessor under any ground lease that may affect all or any portion of the Premises
or the holder of any mortgage or deed of trust that may encumber all or any
portion of the Premises may elect at any time to cause their interest in the
Premises to be subordinate and junior to Tenant's interest under this Lease by
filing an instrument in the immovable property records of each of Bossier and
Caddo Parish, Louisiana effecting such election and providing Tenant with notice
of such election. In the event of the enforcement by the Owner under the Ground
Lease of the remedies provided for by law or by the Ground Lease, Tenant
automatically will become the Tenant of the Owner without change in the terms or
other provisions of this Lease.
Tenant also agrees that if, by reason of an event of default under the
Ground Lease, the Ground Lease is terminated, then Tenant, at the option and
request of the then owner of the Premises (the "Fee Landlord"), shall attorn to
such Fee Landlord as Tenant's direct landlord under this Lease and the Fee
Landlord shall recognize such Tenant as its direct tenant under this Lease.
Tenant agrees to execute and deliver, at any time and from time to time, upon
the request of Landlord or of the Fee Landlord, or any mortgagee of either, any
instrument that may be necessary or appropriate to evidence such attornment.
Tenant hereby appoints Landlord, each such Fee Landlord and each such mortgagee
the mandatary and attorney-in-fact, irrevocably, with full power of
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substitution, of Tenant to execute and deliver any such instrument for and on
behalf of Tenant. This appointment is coupled with an interest and is
irrevocable. Tenant waives any statute or rule of law now or subsequently in
effect that may give or purport to give Tenant any right to elect to terminate
this Lease or to surrender possession of the Premises in the event any
proceeding is brought by a Fee Landlord to terminate any such underlying lease.
Tenant agrees that this Lease shall not be affected in any way whatsoever by any
such proceeding.
1.3 Tenant shall not do anything, nor permit anything to be done,
that would cause the Ground Lease to be terminated or forfeited because of any
right of termination or forfeiture reserved or vested in the landlord under the
Ground Lease, or that would cause Landlord to be in default under the Ground
Lease, and Tenant will, and does hereby, indemnify and hold Landlord and its
partners and their respective officers, directors, members, shareholders,
employees and agents harmless from and against all claims of any kind resulting,
directly or indirectly, from or by reason of any act or omission on the part of
Tenant, or any of its assignees or Subtenants, which may result in the Ground
Lease being terminated or forfeited, or by reason of which Tenant or any of its
assignees or Subtenants may be found to be in default under the Ground Lease.
Tenant shall, and does hereby, indemnify and hold harmless Landlord and its
partners and their respective officers, directors, members, shareholders,
employees and agents from all claims, damages, loss, liability and obligation,
including reasonable attorneys' fees and court costs, due to the possession,
use, occupation, operation, assignment and/or subletting of the Premises by
Tenant or its assigns or any Subtenant.
1.4 In the event of termination of the Ground Lease due to any
casualty suffered by the Premises, condemnation of the Premises or any part
thereof or destruction of the whole or any portion of the Premises, or for any
other reason, including without limitation any right of termination granted to
Landlord, Owner or any Fee Landlord under the Ground Lease, this Lease shall
cease and terminate upon the same date that the Ground Lease terminates. Such
cancellation shall become effective without further notice upon the termination
of the Ground Lease, and Tenant shall at that time immediately relinquish
possession of the Premises. Upon the effective date of such cancellation,
neither Landlord nor Tenant shall have any liability or obligation to the other
pursuant to this Lease, except for liabilities or obligations that accrued prior
to the effective date of such cancellation. Tenant agrees and acknowledges that
Landlord is under no obligation to obtain the financing (the "Financing")
necessary to complete the Shoreside Complex, including, without limitation, the
Parking Facilities (as such terms are defined in the Ground Lease). Tenant also
agrees and acknowledges that Landlord is under no obligation to complete the
Shoreside Complex, including, without limitation, the Parking Facilities (as
defined in the Ground Lease), unless and until Landlord actually obtains the
Financing.
ARTICLE II
GRANTING CLAUSE
2.1 Landlord hereby leases the Premises to Tenant, and Tenant hereby
leases the Premises from Landlord, upon and subject to the terms and conditions
set forth in this Lease.
ARTICLE III
DELIVERY OF PREMISES
3.1 Landlord will deliver the Premises to Tenant in a condition
"ready for tenant improvements", meaning in a condition so as to include:
structural enclosures consisting of walls, roof and a concrete floor; exterior
enclosures consisting of the main front facade; rear dividing walls and service
corridor walls (typically built of concrete block); and roughed-in utilities
including (a) water, power, sewer, gas, telephone and CATV for extension by
Tenant , and (b) six (6) individual HVAC rooftop units providing a total of 250
tons of cooling; provided, Tenant, on the date that the first installment of
Minimum Guaranteed Rental is due hereunder, shall pay
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to Landlord, as additional Rent hereunder, an amount equal to one-half (1/2) of
the costs incurred by Landlord in connection with the purchase and installation
of the air handlers and related equipment and fixtures providing cooling to the
Premises. Landlord also agrees to provide up to 200 parking spaces to Tenant or
Tenant's guests, customers, invitees or employees. Such parking spaces shall be
provided free of charge unless Landlord charges its own guests, customers,
invitees or employees for such parking, in which event Tenant shall pay for each
such parking space at the rates charged to the public. Tenant agrees and
acknowledges that such parking spaces are unassigned and included within the no
less than 1500 unassigned parking spaces to be included within the Parking
Facilities.
TENANT ACKNOWLEDGES AND AGREES THAT ITS OCCUPANCY OF THE PREMISES SHALL BE
DEEMED TO MEAN THAT TENANT HAS AGREED AS FOLLOWS: SUBJECT TO THE MAINTENANCE
OBLIGATIONS OF LANDLORD SET FORTH IN ARTICLE IX HEREOF, TENANT HAS INSPECTED THE
PREMISES AND HAS ACCEPTED THE PREMISES "AS-IS", "WHERE-IS", IN THEIR EXISTING
CONDITION, ACKNOWLEDGES THAT THE PREMISES ARE IN GOOD AND SATISFACTORY
CONDITION, AND HEREBY RENOUNCES AND WAIVES ALL REPRESENTATIONS AND WARRANTIES ON
THE PART OF LANDLORD, WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO THE CONDITION
OF THE PREMISES OR ITS FITNESS FOR A PARTICULAR PURPOSE, INCLUDING, WITHOUT
LIMITATION, ALL WARRANTIES THAT THE PREMISES ARE FREE OF VICES, DEFECTS OR
DEFICIENCIES, WHETHER LATENT, HIDDEN OR APPARENT, AND ALL WARRANTIES WITH
RESPECT TO THE CONDITION OF THE PREMISES, INCLUDING, WITHOUT LIMITATION, ALL
WARRANTIES, IF ANY, THAT THE PREMISES ARE FREE OF ENVIRONMENTAL POLLUTION OR
DEFECTS, ITS FITNESS FOR A PARTICULAR PURPOSE OR ITS FREEDOM FROM DEFECTS OR
DEFICIENCIES AND ALL OTHER WARRANTIES THAT ARE SET FORTH UNDER LA. CIV. CODE
ARTS. 2692-2695, AND LANDLORD HEREBY DISCLAIMS ALL SUCH WARRANTIES. TENANT
AGREES THAT LANDLORD WILL HAVE NO OBLIGATION TO MAKE ANY IMPROVEMENTS TO THE
PREMISES OR, SUBJECT TO THE MAINTENANCE OBLIGATIONS SET FORTH IN ARTICLE IX
HEREOF, TO MAINTAIN, REPAIR OR OTHERWISE UNDERTAKE ANY ACTIVITIES WITH RESPECT
TO THE PREMISES. TENANT ACKNOWLEDGES THAT THE FOREGOING WAIVERS HAVE BEEN
BROUGHT TO THE ATTENTION OF TENANT AND EXPLAINED IN DETAIL TO IT AND THAT
TENANT HAS VOLUNTARILY AND KNOWINGLY CONSENTED TO THE FOREGOING WAIVERS.
__________________
Tenant's Initials
The Premises are leased subject to the existing state of title. Landlord
shall not have any liability whatsoever in respect of or arising out of the
construction or condition of the Premises. Notwithstanding the foregoing, upon
the request of Tenant, Landlord shall assign to Tenant, on a non-exclusive
basis, all construction and manufacturer warranties, if any, related to the
Landlord's work performed in the Premises, if any, prior to Tenant's occupancy
thereof (to the extent such warranties are assignable on a non-exclusive basis).
Landlord represents and warrants that as of the date this Lease is executed by
Landlord, Landlord has a leasehold interest in the Premises subject to the
existing state of title, and that Landlord has full right, power and lawful
authority to execute, deliver and perform its obligations under this Lease, in
the manner and upon the terms contained herein, and to grant the leasehold
estate herein demised, with no other person needing to join in the execution
hereof in order for this Lease to be binding on Landlord. In the event the
Premises are not ready for tenant improvements on or before December 31, 2001,
this Lease shall automatically terminate and the parties hereto shall have no
further rights or obligations hereunder other than those rights or obligations
accruing prior to such termination and those pursuant to which the express terms
of this Lease survive the termination or expiration hereof. Additionally, in
the event Landlord is unable to obtain the Financing on or before January 1,
2000, either party may, upon written notice to the other party, terminate this
Lease. Thereafter, neither party shall have any rights or obligations under this
Lease except rights or obligations accruing prior to the date of termination of
this Lease and those which by the express terms of this Lease survive the
termination or expiration hereof.
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ARTICLE IV
RENT
4.1 Minimum Guaranteed Rental and Percentage Rental (herein, together
and collectively with any additional rent and other amounts payable by Tenant to
Landlord hereunder, the "Rent") shall accrue from the Commencement Date, and
shall be payable to Landlord at Landlord's principal address c/o HWCC-Louisiana,
Inc., Two Galleria Tower, Suite 2200, 13455 Noel Road, LB 48, Dallas, Texas
75240, or, at Landlord's option, in the Parish where the Premises are located,
and shall be payable without demand, presentment or notice (except as may be
otherwise expressly provided herein to the contrary). All amounts and
obligations that Tenant is required to pay or perform pursuant to this Lease,
together with every penalty and interest that may be added for non-payment, non-
performance or late payment thereof (as set forth in Section 4.9 hereof), shall
constitute Rent under this Lease. Time is of the essence with respect to
payment and performance of Tenant's obligations hereunder.
4.2 Tenant shall pay to Landlord Minimum Guaranteed Rental in monthly
installments in the amounts specified in Section 1.1(j) of this Lease. The
first such monthly installment shall be due and payable on or before the last
day of the month in which the Commencement Date occurs, and subsequent
installments shall be due and payable on or before the last day of each
succeeding calendar month during the Lease Term; provided that if the
Commencement Date is a date other than the first day of a calendar month, there
shall be due and payable on or before the last day of such month as Minimum
Guaranteed Rental for such calendar month a sum equal to that proportion of the
Minimum Guaranteed Rental specified for the first full calendar month as herein
provided, which the number of days from the Commencement Date to the end of the
calendar month during which the Commencement Date shall fall bears to the total
number of days in such month.
4.3 In addition to the Minimum Guaranteed Rental, Tenant shall also
pay to Landlord, for each calendar year during the Lease Term, Percentage Rental
determined according to Section 1.1(l) of this Lease. Percentage Rental shall be
paid in quarterly or monthly installments (as the case may be) as follows: On
or before the 25th day of each April and October during the Lease Term, Tenant
shall pay to Landlord a sum of money equal to the Percentage Rental made in or
from the Premises during the previous three (3) months, as the case may be. In
addition, on or before the 25th day of each May, June, July, November, December
and January, Tenant shall pay to Landlord a sum of money equal to the Percentage
Rental made in or from the Premises during the previous calendar month. In the
event that the total of the quarterly or monthly payments (as the case may be)
of Percentage Rental for any calendar year is not equal to the annual Percentage
Rental computed on the amount of Net Cash Flow for such calendar year in
accordance with the Section 1.1(1), then Tenant shall pay to Landlord any
deficiency or Landlord shall refund to Tenant any overpayment, as the case may
be, within ninety (90) days after the end of such calendar year. In no event
shall the Rent to be paid by Tenant and retained by Landlord for any calendar
year be less that the annual Minimum Guaranteed Rental specified in this Lease.
4.4 In the event that either the Commencement Date is a date other
than January 1st, or the termination date of this Lease is a date other than
December 31st, Percentage Rental for any fractional part of a calendar year
following the Commencement Date or preceding the termination date, as the case
may be, shall be prorated to account for the partial calendar year as set forth
in Section 1.1(1). Upon the termination of this Lease, Tenant shall make a
payment of Percentage Rental for the final month or partial calendar month of
the Lease Term determined in accordance with (and subject to) the provisions of
the third sentence of Section 4.3 above.
4.5 The term "Gross Sales" as used in Section 4.3 and elsewhere in
this Lease shall be construed to include the entire amount of the sales price,
whether for cash or otherwise (including the full purchase price of purchases in
whole or in part by means of gift certificates, advertising certificates or
trade-ins), of all sales of food and drink items, merchandise and services, and
other receipts whatsoever, of all business conducted in or from the
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Premises, including, by way of illustration (but in no way limited to), mail or
telephone orders received or filled at the Premises, catering orders received at
or filled from the Premises, "layaways" and other deposits (offset by such sums
refunded to customers), orders taken (although such orders may be filled
elsewhere), sales to employees, sales through vending machines, electronic games
or other devices, and sales by any Subtenant, concessionaire, licensee or
otherwise (as well as licensee fees, franchise fees and similar fees) in or from
the Premises. Each sale upon installment or credit shall be treated as a sale
for the full price in the month during which the sale was made, regardless of
the time when Tenant or any Subtenant, as applicable, receives payment from its
customer. No deduction shall be allowed for uncollected or uncollectible credit
accounts. Gross Sales shall not include, however, any sums collected and paid
out for any sales or excise tax imposed by any duly constituted governmental
authority, nor the amount of returns to shippers or manufacturers, nor the
amount of any cash or credit refund made upon any sale when the merchandise,
food, beverages, or service sold, or some part thereof, is thereafter returned
by a customer and accepted by Tenant or any Subtenant, as applicable, nor the
receipts from sales not made in the ordinary course of business of furniture,
trade fixtures or equipment, nor shift meals or meals served to an employee
while on duty or meals served to employees at a discount.
4.6 It is understood that Minimum Guaranteed Rental is payable on or
before the last day of each calendar month (in accordance with Section 4.2
above) and Percentage Rental is payable as set out in Section 4.3 above, without
offset or deduction of any nature.
4.7 If Tenant fails for two consecutive months to make Rent payments
within ten days of the date due, Landlord, in order to reduce its administrative
costs, may require, by giving written notice to Tenant (and in addition to any
late charge or interest accruing pursuant to Section 4.9, as well as any other
rights and remedies accruing pursuant to Article XX or Article XXI below, or any
other provision of this Lease or at law), that Minimum Guaranteed Rentals be
paid quarterly in advance instead of monthly in arrears and that all future Rent
payments are to be made on or before the due date by cash, cashier's check, or
money order and that the delivery of Tenant's personal or corporate check will
no longer constitute a payment of Rent as provided in this Lease. Any
acceptance of a Rent payment or of a personal or corporate check thereafter by
Landlord shall not be construed as a subsequent waiver of said rights.
4.8 Tenant shall pay its obligations under Article VI (which shall
initially be as set forth in Section 4.2 hereof) on the last day of each month
without notice or demand. If subsequently notified by Landlord of any change in
such monthly amount (which Landlord may do from time to time), Tenant shall then
pay such new amount each month without notice or demand.
4.9 In the event any Rent (including, but not limited to, Minimum
Guaranteed Rental, Percentage Rental or any other obligations of Tenant
constituting Rent hereunder) is not received within 10 days after its due date
for any reason whatsoever, then in addition to the past due amount, Tenant shall
pay to Landlord one of the following (the choice to be at the sole option of
Landlord unless one of the choices is illegal under applicable law, in which
event the other alternative will automatically be deemed to have been selected):
(a) a late charge in an amount equal to ten percent (10%) of the Rent then due,
in order to compensate Landlord for its administrative and other overhead
expenses; or (b) interest on the Rent due at the maximum contractual rate which
could legally be charged in the event of a loan of such Rent to Tenant (but in
no event to exceed 1 1/2% per month), such interest to accrue continuously on
any unpaid balance due to Landlord by Tenant during the period commencing with
the Rent due date and terminating with the date on which Tenant makes full
payment of all amounts owing to Landlord at the time of said payment. Any such
late charge or interest payment shall be payable as additional Rent under this
Lease, shall not be considered as a deduction from Percentage Rental or any
other Rent, and shall be payable immediately on demand.
4.10 Management Fee. As used herein, the term "Management Fee" shall
be defined as a fee, in consideration of Tenant's management of the Premises,
equal to five (5%) percent of all rent derived and received by Tenant from any
and all Subtenants of the Premises.
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4.11 Special Allocation. As used herein, the term "Special
Allocation" shall be defined as an allocation of $51,083.33 per month.
ARTICLE V
SALES REPORTS, RECORDS AND FINANCIAL STATEMENTS
5.1 On or before the 25th day of each calendar month during the Lease
Term, Tenant shall cause to be delivered to Landlord, at the place where Rent is
then payable, a certified statement of Gross Sales (of Tenant and all
Subtenants) made from the Premises during the preceding calendar month. In
addition, within ninety days after the expiration of each calendar year and
within sixty days after the termination of this Lease if this Lease should not
terminate at the end of a calendar year, Tenant shall prepare and deliver to
Landlord, at the place where Rent is then payable, statements of Gross Sales (of
Tenant and all Subtenants) made from the Premises during the preceding calendar
year (or partial calendar year), certified to be correct by the chief financial
officer of Tenant or an independent certified public accountant. All such
statements shall be in such form as the Landlord may reasonably require and, if
requested by Landlord, Tenant also shall provide to Landlord copies of sales
reports submitted by Tenant and all Subtenants to the applicable governmental
authority to whom sales reports must be furnished for sales tax purposes.
Tenant acknowledges Landlord's need for prompt, accurate sales records, inasmuch
as those records not only form the basis for Percentage Rental, but also enable
Landlord to monitor the success of the Premises. Tenant also acknowledges that
its failure to submit statements of Gross Sales as required above will result in
additional (although not readily ascertainable) expenses to Landlord. Tenant
therefore agrees that if it does not deliver to Landlord a statement of Gross
Sales (of Tenant and all Subtenants) within ten (10) days following delivery to
Tenant of a written demand from Landlord, then notwithstanding anything to the
contrary contained elsewhere in this Lease, the Minimum Guaranteed Rental for
the particular month during which the aforesaid statements were due and for each
month thereafter (until such statements are delivered) shall automatically be
doubled. In addition, if Tenant fails for two consecutive calendar months to
deliver statements of Gross Sales within the times specified in the first two
sentences of this Section 5.1, then for the remainder of the Lease Term the
prerequisite of a written demand from Landlord shall cease and thereafter the
Minimum Guaranteed Rental increase provided for in the immediately preceding
sentence shall be applicable for any calendar month in which the required
statement of Gross Sales is not delivered to Landlord within ten (10) days
following the prescribed due date. The rights of Landlord under this Section
5.1 are cumulative with the rights prescribed in Section 5.3, Article XX and
elsewhere in this Lease, at law or in equity.
5.2 Tenant shall keep in the Premises, and at Tenant's home office in
Memphis, TN, a permanent, accurate set of books and records of Net Cash Flow and
of all Gross Sales, including, without limitation, sales of merchandise and
other revenue, derived from the businesses of Tenant and all Subtenants
conducted in the Premises, and all supporting records such as tax reports and
banking records. All such books and records shall be retained and preserved for
at least twenty-four months after the end of the calendar year to which they
relate, and shall be subject to inspection and audit by Landlord and its agents
at all reasonable times.
5.3 In the event Tenant fails to deliver statements of Net Cash Flow
and of Gross Sales for two consecutive months or in the event that Landlord is
not satisfied with the statements of Gross Sales or of Net Cash Flow submitted
by Tenant, Landlord shall be entitled to have its auditors make a special audit
of all books and records, wherever located, pertaining to Gross Sales made in or
from the Premises and Net Cash Flow. If Tenant's statements of Gross Sales or
of Net Cash Flow are found to be incorrect to an extent of more than two percent
(2%) below the figures reflected in an audit of Gross Sales or of Net Cash Flow,
or if Tenant has failed to deliver such statements timely, Tenant shall pay for
such audit. In addition, Tenant shall promptly pay to Landlord any deficiency
which is established by such audit.
5.4 Landlord shall use reasonable efforts to keep confidential all
sales reports, records and financial statements supplied by Tenant; provided,
Landlord shall have the right to reveal such information to mortgagees,
prospective purchasers or lessees, any and all regulatory agencies, including,
but not limited to, the Louisiana
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Gaming Control Board and the Louisiana State Police, Landlord's own managerial
and administrative staff and as may otherwise be required by law. Landlord shall
have no liability whatsoever, including, but not limited to, consequential
damages, to Tenant or any Subtenant, or their businesses, as a result of any
breach of the foregoing covenant for whatever cause or reason.
ARTICLE VI
TENANT'S RESPONSIBILITY FOR TAXES, OTHER
REAL ESTATE CHARGES AND INSURANCE EXPENSES
6.1 Tenant shall be liable for all personal property, inventory and
other taxes levied against personal property and trade fixtures placed by Tenant
or any Subtenant in the Premises. If (i) any such taxes are levied against
Landlord, Landlord's property or Landlord's leasehold interest in the Premises
and (ii)(x) if Landlord elects to pay the same or (y) if the assessed value of
Landlord's property is increased by inclusion of personal property and trade
fixtures placed by Tenant or any Subtenant in the Premises and Landlord elects
to pay the taxes based on such increase, Tenant shall pay to Landlord, upon
demand, that part of such taxes for which Tenant is primarily liable hereunder.
6.2 During the Lease Term, Tenant also shall be liable for, and shall
pay to Landlord, Tenant's Proportionate Share (as defined below) of all Real
Estate Charges (as defined below) and Insurance Expenses (as defined below)
related to the Premises, as additional Rent hereunder. Tenant's obligations
under this Section 6.2 shall be prorated during any partial calendar year (i.e.
the first year and the last year of the Lease Term). "Tenant's Proportionate
Share" shall be a fraction, as reasonably determined by Landlord, the numerator
of which shall be the total floor area in the Premises and the denominator of
which shall be the total leasable floor area of the Shoreside Complex (as
defined in the Ground Lease) at the time when the respective charge was incurred
(excluding, however, areas for which any such Real Estate Charge or Insurance
Expense is paid by a party or parties other than Landlord). "Real Estate
Charges" shall include ad valorem taxes, general and special assessments,
parking surcharges, taxes or excises on rents, taxes and charges for
governmental services (such as street maintenance or fire protection), and any
tax or charge which replaces any such above described Real Estate Charges;
provided, however, that Real Estate Charges shall not be deemed to include any
franchise, estate, inheritance or general income tax. "Insurance Expenses"
shall include all premiums and other expenses incurred by Landlord for liability
insurance and fire and extended coverage property insurance (plus whatever
endorsements or special coverages Landlord, in Landlord's sole discretion, may
consider appropriate).
6.3 Landlord and Tenant shall attempt to obtain separate assessments
for Tenant's obligations pursuant to Section 6.1 and, with respect to Section
6.2, for as much of the Real Estate Charges as are readily susceptible of
separate assessment. To the extent of a separate assessment, Tenant agrees to
pay such assessment before it becomes delinquent and to keep the Premises free
from any lien or attachment. This covenant of Tenant shall survive the
termination or expiration of the Lease Term. With regard to the calendar year
during which the Lease Term expires, Landlord, at its option, either may bill
Tenant when the charges become payable or may charge the Tenant an estimate of
Tenant's Proportionate Share of such charges (based upon information available
for the current year plus, if current year information is not adequate in
itself, information relating to the immediately preceding year).
6.4 If at any time during the Lease Term, Landlord has reason to
believe that at some time within the immediately succeeding twelve (12) month
period Tenant will owe Landlord an additional payment pursuant to one or more of
the preceding sections of this Article VI, Landlord may direct that Tenant
prepay monthly a pro rata portion of the prospective future payment (i.e. the
prospective future payment divided by the number of months before the
prospective future payment will be due). Tenant agrees that any prepayment
directed by Landlord shall be due and payable monthly on the same date that
Minimum Guaranteed Rental is due, without further notice or demand, as
additional Rent hereunder.
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6.5 Tenant shall have the right (unless Landlord shall in good faith
agree to contest, at Tenant's sole expense, such tax imposition) to contest or
resist, in good faith, diligently and by appropriate proceedings, the validity
of the amount or rate of any tax or Real Estate Charge or any increase or
proposed increase of any tax or Real Estate Charge, all at Tenant's sole
expense. If Landlord shall agree to contest such tax or Real Estate Charge,
Landlord shall do so at Tenant's expense (the cost of which contest, if
involving property of Landlord in addition to the Premises, shall be allocated
by Landlord to Tenant on a reasonable and equitable basis) and Tenant shall have
the right to monitor Landlord's contest thereof. If Landlord elects not to
contest such tax or Real Estate Charge or, having elected to contest such tax or
Real Estate Charge, fails to contest such tax or Real Estate Charge diligently
and in good faith and such failure continues uncured beyond a reasonable time
following written notice from Tenant to Landlord, Tenant shall have the right to
itself contest such tax or Real Estate Charge. It shall be a condition
precedent to Tenant's right to contest any such tax or Real Estate Charge that
Tenant provide Landlord with security (in a form (i) reasonably acceptable to
Landlord and (ii) acceptable to Landlord's mortgagee, if any) in an amount
reasonably necessary to assure full payment of such tax or Real Estate Charge
being contested, together with all penalties, fines and interest and other fees
and amounts that could be collected by the taxing authority in case the contest
is unsuccessful (but in any event not less than the amount required by
Landlord's mortgagee in connection with the contest of taxes or Real Estate
Charges). Tenant shall in all events pay all such contested taxes or Real
Estate Charges (together with all penalties, fines, interest and such other fees
and amounts) at least 30 days prior to the date on which the Premises (or any
portion thereof) would be subject to foreclosure on account of nonpayment
thereof. Tenant shall, and does hereby, indemnify and hold harmless Landlord
and its partners and their respective officers, directors, shareholders,
members, employees and agents from and against any and all expenses, liabilities
and claims (including but not limited to attorneys' fees and litigation
expenses) incurred by or asserted against Landlord or the Premises arising as a
result of any such contest by Tenant. Landlord and Tenant agree to reasonably
cooperate with one another in connection with all contests of taxes or Real
Estate Charges under this Lease.
ARTICLE VII
COMMON AREAS
7.1 Tenant acknowledges and agrees that patrons and customers of the
Premises and of the riverboat gaming project of Landlord each will use the Texas
Street Bridge Property (as defined in Section 26.21 hereof) for various
purposes. Landlord, in its sole discretion, may provide security personnel and
other security measures, as Landlord, in its sole discretion, deems necessary or
desirable for the protection of the aforesaid patrons and customers. Tenant
agrees to reimburse Landlord from time to time, upon the receipt by Tenant of
invoices from Landlord, as additional Rent hereunder, for a proportionate share,
as determined by Landlord in its reasonable opinion, of the costs and expenses
incurred by Landlord in providing security personnel and other security measures
for the Texas Street Bridge Property. Notwithstanding the foregoing, under no
circumstances shall Landlord be liable to Tenant, any Subtenant, any customer of
Tenant or Subtenant, or any other person or entity for breaches of security,
including, without limitation, thefts, assaults or other crimes, occurring on or
about the Texas Street Bridge Property.
ARTICLE VIII
USE AND CARE OF PREMISES
8.1 Tenant shall operate and maintain the Premises in an efficient,
high class and reputable manner so as to produce, and cause the production of,
the maximum amount of Gross Sales from the Premises. Tenant shall not at any
time leave the Premises vacant, but shall in good faith continuously throughout
the Lease Term
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conduct and operate, and cause the conduct and operation of, in the entire
Premises the types of businesses for which the Premises are leased.
8.2 The Premises may be used only for the purpose or purposes
specified in Section 1.1(n) above and for no other purpose without the prior
written consent of Landlord. Landlord agrees, however, that it will not
withhold consent in an unreasonable and arbitrary manner (as further explained
in Section 26.4 of this Lease).
8.3 Neither Tenant nor any Subtenant shall, without Landlord's prior
written consent, keep anything within the Premises or use the Premises for any
purpose which increases the insurance premium cost or invalidates any insurance
policy carried on the Premises or other parts of the Shoreside Complex (as
defined in the Ground Lease). All property kept, stored or maintained within
the Premises by Tenant or any Subtenant shall be at such party's sole risk.
8.4 Neither Tenant nor any Subtenant shall conduct within the
Premises any bankruptcy, "going-out-of-business", "lost-our-lease" or similar
sale nor shall Tenant or any Subtenant operate within the Premises a "wholesale"
or "factory outlet" store, a cooperative store, a "second hand" store, a
"surplus" store or a store commonly referred to as a "discount house." Tenant
or its Subtenants may, however, conduct within the Premises fire sales or
auctions, but only with the prior written consent of Landlord. The purpose for
this restriction is the maintenance of a first-class shopping center image, not
price regulation. Therefore, Landlord agrees that items may be sold, and on
occasion be advertised as being sold, at discounted prices as long as Tenant and
its Subtenant, as applicable, comply with all applicable laws and maintain an
image consistent with a first-class shopping center.
8.5 Neither Tenant nor any Subtenant shall: permit any objectionable
noises or odors to emanate from the Premises, take or permit any other action
which would constitute a nuisance, permit any unlawful or immoral practice to be
carried on or committed on the Premises, or do anything which would tend to
injure the reputation of the Premises. Neither Tenant nor any Subtenant shall,
without Landlord's consent, place or permit radio, television, loudspeaker,
amplifier, satellite dish, or other equipment, fixtures or improvements, on the
roof or outside the Premises or where the same can be seen or heard from outside
the building within which the Premises are located, or place any antenna,
equipment or other projection on the exterior of the Premises, except for music
set at reasonable volume levels in the patio areas of Subtenants' spaces, said
volume levels to be subject to the approval of Landlord (which shall not be
unreasonably withheld). Tenant shall not do, nor shall it cause or permit any
of its Subtenants, agents, representatives, employees or customers to do, any
act or thing that would damage or injure any part of the Premises or any persons
or property located on or about the Premises.
8.6 Tenant shall, and shall cause all Subtenants to, take good care
of the Premises and keep the same free from waste at all times. Neither Tenant
nor any Subtenant shall overload the floors in the Premises or deface or injure
the Premises. Tenant shall keep the Premises, and all sidewalks, service-ways,
loading areas and other common areas adjacent to the Premises, neat, clean and
free from dirt, rubbish, ice and snow at all times. Tenant shall store, and
cause the storage of, all trash and garbage within the Premises, or in a trash
dumpster or similar container reasonably approved by Landlord as to type,
location and screening, and Tenant shall arrange for the regular pick-up of such
trash and garbage at Tenant's expense (unless Landlord finds it necessary to
furnish such a service, in which event Tenant shall be charged, and Tenant shall
pay, an equitable portion of the total of charges to all tenants using the
service, with such charge being based upon the market price paid by Landlord
without markup). Receipt and delivery of goods and merchandise and removal of
garbage and trash shall be made only in the manner and from areas reasonably
prescribed by Landlord. Neither Tenant nor any Subtenant shall operate an
incinerator or burn trash or garbage within the Premises or in the vicinity
thereof. Tenant shall not dispose, or allow disposal, of any substances into
the storm or sanitary sewers that would be unlawful, would injure or clog such
lines or would subject Landlord to liability or expense.
8.7 Tenant and all Subtenants shall maintain all display windows in a
neat, attractive condition and keep all display windows, exterior electric signs
and exterior lighting under any canopy in front of the Premises
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lighted from dusk until 11:00 p.m. every day, including Sundays and holidays (or
any other times reasonably established by Landlord for the Premises). All signs,
lighting and canopies shall be subject to the written approval of Landlord
before their attachment or implementation into the Premises, such approval not
to be unreasonably withheld.
8.8 Tenant and each Subtenant shall procure, at their sole cost and
expense, all permits and licenses required for their transaction of business in
the Premises and each shall otherwise comply with all applicable laws,
ordinances and governmental regulations. In addition, if the nature of Tenant's
or any Subtenant's business makes it advisable for Tenant or a Subtenant to take
any extra precautions (for example, in the case of a business which is affected
by so-called "dram shop" laws, Tenant's or a Subtenant's compliance with all
"dram shop" educational programs and procedures), Tenant or such Subtenant shall
take all such extra precautions as may be prudent, required or desirable. At
Landlord's request, Tenant shall deliver to Landlord copies of all such permits
and licenses and proof of Tenant's and each Subtenant's compliance with all such
laws, ordinances, governmental regulations and extra precautions.
ARTICLE IX
MAINTENANCE AND REPAIR OF PREMISES
9.1 Landlord shall keep the foundation, the exterior walls (except
plate glass, windows, doors, door closure devices and other exterior openings,
window and door frames, molding, special store fronts, lighting, plumbing and
other electrical, mechanical and electrical installations, equipment and
fixtures, signs, placards, decorations or other advertising media of any type,
and interior painting or other treatment of exterior walls) and roof of the
Premises in good repair. Landlord, however, shall not be required to make any
repairs occasioned by the acts or negligence of Tenant, its agents, employees,
Subtenants, licensees, customers or concessionaires, and the provisions of the
previous sentence are expressly recognized to be subject to the provisions of
Article XV and Article XVI of this Lease. In the event that the Premises should
become in need of repairs required to be made by Landlord hereunder, Tenant
shall give immediate written notice thereof to Landlord, and Landlord shall not
be responsible in any way for its failure to make any such repairs until a
reasonable time shall have elapsed after receipt by Landlord of such written
notice. In the event that a situation arises because of a need for repair to
any part of the Premises for which Landlord would otherwise be responsible that
poses a threat of death or injury to any person thereon, Tenant may make the
necessary repairs, but only to the extent necessary to avoid said death or
injury, and after said repairs are made, Tenant shall immediately notify
Landlord of the situation, at which time Landlord shall complete said repairs
and reimburse Tenant as necessary.
9.2 Tenant shall keep, and cause all Subtenants to keep, the Premises
in good, clean and habitable condition and shall, at its sole cost and expense,
keep the Premises free of insects, rodents, vermin and other pests. Tenant, at
its expense, shall make all necessary or desirable repairs and replacements to
the Premises, including replacement of cracked or broken glass, except for
repairs and replacements required to be made by Landlord under the provisions of
Section 9.1, Article XV and Article XVI. Without limiting the coverage of the
previous sentence, it is understood that Tenant's responsibilities include the
repair and replacement of all lighting, plumbing and other electrical and
mechanical installations, equipment and fixtures and also include all repairs to
ducts, conduits, pipes and wiring, and any sewer stoppage located in, under or
above the Premises, as well as in, under or above any area outside the Premises
if caused by the act, omission or negligence of Tenant, its agents, Subtenants,
contractors, licensees, customers or concessionaires (with any such repairs and
replacements outside the Premises to be made by Landlord at Tenant's cost). If
any repairs required to be made by Tenant hereunder are not made within ten days
(or within a shorter period designated by Landlord in a notice to Tenant if
Landlord determines, in its sole discretion, that such shorter period is
necessary or desirable for reasons of safety, compliance with applicable laws or
the benefit or convenience of other tenants or users of the Premises) after
written notice delivered to Tenant by Landlord, Landlord may, at its option,
make such repairs without liability to Tenant or any Subtenant for any loss or
damage to the property or business of Tenant or any Subtenant by reason
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of such repairs. Tenant shall pay to Landlord, upon demand, as additional Rent
hereunder, the cost of such repairs, together with interest at the maximum
contractual rate which could legally be charged in the event of a loan of such
payment to Tenant (but in no event to exceed 1 1/2% per month), such interest to
accrue continuously from the date of payment by Landlord until repayment by
Tenant. At the expiration of this Lease, Tenant shall surrender the Premises in
good condition, reasonable wear and tear and losses required to be restored by
Landlord pursuant to Section 9.1, Article XV and Article XVI of this Lease
excepted.
9.3 Landlord, at the expense of Tenant, covenants and agrees to
employ a suitable contractor to perform routine maintenance on the air-
conditioning system serving the Premises, including, but not limited to, timely
(at least monthly) changing of filters, adjustment and inspection of air
handling mechanism and control equipment, and inspection, maintenance and
performance of necessary lubrication, testing and other such normal maintenance
procedures. Tenant shall reimburse Landlord, upon demand, as additional Rent
hereunder, for all costs and expenses incurred by Landlord in connection with
such maintenance. Nothing contained in this Article shall be deemed to be a
guarantee by the Landlord of the performance or responsibility of any contractor
engaged by Landlord as herein provided, and Tenant hereby waives all claims for
damages to persons or property sustained by Tenant, any Subtenant or any person
claiming by through or under Tenant or any Subtenant resulting from or in any
way concerned with Landlord's employment of a contractor pursuant to the
provisions of this Section 9.3. So long as Landlord causes the required
maintenance procedure on such air-conditioning system to be performed, Tenant
shall be responsible for the cost of replacing all duct work, motors and
condenser coils within such system. Landlord shall have no responsibility for
any replacement of the aforesaid air-conditioning system or any components
thereto beyond that set forth in this Section 9.3. Tenant shall have the right
to inspect the air-conditioning system serving the Premises and any records of
maintenance performed on such air-conditioning system at any time during the
Lease Term. Should Tenant, in its reasonable discretion after written notice
to Landlord and the lapse of a reasonable period of time for Landlord to correct
the then existing situation, determine that such servicing has been inadequate
to protect the integrity of such air-conditioning system or that the requisite
maintenance contract is not in full force and effect, Tenant shall have the
right, but not the obligation, to perform such maintenance, or contract on
behalf of Landlord for the performance of such maintenance, as Tenant shall, in
its reasonable judgment, deem appropriate, and Landlord agrees to permit Tenant
to offset against Rent owing hereunder, any and all reasonable costs incurred by
Tenant with respect thereto. Tenant will be reasonable in the exercise of its
rights under this Section and shall first afford Landlord written notice and a
reasonable period of time to address the situation itself before Tenant
exercises any right under this Section.
ARTICLE X
ALTERATIONS AND IMPROVEMENTS
10.1 Neither Tenant nor any Subtenants shall make or add any
permanent or non-movable alterations, additions, improvements, fixtures or
equipment to the Premises without the prior written consent of Landlord, except
for the installation of unattached, readily movable trade fixtures which may be
installed in the Premises without drilling, cutting or otherwise defacing the
Premises. All alterations, additions, improvements, equipment and fixtures
(including, without limitation, all floor coverings, wallcoverings, baseboards,
doors, door fixtures, windows, walls, electrical wiring and switches, lights,
plumbing, bathroom equipment, and all heating and air conditioning equipment,
but excluding Tenant's unattached, readily movable furniture and office
equipment) which may be made or installed upon the Premises by Landlord, Tenant,
any Subtenant or any other person or entity shall remain upon and be surrendered
with the Premises, without compensation therefor to Tenant, any Subtenant or any
other person or entity, and become the property of Landlord at the termination
of this Lease or Tenant's rights of possession under this Lease, unless Landlord
requests their removal, in which event Tenant shall remove the same and restore
the Premises (or other area where such property may be located) to their
original condition at Tenant's expense. Notwithstanding the foregoing, Tenant
may remove, so long as it restores the Premises to the condition existing prior
to their installation, any light fixtures, furniture, kitchen equipment,
security equipment or fire detection equipment. Tenant promptly shall repair
all damage to the
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Premises resulting from any removal of property. This covenant shall survive any
expiration or termination of this Lease.
10.2 All construction work done by or on behalf of Tenant or any
Subtenant within the Premises shall be performed in a good and workmanlike
manner, in compliance with all governmental requirements, and in such manner as
to cause a minimum of interference with other construction in progress on the
Shoreside Complex (as defined in the Ground Lease) and with the transaction of
business relating thereto. Tenant agrees to, and does hereby, indemnify and
hold Landlord and its partners and their respective officers, directors,
members, shareholders, employees and agents harmless from and against all
losses, liabilities and damages (including attorneys' fees and litigation
expenses) resulting from such work, and Tenant shall, if requested by Landlord,
furnish bonds or other security satisfactory to Landlord against such loss,
liability or damage. Tenant shall promptly pay each of its contractors,
subcontractors and suppliers as may be necessary to prevent the imposition or
assertion of any mechanic's, laborer's or materialman's lien on any of the
Premises or Tenant's or Landlord's leasehold interest therein. Nothing herein
contained shall be construed as constituting the consent or request of Landlord
that any contractor, subcontractor or supplier provide any labor, service or
material for any construction, repair or demolition in, of or to any of the
Premises. Landlord is not, and shall not be, liable for any labor, services or
materials furnished or to be furnished to Tenant or any Subtenant, and no
mechanic's, laborer's, materialman's or other liens for any such labor, services
or materials shall attach to or affect the interest of Landlord in any of the
Premises. Tenant shall reimburse Landlord, on demand, for Landlord's costs
incurred in complying with any laws or regulations applicable to any
construction, repair or demolition by or for Tenant.
10.3 In the event that Landlord elects to remodel or repair all or
any portion of the Premises, or modify or reconfigure any portions of the
Premises, Tenant will cooperate with such remodeling, repair, modification or
reconfiguration, including, without limitation, Tenant's tolerating temporary
inconveniences (and even the temporary removal of Tenant's signs in order to
facilitate such remodeling, repair, modification or reconfiguration as it may
relate to the exterior of the Premises), provided, in the event any election to
reconfigure portions of the Premises results in a displacement of Subtenants and
such Subtenants incur out-of-pocket costs as a result of such displacement,
Landlord will reimburse such Subtenants for reasonable, actual out-of-pocket
costs incurred as a result of such displacement upon receipt of the original
invoices therefor.
10.4 In the event Tenant or any Subtenant uses a general contractor
to perform construction work within the Premises, Tenant shall, prior to the
commencement of such work, require said general contractor to execute and
deliver to Landlord a waiver and release of any and all claims against Landlord
and liens against the Premises to which such contractor might at any time be
entitled. The delivery of the waiver and release of lien within the time period
set forth above shall be a condition precedent to the ability of Tenant or any
Subtenant to enter on and begin its construction work at the Premises and, if
applicable, to any reimbursement from Landlord for its construction work.
10.5 Construction of Improvements.
A. Tenant, at Tenant's sole cost, risk and expense, shall construct,
erect and complete, and/or cause each of its Subtenants to construct, erect and
complete, improvements approved by Landlord in accordance with this Section
10.5(A) (the "Improvements") upon and within the Premises. The Improvements
shall be constructed by, or at the direction of, Tenant or its Subtenants in a
good and workmanlike manner and in compliance with all applicable building
codes, zoning ordinances and other regulations. The Improvements shall be
constructed by Tenant or its Subtenants on the Premises substantially in
accordance with plans and specifications approved by Landlord, which approval
shall not be unreasonably withheld or delayed. The approval process for the
Improvements shall be as follows:
1. Tenant shall submit preliminary plans and specifications for the
Improvements to be constructed, erected and completed by it and/or its
Subtenants to Landlord;
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2. Landlord shall have fifteen (15) days after receipt of such
preliminary plans and specifications to approve or disapprove of same,
and such preliminary plans and specifications shall be deemed approved
if Landlord fails to respond in writing to Tenant prior to the
expiration of said fifteen (15) day period;
3. Tenant, within sixty (60) days after Landlord's approval or deemed
approval of the preliminary plans and specifications for the
Improvements, shall complete and submit to Landlord final plans and
specifications, which plans and specifications must be in substantial
conformity to the preliminary plans and specifications approved or
deemed approved by Landlord;
4. Landlord shall have thirty (30) days after its receipt of such final
plans and specifications to approve or disapprove of same, and such
final plans and specifications shall be deemed approved if Landlord
fails to respond in writing to Tenant prior to the expiration of said
thirty (30) day period;
5. Tenant, after approval or deemed approval of the final plans and
specifications, may commence construction of the Improvements shown in
the approved (or deemed approved) final plans and specifications.
B. After commencement of construction of the Improvements, Tenant
covenants and agrees to complete, or cause its Subtenants to complete, as
applicable, construction of the Improvements with reasonable diligence, subject
to the provisions of this Section 10.5 and in conformity with the approved final
plans and specifications therefor. Tenant may thereafter alter, renovate,
reconfigure and/or replace the Improvements, or authorize its Subtenants to
alter, renovate, reconfigure and/or replace the Improvements, and build new
improvements subject to the approval process set forth in this Section 10.5;
provided, however, Landlord's approval shall not be required for any
Improvements of Tenant or any Subtenant totaling no more than $40,000,
individually or in the aggregate, that do not alter the "storefront" or exterior
of the Premises. When available, Tenant shall furnish to Landlord a full set of
as-built plans and specifications for the Improvements. Notwithstanding
anything herein contained to the contrary, if any Improvements (as approved by
Landlord) require the alteration, removal or replacement of any part of the
Premises, such alteration, removal or replacement shall be undertaken by
Landlord at the sole cost and expense of Tenant or its Subtenants.
C. Title to the Improvements, and any modifications, additions,
restorations, repairs and replacements thereto placed or constructed by or for
Tenant or any Subtenant upon the Premises, shall be in Tenant or its successors
and assigns until the expiration of the Lease Term; provided, however, that (i)
the terms and provisions of this Lease shall apply to the Improvements and (ii)
the Improvements (other than furnishings, machinery, equipment, signage, trade
fixtures and other movable personal property installed by or for Tenant or any
Subtenant from time to time) shall be surrendered to and become the absolute
property of Landlord upon the expiration or earlier termination of the Lease
Term without any compensation owing to Tenant, any Subtenant or any other person
or entity therefor.
D. It is expressly acknowledged and understood that Landlord does not
consent, and has not by the execution and delivery of this Lease consented, to
the imposition by any party whomsoever of any lien upon Landlord's interest in
the Premises. Tenant covenants and agrees that all Improvements at any time
constructed upon the Premises will be completed free and clear of all liens and
claims of contractors, subcontractors, mechanics, laborers, materialmen and
other claimants unless Tenant is contesting the imposition of such lien or claim
in good faith and has furnished Landlord with indemnity reasonably satisfactory
to Landlord against any loss by reason of such contest. Tenant further agrees
to, and does hereby, protect, indemnify, defend and hold harmless Landlord and
its partners and their respective officers, directors, members, shareholders,
employees and agents from and against all bills, claims, liens and rights to
liens for
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labor and materials, architects, contractors and subcontractors claims, and
fees, claims and expenses incident to the construction and completion of any
Improvements.
E. Landlord has no construction obligations under this Lease other
than that which is expressly set forth in Section 3.1 hereof.
ARTICLE XI
LANDLORD'S RIGHT OF ACCESS
11.1 Landlord shall have the right to enter upon the Premises or any
part thereof at any time for the purpose of inspecting or making repairs to the
Premises, or, subject to the provisions of this Lease, making repairs,
alterations or additions to adjacent premises, or showing the Premises to
prospective purchasers, lessees or lenders.
11.2 Use of the roof above the Premises is reserved to Landlord and
same is not a part of the Premises.
ARTICLE XII
UTILITIES
12.1 Landlord agrees to cause to be provided connections for the
supply of water, gas, electrical power, CATV, telephone service and sewerage
service at the boundary of the Premises (at locations reasonably determined by
Landlord).
12.2 Tenant, at its sole cost and expense, shall promptly pay all
charges for electricity, water, gas, telephone service, CATV, sewerage service
and other utilities furnished to the Premises or any part thereof. Landlord
may, if it so elects, furnish one or more utility services to Tenant and, in
such event, Tenant shall purchase such services as are tendered by Landlord and
shall pay, on demand, as additional Rent, the rates established therefor by
Landlord, which rates shall not exceed the rates which would be charged for the
same services if furnished directly by local public utility companies. Landlord
may at any time discontinue furnishing any such service without obligation to
Tenant other than to provide connections at the boundary of the Premises for the
public utility, if any, furnishing such service. If Landlord elects to provide
any utility service to Tenant, Landlord shall use commercially reasonable
efforts to minimize and promptly cure all interruptions of such utility service
reasonably within Landlord's control (except for interruptions due to Tenant's
default under this Lease). Notwithstanding anything to the contrary contained
in this Lease, if Landlord shall fail to take such steps as are reasonably
within Landlord's control to cure an interruption of utility services provided
by Landlord within twenty-four (24) hours after such interruption occurs, Tenant
may (but shall not be obligated to) take such steps as are necessary to cure
such interruption. Landlord shall not, as long as Tenant is not in default
hereunder, intentionally interrupt any utility service to the Premises, unless
such interruption is necessitated by an emergency or the need to make repairs.
12.3 Landlord shall not be liable for any interruption whatsoever in
utility services not furnished by Landlord, nor for interruption in utility
services furnished by Landlord which are due to (i) fire, accident, strike, acts
of God or other causes beyond the control of Landlord or (ii) alterations,
repairs or improvements being made to the Premises.
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ARTICLE XIII
INSURANCE COVERAGES
13.1 Landlord shall procure and maintain throughout the Lease Term a
policy or policies of insurance, at its sole cost and expense (but subject to
Article VI above), insuring the Premises under standard fire and extended
coverage insurance and liability insurance (with deductibles and whatever
endorsements or special coverages Landlord, in its sole discretion, may consider
appropriate), to the extent necessary to comply with Landlord's obligations
pursuant to other provisions of this Lease.
13.2 Tenant, at its sole cost and expense, shall procure and maintain
throughout the Lease Term a policy or policies of insurance, at its sole cost
and expense, insuring all fixtures and contents, and all Improvements and other
improvements constructed by or for Tenant or any Subtenant (including, without
limitation, the Improvements), for at least 80% of the replacement cost under
standard fire and extended coverage insurance and, with regard to liability
insurance, insuring both Landlord and Tenant against all claims, demands and/or
actions arising out of or in connection with the use, occupancy or operation of
the Premises by Tenant, any Subtenant or any other person or entity, or the
condition of the Premises. Tenant's liability policy or policies shall be
written by insurance companies satisfactory to Landlord. Tenant shall obtain a
written obligation on the part of each insurance company to notify Landlord at
least thirty days prior to cancellation or alteration of insurance. Such
policies or duly executed certificates of insurance shall be promptly delivered
to Landlord, and renewals thereof as required shall be delivered to Landlord, at
least thirty days prior to the expiration of the respective policy terms. If
Tenant should fail to comply with the foregoing requirement relating to
insurance, Landlord may obtain such insurance without notice, demand or
opportunity to cure, and Tenant shall pay to Landlord, on demand, as additional
Rent hereunder, the premium cost thereof, together with interest at the maximum
contractual rate (but in no event to exceed 1 1/2% per month), from the date of
payment by Landlord until repaid by Tenant. Landlord shall be named as loss
payee with respect to the standard fire and extended coverage insurance covering
the leasehold improvements owned by Landlord.
13.3 Tenant shall obtain and maintain, and cause each of its
Subtenants to obtain and maintain, at all times during the Lease Term insurance
coverage as required hereunder and in Section 13.2 above and as may be required
by law (including, without limitation, broad form comprehensive general
liability coverage, products liability, broad form contractual liability
coverage, liquor liability, auto liability, and business interruption, workers
compensation and employees' liability insurance) from reputable insurance
companies with an A.M. Best Rating of "A" and an A.M. Best Class Rating of XIV
(or comparable ratings from a reputable insurance rating service in the event
A.M. Best ratings are discontinued or materially altered), authorized to do
business in the jurisdiction in which the Premises are located, and covering the
activities of Tenant and its Subtenants. The insurance shall be in form
reasonably satisfactory to Landlord, in amounts at least equal to the following:
(a) comprehensive commercial liability insurance, with a combination
of primary and excess limits of not less than Two Million Dollars
($2,000,000.00), with minimum limits of One Million Dollars ($1,000,000.00) per
occurrence, bodily injury and property damage combined;
(b) auto liability insurance, including coverage of owned, non-owned
and hired vehicles, with a combination of primary and excess limits of not less
than Five Hundred Thousand Dollars ($500,000.00) for bodily injury for each
person, One Million Dollars ($1,000,000.00) for bodily injury for each
occurrence and One Million Dollars ($1,000,000.00) for each occurrence of
property damage;
(c) employer's liability insurance with a limit of not less than Five
Hundred Thousand Dollars ($500,000.00);
(d) workers compensation insurance in such amount as may be required
by applicable statute or rule;
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(e) hazard insurance with sufficient coverage to cover the replacement
cost of the Premises, including all Improvements, with a "value guard"
endorsement, if available;
(f) business interruption insurance with a minimum of Two Hundred
Thousand Dollars ($200,000.00) payable in three (3) equal monthly installments;
(g) hazard insurance with sufficient coverage to cover the replacement
costs of the contents of the Premises, including furniture, fixtures and
equipment; and
(h) if beer, wine, liquor or other alcoholic beverages are served from
the Premises or any part thereof, liquor liability insurance with a minimum of
One Million Dollars ($1,000,000.00) per occurrence and One Million Dollars
($1,000,000.00) in the aggregate.
Tenant shall provide Landlord with proof of such insurance from time
to time as requested by Landlord, and such policies of insurance required herein
shall name Landlord and its partners, and their respective, its affiliates,
members, shareholders, directors, and officers, as additional insureds. The
policies shall provide that the insurers will give thirty (30) days prior
written notice to Landlord before any material alteration to the terms of the
policies or the expiration or termination of such policies of insurance. In the
event Tenant fails to obtain or maintain, or cause its Subtenants to obtain and
maintain, the insurance described herein, Landlord shall have the right, but not
the obligation, to procure such insurance, and in such event, Tenant shall
reimburse Landlord, as additional Rent, for the costs of such insurance,
together with interest thereon at the maximum contractual rate allowed by
applicable law (but in no event to exceed 1 1/2% per month) from the date
advanced by Landlord until repaid. All public liability and property damage
insurance policies shall contain a provision that Tenant's insurance coverage
shall be primary to any coverage Landlord maintains. Prior to the Commencement
Date, and thereafter at least sixty (60) days prior to the expiration of any
policy, Tenant shall deliver to Landlord certificates of insurance, and if
requested, copies of all applicable policies which evidence the coverages
required by this Lease.
ARTICLE XIV
WAIVER OF LIABILITY; MUTUAL WAIVER OF SUBROGATION
14.1 Landlord and its partners and their respective officers,
directors, shareholders, members, employees and agents shall not be liable to
Tenant or any Subtenant, nor to Tenant's or any Subtenant's employees, agents or
visitors, nor to any other person or entity whomsoever, for any injury or death
to person or damage to property occurring in or about the Premises, whether
caused by the Premises coming out of repair, by any defect or failure of any
structural element of the Premises or of any equipment, pipes or wiring, broken
glass, backing up of drains, or gas, water, steam, electricity or oil leaking,
escaping or flowing into the Premises (except where due to Landlord's willful
failure to make repairs required to be made hereunder, after the expiration of a
reasonable time after written notice to Landlord of the need for such repairs).
If any repairs required to be made by Landlord hereunder are not made within
thirty (30) days after written notice delivered to Landlord by Tenant, and the
failure to make such repairs would result in the endangerment of human life or
the risk of physical injury to Tenant or any of its Subtenants, or their
respective agents, employees or invitees, then Tenant may, at its option, make
such repairs, provided Landlord shall not be liable or responsible for any loss
or damage which may result to the property or businesses of Tenant or any
Subtenant by reason of such repairs. Landlord shall pay to Tenant, upon demand,
the cost of such repairs plus interest at the maximum contractual rate which
could legally be charged in the event of a loan of such payment to Landlord (but
in no event to exceed 1 1/2% per month), such interest to accrue continuously
from the date of payment by Tenant until repayment by Landlord. Landlord shall
not be held responsible in any way on account of any construction, repair or
reconstruction (including widening) of any private or public roadways, walkways
or utility lines.
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14.2 Landlord and its partners and their respective officers,
directors, shareholders, members, employees and agents shall not be liable to
Tenant or any Subtenant or their respective employees, agents, or visitors, or
to any other person or entity whomsoever, for any injury or death to person or
damage to property on or about the Premises, and Tenant hereby agrees to, and
does hereby, indemnify Landlord and its partners and their respective officers,
directors, shareholders, members, employees and agents and hold such parties
harmless from any loss, expense or claims (including attorneys' fees and
litigation expenses) arising out of such damage or injury.
14.3 Landlord and Tenant each hereby release the other from any and
all liability or responsibility to the other, or to any other party claiming by,
through or under them by way of subrogation or otherwise, for any loss or damage
to property caused by a casualty which is insurable under standard fire and
extended coverage insurance; provided, however, that this mutual waiver shall be
applicable only with respect to a loss or damage occurring during the time when
standard fire and extended coverage insurance policies contain a clause or
endorsement to the effect that such releases shall not adversely affect or
impair the policy or the right of the insured party to receive proceeds under
the policy; provided, further, that this release shall not be applicable to the
portion of any damage which is not reimbursed by the damaged party's insurer
because of the "deductible" in the damaged party's insurance coverage. The
release specified in this Section 14.3 is cumulative with any releases or
exculpations which may be contained in other provisions of this Lease.
ARTICLE XV
DAMAGE BY CASUALTY
15.1 Tenant shall give immediate written notice to the Landlord of
any damage caused to the Premises by fire or other casualty.
15.2 In the event that the Premises shall be damaged or destroyed by
fire or other casualty insured under standard fire and extended coverage
insurance and Landlord does not elect, or is not allowed under the terms of this
Lease to elect, to terminate this Lease as hereinafter provided, Landlord shall
proceed with reasonable diligence, at its sole cost and expense, to rebuild and
repair the Premises, but in no event shall Landlord be required to expend funds
for such rebuilding or repair in excess of the net insurance proceeds actually
received by Landlord as a result of such casualty. In the event (a) the
building(s) in which the Premises are located shall be destroyed or
substantially damaged by a casualty not covered by Landlord's insurance, or (b)
either the Riverboat Casino (as defined in the Ground Lease) or the improvements
on the Pavilion/Hotel Parcel (as defined in the Ground Lease) shall be destroyed
or damaged, or (c) the holder of a mortgage, deed of trust or other lien on the
Premises at the time of the casualty elects, pursuant to such mortgage, deed of
trust or other lien, to require the use of all or part of Landlord's insurance
proceeds to satisfy all or part of the indebtedness secured by such mortgage,
deed of trust or other lien, then Landlord may elect either to terminate this
Lease or to proceed to rebuild and repair the Premises. Landlord shall give
written notice to Tenant of such election within sixty days after the occurrence
of such casualty and, if it elects to rebuild and repair, shall proceed to do so
with reasonable diligence, at its sole cost and expense.
15.3 Landlord's obligation to rebuild and repair under this Article
XV shall in any event be limited to restoring the Premises to substantially the
condition in which the same existed prior to such casualty, exclusive of any
alterations, additions, Improvements, fixtures and equipment installed by
Tenant. Tenant agrees that promptly after completion of such work by Landlord,
Tenant will proceed with reasonable diligence, at Tenant's sole cost and
expense, to restore, repair and replace all alterations, additions,
Improvements, fixtures, signs and equipment installed by or on behalf of Tenant
or any Subtenant.
15.4 Tenant agrees that during any period of reconstruction or repair
of the Premises, it will continue the operation of its business, and cause the
continuance of operation of each Subtenant's business, within the
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Premises to the extent practicable. In the event Landlord elects to effect
repairs, or must effect repairs, to the Premises upon the occurrence of a
casualty and Landlord does not or cannot terminate this Lease, during the period
from the occurrence of the casualty until Landlord's repairs are substantially
completed, the Minimum Guaranteed Rental shall be reduced in proportion to the
area under reconstruction or repair; however, there shall be no abatement of the
Percentage Rental and other charges provided for herein.
ARTICLE XVI
EMINENT DOMAIN
16.1 If more than thirty percent (30%) of the floor area of the
Premises should be taken for any public or quasi-public use under any
governmental law, ordinance or regulation or by right of eminent domain or by
private purchase in lieu thereof, this Lease shall terminate effective on the
date physical possession is taken by the condemning authority.
16.2 If less than thirty percent (30%) of the floor area of the
Premises should be taken as aforesaid, this Lease shall not terminate, however,
the Minimum Guaranteed Rental (but not Percentage Rental) payable hereunder
during the expired portion of this Lease shall be reduced in proportion to the
area taken, effective on the date physical possession is taken by the condemning
authority. Following such partial taking, Landlord, at its expense, shall make
all necessary repairs or alterations to the remaining Premises required to make
the remaining portions of the Premises an architectural whole.
16.3 [INTENTIONALLY DELETED]
16.4 All compensation awarded for any taking (or the proceeds of
private sale in lieu thereof) of the Premises shall be the property of Landlord,
and Tenant hereby assigns its interest, if any, in any such award to Landlord.
Landlord, however, shall have no interest in any award made to Tenant for
Tenant's moving and relocation expenses or for the loss of Tenant's fixtures and
other corporeal movable property that Tenant would be permitted to remove at the
end of this Lease (if a separate award for such items is made to Tenant)
provided such separate award does not reduce the amount of the award that would
otherwise be awarded to Landlord.
ARTICLE XVII
ASSIGNMENT AND SUBLETTING
17.1 Tenant shall not assign or in any manner transfer this Lease or
any estate or interest therein, or sublet the Premises or any part thereof, or
grant any license, concession or other right of occupancy with respect to any
portion of the Premises, without first making written request to Landlord (which
shall include a copy of the proposed assignment, transfer or sublease and any
other information Landlord may request) and obtaining the prior written consent
of Landlord. The use to which the Premises or any part thereof shall be put is
restricted to the Permitted Use defined in Section 1.1(n). Landlord agrees that
it will not withhold consent in an unreasonable and arbitrary manner (as further
explained in Section 26.4 of this Lease). However, in determining whether or
not to grant its consent, Landlord shall be entitled to take into consideration
factors such as Landlord's desired tenant mix complimentary to the proposed
riverboat casino operation at the Shoreside Complex (as defined in the Ground
Lease), the identity, reputation and net worth of the proposed transferee or
Subtenant, and the then current market conditions (including market rentals).
Landlord shall be entitled to charge Tenant a reasonable fee for processing
Tenant's request, including, but not limited to, Landlord's attorneys' fees.
Any attempted assignment, transfer or sublease in violation of the terms of this
Section 17.1 shall be voidable at Landlord's option, which option may be
exercised at any time by giving Tenant written notice. Such option shall not be
waived by Landlord by the acceptance of Rent or any other act or omission of
Landlord. Such option may only be waived
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by Landlord in writing. Consent by Landlord to one or more assignments or
sublettings shall not operate as a waiver of Landlord's rights as to any
subsequent assignment or subletting. Notwithstanding anything above to the
contrary, the written consent of Landlord shall not be required for any sublease
or assignment to any entity in which Joseph J. Rodriguez is a principal,
partner, member and/or shareholder provided the Premises are operated as
provided in Section 1.1(n). No sublease or assignment, whether or not approved
by Landlord, shall release Tenant from any of its duties or obligations,
including, without limitation, the payment of Minimum Guaranteed Rental and
Percentage Rental, during the Lease Term. By accepting any assignment of this
Lease, or any interest therein or any part hereof, or any sublease hereunder,
the assignee or Subtenant shall, and does by the acceptance of such assignment
or sublease, agree to keep and perform each and every covenant and obligation
herein required to be kept and performed by Tenant, and Tenant, and each
succeeding assignee or Subtenant, shall be and become fully obligated, jointly,
severally and in solido, to keep and perform all such covenants and obligations.
17.2 If Tenant is a corporation, partnership or other entity and if
at any time during the Lease Term the person or persons who, directly or
indirectly, own a majority of the outstanding voting rights or the outstanding
ownership interests in Tenant, or otherwise control Tenant at the time of the
execution of this Lease, cease to own a majority of such voting rights or
ownership interests (except as a result of transfers by devise or descent) or to
control Tenant, the loss of a majority of such voting rights or ownership
interests or of such control shall be deemed as assignment of this Lease by
Tenant and, therefore, subject in all respects to the provisions of Section 17.1
above. The previous sentence shall not apply, however, if at the time of the
execution of this Lease, Tenant is a corporation and the outstanding voting
shares of capital stock of Tenant are listed on a recognized national security
exchange or over-the-counter market.
17.3 Any assignee of an interest in and to this Lease and any
Subtenant shall be deemed, by acceptance of such assignment or sublease, or by
taking actual or constructive possession of the Premises, to have assumed all of
the obligations set forth in or arising under this Lease. Such assumption shall
be effective as of the earlier of (i) the date of such assignment or sublease or
(ii) the date on which the assignee or Subtenant obtains possession of the
Premises.
17.4 Notwithstanding any assignment or subletting, whether or not
permitted hereunder, Tenant shall at all times remain fully responsible and
liable for the payment of the Rent herein specified and for compliance with all
other obligations under this Lease (even if future assignments and sublettings
occur subsequent to such assignment or subletting by Tenant, and regardless of
whether or not Landlord's approval has been obtained for such future assignments
and sublettings).
17.5 Tenant shall not mortgage, pledge or otherwise encumber any
portion of the Premises or its subleasehold interest in the Premises; provided,
however, the foregoing prohibition shall not apply to any rents from any
Subtenants, Net Cash Flow, the Management Fee or the Special Allocation.
17.6 In the event of the transfer or assignment by Landlord of its
interest in this Lease, the Ground Lease or the building containing the Premises
to a person or entity expressly assuming Landlord's obligations under this
Lease, Landlord shall be released from any further obligations hereunder, and
Tenant hereby agrees to look solely to such successor in interest of the
Landlord for performance of such obligations. Any security given by Tenant to
secure performance of Tenant's obligations hereunder may be assigned or
transferred by Landlord to such successor in interest whereupon Tenant agrees
that Landlord shall be discharged of any further obligation relating thereto.
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ARTICLE XVIII
SUBORDINATION; ATTORNMENT; ESTOPPELS
18.1 Tenant hereby agrees that this Lease shall be subject and
subordinate to any mortgage, deed of trust or other lien presently existing or
hereafter placed upon the Premises, and to any renewals and extensions thereof.
Tenant, however, also agrees that any mortgagee or other lienholder shall have
the right at any time to subordinate its mortgage, deed of trust or other lien
to this Lease; provided, however, notwithstanding that this Lease may be (or may
be made to be) superior to a mortgage, deed of trust or other lien, the
mortgagee or other lienholder thereunder shall not be liable for prepaid Rent,
security deposits or claims accruing during Landlord's ownership. The
provisions of a mortgage, deed of trust or other lien affecting the Premises
relative to the rights of the mortgagee or other lienholder thereunder with
respect to proceeds arising from an eminent domain proceeding or other taking
(including a voluntary conveyance by Landlord) and provisions relative to
insurance proceeds paid by reason of damage to or destruction of the Premises
shall be prior and superior to any contrary provisions contained in this Lease
with respect to the payment or usage thereof regardless of whether such
mortgage, deed of trust or other lien is subordinate or senior in priority to
this Lease. The subordination of this Lease as herein contained is enforceable
and self-operative and no further instrument of subordination is required.
However, Tenant hereby irrevocably appoints Landlord as its attorney-in-fact and
mandatary for the purpose of executing, in the name and on behalf of Tenant,
such instruments as Landlord may deemed appropriate to subordinate this Lease to
any mortgage, deed of trust or other lien hereafter placed upon the Premises
should Tenant fail, upon demand, to execute a subordination agreement and such
further instruments subordinating this Lease as Landlord may request from time
to time, one or more times (in forms requested by Landlord). Upon Tenant's
written request and notice to Landlord, Landlord shall use reasonable efforts to
obtain from any such mortgagee a written non-disturbance agreement which
recognizes the rights of Tenant hereunder and provides that this Lease shall
remain in full force and effect during the Lease Term so long as Tenant shall
continue to recognize and perform all of the covenants and conditions of this
Lease. Tenant agrees to attorn to any successor in interest of Landlord's
interest in this Lease, whether by foreclosure, dation en paiment, voluntary
transfer or otherwise.
18.2 At any time when the holder of an outstanding mortgage, deed of
trust or other lien covering Landlord's interest in the Premises has given
Tenant written notice of its interest in this Lease, Tenant agrees that it
cannot and will not exercise any remedies for default by Landlord hereunder
unless and until the holder of the indebtedness secured by such mortgage, deed
of trust or other lien shall have received written notice of such event of
default and a reasonable time (not less than 30 days) shall thereafter have
elapsed without the event of default having been cured. Any such holder may
perform Landlord's obligations under this Lease.
18.3 Tenant agrees that it will, from time to time, upon the request
of Landlord, execute and deliver to Landlord a written statement addressed to
Landlord (or to a party designated by Landlord), which statement shall identify
Tenant and this Lease, shall certify that this Lease is unmodified and in full
force and effect (or if there have been modifications, that the same is in full
force and effect as so modified), shall confirm that Landlord is not in default
as to any obligations of Landlord under this Lease (or if Landlord is in
default, specifying any default), shall confirm Tenant's agreements contained
above in this Article XVIII, and shall contain such other information or
confirmations as Landlord or its lenders or prospective transferees may
reasonably require. Tenant hereby irrevocably appoints and authorizes Landlord
as the attorney-in-fact and mandatary of Tenant for the purpose of executing and
delivering any such written statement on Tenant's behalf if Tenant fails to do
so within seven (7) days after the delivery of a written request therefor from
Landlord to Tenant.
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ARTICLE XIX
DIRECTION OF TENANT'S ENERGIES
19.1 Tenant acknowledges that Tenant's monetary contribution to
Landlord (in the form of Rent) and Tenant's general contribution to commerce
within the Premises (also important in Landlord's determination to execute this
Lease with Tenant) will be substantially reduced if, during the Lease Term,
Tenant fails to fully sublease the Premises to retail Subtenants. Accordingly,
Tenant agrees that if between the period commencing on the 180th day after the
opening of the casino within the Shoreside Complex (as defined in the Ground
Lease) and ending on the 365th day after said opening, Tenant has failed to
cause at least fifty (50%) percent of the floor area of the Premises to be
subleased to retail Subtenants (approved by Landlord in accordance with Sections
1.1(o) and 17.0), Tenant also shall be in default under this Lease. Tenant also
agrees that if at any time after the 365th day after the opening of the casino
within the Shoreside Complex, Tenant has failed to cause at least seventy-five
(75%) percent of the floor area of the Premises to be subleased to retail
Subtenants (approved by Landlord in accordance with Sections 1.1(o) and 17.0),
Tenant shall be in default under this Lease.
ARTICLE XX
DEFAULT BY TENANT AND REMEDIES
20.1 The following events shall be deemed to be events of default
(individually, an "Event of Default") by Tenant under this Lease:
(a) Tenant shall fail to pay any installment of Rent or any other
obligation under this Lease involving the payment of money and such failure
shall continue for a period of ten (10) days after written notice thereof to
Tenant; provided, however, if during any calendar year during the Lease
Term, Landlord delivers to Tenant a single written notice of the failure to
pay an installment of Rent or any other obligation under this Lease
involving the payment of money, no further notice shall be required with
respect to any subsequent failure (i.e., the event of default will
automatically occur on the tenth day after the date upon which the Rent or
other obligation under this Lease involving the payment of money was due
without the requirement that notice of failure to pay, notice of intention
to declare an event of default or any other notice be given to Tenant).
(b) Tenant shall fail to comply with, or otherwise cure any failure to
comply with, any term, provision or covenant of this Lease, other than as
described in subsection (a) above or subsection (i) below, within fifteen
(15) days after written notice from Landlord to Tenant, or if Tenant shall
cure that particular failure but shall again fail to comply with the same
provision of this Lease within three months after Landlord's written notice.
Notwithstanding anything herein contained to the contrary, if any event of
default described in this Section 20.1(b) cannot with due diligence be cured
within the aforesaid fifteen (15) day period, Tenant shall not be in default
hereunder if, prior to the expiration of said fifteen (15) day period,
Tenant shall commence to eliminate the cause of such event of default, shall
proceed diligently and with reasonable dispatch to take all action required
to cure such event of default, and does cure such event of default within
sixty (60) days from its receipt of notice of default from Landlord.
(c) Tenant shall become insolvent, or shall make a transfer in fraud
of creditors, or shall make an assignment for the benefit of creditors.
(d) Tenant shall file a petition under any section or chapter of the
federal Bankruptcy Code, as amended, or under any similar law or statute of
the United States or any State thereof, or Tenant shall be adjudged bankrupt
or insolvent in proceedings filed against Tenant.
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(e) A receiver, keeper or trustee shall be appointed for the Tenant or
for all or substantially all of the assets of Tenant or any guarantor of
Tenant's obligation under this Lease.
(f) Tenant shall abandon or vacate, or shall commence to abandon or
vacate, the Premises or any substantial portion of the Premises or shall
remove or attempt to remove, without the prior written consent of Landlord,
all or a substantial amount of goods, wares, equipment, fixtures, furniture
or other personal property.
(g) Tenant or any Subtenant shall do, or permit to be done, anything
which creates a lien upon the Premises or the leasehold interest of Tenant
or such Subtenant, or Landlord, in and to the Premises (unless Tenant or
such Subtenant, within ten (10) days after notice (actual or constructive)
of such lien, causes the lien to be satisfied and released or bonds around
the lien in accordance with state law and to Landlord's reasonable
satisfaction).
(h) Tenant, without Landlord's prior written consent, assigns or
transfers, or attempts to assign or transfer, this Lease or any estate or
interest herein, or subleases, or attempts to sublease, the Premises or any
part thereof, or grants or attempts to grant any license, concession or
other right of occupancy with respect to any portion of the Premises.
(i) Tenant shall fail to cause at least fifty (50%) percent of the
floor area of the Premises to be subleased to retail Subtenants (approved by
Landlord) at any time during the period commencing 180 days after the
opening of the casino within the Shoreside Complex (as defined in the Ground
Lease) and ending 365 days after said opening, as more fully set forth in
Section 19.1.
(j) Tenant shall fail to cause at least seventy-five (75%) percent of
the floor area of the Premises to be subleased to retail Subtenants
(approved by Landlord) at any time after the date which is 365 days after
the opening of the casino within the Shoreside Complex (as defined in the
Ground Lease), as more fully set forth in Section 19.1.
20.2 Upon the occurrence of any Event of Default hereunder, Landlord
shall have the option to pursue any one or more of the following remedies
immediately and without any further demand, notice, presentment, notice of
intention to exercise remedies, notice to vacate or opportunity to cure
whatsoever, all of which are hereby expressly waived by Tenant:
(a) Tenant shall be obligated to reimburse Landlord for the damages
suffered by Landlord as a result of the Event of Default, together with
interest on such amount at the maximum contractual rate which could legally
be charged in the event of a loan of such amount to Tenant (but in no event
to exceed 1 1/2% per month), and Landlord may pursue a monetary recovery
from Tenant. In this regard, and without limiting the generality of the
immediately preceding sentence, it is agreed that if Tenant fails to open,
or fails to cause Subtenants to open, for business as required in this Lease
or, having opened for business, either Tenant or any Subtenant subsequently
abandons or vacates the Premises or otherwise ceases to conduct business in
the Premises as required in this Lease, then Landlord, at its option, may
seek monetary recovery for the loss of Tenant's anticipated contribution to
commerce within the Premises; moreover, Landlord and Tenant further agree
that inasmuch as the exact amount of damages would be difficult to
determine, liquidated damages will be due monthly in an amount equal to the
monthly Minimum Guaranteed Rental payable for the month if Tenant or a
Subtenant fails to open for business as required in this Lease or, having
opened for business, subsequently abandons or vacates the Premises or
otherwise ceases to conduct business in the Premises as required by this
Lease (including, but not limited to, failing to comply with the
requirements of Section 8.1 of this Lease).
(b) Landlord may take any one or more of the actions permissible at
law to insure performance by Tenant of Tenant's covenants and obligations
under this Lease. In this regard, and without
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limiting the generality of the immediately preceding sentence, it is agreed
if Tenant or a Subtenant fails to open for business as required in this
Lease or, having opened for business, abandons or vacates the Premises,
Landlord may enter upon and take possession of the Premises and continue to
demand from Tenant the Rent and other charges provided in this Lease,
without any obligation to relet; however, if Landlord does, at its sole
discretion, elect to relet the Premises, such action by Landlord shall not
be deemed as an acceptance of Tenant's surrender of the Premises unless
Landlord expressly notifies Tenant of such acceptance in writing pursuant to
this subsection (b), Tenant hereby acknowledging that Landlord shall
otherwise be reletting as Tenant's agent and Tenant furthermore hereby
agreeing to pay to Landlord, on demand, as liquidated damages, any
deficiency that may arise between the Rent and other charges provided in
this Lease and that actually collected by Landlord as a result of a
reletting of the Premise. It is further agreed in this regard that upon the
occurrence of any Event of Default described in subsection (b) of Section
20.1 of this Lease, Landlord shall have the right to enter upon the
Premises, without being liable for prosecution or any claim for damages
therefor, and do whatever Tenant is obligated to do under the terms of this
Lease. Tenant agrees to reimburse Landlord, on demand, for any expenses
which Landlord may incur in thus effecting compliance with Tenant's
obligations under this Lease, as additional Rent hereunder, and Tenant
further agrees that Landlord shall not be liable for, and Tenant shall, and
does hereby, indemnify Landlord and its partners and their respective
officers, directors, shareholders, members, employees and agents, from and
against any damages (including attorneys' fees and litigation expenses)
resulting from such action. Finally, it is agreed that upon the occurrence
of any Event of Default described in subsection (g) of Section 20.1 of this
Lease, Landlord may pay or bond around such lien, whether or not contested
by Tenant, and in such event, Tenant agrees to reimburse Landlord, on
demand, as additional Rent hereunder, for all costs and expenses incurred in
connection with any such action, regardless of whether the lien was valid,
with Tenant further agreeing that Landlord shall in no event be liable for
any damages or claims resulting from such action.
(c) Landlord may terminate this Lease or Tenant's rights of possession
by written notice to Tenant, in which event Tenant shall immediately
surrender the Premises to Landlord, and if Tenant fails to do so, Landlord
may, without prejudice to any other remedy which Landlord may have for
possession or arrearages in Rent (including any late charge or interest
which may have accrued pursuant to Section 4.10 of this Lease), enter upon
and take possession of the Premises and expel or remove Tenant and any other
person who may be occupying the Premises or any part thereof, including any
Subtenant, without being liable for prosecution or any claim for damages
therefor. Tenant hereby waives any required notice to vacate and all
statutory requirements of prior written notice for filing suits for eviction
or damage for nonpayment of Rent. In addition, Tenant agrees to pay to
Landlord, on demand, the amount of all losses and damages which Landlord may
suffer by reason of any termination effected pursuant to this subsection
(c), said losses and damages to be determined by either of the following
alternative measures of damages:
(i) Until Landlord is able, through reasonable efforts, the nature of
which efforts shall be in the sole discretion of Landlord, to relet the
Premises, Tenant shall pay to Landlord on or before the first day of
each calendar month Rent and other charges provided in this Lease.
After the Premises have been relet by Landlord, Tenant shall pay to
Landlord on the 20th day of each calendar month the difference between
the monthly Rent and other charges provided in this Lease for such
calendar month and that actually collected by Landlord for such month.
If it is necessary for Landlord to bring suit in order to collect any
deficiency, Landlord shall have the right to allow such deficiencies to
accumulate and to bring an action on several or all of the accrued
deficiencies at one time. Any such suit shall not prejudice in any way
the right of Landlord to bring a similar action for any subsequent
deficiencies. Any amount collected by Landlord from subsequent tenants
for any calendar month in excess of the monthly Rent and other charges
provided in this Lease shall be credited to Tenant in reduction of
Tenant's liability for subsequent calendar months for which the amount
collected by Landlord will be less than the monthly Rent and other
charges provided in this Lease, but Tenant shall have no right to such
excess other than the above described credit.
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(ii) When Landlord desires, Landlord may demand a final statement.
Upon demand for a final statement, Landlord shall have the right to
receive from Tenant, and Tenant hereby agrees to pay to Landlord, in
addition to any Rent or other amounts then due or payable, the
difference between the total of all Rent and other charges provided in
this Lease for the remainder of the Lease Term and the reasonable
rental value of the Premises for such period, such difference to be
discounted to present value at a rate equal to the rate of interest
which is allowed by law in the State of Louisiana when the parties to a
contract have not agreed on any particular rate of interest (or, in the
absence of such law, at the rate of six percent (6%) per annum).
If Landlord elects to exercise the remedy prescribed in subsection
20.2(b) above, this election shall in no way prejudice Landlord's right
at any time thereafter to cancel said election in favor of the remedy
prescribed in subsection 20.2(c) above, provided that at the time of
such cancellation Tenant is still in default. Similarly, if Landlord
elects to compute damages in the manner prescribed by Subsection
20.2(c)(i) above, this election shall in no way prejudice Landlord's
right at any time thereafter to demand a final settlement in accordance
with Subsection 20.2(c)(ii) above. Pursuit of any of the above
remedies shall not preclude pursuit of any other remedies prescribed in
other sections of this Lease or any other remedies provided by law or
in equity. Landlord may exercise such other remedies hereunder or as
provided by law or equity upon the occurrence of an Event of Default
immediately and without any further demand, notice, presentment, notice
to vacate, notice of intention to exercise remedies or opportunity to
cure whatsoever, all of which are hereby expressly waived by Tenant.
Landlord shall not be required to provide Tenant with any notices of
default or intention to declare an event of default, or with any
opportunity to cure breaches or events of default, except as may be
expressly provided in Section 20.1. Forbearance by Landlord to enforce
one or more of the remedies herein provided upon an event of default
shall not be deemed or construed to constitute a waiver of such event
of default.
20.3 It is expressly agreed that in determining "the monthly Rent and
other charges provided in this Lease," as that term is used throughout
subsections 20.2(c)(i) and 20.2(c)(ii) above, there shall be added to the
Minimum Guaranteed Rental (as specified in Sections 1.1(j) and 4.1 of this
Lease) the payments for taxes, Real Estate Charge and insurance as specified in
Article VI of this Lease.
20.4 It is further agreed that, in addition to payments required
pursuant to subsections 20.2(b) and 20.2(c) above, Tenant shall compensate
Landlord, as additional Rent hereunder, for all expenses incurred by Landlord in
regaining possession of the Premises (including, among other expenses,
attorneys' fees, litigation expenses and any increase in insurance premiums
caused by the vacancy of the Premises), all expenses incurred by Landlord in
reletting (including, among other expenses, repairs, remodeling, replacements,
advertisements and brokerage fees), all concessions granted to a new tenant or
new tenants upon reletting (including, among other concessions, renewal
options), all losses incurred by Landlord as a direct result of Tenant's default
(including, among other losses, any adverse reaction by Landlord's mortgagee or
by other tenants or potential tenants of the Premises) and a reasonable
allowance for Landlord's administrative efforts, salaries and overhead
attributable, directly or indirectly, to Tenant's default and Landlord's pursuit
of the rights and remedies provided herein and under applicable law.
20.5 Landlord may restrain or enjoin any breach or threatened breach
of any covenant, duty or obligation of Tenant herein contained. The remedies of
Landlord hereunder shall be deemed cumulative and not exclusive of each other.
20.6 [INTENTIONALLY DELETED]
20.7 [INTENTIONALLY DELETED.]
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20.8 If any payment of Rent or other sums due to Landlord hereunder
is made via check, the payment shall be effective when delivered to Landlord if
and only if the check is paid on presentment to the drawer thereof. If the
check is dishonored for any reason whatsoever, including, without limitation, as
a result of a stop payment order, insufficient funds or mistake on the part of
Tenant, but excluding a dishonoring due to error on part of the bank or
financial institution, then it shall be conclusively deemed, without the
necessity of notice to Tenant, that the attempted payment never became
effective. Landlord shall have no obligation to present any check more than
once. Without limiting the foregoing, if a check is dishonored as a result of a
stop payment order or insufficient funds or any other act, failure or omission
of Tenant, then (a) the failure to pay the Rent or other sums intended to be
evidenced by such check shall constitute an Event of Default by Tenant under
this Lease, without the requirement of any notice to or demand upon Tenant, upon
the later to occur of (i) the expiration of ten (10) days after the date such
Rent or other sum was due, and (ii) the dishonor of the check; and (b) in
addition to any other remedies available under this Lease, at law or in equity,
Landlord may require, by giving Tenant written notice, that all further Rent and
other sums payable by Tenant during the remainder of the Lease Term be paid via
cash, money order, certified check, cashier's check or other current funds
approved by Landlord.
20.9 In the event that any one or more provisions of this Article XX
authorizes Landlord to enter the Premises, Landlord, to the extent it is
permitted to do so under applicable law, is entitled and is hereby authorized,
without any notice to Tenant, to enter upon the Premises by use of a duplicate
key, a master key, a locksmith's entry procedures or any other means not
involving personal confrontation. If an Event of Default exists, to the extent
permitted by applicable law, Landlord may, without judicial process, change the
locks on the Premises or otherwise limit access to the Premises to the exclusion
of Tenant and any other persons, and remove any and all persons and property
from the Premises, provided such actions are done in a peaceful manner.
Landlord shall not be obligated to place any written notice on the Premises
explaining Landlord's action, or to provide Tenant with a new key to the
Premises or notice of the name and address or telephone number of an individual
from which a new key may be obtained, or to otherwise provide Tenant with access
to or possession of the Premises, if and so long as an Event of Default
continues to exist or this Lease or Tenant's rights of possession hereunder have
been terminated. Notwithstanding the provisions of this Section 20.9, in the
event Tenant is in default under this Lease but Landlord has entered into
nondisturbance agreements with one or more Subtenants, Landlord will comply with
the terms of such nondisturbance agreements with respect to such Subtenant(s),
including, if provided for in such nondisturbance agreement(s), Landlord's
nondisturbance of such Subtenant(s)' possession of their space leased from
Tenant, so long as such Subtenant(s) are, and remain, in compliance with the
terms of their sublease with Tenant, this Lease and their respective
nondisturbance agreements with Landlord.
20.10 In the event of any Event of Default described in subsection
(d) of Section 20.1 of this Lease, any assumption and assignment must conform
with the requirements of the federal Bankruptcy Code which provides, in part,
that the Landlord must be provided with adequate assurances (i) of the source of
Rent and other consideration due under this Lease; (ii) that the financial
condition and operating performance of any proposed assignee and its guarantors,
if any, shall be similar to the financial condition and operating performance of
Tenant as of the date of execution of this Lease; (iii) that any Percentage
Rentals due under this Lease will not decline substantially; (iv) that any
assumption or assignment is subject to all of the provisions of this Lease
(including, but not limited to, restrictions as to use) and will not breach any
such provision contained in any other lease, financing agreement or other
agreement relating to the Shoreside Complex (as defined in the Ground Lease);
and (v) that any assumption or assignment will not disrupt any tenant mix or
balance in the Shoreside Complex (as defined in the Ground Lease).
(a) In order to provide Landlord with the assurances contemplated by
the Bankruptcy Code, Tenant must fulfill the following obligations, in
addition to any other reasonable obligations that Landlord may require,
before any assumption of this Lease is effective: (i) all Events of Default
under subsection (a) of Section 20.1 of this Lease must be cured within ten
(10) days after the date of assumption; (ii) all other Events of Default
under Section 20.1 of this Lease other than under subsection (d) of Section
20.1 must be cured within thirty (30) days after the date of assumption;
(iii) all actual
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monetary losses incurred by Landlord (including, but not limited to,
reasonable attorneys' fees and litigation expenses) must be paid to Landlord
within ten (10) days after the date of assumption; and (iv) Landlord must
receive, within ten (10) days after the date of assumption, a security
deposit in the amount of six (6) months Minimum Guaranteed Rental (using the
Minimum Guaranteed Rental in effect for the first full month immediately
following the assumption) and an advance prepayment of Minimum Guaranteed
Rental in the amount of three (3) months Minimum Guaranteed Rental (using
the Minimum Guaranteed Rental in effect for the first full month immediately
following the assumption).
(b) In the event that this Lease is assumed in accordance with the
requirements of the Bankruptcy Code and this Lease, and is subsequently
assigned, then, in addition to any other reasonable requirements that
Landlord may impose and in order to provide Landlord with the assurances
contemplated by the Bankruptcy Code, Landlord shall be provided with (i) a
financial statement of the proposed assignee prepared in accordance with
generally accepted accounting principles consistently applied, though on a
cash basis, which reveals a net worth in an amount sufficient, in Landlord's
reasonable judgment, to assure the future performance by the proposed
assignee of Tenant's obligations under this Lease, or (ii) a written
guaranty by one or more guarantors with financial ability sufficient to
assure the future performance of Tenant's obligations under this Lease, such
guaranty to be in form and content satisfactory to Landlord and to cover the
performance of all of Tenant's obligations under this Lease.
ARTICLE XXI
LANDLORD'S CONTRACTUAL SECURITY INTEREST
21.1 IN ADDITION TO THE STATUTORY LESSOR'S LIEN, LANDLORD SHALL HAVE
AT ALL TIMES A VALID SECURITY INTEREST TO SECURE PAYMENT OF ALL RENT AND OTHER
SUMS OF MONEY BECOMING DUE HEREUNDER FROM TENANT, AND TO SECURE PAYMENT OF ANY
DAMAGES OR LOSS WHICH LANDLORD MAY SUFFER BY REASON OF THE BREACH BY TENANT OF
ANY COVENANT, AGREEMENT OR CONDITION CONTAINED HEREIN, UPON ALL GOODS, WARES,
EQUIPMENT, FIXTURES, FURNITURE, INVENTORY, IMPROVEMENTS AND OTHER PERSONAL
PROPERTY OF TENANT PRESENTLY, OR WHICH MAY HEREAFTER BE, SITUATED ON THE
PREMISES, AND ALL PROCEEDS THEREFROM, AND SUCH PROPERTY SHALL NOT BE REMOVED
WITHOUT THE CONSENT OF LANDLORD UNTIL ALL ARREARAGES IN RENT, AS WELL AS ANY AND
ALL OTHER SUMS OF MONEY THEN DUE TO LANDLORD OR TO BECOME DUE TO LANDLORD
HEREUNDER, SHALL FIRST HAVE BEEN PAID AND DISCHARGED IN FULL AND ALL THE
COVENANTS, AGREEMENTS AND CONDITIONS HEREOF HAVE BEEN FULLY COMPLIED WITH AND
PERFORMED BY TENANT. Upon the occurrence of an Event of Default by Tenant,
Landlord may, in addition to any other remedies provided herein or under
applicable law, to the extent permitted by applicable law, enter upon the
Premises and take possession of any and all goods, wares, equipment, fixtures,
furniture, improvements and other personal property of Tenant situated on the
Premises, without liability for trespass or conversion, and sell the same at
public or private sale, with or without appraisement, with or without having
such property at the sale, after giving Tenant reasonable notice of the time and
place of any public sale or of the time after which any private sale is to be
made, at which sale the Landlord or its assigns may purchase unless otherwise
prohibited by law. Unless otherwise provided by law, and without intending to
exclude any other manner of giving Tenant reasonable notice, the requirement of
reasonable notice shall be met if such notice is given in the manner prescribed
in this Lease at least five days before the time of sale. Any sale made
pursuant to the provisions of this Section 21.1 shall be deemed to have been a
public sale conducted in a commercially reasonable manner if held in the
Premises or where the property is located after the time, place and method of
sale and a general description of the types of property to be sold have been
advertised in a daily newspaper published in the parish in which the property is
located, for five consecutive days before the date of the sale. The proceeds
from any such disposition, less any and all expenses connected with the taking
of possession,
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holding and selling of the property (including reasonable attorneys' fees and
legal expenses), shall be applied as a credit against the indebtedness secured
by the security interest granted in this Section. Any surplus shall be paid to
Tenant or as otherwise required by law. The Tenant shall pay any deficiencies to
Landlord upon demand. Upon request by Landlord, Tenant agrees to execute and
deliver to Landlord a financing statement in form sufficient to perfect the
security interest of Landlord in the aforementioned property and proceeds
thereof under the provisions of Chapter 9 of the Louisiana Commercial Laws,
La.R.S. 10:9-101 et seq., as well as the Uniform Commercial Code (or
corresponding state statute or statutes) of any other state the laws of which
Landlord may at anytime consider to be applicable. Landlord is hereby
irrevocably vested with a power of attorney from Tenant to execute any and all
such financing statements on behalf of Tenant.
21.2 Notwithstanding Section 21.1, Landlord agrees that it will
subordinate its security interest and lessor's lien to the security interest of
Tenant's supplier or institutional financial source, provided that Landlord
approves the transaction as being reasonably necessary for Tenant's operations
at the Premises, and further provided that the subordination must be limited to
specific transactions and specified items of the fixtures, equipment or
inventory involved in such transaction.
21.3 Landlord acknowledges and agrees that the security interest in
its favor as provided in this Article XXI does not extend to the personal
property of the Subtenants.
ARTICLE XXII
HOLDING OVER
22.1 In the event Tenant remains in possession of the Premises after
the expiration of the Lease Term without the execution of a new lease, it shall
be deemed to be occupying said Premises as a tenant from month to month at a
rental equal to the Rent (including any Percentage Rental) herein provided plus
fifty percent of such amount and otherwise subject to all the conditions,
provisions and obligations of this Lease insofar as the same are applicable to a
month-to-month tenancy.
ARTICLE XXIII
NOTICES
23.1 Whenever any notice is required or permitted hereunder, such
notice shall be in writing. Any notice or document required or permitted to be
delivered hereunder shall be deemed to be delivered when actually received by
the designated addressee or, if earlier and regardless of whether actually
received or not, two (2) days after being deposited in the United States mail,
postage prepaid, certified mail, return receipt requested, addressed to the
parties at the respective addresses set out in Section 1.1 above (or at
Landlord's option, to Tenant at the Premises), or at such other addresses as
they have theretofore specified by written notice.
23.2 If "Tenant" includes or is comprised of more than one person,
firm or corporation, the receipt of notice by one shall be deemed to be notice
to all and all such parties shall arrange among themselves for their joint
execution of a notice to Landlord specifying some individual at some specific
address for the receipt of notices and payment to Tenant. All parties included
within the terms "Landlord" and "Tenant," respectively, shall be bound by
notices and payments given in accordance with the provisions of this Article to
the same effect has if each had received such notice or payment. In addition,
Tenant agrees that notices to Tenant may be given by Landlord's attorney,
property manager or other agent.
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ARTICLE XIV
COMMISSIONS
24.1 Each party represents and warrants to the other that it has had
no dealings with any broker or agent in connection with the negotiation or
execution of this Lease. Each party shall indemnify and hold the other harmless
from any costs, expenses, or liability for commissions or other compensation or
charges claimed by any person, broker or agent claiming through association with
it with respect to this Lease. Each party shall only be responsible for such
commissions or fees as it may agree to pay in a separate written agreement
executed by said party, if any.
ARTICLE XXV
REGULATIONS
25.1 Landlord and Tenant acknowledge that there are in effect
federal, state, parish and municipal laws, orders, rules, directives and
regulations (collectively referred to hereinafter as the "Regulations") and that
additional Regulations may hereafter be enacted or go into effect, relating to
or affecting the Premises, and concerning the impact on the environment of
construction, land use, maintenance and operation of structures, and the conduct
of business. Tenant will not cause, or permit to occur, any act or practice, by
negligence, omission, or otherwise, that would adversely affect the environment
or violate any of said laws, regulations or guidelines. Moreover, Tenant shall
have no claim against Landlord by reason of any changes Landlord, after written
notice to Tenant, may make in the Premises pursuant to said Regulations or any
charges imposed upon Tenant, Tenant's customers or other invites pursuant to
same.
25.2 If, by reason of any Regulations, the payment to, or collection
by, Landlord of any Rent or other charge (collectively referred to hereinafter
as "Lease Payments") payable by Tenant to Landlord pursuant to the provisions of
this Lease is in excess of the amount (the "Maximum Charge") permitted thereof
by the Regulations, then Tenant, during the period (the "Freeze Period") when
the Regulations shall be in force and effect, shall not be required to pay, nor
shall Landlord be permitted to collect, any sum in excess of the Maximum Charge.
Upon the earlier of (i) the expiration of the Freeze Period, or (ii) the
issuance of a final order or judgment of a court of competent jurisdiction
declaring the Regulations to be invalid or not applicable to the provisions of
this Lease, Tenant, to the extent not then proscribed by law, commencing with
the first day of the month immediately following, shall pay to Landlord as
additional Rent, in equal monthly installments during the balance of the Lease
Term, a sum equal to the cumulative difference between the Maximum Charges and
the Lease Payments during the Freeze Period. If any provisions of this section,
or the application thereof, shall to any extent be declared to be invalid or
unenforceable, the same shall not be deemed to affect any of the other
provisions of this section or of this Lease, all of which shall be deemed valid
and enforceable to the fullest extent permitted by law. It is the intention of
Landlord and Tenant to conform strictly to applicable usury laws. Accordingly,
notwithstanding anything to the contrary contained herein or in any other
agreement entered into in connection with or as security for this Lease, it is
agreed that the aggregate of all consideration which constitutes interest under
applicable law (including, but not limited to, any late charges that may
constitute interest under applicable law) that is taken, reserved, contracted
for, charged or received under this Lease, or otherwise in connection with this
Lease, shall under no circumstances exceed the maximum amount of interest
allowed by applicable law, and any excess shall be credited on Tenant's
obligations under this Lease (or, if all such obligations have been paid in
full, refunded to Tenant).
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ARTICLE XXVI
MISCELLANEOUS
26.1 Nothing in this Lease shall be deemed or constructed by the
parties hereto, nor by any third party, as creating the relationship of
principal and agent or of a partnership or joint venture between the parties
hereto, it being understood and agreed that neither the method of computation of
Rent, nor any other provision contained herein, nor any acts of the parties
herein, shall be deemed to create any relationship between the parties hereto
other than the relationship of landlord and tenant.
26.2 Tenant shall not, for any reason, withhold or reduce Tenant's
required payments of Rent and other charges provided in this Lease, it being
agreed that the obligations of Landlord under this Lease are independent of
Tenant's obligations except as may be otherwise expressly provided. The
immediately preceding sentence shall not be deemed to deny Tenant the ability of
pursuing all rights granted it under this Lease or at law; however, at the
direction of Landlord, Tenant's claims in this regard shall be litigated in
proceedings different from any litigation involving Rent claims or other claims
by Landlord against Tenant (i.e., each party may proceed to a separate judgment
without consolidation, counterclaim or offset as to the claims asserted by the
other party).
26.3 Anything contained herein to the contrary notwithstanding, the
liability of Landlord to Tenant for any event of default by Landlord under the
terms of this Lease shall be limited to the proceeds of sale on execution of the
interest of Landlord in the Premises; and Landlord shall not be personally
liable for any deficiency, except that Landlord shall, subject to the provisions
of Section 17.6 hereof, remain personally liable to account to Tenant for any
security deposit under this Lease. This clause shall not be deemed to limit or
deny any remedies which Tenant may have upon the occurrence of an event of
default by Landlord hereunder which do not involve the personal liability of
Landlord or otherwise require the payment of money or incurrence of costs by
Landlord.
26.4 In all circumstances under this Lease, where the prior consent
of one party (the "consenting party"), whether it be Landlord or Tenant, is
required before the other party (the "requesting party") is authorized to take
any particular type of action, such consent shall not be withheld in an
unreasonable or arbitrary manner; however, the requesting party agrees that its
exclusive remedy if it believes that consent has been withheld improperly
(including, but not limited to, consent required from Landlord pursuant to
Section 8.2 or Section 17.1) shall be to institute litigation either for a
declaratory judgment or for a mandatory injunction requiring that such consent
be given (with the requesting party hereby waiving any claim for damages as a
result thereof unless the consenting party refuses to comply with a court order
or judgment requiring it to grant its consent).
26.5 One or more waivers of any covenant, term or condition of this
Lease by either party shall not be construed as a waiver of a subsequent breach
of the same covenant, term or condition. The consent or approval by either
party to or of any act by the other party requiring such consent or approval
shall not be deemed to waive or render unnecessary consent to or approval of any
subsequent similar act. No expiration or termination of the Lease Term or
Tenant's rights of possession hereunder, and no re-entry or repossession of the
Premises, and no reletting of the Premises, shall relieve Tenant of its
liabilities and obligations hereunder, all of which shall survive such
expiration, termination, re-entry, repossession or reletting. Landlord's
failure to insist upon the strict performance of any provision hereof, or to
exercise any option or remedy contained herein, shall not constitute a waiver
thereof or of any provision, option, right or remedy in the future. Receipt by
Landlord of any Rent or other sum with knowledge of any breach or Event of
Default by Tenant hereunder shall not waive such breach or Event of Default, and
no waiver of any provision hereof shall occur unless made in writing. Failure
to declare any Event of Default immediately upon occurrence, or delay in taking
any action or remedy in connection therewith, shall not waive the Event of
Default nor require the giving of any further notice or opportunity to cure
prior to exercise of remedies. Neither the acceptance of late payments nor the
giving of notice or opportunity to
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cure where none are required shall constitute a waiver by Landlord or create any
obligation that Landlord give any future notice or opportunity to cure.
26.6 Whenever a period of time is herein prescribed for action to be
taken by Landlord or Tenant (other than the payment of Minimum Guaranteed Rental
and Percentage Rental by Tenant), Landlord or Tenant shall not be liable or
responsible for, and there shall be excluded from the computation of any such
period of time, any delays due to strikes, riots, acts of God, shortages of
labor or materials, war, governmental laws, regulations or restrictions or any
other causes of any kind whatsoever which are beyond the reasonable control of
Landlord and Tenant.
26.7 If any provision of this Lease should be held to be invalid or
unenforceable, the validity and enforceability of the remaining provisions of
this Lease shall not be affected thereby.
26.8 The laws of the State of Louisiana shall govern the
interpretation, validity, performance and enforcement of this Lease. Venue for
any action under this Lease shall be in the parish or parishes in which the
Premises are located.
26.9 The captions used herein are for convenience only and do not
limit or amplify the provisions hereof.
26.10 Whenever herein the singular number is used, the same shall
include the plural, and words of any gender shall include each other gender.
26.11 The terms, provisions and covenants contained in this Lease
shall apply to, inure to the benefit of and be binding upon the parties hereto
and their respective heirs, successors in interest, assigns (to the extent
allowed herein) and legal representatives, except as otherwise herein expressly
provided.
26.12 If any property of Tenant is left in the Premises for at least
ten (10) days after Tenant deserts, vacates or abandons the Premises, then such
property shall be deemed abandoned by Tenant, and same shall (at Landlord's
option) be Landlord's property without compensation to Tenant therefor and
Landlord may dispose of, sell or use same without liability to Tenant.
Alternatively, Landlord may elect not to own such property and may require
Tenant to remove the property immediately, and if Tenant fails to do so,
Landlord may remove, store and/or dispose of such property as Landlord deems
appropriate, at Tenant's expense, without liability to Tenant or others
therefor.
26.13 This Lease contains the entire agreement between the parties,
and no brochure, rendering, information or correspondence shall be deemed to be
part of this Lease unless specifically incorporated herein by reference. In
addition, no agreement shall be effective to change, modify or terminate this
Lease, in whole or in part, unless such agreement is in writing and duly signed
by the party against whom enforcement of such change, modification or
termination is sought. Notwithstanding any reentry or reletting or other action
by Landlord, no surrender of this Lease or of any or all of the Premises shall
be effective unless Landlord expressly agrees to such surrender in writing.
26.14 LANDLORD AND TENANT HEREBY ACKNOWLEDGE THAT THEY ARE NOT
RELYING UPON ANY BROCHURE, RENDERING, INFORMATION, REPRESENTATION OR PROMISE OF
THE OTHER, OR OF ANY OTHER PERSON OR ENTITY, EXCEPT AS MAY BE EXPRESSLY SET
FORTH IN THIS LEASE.
26.15 This Lease consists of twenty-six articles and Exhibits "A"
through "D". In the event any provision of an exhibit or other attached page
shall be inconsistent with a provision in the body of this Lease, the provision
as set forth in the exhibit shall be deemed to control.
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26.16 In the event either party shall find it necessary to employ an
attorney or initiate any legal proceeding to enforce any provision of this
Lease, whether at law or in equity, the party prevailing shall be entitled (in
addition to any award or judgment for damages) to receive reimbursement of
reasonable attorneys' fees and litigation expenses from the other party.
26.17 Landlord warrants that it has full right and power to execute
this Lease and perform its obligations under this Lease, and Landlord agrees,
represents and warrants that Tenant shall peaceably and quietly have, hold, and
enjoy the Premises during the Lease Term, subject to the terms of this Lease,
the Ground Lease and the state of existing title.
26.18 On or before August 1, 1999, Tenant shall provide to Landlord
commitment letters, letters of intent and other information reasonably required
by Landlord to evidence Tenant's ability to obtain the financing necessary for
Tenant to comply with Tenant's duties under this Lease, including without
limitation, construction of the Improvements.
26.19 Neither Landlord nor Tenant shall record this Lease, but they
shall execute and acknowledge a memorandum of lease in the form of Exhibit "B"
attached hereto and incorporated herein by reference, simultaneously with their
execution of this Lease, and Tenant shall, at its sole expense, record such
memorandum of lease promptly after execution of this Lease. If it becomes
necessary to revise such initial memorandum of lease after it is executed,
Landlord and Tenant shall, within twenty (20) days after request is made by the
other party, execute, acknowledge and record an amended memorandum of lease.
Upon termination of this Lease by expiration or otherwise, Landlord and Tenant
shall execute, acknowledge and deliver the necessary documents to release of
record any such memorandum of lease.
26.20 If Tenant exercises its second five-year renewal option to
extend this Lease as set forth in Section 1.1(i) Landlord shall, notwithstanding
such extension, at all times after commencement of such second five-year renewal
option, have the right to terminate this Lease (the "Termination Right"), with
such termination to be effective as of the date selected by Landlord. In
addition, the Termination Right is subject to the following provisions:
(a) In the event Landlord, in its sole discretion, elects to exercise
the Termination Right, Landlord shall give Tenant at least 180 days' prior
written notice of such election (the "Termination Notice"). The Termination
Notice shall state the termination date ("Termination Date") of the Lease as
selected by Landlord.
(b) In the event that (1) the Termination Date is prior to the
commencement of the third five-year renewal period as described in Section
1.1(i), and (2) Landlord intends to sublease to third parties, on or prior to
the date 18 months after the Termination Date, in excess of 40,000 square feet
of retail space within the property leased to Landlord by Owner under the Ground
Lease, Landlord shall propose replacement space for Tenant that is materially
comparable to or better than the Premises (the "Replacement Space") and provide
the details of such Replacement Space within or together with the Termination
Notice.
(c) (1) If Landlord is required under Section 26.20(b) to propose
Replacement Space for Tenant, Tenant shall have 90 days from the date of the
Termination Notice to inform Landlord whether it (i) accepts the Replacement
Space, or (ii) declines to accept the Replacement Space because Tenant believes
such Replacement Space is not materially comparable to or better than the
existing Premises ("Comparable Space"). If Tenant fails to respond within said
90 day period, (x) the Replacement Space will be deemed to be Comparable Space,
(y) Tenant will be deemed to have accepted the Replacement Space, and (z) Tenant
shall have no further right to contest such matters. If Tenant declines to
accept the Replacement Space because Tenant believes such Replacement Space is
not Comparable Space, the issue of whether the Replacement Space is Comparable
Space shall be settled by arbitration administered by the American Arbitration
Association under its Arbitration Rules for the Real Estate Industry (an
"Arbitration Proceeding") and
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judgment on the award rendered by the arbitrator(s) may be entered in any court
having jurisdiction thereof. The losing party shall bear all of the costs of the
foregoing proceeding.
(2) If the Replacement Space is accepted by Tenant or deemed accepted
by Tenant, Tenant shall relocate, at Tenant's or its Subtenants' expense (except
as set forth in clauses (i) and (ii) below), to the Replacement Space and shall
occupy the Replacement Space for the remainder of the Lease Term, as so
extended, and the terms and provisions of this Lease shall apply to Tenant's
occupancy thereof. Within 30 days after Tenant's relocation to the Replacement
Space, Landlord shall pay Tenant the following sums:
(i) an amount equal to the product of (x) the Subtenants'
collective Earnings Before Interest, Taxes, Depreciation and Amortization,
determined in accordance with generally accepted accounting principles, for the
12 months preceding the month during which Landlord sends the Termination Notice
("Subtenants' Trailing EBITDA"), multiplied by (y) the quotient of (I) the
number of days elapsing from the Termination Date through the earlier of (A) 180
days after the Replacement Space is deemed "ready for tenant improvements" (as
defined in Section 3.1 of this Lease) or (B) the date the first retailer opens
for business in the Replacement Space (the "Loss Period"), divided by (II) 365
(by way of example, if the Loss Period is 182 days, and the Subtenants' Trailing
EBITDA is $10,000,000, then the sum to be paid by Landlord to Tenant pursuant to
this Section 26.20(c)(2)(i) would be $10,000,000 times 182/365 = $5,000,000;
plus
(ii) an amount equal to the product of (x) the sum of Net Cash
Flow and the Management Fee for the 12 months preceding the month during which
Landlord sends the Termination Notice ("Trailing Net Cash Flow"), multiplied by
(y) the quotient of the Loss Period divided by 365.
(d) If (i) Landlord is required under Section 26.20(b) to propose
Replacement Space for Tenant, (ii) Tenant declines to accept the Replacement
Space because Tenant believes such Replacement Space is not Comparable Space,
and, (iii) if contested in an Arbitration Proceeding, the arbitrator(s)
determine that the Replacement Space is not Comparable Space, then Tenant shall
not relocate, or be entitled to relocate, to the Replacement Space proposed by
Landlord, this Lease shall terminate on the Termination Date (or as soon
thereafter as practicable if the determination of the arbitrator(s) in the
Arbitration Proceeding has not been made on or before the Termination Date), and
within 30 days after the Termination Date (or within 30 days after the actual
termination date if such date is delayed pending the determination of the
arbitrator(s) in the Arbitration Proceeding), Landlord shall pay Tenant the
following sums:
(x) an amount equal to the product of Subtenants' Trailing EBITDA
multiplied by 5; plus
(y) an amount equal to the product of (I) the remainder of (A)
Trailing Net Cash Flow minus (B) Percentage Rental for the 12 months preceding
the month during which Landlord sends the Termination Notice, multiplied by (II)
6.
In no event shall Landlord be required to pay any of the Subtenants
any amount of money pursuant to Landlord's exercise of the Termination Right.
Landlord's only payment requirements pursuant to its Termination Right are as
set forth in this Section 26.20.
(e) If (i) the Tenant declines to accept Replacement Space because
Tenant believes such Replacement Space is not Comparable Space, and, (ii) if
contested in an Arbitration Proceeding, the arbitrator(s) determine that the
Replacement Space is Comparable Space, Tenant shall not relocate, or be entitled
to relocate, to the Replacement Space (if any) proposed by Landlord, this Lease
shall terminate on the Termination Date (or as soon thereafter as practicable if
the determination of the arbitrator(s) in the Arbitration Proceeding has not
been made on or before the Termination Date) and Landlord shall have no further
obligation to Tenant under this Lease.
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26.21 With respect to certain real property in the vicinity of the
Premises and the Shoreside Complex (as defined in the Ground Lease), located
under the Texas Street Bridge in Shreveport, Louisiana and as more particularly
set forth on Exhibit "C," attached hereto and incorporated herein by reference
(the "Texas Street Bridge Property"), Landlord and Tenant agree as follows: In
the event that (i) Tenant is not in default of any terms or conditions of this
Lease, (ii) Landlord is not currently occupying, subletting or otherwise using
the Texas Street Bridge Property and (iii) Landlord is willing, in its sole
discretion, to put such property to use, then Tenant shall have a right of first
offer to sublease the Texas Street Bridge Property upon the following terms and
conditions: If Landlord at any time decides to sublease all or any portion of
the Texas Street Bridge Property or any interest therein (the "Offered
Property") to another party, before offering such Offered Property for lease,
Landlord will notify Tenant in writing (said notice referred to herein as the
"ROFO Notice") and offer to sublease to Tenant the Offered Property at a price
and on terms as Landlord shall determine (the "Right of First Offer"). Tenant
shall have five business days after receipt of such notice (the "Election
Period") to elect by written notice to Landlord to sublease the Offered
Property, and Landlord will sublease it to Tenant upon the terms set forth in
the ROFO Notice.
If, within the Election Period, Tenant elects not to sublease the
Offered Property or fails to provide the written notice to Landlord prior to
expiration of the Election Period, Landlord may proceed to sublease the Offered
Property to any other person or entity on terms substantially the same as
offered to Tenant.
26.22 If the applicable casino regulatory organization in any
jurisdiction in which Landlord or any of its constituent partners (or any of
their respective affiliates) holds a gaming or gaming-related license compels
such party to discontinue its relationship with Tenant or any Subtenant (an
"Unsuitable Party"), then such Unsuitable Party shall divest itself of its
interest in the Premises as soon as possible, but in no event later than 120
days after being advised of such unsuitability. If such Unsuitable Party fails
to divest itself of its interest in the Premises within such time frame, then
Landlord shall have the right to acquire all of such Unsuitable Party's interest
in the Premises for an amount equal to the lesser of (i) the book value of such
Unsuitable Party's interest in the Premises or (ii) the amount approved by the
applicable casino regulatory authority.
ARTICLE XXVII
EQUAL OPPORTUNITY EMPLOYMENT AND AFFIRMATIVE ACTION PLAN
27.1 Tenant and Landlord do hereby incorporate the provisions of
Article XXVIII of the Ground Lease, a copy of which is annexed hereto as Exhibit
"D", into this Lease, and Tenant hereby agrees to incorporate Landlord's
obligations to Owner under said Article XXXIII of the Ground Lease into Tenant's
business plan and its ongoing business activities, Tenant hereby agreeing that
Landlord shall be entitled to enforce said Article XXXIII of the Ground Lease
against Tenant as if Landlord was the "Landlord" under said Ground Lease and
Tenant was the "Tenant" under said Ground Lease.
35
<PAGE>
EXECUTED as of the latest date accompanying a signature by Landlord or
Tenant below.
LANDLORD:
QNOV, a Louisiana general partnership
Taxpayer Identification No.: 72-1225563
By: Sodak Louisiana, L.L.C., its general partner
By: /s/ JACK E. PRATT
-----------------------------------
Title: Manager
-----------------------------------
Date: June 3, 1999
-----------------------------------
By: HWCC-Louisiana, Inc., its general partner
By: /s/ JACK E. PRATT
-----------------------------------
Title: Manager
-----------------------------------
Date: June 3, 1999
-----------------------------------
TENANT:
RED RIVER ENTERTAINMENT COMPANY, L.L.C.,
a Tennessee limited liability company
By: /s/ JOSEPH J. RODRIGUEZ
-----------------------------------
Title: Chief Manager
Date of Signature:
Taxpayer Identification No.: 62-1780787
36
<PAGE>
EXHIBIT "A"
PREMISES
37
<PAGE>
EXHIBIT "B"
FORM OF MEMORANDUM OF LEASE
STATE OF______________ (S)
(S)
COUNTY/PARISH OF______ (S)
THIS MEMORANDUM OF LEASE AGREEMENT ("Memorandum") is entered into as
of the ____ day of , 1999, by and between QNOV, a Louisiana general
partnership ("Landlord"), and RED RIVER ENTERTAINMENT COMPANY, L.L.C., a
___________ limited liability company ("Tenant"), sometimes collectively
referred to herein as the "Parties" or singularly as a "Party".
RECITALS
A. Landlord and Tenant have entered into a Retail Space Lease on the
____ day of ____________, 1999 (the "Lease") covering the property described on
Exhibit "A," attached hereto and made a part hereof for all purposes (the
"Premises").
B. Landlord and Tenant desire to enter into and record this
Memorandum in the public records of Bossier/Caddo Parish, Louisiana, to put all
third parties on notice of the Lease and Tenant's rights thereunder in and to
the Premises.
AGREEMENT
1. The Lease. Upon and subject to the terms and provisions set forth
in the Lease, Landlord has leased, demised and let unto Tenant, and Tenant has
taken and leased from Landlord, the Premises. Tenant has certain rights and
interests in the Premises under the Lease.
2. Term. The Term of the Lease commences on the ____ day of
____________, 1999, and runs through the ____ day of , 2____. Provided
Tenant is not in default of its obligations or has not been in default, Tenant
shall have three (3) five-year options to renew the Lease provided it gives
written notice to Landlord at least one hundred eighty (180) days prior to the
expiration of the Lease Term or the first renewal term, as the case may be.
3. Right to Lease Additional Property. The Lease contains a provision
which entitles Tenant to sublease the property described on Exhibit "B" hereto
from Landlord should Landlord elect to sublease said property.
4. Incorporation of Lease. The terms, conditions and provisions of
the Lease are incorporated herein by reference for all purposes. Any
inconsistencies between this Memorandum and the Lease are governed by the Lease
and not by this Memorandum. This Memorandum in no way modifies or amends the
Lease.
[The remainder of this page has been left intentionally blank.]
38
<PAGE>
Executed as of the day and year first above written.
LANDLORD:
QNOV, a Louisiana general partnership
Taxpayer Identification No.: 72-1225563
By: Sodak Louisiana, L.L.C. , its general partner
By:
---------------------------------------
Title: Manager
------------------------------------
Date:
------------------------------------
By: HWCC-Louisiana, Inc., its general partner
By:
---------------------------------------
Title: Manager
------------------------------------
Date:
------------------------------------
TENANT:
RED RIVER ENTERTAINMENT COMPANY, L.L.C.,
a Tennessee limited liability company
By:
---------------------------------------
Title: Chief Manager
------------------------------------
Date of Signature:
------------------------
Taxpayer Identification No.: 62-1780787
--------------
39
<PAGE>
ACKNOWLEDGEMENT
STATE OF __________________
COUNTY OF ________________
BEFORE ME, the undersigned Notary Public, duly commissioned and
qualified and for the aforesaid County and State, personally came and appeared
________________, to me known, who declared and acknowledged to me, Notary, and
the undersigned competent witnesses that he is the Manager of Sodak Louisiana,
L.L.C., and that he is authorized to execute and deliver the foregoing Retail
Space Lease on behalf of Sodak Louisiana, L.L.C. acting in its capacity as a
general partner of QNOV, and that he signed and executed the foregoing Retail
Space Lease, as the free and voluntary act and deed of QNOV, for and on behalf
of QNOV and for the objects and purposes therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal and
the said appearer and the said witnesses have hereunto affixed their signatures
this ____ day of ___________________, 1999.
WITNESSES:
___________________________________ _________________________________
____________________
___________________________________
___________________________________
NOTARY PUBLIC
My Commission expires:______________
<PAGE>
ACKNOWLEDGEMENT
STATE OF __________________
COUNTY OF ________________
BEFORE ME, the undersigned Notary Public, duly commissioned and
qualified and for the aforesaid County and State, personally came and appeared
________________, to me known, who declared and acknowledged to me, Notary, and
the undersigned competent witnesses that he is the _______________ of HWCC-
Louisiana, L.LC., and that he is authorized to execute and deliver the foregoing
Retail Space Lease on behalf of HWCC-Louisiana, L.L.C. acting in its capacity as
a general partner of QNOV, and that he signed and executed the foregoing Retail
Space Lease, as the free and voluntary act and deed of QNOV, for and on behalf
of QNOV and for the objects and purposes therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal and
the said appearer and the said witnesses have hereunto affixed their signatures
this ____ day of ___________________, 1999.
WITNESSES:
___________________________________ _________________________________
____________________
___________________________________
___________________________________
NOTARY PUBLIC
My Commission expires:______________
<PAGE>
ACKNOWLEDGEMENT
STATE OF _________________
_________ OF ___________
BEFORE ME, the undersigned Notary Public, duly commissioned and
qualified and for the aforesaid County/Parish and State, personally came and
appeared ________________, to me known, who declared and acknowledged to me,
Notary, and the undersigned competent witnesses that he is the Chief Manager of
RED RIVER ENTERTAINMENT COMPANY, L.L.C., and that he is authorized to execute
and deliver the foregoing Retail Space Lease on behalf of RED RIVER
ENTERTAINMENT COMPANY, L.L.C., and that he signed and executed the foregoing
Retail Space Lease, as the free and voluntary act and deed of said entity, for
and on behalf of said entity and for the objects and purposes therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal and
the said appearer and the said witnesses have hereunto affixed their signatures
this ____ day of ___________________, 1999.
WITNESSES:
___________________________________ _________________________________
____________________
___________________________________
___________________________________
NOTARY PUBLIC
My Commission expires:______________
<PAGE>
EXHIBIT "C"
TEXAS STREET PARCEL
The property bounded by the Red River on one side, the North Parking
Parcel (as defined in the Ground Lease) and South Parking Parcel (as defined in
the Ground Lease) on another side, Commerce Street on another side and the
Pavillion/Hotel Parcel (as defined in the Ground Lease) and Expansion Parcel (as
defined in the Ground Lease) on another side.
<PAGE>
EXHIBIT "D"
ARTICLE XXXIII - EQUAL OPPORTUNITY EMPLOYMENT AND
AFFIRMATIVE ACTION PLAN
Tenant shall utilize, and coordinate with, the Office of the Mayor to
help ensure the various provisions within this Article XXXIII are fulfilled in a
manner that fosters meaningful participation opportunities for local and
minority/women business enterprise ("M/WBE") vendors, suppliers and contractors.
Tenant agrees that it will make good faith efforts to meet and increase the
voluntary M/WBE goals that Tenant establishes with the Louisiana Gaming Control
Board. These goals have been established as 25% minority business enterprise
procurement and 10% female business enterprise procurement. In an effort to
meet and increase those goals, Tenant and Landlord shall establish and appoint
an Equal Opportunity Employment and Procurement Advisory Council (the "Advisory
Council") comprised of business leaders to advise on the establishment of and
support the attainment of M/WBE procurement and employment goals, with the
overall objective of expanding the level of M/WBE procurement, and increasing
the number of minorities in management positions. The Advisory Council shall be
comprised of six (6) members, three (3) of whom shall be appointed by the
Landlord. Tenant and Landlord may change the number and method of appointment
of members and the frequency of meetings by mutual consent. The Advisory
Council shall provide Tenant with suggested methods to increase M/WBE
procurement activity, and to increase minority representation in management
positions. The Advisory Council shall meet monthly with representatives of the
Tenant regarding Tenant purchasing needs and goals for the next ninety (90)
days. The Tenant shall provide Landlord and Advisory Council with quarterly
reports on M/WBE procurement and employment goals established by Tenant and
related goal achievement. Such reports shall be issued within thirty (30) days
from the end of each calendar quarter of each year.
Tenant agrees to use its best efforts to in good faith:
(a) seek to employ in its operations, at all levels, individuals
living in the City of Shreveport from the various gender, racial and ethnic
backgrounds found in the City of Shreveport. The selection process will be
carried out with a focus on Tenant's commitment to hiring at least eighty
percent (80%) local area residents and at least forty percent (40%)
minorities.
(b) actively recruit handicapped persons in the City of
Shreveport to be included among its employees. Tenant will contact
applicable organizations within the greater Shreveport area that support
persons with disabilities to seek out qualified persons with disabilities
for potential employment. Tenant will fully comply with the Americans with
Disabilities Act. Furthermore, Tenant is taking a leadership position
within the industry by training all of its employees in disability
etiquette toward customers and fellow employees.
(c) contract with local vendors of various gender, racial and
ethnic backgrounds found in the City of Shreveport to the extent possible
and insofar as service availability, cost competitiveness and service
quality will allow.
Tenant will establish a goal expenditure level for certified M/WBEs.
Contracting preference will be given to qualified M/WBEs certified by
either the Mayor of the City of Shreveport or the State of Louisiana.
Tenant will develop a partnership with local area certified M/WBEs to help
them secure a positive business relationship by offering expert advice on
purchasing matters, setting up bids, seeking operational monies, and, if
necessary, establishing an up-front-payment plan for goods and services
rendered. In evaluating M/WBE participation, consideration will be given
to the reasonable price" of that participation. This reasonable price"
concept: (i) recognizes that because of difficulty in obtaining financing,
start-up costs, less experience, inability to purchase large quantities of
supplies and other factors, M/WBE prices may be somewhat higher than those
of non-M/WBEs, at least
<PAGE>
initially; (ii) provides protection to M/WBEs from being rejected when
their prices are only slightly higher than non-M/WBEs; and (iii) provides
that meeting stated M/WBE goals is treated similarly to complying with any
other specification of the bid solicitation which a contractor must meet in
order to be considered a responsive bidder.
Construction Phase - Prior to the contracting process, Tenant will meet
with a representative sampling of minority and female construction related
companies in a geographic area no smaller than an area encompassing Dallas,
Texas, New Orleans, Louisiana and Atlanta, Georgia (the "Subject Area") to
ensure that such companies: (1) are fully aware of the available contract
opportunities for construction projects and (2) have a Tenant contact
person available to answer questions throughout the contracting and
construction phase of such projects. After surveying a representative
sampling of minority and female construction related companies in the
Subject Area, Tenant will establish a goal for the total construction
budget to be contracted with such companies. Any general contractor
wanting to do business with Tenant for construction projects must accept
this provision in order to contract with Tenant. The general contractor
will be held accountable for ensuring compliance with M/WBE goals and will
be required to report on such goal compliance at least quarterly (such
reports will be made available to the Office of the Mayor).
Operations Phase - M/WBE companies will be identified and contacted by
local management. As should be the case in any business, vendors will be
sought that can offer quantity, quality and service, but with a strong
commitment to M/WBE companies.
(d) provide training in the City of Shreveport for individuals to
be employed by Tenant. Once hired, an employee will be trained in the
skills necessary to deliver the kind of service for a first-class riverboat
casino/hotel complex. Individuals will be paid during the training period.
This mandatory training will address applicable job functions within the
gaming business (e.g., table games, slot machines, shift supervision,
security, food and beverage, guest services, etc.) Tenant will continue to
work with the various community groups identified above to keep the line of
communication continuously open.
Tenant will provide to Landlord Tenant's annual community review
report covering the Shreveport properties of Tenant. Tenant believes that any
commitment such as made above should include a reporting and feedback mechanism,
and Tenant accordingly welcomes the requirement for such reporting. The annual
community review report will cover minority hiring as well as business done with
M/WBEs.
<PAGE>
ACKNOWLEDGEMENT
STATE OF __________________
COUNTY OF ________________
BEFORE ME, the undersigned Notary Public, duly commissioned and
qualified and for the aforesaid County and State, personally came and appeared
________________, to me known, who declared and acknowledged to me, Notary, and
the undersigned competent witnesses that he is the Manager of Sodak Louisiana,
L.L.C., and that he is authorized to execute and deliver the foregoing
Memorandum of Lease on behalf of Sodak Louisiana, L.L.C. acting in its capacity
as a general partner of QNOV, and that he signed and executed the foregoing
Memorandum of Lease, as the free and voluntary act and deed of QNOV, for and on
behalf of QNOV and for the objects and purposes therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal and
the said appearer and the said witnesses have hereunto affixed their signatures
this ____ day of ___________________, 1999.
WITNESSES:
___________________________________ _________________________________
____________________
___________________________________
___________________________________
NOTARY PUBLIC
My Commission expires:______________
<PAGE>
ACKNOWLEDGEMENT
STATE OF __________________
COUNTY OF ________________
BEFORE ME, the undersigned Notary Public, duly commissioned and
qualified and for the aforesaid County and State, personally came and appeared
________________, to me known, who declared and acknowledged to me, Notary, and
the undersigned competent witnesses that he is the _______________ of HWCC-
Louisiana, L.LC., and that he is authorized to execute and deliver the foregoing
Memorandum of Lease on behalf of HWCC-Louisiana, L.L.C. acting in its capacity
as a general partner of QNOV, and that he signed and executed the foregoing
Memorandum of Lease, as the free and voluntary act and deed of QNOV, for and on
behalf of QNOV and for the objects and purposes therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal and
the said appearer and the said witnesses have hereunto affixed their signatures
this ____ day of ___________________, 1999.
WITNESSES:
___________________________________ _________________________________
____________________
___________________________________
___________________________________
NOTARY PUBLIC
My Commission expires:______________
<PAGE>
ACKNOWLEDGEMENT
STATE OF _________________
____________ OF ____________
BEFORE ME, the undersigned Notary Public, duly commissioned and
qualified and for the aforesaid County/Parish and State, personally came and
appeared ________________, to me known, who declared and acknowledged to me,
Notary, and the undersigned competent witnesses that he is the Chief Manager of
RED RIVER ENTERTAINMENT COMPANY, L.L.C., and that he is authorized to execute
and deliver the foregoing Memorandum of Lease on behalf of RED RIVER
ENTERTAINMENT COMPANY, L.L.C., and that he signed and executed the foregoing
Memorandum of Lease, as the free and voluntary act and deed of said entity, for
and on behalf of said entity and for the objects and purposes therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal and
the said appearer and the said witnesses have hereunto affixed their signatures
this ____ day of ___________________, 1999.
WITNESSES:
___________________________________ _________________________________
____________________
___________________________________
___________________________________
NOTARY PUBLIC
My Commission expires:______________
<PAGE>
EXHIBIT 10.13
GROUND LEASE
by and between
CITY OF SHREVEPORT,
as Landlord
and
QNOV,
as Tenant
May 19, 1999
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
<C> <S> <C>
ARTICLE I - DEMISING OF PREMISES 1
ARTICLE II - DEFINITIONS 2
ARTICLE III - TERM 13
3.01 Initial Term and Renewal Term(s) 13
3.02 Deemed Exercise of Renewal Options 14
3.03 Default by Tenant 15
3.04 Termination During Initial Term 15
3.05 Confirmation of Dates 15
3.06 Termination by Tenant 15
ARTICLE IV - DEVELOPMENT AND CONSTRUCTION 16
4.01 Construction 16
4.02 Standards for Construction of Shoreside Complex 17
4.03 Review by Design Review Committee 17
4.04 Arbitration 18
4.05 Sidewalks 19
4.06 Elevated Walkways 19
4.07 Cooperation by Landlord 19
4.08 Title to Personal Property 20
4.09 Equipment Liens 20
4.10 Riverboat Casinos 20
4.11 Traffic Study 21
4.12 Utilities 21
ARTICLE V - RENT 22
5.01 Means of Payment 22
5.02 Rent Prior to Construction Commencement Date 22
5.03 Fixed Rent 22
5.04 Percentage Rent 23
5.05 Reporting and Payment 23
5.06 Accounting Records 23
5.07 Annual Audit Procedures 23
5.08 Confidentiality 24
5.09 Additional Rent 24
5.10 Minimum Percentage Rent 24
ARTICLE VI - ADDITIONAL PAYMENTS BY TENANT; IMPOSITIONS 24
6.01 Landlord's Net Return 24
6.02 Impositions 25
6.03 Assessments In Installments 25
</TABLE>
-i-
<PAGE>
<TABLE>
<C> <S> <C>
6.04 Combined Tax Lots 25
6.05 Direct Payment by Landlord 26
6.06 Utilities 26
ARTICLE VII - USE 26
7.01 Permitted Uses 26
7.02 Riverboat Casino 26
7.03 Parking 26
ARTICLE VIII - MARKS AND PUBLICITY 27
8.01 Exclusive Ownership of Marks 27
8.02 References to Marks 27
8.03 Effect of Lease Termination 27
8.04 Publicity 27
ARTICLE IX - LAW 27
9.01 Compliance with Law 27
9.02 Mandated Alterations 27
ARTICLE X - MAINTENANCE AND ALTERATIONS 28
10.01 Obligation to Maintain 28
10.02 Hotel Maintenance 28
10.03 Improvements and Structures. 29
10.06 Existing Improvements 30
ARTICLE XI - PROHIBITED LIENS 30
11.01 Tenant's Covenant 30
11.02 Protection of Landlord 31
ARTICLE XII - INDEMNIFICATION; LIABILITY OF LANDLORD 31
12.01 Mutual Indemnity Obligations 31
12.02 Liability of Landlord 32
12.03 Indemnity Relating to Access 32
12.04 Indemnification Procedures 32
ARTICLE XIII - RIGHT OF CONTEST 33
ARTICLE XIV - INSURANCE 34
14.01 Tenant to Insure 34
14.02 Nature of Insurance Program 35
14.03 Policy Requirements and Endorsements 35
14.04 Deliveries to Landlord 36
14.05 Blanket and Umbrella Policies 36
14.06 Waiver of Certain Claims 36
</TABLE>
-ii-
<PAGE>
<TABLE>
<C> <S> <C>
14.07 No Representation of Adequate Coverage 36
ARTICLE XV - DAMAGE OR DESTRUCTION 36
15.01 Notice; No Rent Abatement 36
15.02 Adjustment of Claims; Use of Insurance Proceeds 37
15.03 Depository 37
ARTICLE XVI - CONDEMNATION 37
16.01 Substantial Condemnation 37
16.02 Insubstantial Condemnation 37
16.03 Temporary Condemnation 38
16.04 Other Governmental Action 38
16.05 Assignment of Condemnation Proceeds 38
16.06 Settlement or Compromise 38
16.07 Prompt Notice 39
16.08 Taking or Termination of Lease by Landlord 39
ARTICLE XVII - TRANSFERS BY LANDLORD 39
17.01 Landlord's Right to Convey 39
17.02 No Encumbrances 39
ARTICLE XVIII - TRANSFERS BY TENANT 39
18.01 Assignment to Related Entities 39
18.02 Acquisitions 39
18.03 Assignment to Unrelated Entities 39
ARTICLE XIX - SUBLETTING 40
19.01 Tenant's Right to Sublet 40
19.02 Subordination, Attornment and Nondisturbance 40
19.03 No Release of Tenant Upon Sublease 41
19.04 Assignment of Sublease Rents 41
ARTICLE XX - TENANT'S RIGHT TO MORTGAGE 41
ARTICLE XXI - QUIET ENJOYMENT 41
ARTICLE XXII - REPRESENTATIONS AND WARRANTIES 42
22.01 Due Authorization and Execution 42
22.02 No Litigation 42
22.03 FIRPTA 42
22.04 No Pending Improvements 42
22.05 No Other Tenants 42
22.06 Representations and Warranties in Agreement to Lease 42
</TABLE>
-iii-
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE XXIII - FORCE MAJEURE 43
ARTICLE XXIV - ACCESS 43
ARTICLE XXV - LATE PAYMENT 43
ARTICLE XXVI - LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS 43
26.01 Landlord's Option 43
26.02 Reimbursement by Tenant 44
ARTICLE XXVII - DEFAULT BY TENANT; REMEDIES 44
27.01 Events of Default 44
27.02 Remedies 44
27.03 Re-Entry 45
27.04 Pending Dispute Regarding Event of Default 45
27.05 Late Payment Fee 45
ARTICLE XXVIII - TERMINATION 45
28.01 Possession 45
28.02 Adjustment of Revenues and Expenses 45
28.03 Documentation 46
28.04 Miscellaneous Assignments 46
28.05 Termination of Memorandum of Lease 46
28.06 Personal Property and Equipment 46
28.07 Remove Riverboat Casino 46
ARTICLE XXIX - NO BROKER 46
ARTICLE XXX - WAIVERS 47
30.01 No Waiver by Silence 47
30.02 Waiver of Trial by Jury 47
ARTICLE XXXI - MEMORANDUM OF LEASE 47
ARTICLE XXXII - ESTOPPEL CERTIFICATES 47
32.01 Rights to Each Party 47
32.02 Failure to Execute Estoppel Certificate 47
32.03 Delivery of Estoppel Certificates 48
ARTICLE XXXIII - EQUAL OPPORTUNITY EMPLOYMENT AND AFFIRMATIVE
ACTION PLAN 48
</TABLE>
-iv-
<PAGE>
<TABLE>
<C> <S> <C>
ARTICLE XXXIV - MISCELLANEOUS 50
34.01 Reasonableness 50
34.02 Documents in Recordable Form 51
34.03 Further Assurances 51
34.04 Performance Under Protest 51
34.05 No Third Party Beneficiaries 51
34.06 Interpretation 51
34.07 Captions 51
34.08 Cumulative Remedies 51
34.09 Right of Injunction 52
34.10 Entire Agreement 52
34.11 Amendment 52
34.12 Partial Invalidity 52
34.13 Successors and Assigns 52
34.14 Governing Law 52
34.15 Obligation to Perform 52
34.16 Counterparts 52
34.17 Time Periods 52
34.18 Arbitration Procedures 52
34.19 Dockside Casino 53
34.20 Prohibited Persons 54
34.21 Signs 54
34.22 Taxes, Payments and Services 54
34.23 Riverboat Casino Admission Fee 55
34.24 Hotel Room Blockage Policy 57
34.25 Landlord's Status 57
34.26 Employee Off-Site Parking 57
34.27 References to Sections, Articles and Exhibits 57
34.28 Barnwell and Civic Theater Parking 57
34.29 SWEPCO Servitude 58
ARTICLE XXXV - STIPULATION AS TO VENUE IN CADDO PARISH 58
ARTICLE XXXVI - NOTICES 58
</TABLE>
-v-
<PAGE>
Exhibits
A - 1 Pavilion/Hotel Parcel
A - 2 Expansion Parcel
A - 3 North Parking Parcel
A - 4 South Parking Parcel
A - 5 Elevated Walkway Spaces
A - 6 Texas Street Parcel
B Permitted Exceptions
C Form of Estoppel Certificate
D Form of Staging Area Servitude Agreement
E Form of SAND Agreement
F Form of Memorandum of Lease
G Leasehold Mortgage Provisions
-vi-
<PAGE>
GROUND LEASE
THIS GROUND LEASE (this "Lease") is made and entered into as of May 19,
1999 (the "Commencement Date"), between the CITY OF SHREVEPORT, LOUISIANA, a
municipal corporation of the State of Louisiana, represented by Keith Hightower,
its Mayor, duly authorized to act under Ordinance No.217: of 1998 of the City of
Shreveport ("Landlord"), and QNOV, a Louisiana general partnership, represented
herein by and through its general partners Sodak Louisiana, L.L.C., which in
turn is appearing herein by and through Jack E. Pratt, its Manager, duly
authorized and HWCC-LOUISIANA, INC., which in turn is appearing herein by and
through Jack E. Pratt, its President, duly authorized ("QNOV").
Recitals
A. Landlord wishes to lease to QNOV, and QNOV wishes to lease from
Landlord, certain immovable property located in the City of Shreveport and more
particularly described in Exhibits "A-1" (the "Pavilion/Hotel Parcel"), "A-2"
(the "Expansion Parcel"), "A-3" (the "North Parking Parcel"), "A-4" (the "South
Parking Parcel"), "A-5" (the "Elevated Walkway Spaces") and "A-6" (the "Texas
Street Parcel") (collectively, the "Premises") for the purpose of constructing
and operating a riverboat/entertainment complex, Hotel (as hereinafter defined),
no less than 1950 surface and structured parking spaces and related facilities
(collectively, the "Shoreside Complex") and for other uses and purposes as set
forth in this Lease.
B. Landlord declares that in entering into this Lease it has complied with
all requirements of Law, including La. R.S. 33:4712.
C. The parties desire to enter into this Lease to set forth their rights
and obligations relating to the Premises.
NOW, THEREFORE, IN CONSIDERATION OF THE COVENANTS AND AGREEMENTS OF THE
PARTIES CONTAINED IN THIS LEASE, INCLUDING THE PAYMENT OF RENT (HEREINAFTER
DEFINED), AND IN CONSIDERATION OF THE RECITALS SET FORTH ABOVE (WHICH ARE
INCORPORATED BY REFERENCE IN THIS LEASE), INTENDING TO BE LEGALLY BOUND AND FOR
THE CAUSE EXPRESSED HEREIN, LANDLORD AND TENANT AGREE AS FOLLOWS:
ARTICLE I - DEMISING OF PREMISES
Landlord hereby leases the Premises to Tenant, and Tenant hereby takes and
hires the Premises from Landlord, all subject only to the estates, interests,
liens, charges and encumbrances set forth in Exhibit "B" (the "Permitted
Exceptions"). The Premises are leased to Tenant for the Term defined in this
Lease, upon all the terms and conditions of this Lease.
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Landlord represents and warrants to Tenant that Landlord holds good and
clear record and marketable fee simple absolute title and full ownership to the
Premises, together with: (a) all right, title and interest of Landlord, if any,
in and to the land lying in the bed of any street or highway in front of or
adjoining any portion of the Premises; (b) the appurtenances and all the estate
and rights of Landlord in and to the Premises; (c) any strips or alluvion
adjoining any portion of the Premises; and (d) riparian rights and littoral
rights associated therewith, including, but not limited to, all rights necessary
to dock or moor a riverboat casino and related facilities, excepting, however,
all rights in or ownership of the bed or bank of the Red River, being those
lands below the low water line of said river, all of which rights are vested in
the State of Louisiana and administered by the Caddo-Bossier Port Commission, an
agency of the State of Louisiana, all subject only to the Permitted Exceptions.
Notwithstanding the preceding representations and warranties or anything else
contained in this Lease to the contrary, Tenant acknowledges and agrees that
Landlord is making no representation or warranty relative to its title to or
ownership of the Texas Street Parcel. Tenant further acknowledges and agrees
that its lease of the Texas Street Parcel is subject to a servitude of public
use in favor of the public and that such servitude, as it relates to the Texas
Street Parcel, shall be considered a Permitted Exception hereunder for all
purposes.
Notwithstanding the foregoing, Landlord and Tenant acknowledge and agree
that the matters enumerated on Exhibit B-1 (the "Outstanding Title Matters")
hereto presently affect the Premises although they are not Permitted Exceptions.
Landlord, at its sole cost and expense, shall use its best efforts to cause the
satisfaction, termination, cancellation and release of all Outstanding Title
Matters on or before April 30, 1999 (the "Outside Title Date"), or such later
date as may be agreed upon in writing by Landlord and Tenant, to enable Tenant
to receive an owner's policy of title insurance and Tenant's lenders to receive
a mortgagee's policy of title insurance, which do not list any of the
Outstanding Title Matters as exceptions to Tenant's leasehold interest in the
Premises.
ARTICLE II - DEFINITIONS
"Acceptable Payment Discrepancy" is defined in Section 34.22(c).
"Accounting Principles" means generally accepted accounting principles, as
by the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board, applied in accordance with applicable requirements
of the Department of Public Safety and Corrections and the LGCB.
"Additional Rent" means any and all sums and payments to be paid by Tenant
pursuant to this Lease other than Fixed Rent, Percentage Rent and amounts
payable under Section 34.23(b).
"Admission Fee" means the admission fee authorized under La. R.S. 27:93 or
any other fee, tax or imposition based upon passengers boarding a Riverboat
Casino, whether levied pursuant to La. R.S. 27:93 or any other law, ordinance or
regulation whatsoever.
"Adjusted Gross Revenue" for any period means the sum of Gross Revenue less
the following revenues actually received by Tenant and included in Gross
Revenues: (i) any gratuities
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or service charges added to a customer's bill; (ii) any credits or refunds made
to customers, guests or patrons; (iii) any sums and credits received by Tenant
for lost or damaged merchandise; (iv) any sales taxes, excise taxes, gross
receipt taxes, admission taxes, entertainment taxes, tourist taxes or similar
charges; (v) any proceeds from the sale or other disposition of furnishings and
equipment or other capital assets; (vi) any fire and extended coverage insurance
proceeds; (vii) any condemnation awards; (viii) any proceeds of financing or
refinancing; and (ix) any interest on bank account(s).
"Advisory Council" is defined in Article XXXIII.
"Affiliate" means, as to any entity, another entity that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with such entity.
"Business Day" means any weekday on which national banks are generally open
for the conduct, with bank personnel, of regular banking business.
"Casualty" means any damage or destruction affecting any or all
improvements located on the Premises.
"Combined Tax Lot" is defined in Section 6.04.
"Commencement Date" is defined in the preamble of this Lease.
"Condemnation" means any taking of the Premises or any part of the Premises
by condemnation or by exercise of any right of eminent domain, or by any similar
proceeding or act of any Government.
"Construction Period" is defined in Section 5.02.
"Construction Period Rent" is defined in Section 5.02.
"Construction Trigger Date" means the six month anniversary of the
Commencement Date.
"Construction Commencement Date" means the date upon which construction of
the Shoreside Complex commences.
"Consumer Price Index" means the Consumer Price Index for All Urban
Consumers published by the Bureau of Labor Statistics of the United States
Department of Labor, United States City Average, all items (1982-1984 = 100).
If such index is no longer published, then Tenant shall designate a successor
or replacement index of substantially equivalent reliability and objectivity.
The Consumer Price Index in effect for any given date shall be deemed to refer
to the Consumer Price Index last published before such date.
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"Default" means any Monetary Default or Non-Monetary Default. Each and
every covenant of Tenant under this Lease, if not performed by Tenant, shall
give rise to a Default as to which Tenant shall have the cure rights provided
for in this Lease.
"Depository" means an Institutional Lender designated by Tenant to act as
"Depository" where expressly provided for in this Lease.
"Design Development Documents" means documents that (a) illustrate and
describe the refinement of the design of the Shoreside Complex, including site
traffic circulation, parking, ingress and egress, all proposed improvements and
conceptual landscaping plans, (b) establish the scope, relationships, forms,
size and appearance of the Shoreside Complex by means of plans, sections and
elevations and typical construction details and (c) include specifications that
identify major materials and systems and their quality levels.
"Design Review Committee" means a committee of seven individuals whose
meetings and deliberations shall be presided over by the Mayor of Shreveport or,
in the Mayor's absence, his designee. The members of the committee shall be the
Mayor of Shreveport (Chairman), the Chairman of the Shreveport City Council, the
Chairman of the Metropolitan Planning Commission, two citizens selected by the
Mayor from recommendations from members of the Shreveport City Council, and two
citizens selected by the Mayor of Shreveport. Of the seven members, two shall
be certified architects of the State of Louisiana. All members shall be
appointed within thirty (30) days of the Commencement Date.
"Elevated Walkway" means an enclosed climate-controlled pedestrian walkway.
"Elevated Walkway Spaces" is defined in the recitals of this Lease.
"Equipment Liens" means purchase-money security interests, financing
leases, and similar arrangements (including the corresponding UCC-1 financing
statements) relating to Tenant's acquisition or financing of personal property
used in connection with the operation of the Premises and any Riverboat Casino,
sale or installment sale arrangements, or used under licenses, such as
furniture, fixtures and equipment, telephone, telecommunications and facsimile
transmission equipment, point of sale equipment, televisions, radios, and
computer systems, provided that each Equipment Lien encumbers or otherwise
relates to only the property financed or otherwise provided by the secured party
under such Equipment Lien. The lessor, seller or other secured party under an
Equipment Lien may be an Affiliate of Tenant.
"Estoppel Certificate" means a statement in writing containing all (or, at
the option of the Requesting Party, only some) of the statements set forth in
the form attached as Exhibit "C" and containing such additional information
relating to the Lease and the Premises as the Requesting Party shall reasonably
specify.
"Estoppel Certificate Request" is defined in Section 32.01.
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"Event of Default" is defined in Section 27.01.
"Expansion Parcel" is defined in the recitals of this Lease.
"Fee Estate" means Landlord's fee estate in the Premises or any part of the
Premises or any direct or indirect interest in such fee estate. The Fee Estate
is subject to this Lease.
"Fee Mortgage" means any mortgage, deed of trust, deed to secure debt,
assignment, security interest, pledge, financing statement or other
instrument(s) or agreement(s) intended to grant security for any obligation
encumbering the Fee Estate as entered into, renewed, modified, amended, extended
or assigned from time to time during the Term.
"Fee Mortgagee" means any holder of a Fee Mortgage.
"Fiscal Month" means Tenant's actual fiscal month which shall be a calendar
month. If Tenant elects to change its Fiscal Month, it shall give not less than
sixty (60) days' Notice to Landlord specifying the change prior to the effective
date thereof and such change shall not cause a delay in any payment due under
this Lease. Such term shall also mean and refer to any partial Fiscal Month
arising because of a change in Tenant's Fiscal Month, subject to proration of
any periodic payments calculated on the basis of a Fiscal Month.
"Fiscal Year" means Tenant's actual fiscal year which shall be a calendar
year. If Tenant elects to change its Fiscal Year, it shall give not less than
ninety (90) days' Notice to Landlord specifying the change prior to the
effective date thereof and any such change of date shall not cause a delay in or
change the amount of payments due under this Lease. Such term shall also mean
and refer to any partial Fiscal Year arising because of a change in Tenant's
Fiscal Year or because of a variation between the commencement date of Tenant's
Fiscal Year and the date when Tenant is required to commence to pay Percentage
Rent calculated with respect to each Fiscal Year (in each case subject to
proration of any periodic payments calculated on the basis of a Fiscal Year).
"Fixed Rent" is defined in Section 5.03(a).
"Government" means each and every applicable governmental authority,
department, agency, bureau or other entity or instrumentality having
jurisdiction over the Premises, including the federal government of the United
States, the State government and any subdivisions and municipalities thereof,
including the Parish government, and all other applicable governmental
authorities and subdivisions thereof.
"Gross Revenue" means all revenue of any nature derived by Tenant directly
or indirectly from the Shoreside Complex or any Riverboat Casino operated by
Tenant and berthed at the Premises, including food and beverage sales and other
income, rental or other payments from lessees, sublessees, licensees, managers
and concessionaires (but not the gross receipts of such lessees, sublessees,
licensees, managers and concessionaires, except as required by Section 19.01
hereof) net of any real estate or personal property taxes or the like collected
by Tenant or such
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lessees, sublessees, licensees, managers and concessionaires, less an amount
equal to the difference between Promotional Allowances and Room Rate Supplements
for the relevant period, and, in the case of such a Riverboat Casino, Net Gaming
Proceeds of such Riverboat Casino, in each case less items deductible as losses
in the ordinary course of business according to Law. Parking Revenue, if any, is
hereby specifically excluded from Gross Revenue.
"Hollywood" is defined in Section 8.01.
"Hotel" means a hotel and related facilities constructed on the Premises as
described in Section 4.01.
"HWCC" means HWCC-Louisiana, Inc.
"Impositions" means all taxes, special and general assessments, water
rents, rates and charges, commercial rent taxes, sewer rents and other
impositions and charges of every kind and nature whatsoever with respect to the
Premises that may be assessed, levied, confirmed, imposed or become a lien on
the Premises (other than on account of any actions or omissions of Landlord or
conditions existing on, at or with respect to the Premises before the
Construction Commencement Date) by or for the benefit of any Government with
respect to any period commencing on the Construction Commencement Date and
thereafter during the Term together with any taxes and assessments that may be
levied, assessed or imposed by the State or by any political or taxing
subdivision of the State upon the gross income arising from any Rent or in lieu
of or as a substitute, in whole or in part, for taxes and assessments imposed
upon or related to the Premises and commonly known as real estate taxes. The
term "Impositions" shall, however, not include any of the following, all of
which Landlord shall pay before delinquent or payable only with a penalty: (a)
any franchise, income, excess profits, estate, inheritance, succession,
transfer, gift, corporation, business, capital levy, or profits tax, or license
fee, of Landlord; (b) if the Premises is part of a Combined Tax Lot, any taxes
and other Impositions reasonably allocable to any portion of such Combined Tax
Lot other than the Premises, in accordance with the applicable provisions of
this Lease; (c) the incremental portion of any Imposition that would not have
been levied, imposed or assessed but for any sale or other direct or indirect
transfer of the Fee Estate or of any interest in Landlord during the Term; (d)
any charges that would not have been payable but for any act or omission of
Landlord or conditions existing on, at or with respect to the Premises before
the Construction Commencement Date; (e) any charges that are levied, assessed or
imposed against the Premises during the Term based on the recapture or reversal
of any previous tax abatement or tax subsidy, or compensating for any previous
tax deferral or reduced assessment or valuation, or based on a miscalculation or
misdetermination of any charge of any kind imposed or assessed with respect to
the Premises, relating to any period before the Construction Commencement Date;
(f) any sales or other taxes assessed and levied against Landlord's receipt of
Rent hereunder (except where such taxes are imposed, in whole or in part, in
lieu of or in substitution for real estate taxes, in which event same shall be
paid by Tenant); and (g) interest, penalties and other charges with respect to
items "a" through "f."
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"Indemnify" means, as to any Indemnitor, that such Indemnitor shall
indemnify the Indemnitee (and its partners, officers, directors, agents,
officials and employees or their equivalent) and defend and hold the Indemnitee
(and its partners, officers, directors, agents, officials and employees or their
equivalent) harmless from and against any and all losses, costs, claims,
liabilities, penalties, judgments, damages or other injuries, detriments, or
expenses (including reasonable attorneys' fees, court costs, interest and
penalties) reasonably incurred or suffered by the Indemnitee (and its partners,
officers, directors, agents, officials and employees or their equivalent) on
account of the matter that is the subject of such indemnification or in
enforcing the Indemnitor's indemnity.
"Indemnitee" means a party that is entitled to be Indemnified pursuant to
this Lease.
"Indemnitor" means a party that agrees to Indemnify another party pursuant
to this Lease.
"In Lieu Payment" is defined in Section 34.23(b)(i).
"Initial Term" is defined in Section 3.01(a).
"Institutional Lender" means a bank, trust company, savings and loan
association, insurance company, credit union, savings bank, pension, welfare or
retirement fund or system, real estate investment trust, federal or state agency
regularly making or guaranteeing mortgage loans, any other entity actively
engaged in commercial real estate financing and having total assets of at least
$100,000,000, or a corporation or other entity that is a wholly-owned subsidiary
of any of the foregoing entities, including any of the foregoing when acting as
trustee for other lender(s), whether or not such other lender(s) are themselves
Institutional Lenders. The fact that a particular entity (or any affiliate of
such entity) is a partner of the then Tenant under this Lease shall not preclude
such entity from being an Institutional Lender and a Leasehold Mortgagee,
provided that such entity has in fact made a loan to Tenant secured by a
Leasehold Mortgage and otherwise qualified as an Institutional Lender and a
Leasehold Mortgagee (as applicable).
"Insubstantial Condemnation" means any Condemnation other than a
Substantial Condemnation.
"Landlord", as it applies to covenants or obligations of Landlord, shall
refer to the Landlord named in the opening paragraph of this Lease and shall,
throughout the Term, be limited to mean and refer to only the owner of the Fee
Estate.
"Law" or "Laws" means all laws, ordinances, requirements, orders,
directives, rules and regulations of any applicable Government affecting the
development, improvements, alteration, use, maintenance, operation or occupancy
of the Premises or any part of the Premises, whether in force at the
Commencement Date or passed, enacted or imposed thereafter, subject in all
cases, however, to all applicable waivers, variances and exemptions limiting the
application of the foregoing to the Premises. For purposes of determining
Tenant's obligations under this Lease, however, the term "Law" or "Laws" shall
not include any of the foregoing that require the correction or remediation
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of any condition not caused or created by Tenant that affected the Premises at
the Construction Commencement Date.
"Leasehold Estate" means Tenant's leasehold estate arising under this
Lease, upon and subject to all the terms and conditions of this Lease, or any
part of such leasehold estate or any direct or indirect interest in such
leasehold estate.
"Leasehold Mortgage" means any mortgage, deed of trust, deed to secure
debt, assignment security interest, pledge, financing statement or any other
instrument(s) or agreement(s) intended to grant security for any obligation
(including a purchase-money or other promissory note) encumbering the Leasehold
Estate, as entered into, renewed, modified, consolidated, amended, extended or
assigned from time to time during the Term.
"Leasehold Mortgagee" means a holder of a Leasehold Mortgage.
"LGCB" means the Louisiana Gaming Control Board and any of its successor(s)
who preside over gaming activities in the State of Louisiana.
"Loss of License" is defined in Section 3.06(c).
"Mandated Alterations" means any repairs or alterations mandated by Laws
imposed, increased or otherwise rendered more burdensome after the Construction
Commencement Date, including "retro-fitting" and structural alterations, whether
or not such Laws could reasonably have been foreseen at the Construction
Commencement Date.
"Memorandum of Lease" is defined in Article XXXI.
"Minimum Room Rate" means the average daily hotel room rate within the
greater Shreveport metropolitan area for the most recent calendar year as
reported by Smith Travel Research or, if such report is not available, as
reported by any other source generally accepted in the hotel business.
"Monetary Default" means any failure by Tenant to pay any Rent or other sum
of money payable pursuant to this Lease, when and as required to be paid
pursuant to this Lease.
"Mortgage" means a Fee Mortgage or a Leasehold Mortgage.
"Mortgagee" means the holder of any Mortgage.
"M/WBE" is defined in Article XXXIII.
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"Net Gaming Proceeds" means "net gaming proceeds" as defined in La.R.S.
27:44(15) as of the Commencement Date.
"Non-Monetary Default" means any failure by Tenant to perform as required
by this Lease, other than a Monetary Default.
"North Parking Facility" means the parking facility to be constructed by
Tenant on the North Parking Parcel.
"North Parking Parcel" is defined in the recitals of this Lease.
"Notice" means any notice, demand, request, election, designation, or
consent, including any of the foregoing relating to a Default or alleged
default, that is permitted, required or desired to be given by either party in
connection with this Lease. Notices shall be delivered, and shall become
effective, only in accordance with Article XXXVI.
"Notice of Default" means any Notice from one party to the other claiming
or giving Notice of a Default or alleged Default by the recipient and stating
the nature of such Default with particularity.
"Opening Date" means the first date on which the Riverboat Casino is open
to the public and has commenced doing business.
"Parish" means each of Bossier and Caddo Parish, Louisiana.
"Parking Facilities" means any area for parking motor vehicles located on
the Premises.
"Parking Facilities Net Income" shall mean all Parking Revenue less all
direct costs and expenses associated with maintaining and operating the Parking
Facilities, including but not limited to, all labor costs; maintenance and
repair costs; insurance costs; and uninsured liabilities and direct costs
incurred by Tenant in association with maintaining and operating the Parking
Facilities.
"Parking Income Credit" means: (a) with respect to any Fiscal Month during
the Initial Term, the amount, if any, by which $29,166 exceeds 50% of the
Parking Facilities Net Income for such Fiscal Month; and (b) with respect to any
Fiscal Month during any Renewal Term, the amount, if any, by which one-twelfth
of the then-applicable annual Fixed Rent exceeds 50% of the Parking Facilities
Net Income for such Fiscal Month.
"Parking Revenue" means revenue derived from the rental of parking space in
the Parking Facilities, but excluding any rent derived under any Sublease which
might be attributable to any parking spaces provided to the Subtenant thereunder
by the Tenant as sublessor.
"Pavilion/Hotel Parcel" is defined in the recitals of this Lease.
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"Payment Year" means a twelve-month period commencing on the first day of
the first month after any Riverboat Casino berthed at the Premises is open to
the public for business.
"Percentage Rent" shall have the meaning set forth in Section 5.04.
"Permitted Exception" shall have the meaning set forth in Article I.
"Permitted Hotel Construction Period" means the period of time which Tenant
is afforded by the LGBC after the commencement of construction of the Hotel to
achieve substantial completion of the Hotel, as such period of time may be
extended, amended, modified or supplemented from time to time, one or more
times.
"Premises" is defined in the recitals of this Lease.
"Prime Rate" means the prime rate or equivalent "base" or "reference" rate
for corporate loans: (a) announced from time to time by Citibank, N.A., New
York, New York; or (b) if such rate is no longer so published or announced, then
a reasonably equivalent rate generally recognized as the New York Prime Rate, as
such term is commonly understood, or as may be mutually agreed by Tenant and
Landlord. Notwithstanding anything to the contrary in this Lease, the Prime Rate
shall never exceed the highest rate of interest legally permitted to be charged
in transactions of the character of this Lease between parties of a character
similar to Landlord and Tenant.
"Prohibited Lien" means any mechanic's, vendor's, laborer's or material
supplier's statutory lien or other similar lien arising by reason of work,
labor, services, equipment or materials supplied, or claimed to have been
supplied, to Tenant, which lien either: (a) is filed against the Fee Estate or
(b) is filed against the Leasehold Estate and, upon termination of this Lease,
would under the law of the State attach to the Fee Estate. Notwithstanding
anything to the contrary in this Lease, an Equipment Lien shall not constitute a
Prohibited Lien and nothing in this Lease shall prohibit Tenant from creating,
or require Tenant to remove, any Equipment Lien.
"Prohibited Person" means a person or entity (or any person directly or
indirectly affiliated with such person or entity) that, in the reasonable
judgement of Tenant: (i) would or could, if such person or entity owned an
interest in the Fee Estate, endanger any gaming license held by Tenant or any
Affiliate of Tenant; (ii) is in the business of issuing licenses or franchises
for hotels or operating or managing hotels under brand names owned or controlled
by such person or entity or an Affiliate of such person or entity; or (iii) is
in the gaming or casino business.
"Promotional Allowances" means "Promotional Allowances" as defined in the
Uniform System of Accounts for the Lodging Industry, Ninth revised edition, and
includes, but is not limited to, the following: rooms, food, beverage, travel
and other amenities provided free of charge as an incentive to gamble at the
Riverboat Casino.
"Qualified Arbitrator" means one of the following: (a) a reputable and
generally recognized consulting or accounting firm specializing in real estate
or the casino industry, such as Arthur
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Andersen & Company; or (b) an appraiser (who shall be an M.A.I. of the American
Institute of Real Estate Appraisers or equivalent) or an attorney, either
having at least ten years' experience in commercial real estate transactions in
either Parish.
"Relocation Costs" is defined in Section 4.14.
"Renewal Option" is defined in Section 3.01(b).
"Renewal Term" is defined in Section 3.01(b).
"Rent" means Construction Period Rent, Percentage Rent, Fixed Rent and
Additional Rent.
"Riverboat Casino" means a riverboat licensed to Tenant and regulated
under the provisions of the Louisiana Riverboat Economic Development and Gaming
Control Act, as amended from time to time.
"Room Rate Supplement" means, with respect to any Hotel room, for any
period, the amount, if any, by which the product of the Minimum Room Rate for
such room and the number of days that such room was actually occupied during
such period exceeds the sum of the actual room rents charged to occupants of
such room during such period.
"Shoreside Complex" is defined in the recitals of this Lease.
"Sodak" means Sodak Louisiana, L.L.C.
"South Parking Facility" means the parking facility to be constructed on
the South Parking Parcel.
"South Parking Parcel" is defined in the recitals of this Lease.
"State" means the State of Louisiana.
"Sublease" means any sublease of the Premises or any part of the Premises,
or any other agreement or arrangement (including, but not limited to, a license
or concession agreement) made by Tenant granting any third party the right to
occupy, use or possess any portion of the Premises in exchange for rent or other
monetary payments to Tenant. The term "Sublease" shall not include any
management agreement wherein the party to the agreement other than Tenant is
paid a fee by Tenant to manage facilities located upon the Premises as the agent
for or on behalf of Tenant.
"Substantial Condemnation" means any Condemnation that, in Tenant's
reasonable judgment, renders the remaining portion of the Premises unusable for
its original purpose. Tenant may waive its right to treat as a Substantial
Condemnation any Condemnation that would otherwise qualify as such.
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"Subtenant" means any person having rights of occupancy, use or possession
under a Sublease.
"Temporary Condemnation" means a Condemnation relating to the temporary
right to use or occupy the Premises or any part of the Premises.
"Tenant" means QNOV and its successors and assigns hereunder as tenant
under this Lease.
"Tenant's Monthly Statement" means a statement of Adjusted Gross Revenue of
the Shoreside Complex and any Riverboat Casino operated by Tenant and berthed at
the Premises and Parking Facilities Net Income for each Fiscal Month, in
reasonable detail with applicable revenues and expenses from operations shown
separately by category of operation, which statement shall generally be in the
format of Exhibit "D" attached hereto and made a part thereof.
"Term" is defined in Section 3.01(b).
"Termination Date" means the date when this Lease terminates or expires.
"Texas Street Parcel" is defined in the recitals of this Lease.
"Traffic Study" is defined in Section 4.11.
"Unavoidable Delay" means delay in performance of any obligation arising
from or on account of any cause whatsoever beyond the reasonable control of the
person required or entitled to perform, including strikes, labor troubles,
litigation (other than litigation initiated by Tenant), Casualty, Condemnation,
accidents, Laws, governmental preemption, failure or refusal of a governmental
body to issue a required permit or license, war, riots, and other causes beyond
such party's reasonable control, whether similar or dissimilar to the causes
specifically enumerated in this paragraph, notwithstanding reasonable efforts to
mitigate such cause of delay. In no event shall Unavoidable Delay be deemed to
include any delay caused by a person's financial condition.
A fact, circumstance, or event shall render the operation of the Premises,
the Shoreside Complex or a Riverboat "Uneconomic" if such fact, circumstance or
event does or would, in the reasonable judgment of Tenant or the owner of such
Riverboat, as the case may be: (a) cause the Premises, the Shoreside Complex or
such Riverboat to be in violation of Law; or (b) cause further development,
construction, restoration or operation of the Premises, the Shoreside Complex or
such Riverboat to be impracticable or commercially unreasonable.
"Waiver of Subrogation" means a provision in, or endorsement to, any
insurance policy required by this Lease, by which the insurance carrier agrees
to waive all rights of recovery by way of subrogation against either party to
this Lease in connection with any loss covered by such insurance policy.
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ARTICLE III - TERM
3.01 INITIAL TERM AND RENEWAL TERM(S).
(a) INITIAL TERM. The Initial Term (the "Initial Term") of this Lease
shall begin on the Construction Commencement Date and shall continue until
the tenth anniversary of the Opening Date, unless terminated sooner in
accordance with the provisions of this Lease, provided, however, Tenant
shall be afforded access to the Premises for the purpose of undertaking due
diligence with respect to the Premises and other pre-construction
activities commencing on the Commencement Date and ending at 11:59 p.m.
local time on the date immediately preceding the Construction Commencement
Date. Tenant shall act in good faith to minimize disruption of the uses of
the Premises prior to the Construction Commencement Date.
(b) RENEWAL TERMS. Tenant shall have the absolute and unconditional
right and option (each such right and option, a "Renewal Option") to extend
and renew this Lease upon the same terms and conditions as this Lease, for
seven additional successive periods of five years each and an eighth
additional successive period ending on the last day of the month that
includes the fiftieth anniversary of the Opening Date (the "Renewal Terms")
following the expiration of the Initial Term. Wherever this Lease refers to
the "Term," such reference shall be deemed to mean the Initial Term, as
extended from time to time pursuant to Tenant's Renewal Options to include
one or more Renewal Terms, so that upon Tenant's exercise of any Renewal
Option, the "Term" shall be redefined and extended to include the
corresponding Renewal Term arising pursuant to such Renewal Option. Each
Renewal Term shall commence immediately upon the expiration of the Initial
Term or the preceding Renewal Term, as the case may be, and except as
otherwise provided herein, shall expire at the end of the last day before
the day that is the fifth anniversary of the day on which such Renewal Term
commenced. At the expiration or termination of the final Renewal Term
provided for herein, Tenant shall have the right to extend this Lease under
the then prevailing market rates and terms for ground leases in the
Shreveport/Bossier City area to owners and/or operators of riverboat gaming
casinos. Tenant shall notify Landlord in writing at least ninety (90) days
prior to the expiration of the final Renewal Term of its desire to further
extend the term of this Lease upon the expiration or termination of the
final Renewal Term provided for herein. Upon the receipt of such Notice
from Tenant, Landlord and Tenant shall negotiate in good faith in an
attempt to agree upon the terms of, and rent to be paid during, any
extension of this Lease. If Landlord and Tenant are unable to agree upon
such terms and rent by the date which is forty-five (45) days prior to the
expiration or termination of the final Renewal Term provided for hereunder,
such terms and rent shall be decided by arbitration conducted in accordance
with Section 3.01(c) of this Lease. Any extension of this Lease shall be
limited to the extent required by applicable law.
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(c) ARBITRATION PROCEDURE.
(i) If the parties are required to arbitrate the terms and rent
applicable to an extension of this Lease subsequent to the final Renewal
Term provided for hereunder, then Landlord and Tenant may jointly appoint
an Arbitrator. Such Arbitrator shall render his decision within fifteen
(15) days of such appointment.
(ii) If Landlord and Tenant do not make such a joint appointment
by the date which is thirty-five (35) days prior to the expiration of the
final Renewal Term hereunder, then each party shall appoint one Arbitrator
by the date which is thirty (30) days prior to the expiration of the final
Renewal Term hereunder. Each such Arbitrator shall be an individual who:
(A) is not otherwise employed by and is not otherwise a creditor of either
party; and (B) has at least five years of experience in valuing leasehold
interests in hotels and riverboat casino/gaming complexes. The two
appointed Arbitrators shall meet within ten (10) days of such referral and
shall appoint a third Arbitrator, and if such Arbitrators are not able to
agree on such third Arbitrator within such time, then, on five (5) days'
Notice in writing to the other Arbitrator, either Arbitrator shall apply to
the branch of the American Arbitration Association in Shreveport, Louisiana
to designate and appoint such third Arbitrator. The three Arbitrators
shall render their decision within ten (10) days after the appointment of
the third Arbitrator. The Arbitrators shall act by majority vote. If the
Arbitrators fail to render their decision within such time, either party
may seek an order from a court of competent jurisdiction in the State: (x)
requiring such Arbitrators to render their decision immediately, or (y)
appointing one replacement Arbitrator of equivalent qualifications and
directing such Arbitrator to render his decision.
(iii) If either party fails timely to appoint an Arbitrator,
then the single Arbitrator designated by the other party shall act as the
sole Arbitrator and shall be deemed to be the unanimously approved
Arbitrator to resolve such dispute.
(iv) The fees and expenses of the Arbitrators shall be shared
equally by Landlord and Tenant. All Arbitrators, by accepting appointment,
submit to the jurisdiction of the courts of the State.
(v) All proceedings by the Arbitrators shall be conducted in
accordance with the Louisiana Arbitration Law (La. R.S. 9:4201 et seq.),
except to the extent the provisions of such law are modified by this Lease
or the mutual agreement of the parties. Unless otherwise agreed, all
arbitration proceedings shall be conducted in Shreveport, Louisiana, at the
offices of Landlord or Tenant.
3.02 DEEMED EXERCISE OF RENEWAL OPTIONS. Tenant shall be deemed to have
exercised each Renewal Option automatically unless Tenant has elected not to
exercise such Renewal Option by giving Landlord Notice to such effect at least
one hundred eighty (180) days before the date on which such Renewal Option
otherwise would commence. If Tenant properly gives Notice that Tenant elects
not to exercise any Renewal Option, then this Lease shall terminate and expire
upon
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the expiration or termination of the then Term, and Tenant shall not be
permitted to exercise any subsequent Renewal Option.
3.03 DEFAULT BY TENANT. Tenant's Renewal Options shall remain effective
notwithstanding Tenant's Default, unless and until Tenant's cure periods shall
have expired without cure of such Default, and Landlord has lawfully terminated
this Lease. Provided that this Lease has not been lawfully terminated, there
shall be no conditions (express or implied) to Tenant's exercise of any Renewal
Option(s). The exercise of any Renewal Option shall not impair any rights or
remedies of Landlord with respect to any Default occurring before such exercise.
3.04 TERMINATION DURING INITIAL TERM. If construction of the Shoreside
Complex has not commenced by the Construction Trigger Date, then Landlord may
elect to terminate this Lease by giving Notice of such election to Tenant within
thirty (30) days after the Construction Trigger Date. If Landlord does not give
such Notice within such time, then Landlord's right to make such election shall
thereupon expire. Construction of the Hotel shall be completed prior to the
expiration of the Permitted Hotel Construction Period. If substantial
completion of the Hotel has not been achieved prior to the expiration of the
Permitted Hotel Construction Period, Landlord may elect to terminate this Lease
as of the expiration of the Permitted Hotel Construction Period by giving Notice
of such election to Tenant within thirty (30) days from the expiration of the
Permitted Hotel Construction Period. If Landlord does not give such Notice
within such time, Landlord's right to make such election shall thereupon expire.
If Landlord elects to terminate this Lease pursuant to its right to do so under
this Section 3.04, then, if requested to do so by Landlord in Landlord's Notice
of termination, Tenant shall (i) remove all improvements located upon the
Premises and placed there by Tenant and (ii) return the Premises to its
approximate condition on the Construction Commencement Date.
3.05 CONFIRMATION OF DATES. If Landlord and Tenant disagree as to any
date relevant to the calculation of Rent or to the determination of the Term
(including the expiration date of each Renewal Term when and as the
corresponding Renewal Option shall have been exercised or deemed exercised),
then Tenant may pay Rent and otherwise perform under this Lease based on
Tenant's own determination of such date unless and until such date is otherwise
determined by the final judgment of a court of competent jurisdiction. To the
extent that any such court accepts Landlord's position and rejects Tenant's
position, Tenant shall within five (5) Business Days remit to Landlord an amount
equal to any previous underpayments of Rent made because of Tenant's
determination of such date, together with interest on the underpayment at the
Prime Rate, plus two percent (2%) from the date the underpayment was originally
due under this Lease to the date of payment.
3.06 TERMINATION BY TENANT.
(a) CESSATION OF OPERATIONS. Tenant shall have the right to cease
operations of the Shoreside Complex or any Riverboat Casino operated by
Tenant to the extent necessary, in the commercially reasonable judgment of
Tenant, to maintain, repair, renovate, replace, substitute for, or expand
such properties provided that such cessation shall not terminate this Lease
or affect Tenant's obligation to pay rent hereunder and Tenant shall use
its best efforts
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to expedite completion of such matters and restore operations. If
operations of the Shoreside Complex or any Riverboat Casino operated by
Tenant shall become Uneconomic, then Tenant may cease operations of such
facility and, in the case of such a cessation of operations of such a
Riverboat Casino, Fixed Rent shall thereafter neither accrue nor be
payable. If operations of the Shoreside Complex or any Riverboat Casino
operated by Tenant shall all become Uneconomic, Tenant shall have the
right, upon thirty (30) days' Notice to Landlord, to terminate this Lease,
provided that Tenant delivers possession of the Premises to Landlord free
and clear of any Leasehold Mortgage liens or other security interests
(unless incurred by Landlord).
(b) CHANGE OF LAW. Anything in this Lease to the contrary
notwithstanding, if gaming on Riverboat Casinos berthed at the Premises
shall become unlawful due to a change in law, then Tenant may elect to
terminate this Lease by giving Notice of such election to Landlord not more
than ninety (90) days after such gaming has become unlawful. If Tenant
does not so elect to terminate this Lease, then this Lease shall continue
in accordance with its terms; provided however, that from and after the
date that gaming has become unlawful, Fixed Rent shall not accrue or be
payable.
(c) LOSS OF LICENSE. Anything in this Lease to the contrary
notwithstanding, if Tenant's riverboat gaming license issued by the LGCB
shall be rescinded, voided or not renewed for any reason whatsoever ( a
"Loss of License"), then Tenant may elect to terminate this Lease by giving
Notice of such election to Landlord not more than ninety (90) days after
such Loss of License. If Tenant does not so elect to terminate this Lease,
then this Lease shall continue in accordance with its terms; provided
however, that from and after the date of such Loss of License, Fixed Rent
shall not accrue or be payable.
(d) UNECONOMIC OPERATIONS. Any Notice by Tenant terminating this
Lease because operation of the Premises, the Shoreside Complex or any
Riverboat Casino operated by Tenant has become Uneconomic shall include a
reasonably detailed explanation of Tenant's determination that such
operation has become Uneconomic.
ARTICLE IV - DEVELOPMENT AND CONSTRUCTION
4.01 CONSTRUCTION. The Hotel shall have not less than 300 separate
rentable rooms. Tenant may, at any time during the Term, add additional hotel
rooms based upon its analysis of competitive market conditions. At Tenant's
option, the Hotel and its related facilities may include guest and valet parking
facilities. The Hotel and the remainder of the Shoreside Complex may be
physically connected. The footprint of that portion of the Shoreside Complex
bounded to the West by Clyde E. Fant Memorial Parkway and the East by the Red
River may extend to the line made by the east curb of Clyde E. Fant Memorial
Parkway as located as of the Commencement Date. During construction of the
Shoreside Complex, Landlord shall permit the closure, and assist Tenant in
obtaining any permits and consents necessary to close, portions of (i) Clyde E.
Fant Memorial Parkway adjacent to the Premises, (ii) Texas Street under the
Texas Street Bridge and (iii) Milam Street from Commerce Street to Clyde E. Fant
Memorial Parkway.
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4.02 STANDARDS FOR CONSTRUCTION OF SHORESIDE COMPLEX. Tenant shall
cause the Shoreside Complex to be constructed substantially in accordance with
the Design Development Documents approved by the Design Development Committee
and shall cause the Shoreside Complex to be constructed in compliance with all
applicable building codes, laws, ordinances and regulations. The Hotel also
shall satisfy the criteria for receiving an American Automobile Association
Three Diamond rating as described in Lodging Listing Requirements & Diamond
Rating Guidelines (Revised June 1996) published by American Automobile
Association. Tenant shall obtain and pay for all permits and approvals required
by Law in order for Tenant to construct the Shoreside Complex, and approval by
Landlord for purposes of this Lease shall not be deemed approval by any
department or agency of the City of Shreveport charged with the enforcement of
building codes or the issuance of building permits. Landlord agrees and
acknowledges that portions of the Shoreside Complex and related facilities may
be physically connected and integrated at the boundary between the parcels
comprising the Premises. Landlord represents that, as of the Commencement Date,
the required set backs, side yards, front yards, back yards, floor area ratio
restrictions, limitations on number and size of signage and height applicable to
the Premises, as set forth in the Comprehensive Zoning Ordinance for the City of
Shreveport, are as set forth on Exhibit "H" attached hereto and made a part
hereof.
4.03 REVIEW BY DESIGN REVIEW COMMITTEE.
(a) Tenant shall submit (i) copies of the Design Development
Documents, (ii) information relative to the Hotel concerning space
allocation on a floor by floor basis, (iii) conceptional floor plans for
the Hotel showing conceptual exterior elevations, (iv) a conceptual theme
for Hotel furniture, fixtures and equipment, and (v) the estimated
construction cost of the Hotel, including the estimated cost per room for
the Hotel's shell and furniture, fixtures and equipment, to the Landlord
within two hundred seventy (270) days after the Commencement Date, and
Landlord shall ensure that copies of the Design Development Documents and
the other information submitted are forwarded to all members of the Design
Review Committee. If such documents and information, or any subsequent
revisions submitted hereunder, are rejected, as provided in Section
4.03(b), then, unless Tenant elects arbitration of such rejection under
Section 4.04, Tenant shall submit Design Development Documents and related
information revised in response to such rejection within ninety (90) days
after Landlord gives Tenant Notice of such rejection.
(b) The Design Review Committee shall give Tenant Notice that it
approves or rejects documents and information submitted under Section
4.03(a) within twenty-one (21) days after they are submitted to the
Landlord. A Notice of rejection shall include a reasonably detailed
explanation of the basis of such rejection and specific modifications of
such documents and/or information that, if made, would cause such documents
and information to be approved. If the Design Review Committee does not
give a Notice of rejection within such twenty-one (21) day period, then
such documents and information shall be deemed approved by the Design
Review Committee.
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4.04 ARBITRATION.
(a) REJECTION OF DOCUMENTS. If Landlord rejects the Design
Development Documents and related information, then Tenant may elect to
arbitrate such rejection under the provisions of this Section 4.04 by
giving Notice of such election within thirty (30) days after receiving
Notice of such rejection. If Tenant does not give Notice of such election
within such 30-day period, then Landlord's rejection shall become final and
conclusive.
(b) ARBITRATION PROCEDURE.
(i) If either party gives Notice that it elects arbitration under
this Section 4.04, then Landlord and Tenant may jointly appoint an
Arbitrator. Such Arbitrator shall render his decision within fifteen (15)
days of such appointment.
(ii) If Landlord and Tenant do not make such a joint appointment
within ten (10) days after such Notice is given, then each party shall
appoint one Arbitrator within five (5) after the expiration of such 10-day
period. Each such Arbitrator shall be an individual who: (A) is not
otherwise employed by and is not otherwise a creditor of either party; and
(B) has at least five years of experience in the design, construction,
management and operation of hotels and riverboat casino/gaming complexes.
The two appointed Arbitrators shall meet within ten days of such referral
and shall appoint a third Arbitrator, and if such Arbitrators are not able
to agree on such third Arbitrator within such time, then, on five days'
Notice in writing to the other Arbitrator, either Arbitrator shall apply to
the branch of the American Arbitration Association in Shreveport, Louisiana
to designate and appoint such third Arbitrator. The three Arbitrators
shall render their decision within ten (10) days after the appointment of
the third Arbitrator. The Arbitrators shall act by majority vote. If the
Arbitrators fail to render their decision within such time, either party
may seek an order from a court of competent jurisdiction in the State: (x)
requiring such Arbitrators to render their decision immediately, or (y)
appointing one replacement Arbitrator of equivalent qualifications and
directing such Arbitrator to render his decision.
(iii) If either party fails timely to appoint an Arbitrator,
then the single Arbitrator designated by the other party shall act as the
sole Arbitrator and shall be deemed to be the unanimously approved
Arbitrator to resolve such dispute.
(iv) The fees and expenses of the Arbitrators shall be paid by
the party whose position is not adopted by the Arbitrators. All
Arbitrators, by accepting appointment, submit to the jurisdiction of the
courts of the State.
(v) All proceedings by the Arbitrators shall be conducted in
accordance with the Louisiana Arbitration Law (La. R.S. 9:4201 et seq.),
except to the extent the provisions of such law are modified by this Lease
or the mutual agreement of the parties. Unless otherwise agreed, all
arbitration proceedings shall be conducted in Shreveport, Louisiana, at the
offices of Landlord or Tenant.
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(vi) The decision of the Arbitrators with respect to a rejection
of documents and related information shall be either that such rejection is
reasonable or that such rejection is unreasonable. If the decision of the
Arbitrators is that such rejection is unreasonable, then the documents and
related formation covered by such rejection shall be deemed approved by the
Design Review Committee. No rejection shall be determined to be reasonable
if the modifications specified in the Notice of such rejection would cause
an increase in the cost of the Shoreside Complex that, together with the
costs of any previous modifications specified by the Design Review
Committee and made by Tenant, exceeds $250,000 in the aggregate. The
decision of the Arbitrators with respect to a denial of a request for time
shall be either that such denial is reasonable or that such denial is
unreasonable. If the decision of the Arbitrators is that such denial is
unreasonable, then such request shall be deemed granted. The Arbitrators
shall exclusively and finally determine whether a particular dispute falls
within the scope of their authority unless such determination is legally
groundless or in excess of the limitations provided in this Agreement. Any
decision of Arbitrators made in accordance with this Section 4.04 shall be
binding on the parties and enforceable in any court of competent
jurisdiction.
4.05 SIDEWALKS. Tenant shall construct and maintain sidewalks within
the Premises adjacent to Clyde E. Fant Memorial Parkway. Tenant shall not be
required to maintain a continuous pedestrian riverwalk between the Shoreside
Complex and the Red River or at any other location, provided Tenant shall
construct and maintain a continuous walkway running in an east-west direction
connecting the walkway along the Red River and running on the Eastern edge of
the Expansion Parcel with the walkway East of and adjacent to Clyde E. Fant
Memorial Parkway and running on the Western edge of the Expansion Parcel, as
each such walkway is located on the Commencement Date.
4.06 ELEVATED WALKWAYS. Tenant shall construct an Elevated
Walkway over Clyde E. Fant Memorial Parkway between the Pavillion/Hotel Parcel
and the North Parking Parcel. In Tenant's sole discretion, Tenant also may
elect to construct Elevated Walkway(s) over any other portions of the Elevated
Walkway Spaces. In the event Tenant is required or elects to construct any
Elevated Walkway, Landlord, in its capacity as lessor under this Lease, agrees
and acknowledges that it will assist Tenant in obtaining and/or granting any
permits and consents necessary to construct such Elevated Walkway.
4.07 COOPERATION BY LANDLORD. Upon Tenant's request, Landlord shall,
without cost to Landlord, promptly join in and execute any instruments
including, but not limited to, applications for building permits, demolition
permits, alteration permits, appropriate consents, zoning, rezoning or use
approvals, amendments and variances, easements, servitudes, encumbrances, and/or
liens (excluding Mortgages) against the Premises (Fee Estate and Leasehold
Estate), and such other instruments as Tenant may from time to time request to
enable Tenant from time to time to use, develop, improve, and construct
improvements on the Premises in accordance with this Lease, provided each of the
foregoing is in reasonable and customary form and does not cause the Fee Estate
to be encumbered as security for any obligation and does not otherwise expose
the Fee Estate
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to any material risk of forfeiture during the Term. Tenant shall indemnify
Landlord for any liability arising by reason of any such joinder or execution.
It is agreed that the joinder by Landlord in any application filed by Tenant
under the preceding sentence (i) shall not limit or otherwise affect the review
of such application by the City of Shreveport or any agency or department of the
City of Shreveport charged with responsibility for such review, and (ii) shall
not imply or guarantee that such application will be approved by the City of
Shreveport, or its agencies or departments, acting in their public or police
power capacity. Tenant shall reimburse Landlord's reasonable attorneys' fees
incurred by Landlord in performing under this Section 4.07. Landlord agrees not
to oppose or object to any applications filed by Tenant with any Government in
connection with the development, operation or alteration of any improvements
located on the Premises, subject to Landlord's review and approval rights set
forth in Section 4.03.
4.08 TITLE TO PERSONAL PROPERTY. Notwithstanding anything to the
contrary in this Lease, all personal property located in, on or at the Premises
or otherwise constituting part of the Premises shall at all times during and
after the Term be owned by, and shall belong to, Tenant or a Subtenant. Tenant
or such Subtenant shall have title to the foregoing throughout and after the
Term. All the benefits and burdens of ownership of the foregoing shall be and
remain in Tenant or such Subtenant during and after the Term. The provisions of
this Section 4.08 shall be without prejudice to the rights of Landlord to
enforce its lessor's privilege as to such personal property.
4.09 EQUIPMENT LIENS. If at any time or from time to time Tenant desires to
enter into or grant any Equipment Liens, then upon Tenant's request, Landlord
shall enter into such customary documentation with respect to the property
leased or otherwise financed pursuant to such Equipment Liens as Tenant shall
request, providing for matters such as the following: (a) Landlord's waiver of
the right to take possession of such property upon occurrence of an Event of
Default; and (b) customary agreements by Landlord to enable the secured party to
repossess such property in the event of a default by Tenant permitting such
secured party to exercise remedies under its Equipment Lien.
4.10 RIVERBOAT CASINOS. Notwithstanding anything in this Lease to the
contrary, any Riverboat Casinos berthed at the Premises shall at all times
during and after the Term be (a) owned by and belong to Tenant or a Subtenant or
(b) leased by Tenant or a Subtenant. At no time shall any Riverboat Casino be
considered property of Landlord, and Landlord shall have no right, title or
interest, including any lessor's lien, in any Riverboat Casino. All benefits
and burdens of ownership of any Riverboat Casino berthed at the Premises (except
for Landlord's right to a percentage of the revenues generated by such Riverboat
Casino pursuant to Section 5.03) shall be and remain with Tenant or a Subtenant.
Tenant and any Subtenant shall have the unrestricted right to obtain financing
by granting lenders a mortgage or security interest in: (i) any Riverboat Casino
that it owns or leases; (ii) the equipment and supplies located on such
Riverboat Casino; and (iii) the income and revenues generated by such Riverboat
Casino, except any interest in such income and revenue shall be subject to
Landlord's right to receive Rent.
4.11 TRAFFIC STUDY. Landlord shall reimburse Tenant for one-third (1/3)
of the cost of the traffic study prepared by Wilbur Smith Associates, Inc. for
HWCC attached as Exhibit "I" (the "Traffic Study"). The Landlord shall enact
ordinances to accomplish, and pay all cost and expense
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related to effect, the installation of traffic signals and other proposals made
by the traffic engineer in the Traffic Study, as well as the following traffic
changes:
(a) Modification of Fannin Street to accommodate two lanes of
westbound traffic and one lane of eastbound traffic between Clyde
E. Fant, Memorial Parkway and Market Street;
(b) Reversing traffic on Crockett and Milam Street;
(c) Installation of traffic signals at specified intersections on
Milam Street, Travis Street and such other streets as may be
mutually agreed to by Landlord and Tenant to facilitate access to
the Premises; and
(d) Installation of directional signage on Spring Street and such
other streets as may be mutually agreed to by the Landlord and
the Tenant to facilitate access to the Premises.
The Tenant acknowledges that traffic patterns and the means by which to
address the same may change from time to time during the term of this Lease, and
the Tenant agrees to cooperate in the change of any traffic plan so long as the
objective is to facilitate traffic flow to and from the Premises.
4.12 UTILITIES. Landlord covenants that as of the Commencement Date and at
all times during the Term, all necessary utilities have been and will continue
to be delivered to the lot lines of each of the Pavilion/Hotel Parcel, the
Expansion Parcel, the North Parking Parcel and the South Parking Parcel.
4.13 STAGING AREA. Landlord hereby agrees to use its best efforts to help
Tenant locate an adequate staging area to use during the construction of the
Shoreside Complex for storage and other construction purposes. Landlord and
Tenant shall first attempt to identify one or more properties as being adequate
for staging purposes which are owned by Landlord. In the event one or more such
properties are identified, Landlord agrees to grant to Tenant a servitude of use
for staging purposes over such property or properties, as applicable, on terms
mutually agreeable to each of Landlord and Tenant. No payments shall be due to
Landlord in consideration for such servitude, Landlord hereby agreeing that
Tenant's execution and delivery of this Lease is adequate and sufficient
consideration for any such servitude. In the event that Landlord and Tenant are
unable to locate property owned by Landlord which is adequate for Tenant's
staging needs, Landlord and Tenant shall endeavor, and cooperate with each
other, to locate other suitable property or properties for such purpose.
4.14 SWEPCO RELOCATION UNDER THE PREMISES. Landlord shall reimburse
Tenant, on demand, for all costs and expenses (the "Relocation Costs") incurred
by Tenant in connection with the relocation of underground power lines and
related facilities located within the Premises on the Commencement Date. In
lieu of seeking reimbursement for the Relocation Costs, Tenant, at its sole
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option, shall have the right to a credit against Rent due and payable to
Landlord on or after the Opening Date in an amount equal to the aggregate
Relocation Costs incurred by Tenant. Landlord agrees to cooperate with Tenant
in connection with the relocation of the aforesaid power lines and related
facilities and to execute and deliver such documents, instruments, servitudes,
agreements and other writing as may be reasonably requested by the relocating
utility company in order to effect such relocation. Landlord agrees that the
work to relocate the aforesaid power lines and related facilities will commence
after the Construction Commencement Date and Landlord agrees to take no action
to cause the removal of such power liens and related facilities prior to that
date.
ARTICLE V - RENT
5.01 MEANS OF PAYMENT. Tenant shall pay all Rent payable to Landlord by
either of the following, at Tenant's election, which election Tenant may change
from time to time by at least thirty (30) days' Notice to Landlord: (a) good and
sufficient check (subject to collection) delivered to Landlord or (b) wire
transfer to Landlord's bank account, which Landlord shall identify to Tenant
upon request (and Landlord shall have the right to change from time to time by
at least thirty (30) days' Notice to Tenant).
5.02 RENT PRIOR TO CONSTRUCTION COMMENCEMENT DATE. Prior to the
Construction Commencement Date, no Rent shall be due hereunder notwithstanding
the fact that Tenant shall have access to the Premises prior to such date for
the purposes set forth in Section 3.01(a) hereof. Commencing on the
Construction Commencement Date and continuing through and including the date
immediately preceding the Opening Date (the "Construction Period"), Tenant shall
pay construction period rent ("Construction Period Rent") at the rate of $10,000
per Fiscal Month. Construction Period Rent for partial Fiscal Months at the
beginning or end of the Construction Period shall be prorated based on the
number of days in such Fiscal Month within the Construction Period divided by
the number of days in the entire Fiscal Month.
5.03 FIXED RENT.
(a) AMOUNT OF PAYMENT. Beginning on the Opening Date, and continuing
through the remainder of the Initial Term, Tenant shall pay fixed rent
("Fixed Rent") at the rate of $450,000 per Fiscal Year. Beginning on the
first day of the first Renewal Term, Tenant shall pay Fixed Rent at the
rate of $402,500 per Fiscal Year. Fixed Rent for each of the second
through the fifth Renewal Terms shall be equal to 115% of the Fixed Rent
for the preceding Renewal Term. Fixed Rent for each Renewal Term after the
fifth Renewal Term shall be paid at the rate applicable to the fifth
Renewal Term.
(b) MONTHLY PAYMENTS AND PRORATION OF FIXED RENT. Tenant shall pay
Fixed Rent in equal monthly installments in advance on or before the first
day of each Fiscal Month. Rent for partial Fiscal Months at the beginning
or end of the Term shall be prorated based on days in such Fiscal Month
within the Term divided by days in the entire Fiscal Month.
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5.04 PERCENTAGE RENT. Beginning with the Opening Date and continuing
throughout the entire remaining Term, Tenant shall pay Landlord percentage rent
(the "Percentage Rent") for each Fiscal Month equal to the sum of: (a) 1% of
Adjusted Gross Revenue for such Fiscal Month; and (b) the amount, if any, by
which 50% of the Parking Facilities Net Income for such Fiscal Month exceeds the
Parking Income Credit for such Fiscal Month. Subject to Section 3.06 hereof,
Tenant shall conduct gaming operations (including the restoration of gaming
operations after the cessation of same) throughout the Term in accordance with
the terms of this Lease and in a commercially reasonable manner.
5.05 REPORTING AND PAYMENT. Tenant shall deliver to Landlord Tenant's
Monthly Statement within twenty (20) days after the end of each Fiscal Month
after the Opening Date. Tenant shall pay any Percentage Rent due based on
Tenant's Monthly Statement within twenty (20) days after the end of the Fiscal
Month covered by Tenant's Monthly Statement.
5.06 ACCOUNTING RECORDS. Tenant shall maintain (at the Premises
or at a central accounting location identified to Landlord upon request) account
records and procedures complying with Accounting Principles to enable Landlord
to calculate any Percentage Rent or other amounts due under this Lease. Tenant
shall permit an audit by Landlord or its designated representative of all of its
books and records relative to this Lease at any time upon such notice as may be
specified in the request to audit. If Tenant shall at any time be located
outside of the Parish, in the event of an audit by Landlord, Tenant shall
deliver its books and records, or have such books and records delivered, to the
designated representative of Landlord at an address designated by Landlord
within the City of Shreveport. If the designated representative of the Landlord
finds the books and records delivered to be incomplete, Tenant shall pay the
costs of the designated representative of Landlord to travel to Tenant's offices
to audit or retrieve the complete books and records of Tenant relative to this
Lease. Tenant shall preserve Tenant's books and records relating to each Fiscal
Year for at least three years after the end of such Fiscal Year. If at the
conclusion of such three-year period a dispute is pending between Landlord and
Tenant regarding the amount of Adjusted Gross Revenue for such Fiscal Year or
other amounts due under this Lease, then Tenant shall continue to preserve such
records pending the final disposition of such dispute. Notwithstanding the
foregoing, books and records of Tenant that are subject to audit findings shall
be retained for three years after such findings have been resolved.
5.07 ANNUAL AUDIT PROCEDURES. Within (and in no event later than) one
hundred eighty (180) days after the end of each Fiscal Year, Tenant, at Tenant's
expense, shall cause a certified public accountant designated by Tenant (and
approved by Landlord, such approval not to be unreasonably withheld), which CPA
shall be licensed in Louisiana, and a member of AICPA, to audit Tenant's (and/or
Subtenant's, licensee's or concessionaire's) books and records relevant to the
calculation of Rents and other payments reported by Tenant during the preceding
Fiscal Year. Landlord hereby approves Arthur Andersen & Co. as such certified
public accountant as long as such entity is licensed in Louisiana and is a
member of the AICPA. In connection with such audit, Tenant shall provide to the
auditor and to Landlord copies of all financial reports and tax returns
furnished to the State of Louisiana in connection with the determination of
Tenant's taxable gaming revenue. Further, Landlord shall have the right to audit
the books and records of Tenant with respect to all
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Rents or other payments provided for in this Lease at any time upon reasonable
Notice; provided, that Landlord agrees to exercise this special audit right not
more frequently than once per Fiscal Year. Any audit shall be performed in
accordance with generally accepted auditing standards, during ordinary business
hours and without unreasonably interfering with Tenant's business. If such audit
reveals that Adjusted Gross Revenue or other Rent was understated, then within
thirty (30) days after receipt of the audit with appropriate backup
documentation, Tenant shall pay the net additional Rent due on account of the
audit corrections. If such audit reveals that Adjusted Gross Revenue or other
Rent was overstated, then Tenant shall be entitled to a credit against the next
payment(s) of Rent under this Lease in an amount equal to the previous
overpayment revealed by the audit corrections. Any adjusting payment on account
of previous overpayment or underpayment shall bear interest at the Prime Rate
from the date it would have been paid (or the date of Tenant's previous
overpayment, if applicable) had Tenant's Annual Statement been correct until the
date actually paid or credited. If Rent was understated by more than 3% then
Tenant shall pay the reasonable cost of the special audit disclosing such
understatements; otherwise the special audit shall be conducted at Landlord's
expense.
5.08 CONFIDENTIALITY. To the extent permitted by Law, Landlord shall
preserve the confidentiality of all information obtained by Landlord relating to
Tenant's Adjusted Gross Revenue and financial statements, except in any
litigation or arbitration proceedings between the parties.
5.09 ADDITIONAL RENT. In addition to Construction Period Rent, Fixed Rent
and Percentage Rent, Tenant shall pay when due, as additional rent under this
Lease, all Additional Rent.
5.10 MINIMUM PERCENTAGE RENT. From the Opening Date until this Lease is
lawfully terminated, Tenant shall be unconditionally obligated to pay Landlord
minimum Percentage Rent of not less than $500,000 per annum in addition to any
portion of the Fixed Rent, provided that Tenant is able to operate a Riverboat
Casino, and/or collect business interruption insurance in respect of the non-
operation thereof covering not less than one hundred twenty (120) days in the
year for which the minimum Percentage Rent is claimed. In the event actual
Percentage Rent payments in any Fiscal Year with respect to which such minimum
Percentage Rent is payable by Tenant are less than $500,000, without considering
Fixed Rent, the difference shall be paid to Landlord within thirty (30) days
after the end of such Fiscal Year.
ARTICLE VI - ADDITIONAL PAYMENTS BY TENANT; IMPOSITIONS
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6.01 LANDLORD'S NET RETURN. The parties intend that this Lease shall
constitute a "net lease," so that Rent shall provide Landlord with "net" return
for the Term, free from any expenses or charges with respect to the Premises,
except as specifically provided in this Lease. Accordingly, Tenant shall pay as
Additional Rent and discharge, before failure to pay the same shall create a
material risk of forfeiture or give rise to a penalty, each and every item of
expense of every kind and nature whatsoever related to or arising from the
Premises or by reason of or in any manner connected with or arising from the
development, leasing, operation, management, maintenance, repair, use or
occupancy of the Premises or any portion of the Premises. Notwithstanding
anything to the contrary in this Lease, Tenant shall not be required to pay any
of the following: (a) principal, interest, or other charges payable under any
Fee Mortgage; (b) depreciation, amortization, brokerage commissions, financing
or refinancing costs, management fees or leasing expenses incurred by Landlord
with respect to the Fee Estate or the Premises; (c) consulting, overhead,
travel, legal, staff, and other similar costs incidental to Landlord's ownership
of the Premises, other than reasonable attorneys' fees incurred by Landlord and
payable by Tenant pursuant to express provisions of this Lease; (d) any costs
arising from or pursuant to any instrument or agreement affecting the Premises
that is not a Permitted Exception and to which Landlord is a party and Tenant is
not a party; and (e) any cost or expense arising directly or indirectly from any
conditions existing on, at or with respect to the Premises before the
Construction Commencement Date; and (f) any sales or other taxes assessed and
levied against Landlord's receipt of Rent hereunder (except where such taxes are
imposed, in whole or in part, in lieu of or in substitution for real estate
taxes, in which event same shall be paid by Tenant).
6.02 IMPOSITIONS. For any period commencing on the Construction
Commencement Date and thereafter during the Term (with daily proration for
periods partially within the foregoing period and partially outside the
foregoing period), and subject to Article XIII, Tenant shall pay and discharge,
before failure to pay the same shall create a material risk of forfeiture or
give rise to a penalty, all Impositions. Tenant shall also pay all interest and
penalties assessed by any Government on account of late payment of any
Imposition, unless such late payment was caused by Landlord's failure to remit
an Imposition (paid to Landlord by Tenant) in accordance with Tenant's
reasonable instructions or Landlord's failure to promptly forward Tenant a copy
of a tax bill received by Landlord, in which case Landlord shall pay such
interest and penalties.
6.03 ASSESSMENTS IN INSTALLMENTS. To the extent that may be permitted by
law, Tenant shall have the right to apply for conversion of any assessment to
cause it to be payable in installments. After such conversion, Tenant shall pay
and discharge only such installments of such assessments as shall become due and
payable commencing on the Construction Commencement Date and thereafter during
the Term.
6.04 COMBINED TAX LOTS. If, as of the Commencement Date, the
Premises are part of a tax lot (a "Combined Tax Lot") that includes any land or
improvements other than the Premises, then the parties shall diligently and
expeditiously cooperate (including by bringing such proceedings as may be
necessary), all at Landlord's expense, including Tenant's reasonable attorneys'
fees, to cause the Combined Tax Lot to be divided so that the Premises
(including the Fee Estate and the Leasehold Estate) shall be a single separate
tax lot that is no longer a Combined Tax Lot. Pending such
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division of the Combined Tax Lot: (a) each party shall promptly provide the
other with a copy of any tax bill received by such party relating to the
Combined Tax Lot; (b) Tenant shall pay a portion of the Impositions assessed
with respect to the Combined Tax Lot equal to the estimated assessment of the
Premises divided by the assessment of the Combined Tax Lot (except to the extent
that Tenant reasonably determines that a particular Imposition, other than real
estate taxes, is more appropriately allocated in some other way); (c) Landlord
shall pay all Impositions (and the items excluded from the definition of such
term by clauses "a" through "g" in such definition) with respect to the balance
of the Combined Tax Lot; (d) the estimated assessment for the Premises shall be
determined to the extent possible, based on preliminary information from the tax
assessment authorities and otherwise by Tenant, in consultation with Landlord
(and, in any event, when the assessment of the Premises has been determined the
parties shall make such adjusting payments (with interest at the Prime Rate) as
shall be appropriate to compensate for errors in the estimated payments
previously made); and (e) if either party fails to pay its share of taxes and
charges for the Combined Tax Lot before delinquency and such failure continues
for ten Business Days after Notice from the other party, then such other party
shall be entitled to pay the first party's unpaid Impositions with respect to
the Combined Tax Lot, and the first party shall promptly upon demand reimburse
the other party's advances made on the first party's account with interest at
the Prime Rate.
6.05 DIRECT PAYMENT BY LANDLORD. If any Imposition or other item of
Rent is required to be paid directly by Landlord, then: (a) Landlord appoints
Tenant as Landlord's attorney in fact for the purpose of making such payment;
and (b) if the person entitled to receive such payment refuses to accept it from
Tenant, then Tenant shall give Landlord Notice of such fact and shall remit
payment of such Imposition to Landlord in a timely manner accompanied by
reasonable instructions as to the further remittance of such payment. Landlord
shall with reasonable promptness comply with Tenant's reasonable instructions
and shall Indemnify Tenant against Landlord's failure to do so.
6.06 UTILITIES. Tenant shall pay all fuel, gas, light, power, water,
sewage, garbage disposal, telephone and other utility charges, and the expenses
of installation, maintenance, use and service in connection with the foregoing,
relating to the Premises during the Term.
ARTICLE VII - USE
7.01 PERMITTED USES. Tenant may use the Premises for any lawful purpose.
7.02 RIVERBOAT CASINO. Tenant may berth and operate Riverboat Casinos on
the Red River adjacent to or within or upon the Premises or sublease portions of
the Premises to third parties for such purpose. Tenant at any time may
substitute a different (but, if permanent, at least equal in quality) Riverboat
Casino for any Riverboat Casino operated at the Premises by Tenant.
7.03 PARKING. Tenant shall have the right to charge such amounts for
parking as Tenant deems appropriate; provided, however, that, except during
periods that charges are imposed for parking at lots owned, leased or operated
by any gaming operators on the Shreveport side of the Red River, Tenant shall
not charge for parking, other than valet parking, in the South Parking Facility
or the North Parking Facility. Under no circumstances shall Tenant be prohibited
or restricted from
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charging a fee for valet parking at any time at either the South Parking
Facility or the North Parking Facility.
ARTICLE VIII - MARKS AND PUBLICITY
8.01 EXCLUSIVE OWNERSHIP OF MARKS. Landlord acknowledges and recognizes
the exclusive rights of Hollywood Casino Corporation, a Delaware corporation
("Hollywood"), and certain Affiliates of Hollywood, to the "Hollywood Casino"
name and system, and all other service marks, trademarks, copyrights, logos,
registrations and patents used in connection with the "Hollywood Casino"
casinos, riverboat casinos and casino hotels (collectively, the "Marks").
Landlord acknowledges that the Marks are the exclusive property of such
Affiliates. Landlord disclaims any right, title or interest in or to any of the
Marks by operation of this Lease or in the event of its termination or
cancellation. Such Affiliates shall have the sole right and (to the extent they
determine appropriate) responsibility to institute and prosecute all disputes
with third parties concerning the use of or any Mark.
8.02 REFERENCES TO MARKS. Landlord shall not use any Mark in any way or for
any purpose (including the sale of securities or in connection with any other
financing) without the prior written consent of the owner of such Mark.
8.03 EFFECT OF LEASE TERMINATION. Landlord acknowledges and agrees that
in the event of any termination or cancellation of this Lease (including on
account of an Event of Default): (a) neither Tenant nor any Affiliate of Tenant
shall be under any obligation, express or implied, to issue a license to
Landlord or any subsequent operator of any portion of the Premises; (b) Landlord
shall not use any Mark in association with the improvements located at the
Premises; and (c) Tenant and any Affiliate of Tenant shall have the right to
enter the Premises and remove all signs, furnishings, printed materials,
emblems, slogans or other distinguishing characteristics that in any way use or
are now or hereafter connected with any Mark.
8.04 PUBLICITY. Landlord agrees not to announce or refer to the Premises,
any Riverboat Casino or the Shoreside Complex orally or in writing with the use
of any Mark, in significant written public communication such as any press
release, advertisement, prospectus or other marketing communication of any kind
without Tenant's prior written consent.
ARTICLE IX - LAW
9.01 COMPLIANCE WITH LAW. During the Term, Tenant shall, at its own
expense, observe and comply with all Laws affecting the Premises; provided,
however, that: (i) maintenance and repair of improvements existing on the
Premises at the Construction Commencement Date shall be governed by the
applicable provision of Article X; and (ii) Tenant shall make any Mandated
Alterations required by Law arising at any time after the Construction
Commencement Date and thereafter during the Term, subject to the terms of
Section 9.02.
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9.02 MANDATED ALTERATIONS. If: (a) the LGCB or any Government requires
a Mandated Alteration of all or any portion of the Premises or any improvements
thereon; and (b) Tenant determines that the performance of such Mandated
Alteration would render the operation of the Premises Uneconomic, then,
notwithstanding anything to the contrary in this Lease, Tenant, in lieu of
performing such Mandated Alteration may elect to terminate this Lease by giving
Notice of such election to Landlord within one hundred eighty (180) days after
such requirement is imposed.
ARTICLE X - MAINTENANCE AND ALTERATIONS
10.01 OBLIGATION TO MAINTAIN. Commencing upon the Opening Date and
thereafter during the Term, Tenant shall keep and maintain the Premises in good
order, condition and repair in a condition and quality equal to its condition
and quality at the Opening Date, subject, in each case, to Casualty (governed by
the separate applicable provisions of this Lease), reasonable wear and tear, and
any other conditions that Tenant is not required to repair pursuant to this
Lease.
10.02 HOTEL MAINTENANCE.
(a) INSPECTION BY LANDLORD. At any time after the Opening Date,
Landlord shall be permitted to inspect the Hotel in order to verify
Tenant's compliance with the provisions of Section 10.01. Such inspections
(except for inspections of corrective actions) shall occur not more than
once in any year during the Term. Promptly and in any case not more than
thirty (30) days after any such inspection, Landlord shall give Tenant
Notice of any corrective action that Landlord believes is necessary to
comply with the requirements of Section 10.01 that requires corrective
action. Except as otherwise provided in Section 10.02 (b), Tenant shall
promptly thereafter perform such corrective actions as may be necessary to
cause the condition of the Hotel to be in material compliance with the
provisions of Section 10.01.
(b) ARBITRATION. If Tenant does not agree that corrective action is
necessary with respect to any Notice given by Landlord, then Tenant may
submit such matter to arbitration in accordance with the following
provisions:
(i) Landlord and Tenant may jointly appoint an Arbitrator. Such
Arbitrator shall render his decision within thirty (30) days of such
appointment.
(ii) If Landlord and Tenant do not appoint an Arbitrator under
Section 10.02(b)(i) within twenty (20) days after such Notice is
given, then each party shall appoint one Arbitrator within ten days
after the expiration of such 20-day period. Each such Arbitrator
shall be an individual who: (A) is not otherwise employed by and is
not otherwise a creditor of either party; and (B) has at least five
years of experience in the management and operation of riverboat
casino/gaming complexes. The two appointed Arbitrators shall meet
within ten days of such referral and shall appoint a third
Arbitrator, and if such Arbitrators are not able to agree on such
third Arbitrator within such time, then, on five days' Notice in
writing to the other
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Arbitrator, either Arbitrator shall apply to the branch of the
American Arbitration Association in Shreveport, Louisiana to
designate and appoint such third Arbitrator. The three Arbitrators
shall render their decision within twenty (20) days after the
appointment of the third Arbitrator. The Arbitrators shall act by
majority vote. If the Arbitrators fail to render their decision
within such time, either party may seek an order from a court of
competent jurisdiction in the State: (x) requiring such Arbitrators
to render their decision immediately, or (y) appointing one
replacement Arbitrator of equivalent qualifications and directing
such Arbitrator to render his decision.
(iii) If either party fails timely to appoint an Arbitrator
pursuant to Section 10.02(b)(ii), then the single Arbitrator
designated by the other party shall act as the sole Arbitrator and
shall be deemed to be the unanimously approved Arbitrator to resolve
such dispute.
(iv) The fees and expenses of the Arbitrators shall be paid by
the party whose position is not adopted by the Arbitrators. All
Arbitrators, by accepting appointment, submit to the jurisdiction of
the courts of the State.
(v) All proceedings by the Arbitrators shall be conducted in
accordance with the Uniform Arbitration Act as enacted in the State,
except to the extent the provisions of such Act are modified by this
Agreement or the mutual agreement of the parties. Unless otherwise
agreed, all arbitration proceedings shall be conducted in
Shreveport, Louisiana, at the offices of Landlord or Tenant.
(d) ARBITRATION DECISION. In all arbitration proceedings hereunder,
the Arbitrators shall be required to agree upon and approve the substantive
position advocated by one party with respect to each disputed item. The
Arbitrators shall exclusively and finally determine whether a particular
dispute falls within the scope of their authority unless such determination
is legally groundless or in excess of the limitations provided in this
Agreement. The decision and award of any Arbitrators made in accordance
with this Section 10.02 shall be binding on the parties and enforceable in
any court of competent jurisdiction.
10.03 IMPROVEMENTS AND STRUCTURES. Except as (a) permitted under
Article IV, (b) the construction of a hotel on the Expansion Parcel, (c) any
other construction with a cost less than $35,000,000.00, and (d) any
maintenance, repair or replacement in the ordinary course of business, Tenant
may not construct or permit the construction of any improvements or structures
without the prior written consent of Landlord, which shall not unreasonably be
withheld, delayed or conditioned. Such consent shall be deemed given if it has
not been denied in writing by Landlord within thirty (30) days from Landlord's
receipt of the plans and specifications for such proposed improvements. In the
event such additional development is for the purpose of development of sources
of revenue or profit centers not related to the operation of the Premises as
originally contemplated in this Lease, then such additional development shall
not be permitted unless and until Tenant and Landlord have agreed to a fair and
reasonable rental arrangement to cover the new revenue sources to be developed.
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Notwithstanding anything herein contained to the contrary, although Tenant shall
not be required to obtain the consent of Landlord to construct a hotel on the
Expansion Parcel, Tenant shall be required to submit design development
documents (similar in nature and scope to the Design Development Documents and
other related documents described in Section 4.03(a) hereof for the Hotel) to
the Design Review Committee for approval prior to commencing construction of a
hotel upon the Expansion Parcel. Upon its receipt of such documents, the Design
Review Committee shall approve or reject the documents submitted in the manner
and with the effect set forth in Section 4.03(b) hereof. If the Design Review
Committee rejects the aforesaid documents, Tenant may elect to arbitrate such
decision in the manner and with the effect set forth in Section 4.04 of this
Lease.
10.04 TENANT'S RIGHT TO PERFORM ALTERATIONS. At Tenant's sole cost and
expense, Tenant may perform material alterations or reconstructions to the
Shoreside Complex and Parking Structures subject to Landlord's consent as
provided in this Section 10.04. Tenant shall perform all such work in
substantial compliance with all Laws. Plans and specifications for all material
alterations or reconstructions shall be submitted to Landlord at least thirty
(30) days prior to commencement of work and will be subject to Landlord's
consent and approval, which shall not unreasonably be withheld, delayed or
conditioned and which shall be completed by Landlord within thirty (30) days
from receipt of the plans and specifications for such improvements.
Construction shall not commence until Landlord's approval is received by Tenant
or the review period expires.
10.05 PLANS AND SPECIFICATIONS. Except as provided in Sections 10.03 and
10.04, Tenant may make alterations, reconstructions or repairs to the
improvements on the Premises without Landlord's consent. If Tenant obtains
plans and specifications or surveys (including working plans and specifications
and "as-built" plans and specifications and surveys) for such improvements,
repairs or alterations, Tenant shall promptly provide Landlord with a true and
complete copy of such plans and specifications or surveys, subject to the terms
of any agreement between Tenant and the applicable outside architect, engineer
or surveyor. (Tenant shall exercise reasonable efforts to cause its agreements
with such outside professionals to permit the deliveries described in this
Section 10.05.) Plans and specifications and surveys delivered by Tenant to
Landlord shall be for Landlord's information only except to the extent, if any,
otherwise expressly provided in this Lease.
10.06 EXISTING IMPROVEMENTS. Nothing in this Lease shall be construed to
require Tenant to correct or remedy any noncompliance with Law affecting any
improvements existing at the Premises on the Commencement Date, or otherwise
maintain any such improvements in a condition fit for occupancy. Landlord shall
promptly reimburse Tenant for the cost incurred in the demolition or removal of
all existing above ground improvements (but excluding any surface parking lot),
removal of which is necessary for construction of the Shoreside Complex and the
Parking Facilities. To the extent that any Government specifically requires the
performance of any work or demolition to prevent any improvements not removed by
Tenant, if any, from constituting a hazard, Tenant shall perform such work or
demolition and Landlord shall promptly reimburse Tenant for the cost incurred in
such work or demolition.
ARTICLE XI - PROHIBITED LIENS
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11.01 TENANT'S COVENANT. Tenant shall not suffer or permit any Prohibited
Lien to be filed. If a Prohibited Lien is filed then Tenant shall, within 30
days after receiving Notice of such filing (but in any case within 15 days after
receipt of Notice of commencement of foreclosure proceedings), commence and then
prosecute appropriate action to cause such Prohibited Lien to be paid,
discharged or bonded. Nothing in this Lease shall be construed to restrict
Tenant's right to contest the validity of any Prohibited Lien and to pursue
Tenant's position to a final judicial determination. The mere existence of a
Prohibited Lien shall not be construed as a Default under this Lease.
11.02 PROTECTION OF LANDLORD. Notice is hereby given that Landlord shall
not be liable for any labor or materials furnished or to be furnished to Tenant
upon credit, and that no mechanic's or other lien for any such labor or
materials shall attach to or affect the Fee Estate. Nothing in this Lease shall
be deemed or construed in any way to constitute Landlord's consent or request,
express or implied, by inference or otherwise, to any contractor, subcontractor,
laborer, equipment or material supplier for the performance of any labor or the
furnishing of any materials or equipment for any improvement, alteration or
repair of or to the Premises, or any part of the Premises, nor as giving Tenant
any right, power or authority to contract for, or permit the rendering of, any
services, or the furnishing of any materials that would give rise to the filing
of any liens against the Fee Estate. Tenant shall Indemnify Landlord against any
work performed on the Premises for or by Tenant or any Subtenant.
ARTICLE XII - INDEMNIFICATION; LIABILITY OF LANDLORD
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12.01 MUTUAL INDEMNITY OBLIGATIONS. Landlord and Tenant shall each
Indemnify the other against: (a) any wrongful act, wrongful omission or
negligence of the Indemnitor (or, in the case of Tenant, of any of Tenant's
Subtenants) or its or their partners, directors, officers, or employees, or
their equivalent; and (b) any breach or default by the Indemnitor under this
Lease. In addition to and without limiting the generality of the foregoing
indemnity, Tenant shall Indemnify Landlord against all the following matters:
(x) the management or occupancy of, or any work or activity performed in and on,
the Premises, the Shoreside Complex or any Riverboat Casino by Tenant during the
Term or in the performance of Tenant's obligations under Section 28.07; (y) the
condition of the Premises, the Shoreside Complex or any Riverboat Casino or any
improvement located on the Premises, the Shoreside Complex or any Riverboat
Casino at any time after the Construction Commencement Date and thereafter
during the Term; and (z) any accident, injury or damage whatsoever caused to any
person occurring at any time after the Construction Commencement Date and
thereafter during the Term, in or on the Premises, the Shoreside Complex or any
Riverboat Casino or any improvements located on the Premises, the Shoreside
Complex or any Riverboat Casino. Furthermore, Tenant agrees to pay, and to
Indemnify Landlord against, reasonable legal costs, including reasonable counsel
fees and disbursements, incurred by Landlord in obtaining possession of the
Premises if Tenant fails to surrender possession upon the expiration or earlier
termination of the Term. Notwithstanding anything to the contrary in this
Lease, neither party shall be required to Indemnify the other party from or
against such other party's intentional acts or omissions or negligence, and
Tenant shall not be required to Indemnify Landlord from or against any condition
that existed on or at the Premises at or before the Construction Commencement
Date that was not created by Tenant. Landlord shall Indemnify Tenant against
any liability arising from the environmental condition of the Premises existing
immediately prior to the Construction Commencement Date and not created by
Tenant, whether such condition is known or unknown on the Construction
Commencement Date to the parties hereto. Tenant shall Indemnify Landlord
against any liability arising from any environmental condition of the Premises
created at any time after the Construction Commencement Date and thereafter
during the Term whether such condition is known or unknown on the Construction
Commencement Date or thereafter during the Term to the parties hereto. The
terms of this provision shall survive the termination or expiration of this
Lease.
12.02 LIABILITY OF LANDLORD. Tenant is and shall be in exclusive control
and possession of the Premises and all Improvements thereon at all times after
the Construction Commencement Date and thereafter during the Term as provided in
this Lease. Subject to Section 12.01, Landlord shall not be liable for any
injury or damage to any property or to any person occurring on or about the
Premises, the Shoreside Complex or any Riverboat Casino at any time commencing
upon the Construction Commencement Date and thereafter during the Term. The
provisions of this Lease permitting Landlord to enter and inspect the Premises
are intended to allow Landlord to be informed as to whether Tenant is complying
with the agreements, terms, covenants and conditions of this Lease, and to the
extent permitted by this Lease, to perform such acts required by this Lease as
Tenant shall fail to perform. Such provisions shall not be construed to impose
upon Landlord any liability to third parties, but nothing in this Lease shall be
construed to exculpate, relieve or Indemnify Landlord from or against any
liability of Landlord to third parties existing at or before the Construction
Commencement Date, or arising from facts or circumstances in existence at or
before the Construction Commencement Date, in respect of which Landlord shall
Indemnify Tenant.
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12.03 INDEMNITY RELATING TO ACCESS. Tenant shall Indemnify Landlord
against any accident, injury, damage or loss whatsoever caused to any person as
a direct result of inspections, work or any other activity performed in or on
the Premises by Tenant on and after the Commencement Date through and including
the date immediately preceding the Construction Commencement Date.
12.04 INDEMNIFICATION PROCEDURES. Wherever this Lease requires an
Indemnitor to Indemnify an Indemnitee, the following procedures and requirements
shall apply:
(a) PROMPT NOTICE. The Indemnitee shall give the Indemnitor prompt
Notice of any claim. To the extent, and only to the extent, that both (a)
the Indemnitee fails to give prompt Notice of such claim and (b) the
Indemnitor is thereby prejudiced, the Indemnitor shall be relieved of its
indemnity obligations under this Lease with respect to such claim.
(b) SELECTION OF COUNSEL. The Indemnitor shall be entitled to select
counsel (reasonably acceptable to the Indemnitee, but counsel to the
Indemnitor's insurance carrier shall be deemed satisfactory).
Notwithstanding anything to the contrary in the preceding sentence, if the
Indemnitee is Tenant or another Affiliate of Tenant, then: (a) the
Indemnitee shall be entitled to approve the Indemnitor's choice of counsel
or select the Indemnitee's own counsel and be represented by such counsel;
and (b) if the Indemnitee selects its own counsel, then such counsel shall
consult with (but not be controlled by) the Indemnitor's counsel and the
Indemnitor and the Indemnitee shall each pay fifty percent (50%) of the
reasonable attorneys' fees of the Indemnitee's counsel.
(c) SETTLEMENT. The Indemnitor may, with the consent of the
Indemnitee, not to be unreasonably withheld, settle the claim, except that
no consent by the Indemnitee shall be required as to any settlement by
which (x) the Indemnitor procures (by payment, settlement, or otherwise) a
release of the Indemnitee pursuant to which the Indemnitee is not required
to make any payment whatsoever to the third party making the claim, (y)
neither the Indemnitee nor the Indemnitor acting on behalf of the
Indemnitee makes any admission of liability, and (z) the continued
effectiveness of this Lease is not jeopardized in any way.
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ARTICLE XIII - RIGHT OF CONTEST
Notwithstanding anything to the contrary in this Lease, Tenant shall have
the right to contest, at its sole expense, by appropriate legal proceedings
diligently conducted in good faith, the amount or validity of any Imposition or
Prohibited Lien; the valuation, assessment or reassessment (whether proposed or
final) of the Premises for purposes of real estate taxes; the validity of any
Law or the application of any Law to the Premises; or the validity or merit of
any claim against which Tenant is required to Indemnify Landlord under this
Lease. Tenant may defer payment of the contested Imposition or compliance with
the contested Law or performance of any other contested obligation pending the
outcome of such contest, provided that such deferral does not subject the
Premises to any material risk of imminent forfeiture or Landlord to any material
risk of criminal liability. Landlord shall not be required to join in any such
contest proceedings unless a Law shall require that such proceedings be brought
in the name of Landlord or any owner of the Fee Estate. In such case, Landlord
shall cooperate with Tenant so as to permit such proceedings to be brought in
Landlord's name. In addition to, and without limiting, Landlord's obligations
under the preceding sentence, Landlord appoints Tenant as Landlord's attorney-
in-fact, irrevocably, with full power of substitution, to execute and deliver
any documentation, and to otherwise act on Landlord's behalf to the full extent
Landlord could and in Landlord's place and stead, in any such proceeding. This
appointment is coupled with an interest and is irrevocable. Tenant shall pay
all reasonable costs and expenses (including reasonable attorneys' fees)
incident to such proceedings. Tenant shall Indemnify Landlord against such
contest and against any liability arising from representations and warranties
set forth in any such documentation. Tenant shall be entitled to any refund of
any Imposition (and penalties and interest paid by Tenant) based upon Tenant's
prior overpayment of such Imposition, whether such refund is made during or
after the Term. Upon termination of Tenant's contest of an Imposition, Tenant
shall pay the amount of such Imposition (if any) as has been finally determined
in such proceedings to be due, together with any costs, interest, penalties or
other liabilities in connection with such Imposition. Upon final termination of
Tenant's contest of a Law, Tenant shall comply with such final determination.
Landlord shall not enter any objection to any contest proceeding undertaken by
Tenant pursuant to this Article XIII, except with respect to contest proceedings
involving or which may affect Impositions levied or collected by the City of
Shreveport. Subject to the City of Shreveport's right to intervene in matters
involving Impositions levied or collected by the City of Shreveport, Tenant's
right to contest any Imposition or the valuation, assessment or reassessment of
the Premises for tax purposes shall be to the exclusion of Landlord, and
Landlord shall have no right to contest the foregoing without Tenant's consent,
not to be unreasonably withheld.
ARTICLE XIV - INSURANCE
14.01 TENANT TO INSURE. Tenant shall, at Tenant's sole cost and expense,
commencing on the Construction Commencement Date and thereafter during the Term,
maintain or cause its Subtenants to maintain the following insurance (or its
then reasonably available equivalent):
(a) CASUALTY. Casualty insurance providing coverage for the Premises
and all equipment, fixtures, and machinery at or in the Premises, against
loss, damage, and
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destruction by fire and other hazards encompassed under broad form coverage
as may be customary for like properties in the Parish (but Tenant shall in
no event be required to maintain earthquake or war risk insurance) from
time to time commencing on the Construction Commencement Date and
thereafter during the Term, in an amount not less than 100% of the
replacement value of the insurable buildings, structures, improvements and
equipment (excluding excavations and foundations) located at the Premises,
but in any event sufficient to avoid co-insurance in the event of a partial
loss. To the extent customary for like properties at the time, such
insurance shall include coverage for explosion of steam and pressure
boilers and similar apparatus located at the Premises; an "increased costs
of construction" endorsement; and an endorsement covering demolition and
cost of debris removal.
(b) LIABILITY. General public liability insurance against claims for
personal injury, death or property damage occurring upon, in or about the
Premises and the Riverboat Casinos berthed at the Premises and streets and
passageways adjoining the Premises, including so-called Garage Keeper's
Legal Liability coverage. The coverage under all such liability insurance
shall be at least $50,000,000 in respect of any one occurrence, for injury
or death to persons or property damage. Landlord shall be entitled from
time to time, upon 180 days' Notice to Tenant, to increase the dollar
limits set forth in this Section 14.01(b), subject to the following
limitations, which shall be cumulative: (a) such increased limits shall
never exceed the limits initially set forth plus an increase proportionate
to the increase in the Consumer Price Index from the Construction
Commencement Date to the date of the adjustment, rounded to the nearest
million dollars; (b) such limits shall never exceed the limits customarily
maintained for similar commercial properties located in the Parish; and (c)
Landlord shall not be entitled to increase such limits more frequently than
once every five years.
(c) WORKERS' COMPENSATION. Workers' compensation insurance covering
all persons it employs in connection with the construction, alteration,
repair or operation of the Premises and with respect to whom any claim
could be asserted against Landlord or the Fee Estate.
(d) CONSTRUCTION PERIOD. For the period from the commencement of
construction of the Shoreside Complex through the completion of such
construction, Tenant shall also (i) ensure that the contractor of the
Shoreside Complex maintains customary contractor's liability insurance
having a limit of not less than $25,000,000 (and, if the contractor is
undertaking foundation, excavation or demolition work, an endorsement
stating that such operations are covered and that the "XCU Exclusions" have
been deleted); and (ii) Tenant shall maintain Builder's Risk Insurance
(having such scope of coverage as may be customary for like construction
projects in the Parish at the time) written on a completed value non-
reporting basis (with an endorsement stating that "permission is granted to
complete and occupy").
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(e) BUSINESS INTERRUPTION. Tenant shall obtain and maintain business
interruption insurance covering Tenant's business at the Premises and
Riverboat Casinos berthed at the Premises at all times commencing on the
Construction Commencement Date and continuing throughout the Term.
Business interruption insurance shall include coverage for the payment of
Fixed Rent, Percentage Rent and In Lieu Payments to the Landlord.
(f) OTHER. Tenant shall obtain such other insurance as Tenant
determines appropriate in the exercise of Tenant's reasonable business
judgment.
14.02 NATURE OF INSURANCE PROGRAM. Any or all insurance required by
this Lease may be provided by a "captive" insurance company affiliated with
Tenant or, by Notice to Landlord specifying the risks being covered by self-
insurance, through a self-insurance program provided, in the latter case, that
the self-insuring entity is (a) an affiliate or subsidiary of Tenant or (b) any
other substantial entity that, in Landlord's reasonable judgment, has sufficient
assets and net worth under the circumstances. Tenant agrees to provide any and
all necessary financial and reporting information which Landlord may reasonably
request in making this determination.
14.03 POLICY REQUIREMENTS AND ENDORSEMENTS. All insurance policies
required by this Lease shall contain (by endorsement or otherwise) the following
provisions:
(a) ADDITIONAL INSUREDS. Liability, casualty and business
interruption insurance policies shall name as additional insureds Landlord
and any Fee Mortgagees, as their interests may appear.
(b) PRIMARY COVERAGE. All policies shall be written as primary
policies not contributing with or in excess of any coverage that Landlord
may carry.
(c) TENANT'S ACT OR OMISSIONS. Each policy shall include, if
available without additional cost, a provision that any act or omission of
Tenant shall not prejudice any party's rights (other than Tenant's) under
such insurance coverage.
(d) CONTRACTUAL LIABILITY. Policies of liability insurance shall
contain contractual liability coverage, relating to Tenant's indemnity
obligations under this Lease.
(e) INSURANCE CARRIER STANDARDS. Each insurance carrier shall be
authorized to do business in the State, and, except to the extent such
insurance is provided in compliance with this Lease by an affiliated
"captive" insurance company or pursuant to Tenant's self-insurance program,
each domestic insurer shall have a "Best's" rating of at least A(-)VIII.
Unrated international insurance carriers may be utilized by Tenant only
with the prior approval of Landlord, which approval shall not be
unreasonably withheld; provided, that the Lloyd's of London Association is
approved by the Landlord.
(f) NOTICE TO LANDLORD. All policies of Insurance shall provide by
their express terms for 30 days' prior Notice of any cancellation to
Landlord.
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14.04 DELIVERIES TO LANDLORD. Upon Notice to such effect by Landlord,
Tenant shall deliver to Landlord policies or certificates or certified copies of
the insurance policies required by this Lease, endorsed "Paid" or accompanied by
other evidence that the premiums for such policies have been paid, at least ten
days before expiration of any then current policy.
14.05 BLANKET AND UMBRELLA POLICIES. Tenant may provide any insurance
required by this Lease pursuant to a "blanket" or "umbrella" insurance policy,
provided that such policy otherwise complies with this Lease.
14.06 WAIVER OF CERTAIN CLAIMS. To the extent that Landlord or Tenant
purchases any hazard insurance relating to the Premises, the party purchasing
such Insurance shall attempt to cause the insurance carrier to agree to a Waiver
of Subrogation. If any insurance policy cannot be obtained with a Waiver of
Subrogation, or a Waiver of Subrogation is obtainable only by the payment of an
additional premium, then the party undertaking to obtain the insurance shall
give Notice of such fact to the other party. The other party shall then have
ten (10) Business Days after receipt of such Notice either to place the
insurance with a company that is reasonably satisfactory to the other party and
that will issue the insurance with a Waiver of Subrogation at no additional
cost, or to agree to pay the additional premium if such a policy can be obtained
only at additional cost. To the extent that the parties actually obtain
insurance with a Waiver of Subrogation, the parties release each other, and
their respective authorized representatives, from any claims for damage to any
person or the Premises that are caused by or result from risks insured against
under such insurance policies, but only to the extent of the available insurance
proceeds.
14.07 NO REPRESENTATION OF ADEQUATE COVERAGE. Neither party makes any
representation, or shall be deemed to have made any representation, that the
limits, scope or form of insurance coverage specified in this Article IV are
adequate or sufficient.
ARTICLE XV - DAMAGE OR DESTRUCTION
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15.01 NOTICE; NO RENT ABATEMENT. Tenant shall promptly give Landlord
Notice of any Casualty. There shall be no abatement of Rent on account of a
Casualty. Tenant shall, with reasonable promptness, restore the damaged
improvements as nearly as may be practicable to their condition, quality, and
class immediately prior to such Casualty, with such changes or alterations
(including demolition) as Tenant shall elect to make in conformity with this
Lease; provided, however, that if, in Tenant's judgment, the cost to Tenant of
such restoration or other circumstances would cause the operation of the
Premises to be Uneconomic or if such Casualty occurs within the last year of the
Term, then Tenant may terminate this Lease by at least thirty (30) days' advance
Notice to Landlord and assign to Landlord all of Tenant's rights with respect to
insurance proceeds arising from the Casualty. If Tenant gives such a Notice,
then Landlord shall have the right, by Notice to Tenant within ten (10) Business
Days after receipt of Tenant's Notice, to require Tenant to cause the remaining
improvements to be demolished and the debris removed, so that the Premises are
returned to Landlord as vacant and level land. The parties shall cooperate to
make available the insurance proceeds for such work, which Tenant shall perform
with reasonable promptness but the completion of which shall not be a condition
to termination of this Lease. Any remaining insurance proceeds after
performance of such work shall belong to Landlord.
15.02 ADJUSTMENT OF CLAIMS; USE OF INSURANCE PROCEEDS. Tenant shall be
solely responsible for the adjustment of any insurance claim that has not been
assigned to Landlord under Section 15.01. All proceeds of casualty or hazard
insurance shall be paid to Tenant and shall under no circumstances be paid to
Fee Mortgagees unless (a) pursuant to some other express provision of this Lease
Tenant is required to pay or assign such proceeds to Landlord and (b) pursuant
to a Fee Mortgage such proceeds payable to Landlord shall be paid instead to the
Fee Mortgagee.
15.03 DEPOSITORY. All proceeds in excess of $1,000,000 of casualty
insurance to be applied by Tenant to rebuild, restore or repair the Premises
shall be deposited with a Depository, to be disbursed for the repair,
restoration or reconstruction of the Premises.
ARTICLE XVI - CONDEMNATION
16.01 SUBSTANTIAL CONDEMNATION. If a Substantial Condemnation of the
Premises shall occur, then this Lease shall terminate as of the effective date
of such Substantial Condemnation, and the Rent shall be apportioned accordingly.
The proceeds of any condemnation award made in connection with a Substantial
Condemnation shall be allocated between Landlord and Tenant as follows: (x)
first, Tenant shall be entitled to receive such portion of the award, with
interest, as shall equal the value of the Leasehold Estate including all
improvements located on the Premises; (y) second, Landlord shall, subject to the
rights of Fee Mortgagees, be entitled to receive such portion of the award, with
interest, as shall equal the value of the Fee Estate (which value shall reflect
the present value of Rent under this Lease) subject to this Lease; and (z)
third, Tenant shall be entitled to receive the entire remaining balance of any
such award. All determinations of value required by the preceding sentence
shall be made as if the Condemnation had never occurred, the Leasehold Estate
had not been terminated, and this Lease had continued for all Renewal Terms
except to the extent that Tenant determines that Tenant would have elected not
to exercise any future Renewal Option(s) not already exercised or deemed
exercised at the effective date of Condemnation.
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16.02 INSUBSTANTIAL CONDEMNATION. If an Insubstantial Condemnation
shall occur, then any condemnation award or awards shall be applied first to
repair, restoration or reconstruction of any remaining part of the improvements
not so taken. Tenant shall perform such repair, restoration or reconstruction
in accordance with applicable requirements of this Lease. The balance of any
such award or awards remaining after the repair, restoration or reconstruction
shall be distributed to Landlord and Tenant as if they were proceeds of a
Substantial Condemnation affecting only the portion of the Premises taken.
16.03 TEMPORARY CONDEMNATION. If a Temporary Condemnation shall occur
with respect to the use or occupancy of the Premises that, in Tenant's
reasonable judgment, renders the Premises unusable for its original purpose for
a period greater than ninety (90) days, then Tenant shall, at its option, be
entitled to terminate this Lease effective as of the commencement date of the
Temporary Condemnation. If Tenant exercises such option, then any Condemnation
award made in connection with such Temporary Condemnation shall be distributed
as if such Temporary Condemnation was a Substantial Condemnation in accordance
with Section 16.01. If the Temporary Condemnation relates to a period of ninety
(90) days or less, or if Tenant does not elect to terminate this Lease, then all
proceeds of such Temporary Condemnation (to the extent attributable to periods
within the Term) shall be paid to Tenant and Tenant's obligations under this
Lease shall not be affected in any way.
16.04 OTHER GOVERNMENTAL ACTION. In the event of any action by any
Government not resulting in a Condemnation but creating a right to compensation,
such as the changing of the grade of any street upon which the Premises abut,
then this Lease shall continue in full force and effect without reduction or
abatement of Rent and Tenant shall be entitled to receive the award or payment
made in connection with such action.
16.05 ASSIGNMENT OF CONDEMNATION PROCEEDS. Landlord hereby assigns to
a Depository selected for such purpose, who shall have the right to receive, and
there shall be paid to such Depository, the entire amount of any awards or other
sums received, whether by Landlord or Tenant, as compensation as a result of any
Condemnation. Such awards to be paid to such Depository shall include: (i) all
awards made on account of any improvements that are the subject of a
Condemnation, whether or not the value of such improvements is the subject of a
separate award or otherwise separately determined by the Condemnation authority;
and (ii) the full value of the land that is the subject of the Condemnation.
All such proceeds shall be applied and disbursed in accordance with this Article
XVI.
16.06 SETTLEMENT OR COMPROMISE. Neither Landlord nor Tenant shall
settle or compromise any Condemnation award in any Condemnation proceeding that
affects the property interests of the other party hereto without the consent of
the consent of such other party. Tenant shall be entitled to appear in such
proceedings and claim such share of the award as it is entitled to receive
pursuant to the terms of this Lease. Subject to the terms of its Leasehold
Mortgage, any Leasehold Mortgagee shall also be entitled to appear in such
proceedings and empowered to participate in any settlement, arbitration or other
proceeding involving any Condemnation. Landlord shall have no right to
participate in any proceedings affecting only the Leasehold Estate unless either
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(a) Tenant elects to terminate this Lease on account of such proceedings or (b)
Tenant is not legally permitted to participate in such proceedings. In the
latter case, Landlord shall participate in such proceedings in accordance with
Tenant's instructions, all at Tenant's expense and using counsel selected,
instructed and paid by Tenant. Nothing herein shall be construed to limit
Landlord's ability to assert a claim for compensation for Rent or other payments
required by this Lease as part of a condemnation award.
16.07 PROMPT NOTICE. If either party becomes aware of any Condemnation or
threatened or contemplated Condemnation, then such party shall promptly give
Notice thereof to the other party.
16.08 TAKING OR TERMINATION OF LEASE BY LANDLORD. Pursuant to Section
2.03(a) of the Charter of the City of Shreveport, Landlord, in its governmental
capacity, may be required to terminate this Lease because the Premises are
required for public purpose. In such event, the taking or termination shall be
treated as a Substantial Condemnation hereunder and all compensation lawfully
due for such taking shall be apportioned as provided in Section 16.01 hereof.
ARTICLE XVII - TRANSFERS BY LANDLORD
17.01 LANDLORD'S RIGHT TO CONVEY. Landlord shall not, during the Term
of this Lease, convey its Fee Estate except to a Fee Mortgagee which forecloses
on the Fee Estate or accepts a deed in lieu of foreclosure on the Fee Estate, as
a result of a default by Landlord under a Fee Mortgage.
17.02 NO ENCUMBRANCES. During the Term Landlord shall not enter into, grant
or permit or suffer to attach to the Fee Estate any easement, servitude,
restriction, lien (including mechanics' lien, material supplier's lien, or other
statutory lien) or other encumbrance affecting title to the Fee Estate (other
than a Fee Mortgage), except for encumbrances entered into at Tenant's request
or with Tenant's consent, or Permitted Exceptions. Tenant shall not unreasonably
withhold Tenant's consent so long as such easement, servitude, restriction, lien
or other encumbrance is fully subordinated to this Lease, all rights and
interests of Tenant hereunder, and all estates arising from this Lease
(including Leasehold Mortgages), any amendments to the foregoing, and the rights
of all other third parties then or thereafter claiming by, through or under
Tenant or any Leasehold Mortgage. Without Tenant's prior written consent, which
Tenant may withhold for any reason or no reason, Landlord shall not enter into
any agreement or instrument by which the Premises are combined with any other
real property for purposes of any Law governing zoning, bulk, development
rights, or any similar matters or by which any rights arising under such Laws to
develop the Premises are transferred to any other real property.
ARTICLE XVIII - TRANSFERS BY TENANT
18.01 ASSIGNMENT TO RELATED ENTITIES. This Lease may be assigned from
time to time by Tenant to any Affiliate of Tenant, so long as such assignee
agrees in writing to assume the obligations of Tenant.
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18.02 ACQUISITIONS. An acquisition of Tenant or any Affiliate of
Tenant shall not constitute an assignment of this Lease and is hereby expressly
permitted.
18.03 ASSIGNMENT TO UNRELATED ENTITIES. This Lease may be assigned
from time to time by Tenant to any assignee, provided that such assignee
expressly assumes in writing all obligations of Tenant hereunder, has a net
worth at the time of such assignment not less than $100,000,000 or its
obligations hereunder are guaranteed by an entity having a net worth at the time
of such assignment not less than $100,000,000.
ARTICLE XIX - SUBLETTING
19.01 TENANT'S RIGHT TO SUBLET. Tenant may enter into a Sublease,
extend, renew or modify any Sublease, consent to any sub-subleasing (or further
levels of subleasing) (all of which shall be within the defined term "Sublease,"
and the occupants thereunder shall all be deemed "Subtenants"), terminate any
Sublease or evict any Subtenant, all without Landlord's consent, provided,
however, that Tenant agrees not to sublet or otherwise license the Parking
Facilities (other than any retail space located within such Parking Facilities),
gaming operations and/or food and beverage services located within the
Pavilion/Hotel Parcel or the Expansion Parcel unless such Sublease or license
provides, or such Subtenant agrees to provide, Landlord with the same percentage
of such Subtenant's Adjusted Gross Revenue and Parking Facilities Net Income, if
applicable, from such activities, which would have been due if such activities
had been performed directly by Tenant and provides Landlord with audit rights
with respect to such revenues substantially equivalent to the audit rights
provided to Landlord under this Lease. Tenant agrees to give Landlord thirty
(30) days' prior Notice of any Sublease. The term of any Sublease (including
renewal options) shall not extend beyond the Term (including only any Renewal
Options previously exercised by Tenant or that Tenant agrees, in the Sublease,
to exercise). If Tenant enters into any Sublease, then each Sublease shall be
subordinate to this Lease and shall contain provisions in form and substance
substantially as follows, and each Subtenant by executing its Sublease shall be
deemed to have agreed to the following (the term "Sublandlord" to be defined in
the Sublease to refer to Tenant as sublandlord under the Sublease):
Subtenant agrees that if, by reason of a default under any underlying lease
(including any underlying lease through which Sublandlord derives its
leasehold estate in the demised subpremises), such underlying lease and the
leasehold estate of Sublandlord in the demised subpremises is terminated,
then Subtenant, at the option and request of the then fee owner of the
demised subpremises (the "Fee Landlord"), shall attorn to such Fee Landlord
as Subtenant's direct landlord under this Sublease and the Fee Landlord
shall recognize such Subtenant as its direct tenant under this Sublease.
Subtenant agrees to execute and deliver, at any time and from time to time,
upon the request of Sublandlord or of the Fee Landlord or any mortgagee of
either, any instrument that may be necessary or appropriate to evidence
such attornment. Subtenant hereby appoints Sublandlord or such Fee
Landlord or such mortgagee the attorney-in-fact, irrevocably, with full
power of substitution, of Subtenant to execute and deliver any such
instrument for and on behalf of Subtenant. This appointment is coupled
with an interest and is irrevocable. Subtenant waives any statute or rule
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of law now or subsequently in effect that may give or purport to give
Subtenant any right to elect to terminate this Sublease or to surrender
possession of the demised subpremises in the event any proceeding is
brought by a Fee Landlord to terminate any such underlying lease.
Subtenant agrees that this Sublease shall not be affected in any way
whatsoever by any such proceeding.
19.02 SUBORDINATION, ATTORNMENT AND NONDISTURBANCE. Landlord shall,
upon Tenant's request made at any time or from time to time, enter into a
Subordination, Attornment and Nondisturbance Agreement in the form of Exhibit
"E" (a "SAND Agreement") with any Subtenant, and if Landlord fails or refuses to
enter into a SAND Agreement Landlord shall be deemed to have done so, provided
that: (a) the rent per rentable square foot of improvements under such sublease
equals or exceeds the corresponding Rent under this Lease, allocated over all
improvements constituting part of the Premises or the aggregate rent under such
Subleases and all other Subleases as to which Tenant requests or obtains SAND
Agreements equals or exceeds the Rent under this Lease, and such Sublease is on
terms that are commercially reasonable at the time of execution of such Sublease
and (b) Tenant provides Landlord with a copy of such Sublease, which Sublease
shall contain the attornment provisions required by this Lease. If Landlord
fails to execute and return to Tenant any such SAND Agreement within ten
Business Days after Landlord's receipt of the same, then Landlord authorizes and
instructs Tenant to execute such SAND Agreement on Landlord's behalf.
Accordingly, Landlord appoints Tenant as Landlord's attorney-in-fact, with full
power of substitution, to execute and deliver any such SAND Agreement for and on
behalf of Landlord. This appointment is coupled with an interest and is
irrevocable.
19.03 NO RELEASE OF TENANT UPON SUBLEASE. No Sublease shall affect or
reduce any obligations of Tenant or rights of Landlord under this Lease. All
obligations of Tenant under this Lease shall continue in full force and effect
notwithstanding any Sublease.
19.04 ASSIGNMENT OF SUBLEASE RENTS. Tenant hereby assigns, transfers
and sets over to Landlord all of Tenant's right, title, and interest in and to
every Sublease entered into by Tenant from time to time, together with all
subrents or other sums of money due and payable under such Sublease, and all
security deposited with Tenant under such Sublease. Such assignment shall,
however, become effective and operative only if this Lease shall expire or be
terminated or canceled, or if Landlord re-enters or takes possession of the
Premises pursuant to this Lease.
ARTICLE XX - TENANT'S RIGHT TO MORTGAGE
Tenant shall have the absolute and unconditional right, without Landlord's
consent, to execute and deliver Leasehold Mortgage(s) encumbering this Lease and
the Leasehold Estate at any time and from time to time during the Term.
Landlord shall not be required to join in or "subordinate" the Fee Estate to any
Leasehold Mortgage. If Tenant exercises this right, the provisions of Exhibit
"G" shall be applicable and shall govern the effect of any rights arising under
any Leasehold Mortgage(s) executed and delivered by Tenant as if such provisions
were fully set forth in this Lease. The parties shall execute such further
documents as may be required to effect the foregoing.
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ARTICLE XXI - QUIET ENJOYMENT
Landlord covenants that Tenant shall and may peaceably and quietly have,
hold and enjoy the Premises for the Term without molestation or disturbance by
or from Landlord, anyone claiming by or through Landlord or having title to the
Premises paramount to Landlord or any Fee Mortgagee, and free of any encumbrance
created or suffered by Landlord, except Permitted Exceptions; provided the
foregoing covenant is applicable to the Texas Street Parcel only to the extent
of Landlord's right, title and interest therein.
ARTICLE XXII - REPRESENTATIONS AND WARRANTIES
Landlord represents and warrants to Tenant that the following facts and
conditions exist and are true as of the Commencement Date and, to the extent
specifically so stated, will remain true throughout the Term. In addition,
Tenant makes, for the benefit of Landlord, certain reciprocal representations
and warranties as set forth below.
22.01 DUE AUTHORIZATION AND EXECUTION. Landlord has full right, title,
authority and capacity to execute and perform this Lease, the Memorandum of
Lease and any other agreements and documents to which Landlord is a party and
referred to or required by this Lease (collectively, the "Documents"); the
execution and delivery of the Documents has been duly authorized by all
requisite actions of Landlord; the Documents constitute valid and binding
obligations of Landlord; neither the execution of the Documents nor the
consummation of the transactions contemplated thereby violates any agreement
(including Landlord's organizational documents), contract or other restriction
to which Landlord is a party or is bound. Tenant makes reciprocal warranties
and representations to Landlord. Both parties' representations and warranties
contained in this Section 22.01 shall continue to apply in full force and effect
throughout the Term as if made continuously throughout the Term.
22.02 NO LITIGATION. There is no pending litigation, suit, action
or proceeding before any court or administrative agency nor has Landlord
received any formal notice of any threatened litigation, suit, action or
proceeding before any court or administrative agency affecting the Premises or
attacking the validity of this Lease or the Landlord's execution, delivery and
performance of this Lease or that would, if adversely determined, adversely
affect the validity of this Lease.
22.03 FIRPTA. Landlord is not a "foreign person" within the meaning
of Section 1445(f)(3) of the United States Internal Revenue Code of 1986.
22.04 NO PENDING IMPROVEMENTS. Landlord is not a party to any
outstanding contracts for any improvements to the Premises, nor does any person
have the right to claim any mechanic's or supplier's lien arising from any labor
or materials furnished to Landlord.
22.05 NO OTHER TENANTS. At the Construction Commencement Date, Tenant
will be the only tenant of the Premises.
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22.06 REPRESENTATIONS AND WARRANTIES IN AGREEMENT TO LEASE. All of
Landlord's representations and warranties set forth herein are true and correct
as of the Commencement Date and will be true and correct on the Construction
Commencement Date. Tenant makes a reciprocal warranty and representation to
Landlord as to the truth and correctness of Tenant's representations and
warranties herein.
ARTICLE XXIII - FORCE MAJEURE
Tenant's obligation to perform or observe any term, condition, covenant or
agreement on Tenant's part to be performed or observed pursuant to this Lease
(other than Tenant's obligation to pay any item of Rent when due) shall be
suspended during such time as such performance or observance is prevented or
delayed by reason of any Unavoidable Delay. Tenant shall make reasonable
efforts to mitigate or reduce the effects of any Unavoidable Delay.
ARTICLE XXIV - ACCESS
Landlord and its agents, representatives and designees shall have the right
to enter the Premises upon reasonable notice to Tenant during regular business
hours and in accordance with Tenant's reasonable instructions, solely for the
purpose of curing Tenant's Defaults (provided that Landlord shall have given
Tenant prior Notice of such Default in accordance with this Lease) or for
purposes relating to the transfer or sale of the Fee Estate in compliance with
this Lease. In entering the Premises pursuant to this Article XXIV, Landlord
and its designees shall not interfere with the conduct of operations on the
Premises by Tenant or anyone claiming through Tenant and shall comply with
Tenant's reasonable instructions. Landlord shall Indemnify Tenant against any
claims arising from Landlord's entry upon the Premises pursuant to this Article
XXIV or any other provision of this Lease permitting Landlord to enter the
Premises (except upon termination of this Lease).
ARTICLE XXV - LATE PAYMENT
If Tenant makes any payment required under this Lease more than fifteen
(15) days after such payment is first due and payable, then in addition to any
other remedies Landlord may have under this Lease, and without reducing or
adversely affecting any of Landlord's other rights and remedies, Tenant shall
pay Landlord interest on such late payment, at an interest rate equal to the
Prime Rate plus two percent (2%), beginning on the day payment was first due and
payable and continuing until the date when Tenant actually makes such payment.
Failure to pay such interest shall be deemed a failure to make the late payment
and, in such event, payment without interest shall not cure any applicable
Monetary Default.
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ARTICLE XXVI - LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS
26.01 LANDLORD'S OPTION. If Tenant shall at any time fail to make
any payment or perform any other act on its part to be made or performed, then
Landlord, after ten Business Days' Notice to Tenant, or with such notice (if
any) as is reasonably practicable under the circumstances, in case of an
emergency, and without waiving or releasing Tenant from any obligation of Tenant
or from any default by Tenant and without waiving Landlord's right to take such
action as may be permissible under this Lease as a result of such Default, may
(but shall be under no obligation to) make such payment or perform such act on
Tenant's part to be made or performed pursuant to this Lease. Subject to the
provisions of Article XXIV, Landlord may enter upon the Premises for such
purpose.
26.02 REIMBURSEMENT BY TENANT. All reasonable sums paid by Landlord
and all costs and expenses reasonably incurred by Landlord, together with
reasonable attorneys' fees, in connection with the exercise of Landlord's cure
rights under Section 26.01, shall constitute Additional Rent. Tenant shall pay
such Additional Rent within thirty (30) days after Landlord's demand accompanied
by evidence reasonably establishing that Landlord properly and reasonably
incurred such costs and expenses in accordance with this Lease.
ARTICLE XXVII - DEFAULT BY TENANT; REMEDIES
27.01 EVENTS OF DEFAULT. The term "Event of Default" shall mean and
refer to the occurrence of any one or more of the following circumstances:
(a) MONETARY DEFAULT. If a Monetary Default shall occur and the
Monetary Default shall continue for thirty (30) days after Landlord has
given Tenant Notice of such Monetary Default, specifying in reasonable
detail the amount of money required to be paid by Tenant and the nature of
such payment; provided, however, payment(s) withheld by Tenant that are the
subject of a pending legal or arbitration proceeding between Landlord and
Tenant shall not constitute a Monetary Default, unless such payment(s)
is/are not made within thirty (30) days of a final, non-appealable
judgment with respect to such payment(s) in favor of the Landlord.
(b) NON-MONETARY DEFAULT. If a Non-Monetary Default shall occur and
the Non-Monetary Default shall continue and not be remedied by Tenant
within sixty (60) days after Landlord shall have delivered to Tenant a
Notice describing the same in reasonable detail, or, in the case of a Non-
Monetary Default that cannot with due diligence be cured within sixty (60)
days from such Notice, if Tenant shall not (x) within sixty (60) days from
Landlord's Notice advise Landlord of Tenant's intention to take all
reasonable steps necessary to remedy such Non-Monetary Default, (y) duly
commence the cure of such Non-Monetary Default within such period, and then
diligently prosecute to completion the remedy of the Non-Monetary Default
and (z) complete such remedy within a reasonable time under the
circumstances.
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27.02 REMEDIES. Upon occurrence of an Event of Default, Landlord may
exercise any or all of the following remedies, and any other remedies provided
for under this Lease or available by law, all of which shall be cumulative: (a)
Landlord shall have the right to proceed by appropriate judicial proceedings,
either at law or in equity, to enforce performance or observance by Tenant of
the applicable provisions of this Lease and/or to recover damages to the extent
arising against Tenant for breach of this Lease; and/or (b) Landlord may give
Tenant a Notice of termination of this Lease, which shall be effective from the
date of service of such Notice. Upon delivery of such Notice, this Lease, the
Leasehold Estate and the Term shall terminate and Landlord shall retake
possession of the Premises and all rights of Tenant shall come to an end with
the same effect as if that day were the expiration date of this Lease. Tenant
shall peaceably and quietly yield up and surrender to Landlord the Premises.
27.03 RE-ENTRY. Upon the occurrence of an Event of Default and the
termination of this Lease as provided in this Article XXVII, Landlord or
Landlord's agents and employees may re-enter the Premises, or any part of the
Premises, either by summary dispossess proceedings or by any suitable action or
proceeding at law, or by force (to the extent permitted by law) or otherwise,
without being liable to indictment, prosecution or damages, and may repossess
the same, and may remove any person from the Premises, all so that Landlord may
have, hold and enjoy the Premises.
27.04 PENDING DISPUTE REGARDING EVENT OF DEFAULT. Notwithstanding anything
to the contrary in the foregoing remedies provided for Landlord under this
Lease, if Tenant shall have given Landlord Notice before termination of this
Lease that Tenant contests Landlord's determination that an Event of Default has
occurred, then Landlord shall not disturb Tenant's possession of the Premises,
Tenant shall be entitled to remain in possession of the Premises under this
Lease, and the Term shall be deemed to continue, so long as: (a) Tenant
continues to pay Landlord the Rent provided for in this Lease and continues to
perform such other obligations under this Lease as are not in dispute; and (b)
no final order or judgment terminating this Lease or Tenant's possession
thereunder has been entered by a court of competent jurisdiction.
27.05 LATE PAYMENT FEE. If more than one Monetary Default occurs in any
year, then for the second and each subsequent Monetary Default in such year,
Tenant shall pay a late fee equal to five percent (5%) of the payment that is
the basis of such Monetary Default at the time such payment is made.
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ARTICLE XXVIII - TERMINATION
All improvements constituting part of the Premises (including signs bearing
any Mark, furniture, fixtures and equipment and any personal property) shall be
the property of Tenant during the Term and subsequent to the Termination Date if
this Lease is terminated by Landlord pursuant to Section 16.08 of this Lease.
If this Lease terminates or expires for any reason other than the exercise by
Landlord of its right to terminate this Lease pursuant to Section 16.08 hereof,
all improvements constituting part of the Premises (other than signs bearing any
Mark, furniture, fixtures and equipment and any personal property, all of which
Tenant may remove) shall become Landlord's property (subject to Permitted
Exceptions). Upon a termination of this Lease by Landlord pursuant to Section
16.08 hereof, such termination shall be treated as a Substantial Condemnation
hereunder and all compensation lawfully due for such taking shall be apportioned
as provided in Section 16.01 hereof. Upon the termination or expiration of this
Lease for any other reason, Landlord and Tenant shall have the following rights
and obligations as set forth in this Article XXVIII:
28.01 POSSESSION. Tenant shall deliver to Landlord possession of the
Premises, in a good order, condition and repair, subject to reasonable wear and
tear, and any other conditions that Tenant is not required to repair pursuant to
this Lease.
28.02 ADJUSTMENT OF REVENUES AND EXPENSES. Landlord and Tenant shall adjust
between themselves, as of 11:59 p.m. on the Termination Date, all revenues and
expenses of owning, operating, occupying, managing and maintaining the Premises,
including all revenues and expenses of the Premises that would customarily be
apportioned in connection with a conveyance of the Premises. Such apportionments
shall be calculated and determined in a manner consistent with proper accounting
practices. Any disputes shall be resolved by a certified public accountant
designated by Tenant and reasonably satisfactory to Landlord.
28.03 DOCUMENTATION. Tenant shall deliver to Landlord copies or originals
of all Subleases, Sublease files, contracts (other than contracts with Tenant's
parent, subsidiaries or affiliates, which shall automatically terminate on the
Termination Date), maintenance and service records, plans, specifications,
manuals and all other papers and documents that may be necessary or appropriate
for the proper operation and management of the Premises, provided the same are
in Tenant's possession and can lawfully be delivered to Landlord. The operating
manuals of Tenant, any Subtenant and any Affiliate of Tenant or any Subtenant
for the operation of a casino or Riverboat Casino or hotels and related
facilities and all personnel files are specifically excluded.
28.04 MISCELLANEOUS ASSIGNMENTS. Upon request, Tenant shall assign to
Landlord, without recourse, all assignable licenses and permits affecting the
Premises and all assignable contracts, warranties and guarantees then in effect
relating to the Premises, other than any to which Tenant or its partners or
their subsidiaries or affiliates are a party.
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28.05 TERMINATION OF MEMORANDUM OF LEASE. If the parties shall have
entered into and recorded a Memorandum of Lease, then they shall enter into a
memorandum, in recordable form reasonably satisfactory to both parties,
terminating the Memorandum of Lease.
28.06 PERSONAL PROPERTY AND EQUIPMENT. Upon termination of this Lease,
Tenant shall have the right to remove all personal property and equipment that
is not attached to the Premises, provided such removal is not to the prejudice
of any lessor's privilege in favor of Landlord securing amounts then due.
28.07 REMOVE RIVERBOAT CASINO. Except as otherwise provided for
herein or as otherwise agreed by the parties hereto, upon the termination of
this Lease for any reason, Tenant shall remove any Riverboat Casino owned and
operated at the Premises by Tenant and all personal property located on said
Riverboat Casino from the Premises, within sixty (60) days following the
Termination Date, without compensation or further obligation to Landlord.
ARTICLE XXIX - NO BROKER
Neither Landlord nor Tenant has engaged the services of a broker, finder or
agent in this transaction as it relates to the Premises, and neither has
employed, nor authorized any other person to act in such capacity. Landlord and
Tenant each hereby agree to Indemnify the other in accordance with Article XII,
as a result of any claim brought by a person or entity engaged or claiming to be
engaged as a finder, broker or agent by the Indemnitor. The foregoing
representation, warranty and indemnity shall survive the expiration or earlier
termination of this Agreement.
ARTICLE XXX - WAIVERS
30.01 NO WAIVER BY SILENCE. Failure of either party to complain of
any act or omission on the part of the other party shall not be deemed a waiver
by the non-complaining party of any of its rights under this Lease. No waiver
by either party at any time, express or implied, of any breach of any provisions
of this Lease shall be a waiver of a breach of any other provision of this Lease
or a consent to any subsequent breach of the same or any other provision. No
acceptance by Landlord of any partial payment shall constitute an accord or
satisfaction but shall only be deemed a part payment on account.
30.02 WAIVER OF TRIAL BY JURY. Landlord and Tenant hereby waive trial
by jury in any action, proceeding or counterclaim brought by either against the
other on any matter whatsoever arising out of or in any way connected with this
Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of the
Premises, including any claim of injury or damage, and any emergency or
statutory remedy with respect to the foregoing.
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ARTICLE XXXI - MEMORANDUM OF LEASE
The parties shall at any time, at the request of either, promptly execute,
acknowledge and deliver duplicate originals of a recordable memorandum of lease
(the "Memorandum of Lease") in the form of Exhibit "F" and containing such other
information as may, from time to time, be legally required to be contained in a
memorandum of lease.
ARTICLE XXXII - ESTOPPEL CERTIFICATES
32.01 RIGHTS TO EACH PARTY. At any time and from time to time, upon
not less than ten Business Days prior written request (an "Estoppel Certificate
Request") by either party to this Lease (the "Requesting Party"), the other
party to this Lease (the "Certifying Party") shall execute, acknowledge and
deliver to the Requesting Party (or directly to a third party whose name and
address are provided by the requesting party (a "Third Party") up to four
original counterparts of an Estoppel Certificate. An Estoppel Certificate
Request shall not be valid unless accompanied by: (a) up to four counterparts of
a proposed form of Estoppel Certificate reflecting present facts and
circumstances at the time of the Estoppel Certificate Request; and (b) a
certificate by the Requesting Party that to the best of the Requesting Party's
knowledge the proposed form of Estoppel Certificate is substantially correct and
omits no material information required to be disclosed in such Estoppel
Certificate. Any Estoppel Certificate may be relied upon by any Third Party to
whom an Estoppel Certificate is required to be directed. The execution of any
Estoppel Certificate shall not limit the rights of the Certifying Party against
the Requesting Party.
32.02 FAILURE TO EXECUTE ESTOPPEL CERTIFICATE. If (i) the Requesting
Party delivers an Estoppel Certificate Request to the Certifying Party in
accordance with the Notice provisions of this Lease and (ii) ten Business Days
have elapsed from the effectiveness of such Estoppel Certificate Request and
during such period the Certifying Party has failed to execute and deliver to the
Requesting Party (or its attorneys or the Third Party(ies) designated by such
Requesting Party) the Estoppel Certificate counterpart(s) provided by the
Requesting Party, setting forth with reasonable specificity any alleged
exceptions to the statements required to be contained in such Estoppel
Certificate, then the Certifying Party shall be deemed for all purposes, whether
or not this Lease has been terminated or is otherwise in full force and effect,
to have executed and delivered to the Third Party and the Requesting Party an
Estoppel Certificate, dated as of the effective date of the Estoppel Certificate
Request, in the form submitted by the Requesting Party to the Certifying Party.
32.03 DELIVERY OF ESTOPPEL CERTIFICATES. Any Requesting Party may
request that the Certifying Party execute an undated Estoppel Certificate. If
the Requesting Party makes such request, then in place of delivering the undated
Estoppel Certificate to the Requesting Party or any Third Party, the Certifying
Party shall deliver the undated Estoppel Certificate to the Requesting Party's
attorneys, who shall hold the undated Estoppel Certificate in accordance with
the following provisions. If the Certifying Party gives Notice to the
Requesting Party's attorneys that the Estoppel Certificate is no longer correct,
then the Requesting Party's attorneys shall return the Estoppel Certificate to
the Certifying Party, who shall within five Business Days execute a corrected
undated Estoppel Certificate and redeliver it to the Requesting Party's
attorneys. At any time when the
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Requesting Party's attorneys are holding an undated Estoppel Certificate and
have not received notice from the Certifying Party that such Estoppel
Certificate is incorrect, the Requesting Party shall be entitled to instruct its
attorneys to date the Estoppel Certificate as of the then-current date and
deliver it to the Requesting Party or a Third Party. The Requesting Party's
attorneys shall promptly comply with such request. The Requesting Party shall be
entitled to designate any title insurance company or abstract company licensed
in the State to take the actions to be taken by the Requesting Party's attorneys
pursuant to this paragraph. If requested by the Requesting Party's attorneys or
such title insurance company or abstract company, the Requesting Party and the
Certifying Party shall enter into an escrow agreement, on customary terms, to
further implement the provisions of this Section 32.03.
ARTICLE XXXIII - EQUAL OPPORTUNITY EMPLOYMENT AND
AFFIRMATIVE ACTION PLAN
Tenant shall utilize, and coordinate with, the Office of the Mayor to
help ensure the various provisions within this Article XXXIII are fulfilled in a
manner that fosters meaningful participation opportunities for local and
minority/women business enterprise ("M/WBE") vendors, suppliers and contractors.
Tenant agrees that it will make good faith efforts to meet and increase the
voluntary M/WBE goals that Tenant establishes with the Louisiana Gaming Control
Board. These goals have been established as 25% minority business enterprise
procurement and 10% female business enterprise procurement. In an effort to
meet and increase those goals, Tenant and Landlord shall establish and appoint
an Equal Opportunity Employment and Procurement Advisory Council (the "Advisory
Council") comprised of business leaders to advise on the establishment of and
support the attainment of M/WBE procurement and employment goals, with the
overall objective of expanding the level of M/WBE procurement, and increasing
the number of minorities in management positions. The Advisory Council shall be
comprised of six (6) members, three (3) of whom shall be appointed by the
Landlord. Tenant and Landlord may change the number and method of appointment
of members and the frequency of meetings by mutual consent. The Advisory
Council shall provide Tenant with suggested methods to increase M/WBE
procurement activity, and to increase minority representation in management
positions. The Advisory Council shall meet monthly with representatives of the
Tenant regarding Tenant purchasing needs and goals for the next ninety (90)
days. The Tenant shall provide Landlord and Advisory Council with quarterly
reports on M/WBE procurement and employment goals established by Tenant and
related goal achievement. Such reports shall be issued within thirty (30) days
from the end of each calendar quarter of each year.
Tenant agrees to use its best efforts to in good faith:
(a) seek to employ in its operations, at all levels, individuals
living in the City of Shreveport from the various gender, racial and ethnic
backgrounds found in the City of Shreveport. The selection process will be
carried out with a focus on Tenant's commitment to hiring at least eighty
percent (80%) local area residents and at least forty percent (40%)
minorities.
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(b) actively recruit handicapped persons in the City of Shreveport to
be included among its employees. Tenant will contact applicable
organizations within the greater Shreveport area that support persons with
disabilities to seek out qualified persons with disabilities for potential
employment. Tenant will fully comply with the Americans with Disabilities
Act. Furthermore, Tenant is taking a leadership position within the
industry by training all of its employees in disability etiquette toward
customers and fellow employees.
(c) contract with local vendors of various gender, racial and
ethnic backgrounds found in the City of Shreveport to the extent possible
and insofar as service availability, cost competitiveness and service
quality will allow.
Tenant will establish a goal expenditure level for certified M/WBEs.
Contracting preference will be given to qualified M/WBEs certified by
either the Mayor of the City of Shreveport or the State of Louisiana.
Tenant will develop a partnership with local area certified M/WBEs to help
them secure a positive business relationship by offering expert advice on
purchasing matters, setting up bids, seeking operational monies, and, if
necessary, establishing an up-front-payment plan for goods and services
rendered. In evaluating M/WBE participation, consideration will be given
to the "reasonable price" of that participation. This "reasonable price"
concept: (i) recognizes that because of difficulty in obtaining financing,
start-up costs, less experience, inability to purchase large quantities of
supplies and other factors, M/WBE prices may be somewhat higher than those
of non-M/WBEs, at least initially; (ii) provides protection to M/WBEs from
being rejected when their prices are only slightly higher than non-M/WBEs;
and (iii) provides that meeting stated M/WBE goals is treated similarly to
complying with any other specification of the bid solicitation which a
contractor must meet in order to be considered a responsive bidder.
Construction Phase - Prior to the contracting process, Tenant will meet
with a representative sampling of minority and female construction related
companies in a geographic area no smaller than an area encompassing Dallas,
Texas, New Orleans, Louisiana and Atlanta, Georgia (the "Subject Area") to
ensure that such companies: (1) are fully aware of the available contract
opportunities for construction projects and (2) have a Tenant contact
person available to answer questions throughout the contracting and
construction phase of such projects. After surveying a representative
sampling of minority and female construction related companies in the
Subject Area, Tenant will establish a goal for the total construction
budget to be contracted with such companies. Any general contractor
wanting to do business with Tenant for construction projects must accept
this provision in order to contract with Tenant. The general contractor
will be held accountable for ensuring compliance with M/WBE goals and will
be required to report on such goal compliance at least quarterly (such
reports will be made available to the Office of the Mayor).
Operations Phase - M/WBE companies will be identified and contacted by
local management. As should be the case in any business, vendors will be
sought that can offer quantity, quality and service, but with a strong
commitment to M/WBE companies.
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(d) provide training in the City of Shreveport for individuals to
be employed by Tenant. Once hired, an employee will be trained in the
skills necessary to deliver the kind of service for a first-class riverboat
casino/hotel complex. Individuals will be paid during the training period.
This mandatory training will address applicable job functions within the
gaming business (e.g., table games, slot machines, shift supervision,
security, food and beverage, guest services, etc.) Tenant will continue to
work with the various community groups identified above to keep the line of
communication continuously open.
Tenant will provide to Landlord Tenant's annual community review
report covering the Shreveport properties of Tenant. Tenant believes that any
commitment such as made above should include a reporting and feedback mechanism,
and Tenant accordingly welcomes the requirement for such reporting. The annual
community review report will cover minority hiring as well as business done with
M/WBEs.
ARTICLE XXXIV - MISCELLANEOUS
34.01 REASONABLENESS. Wherever this Lease states that approval by either
party shall not be unreasonably withheld: (a) such approval shall not be
unreasonably delayed or conditioned; and (b) no withholding of approval shall be
deemed reasonable unless withheld by Notice specifying reasonable grounds, in
reasonable detail, for such withholding of approval, and indicating specific
reasonable changes in the proposal under consideration that would cause such
proposal to be acceptable.
34.02 DOCUMENTS IN RECORDABLE FORM. Wherever this Lease requires either
party to deliver to the other a document in recordable form, both parties shall
be deemed to have consented to the recording of such document, at the sole
expense of the party that elects to record it.
34.03 FURTHER ASSURANCES. Each party agrees to execute and deliver such
further documents, and perform such further acts, as may be reasonably necessary
to achieve the intent of the parties with respect to Tenant's leasing of the
Premises from Landlord, as set forth in this Lease. Without limiting the
generality of this Section 34.03, upon request at any time or from time to time
either party shall execute and deliver to the other: (a) additional counterparts
of this Lease or any related documents, provided such additional counterparts
are prepared at the expense of the party requesting them; and (b) such
documentation as any title insurance company shall require to evidence such
matters as due formation, authorization and execution of this Lease on the part
of the party of whom the request is made.
34.04 PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise
as to the amount of any payment to be made by one party to the other under this
Lease, then the party against whom the obligation to pay is asserted shall have
the right to make payment "under protest." Such payment shall not be regarded
as a voluntary payment. The party making the payment shall continue to have the
right to institute suit for recovery of such sum. To the extent that it shall
be determined that the
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party making the payment "under protest" was not required to make such payment,
such party shall be entitled to recover such sum or so much of such sum as such
party was not legally required to pay pursuant to this Lease, together with
interest on such overpayment at the Prime Rate.
34.05 NO THIRD PARTY BENEFICIARIES. Nothing in this Lease shall be
deemed to confer upon any person (other than Landlord, Tenant, Fee Mortgagees or
Leasehold Mortgagees) any right to insist upon, or to enforce against Landlord
or Tenant, the performance or observance by either party of its obligations
under this Lease.
34.06 INTERPRETATION. No inference in favor of or against any party shall
be drawn from the fact that such party has drafted any portion of this Lease.
The parties have both participated substantially in the negotiation, drafting
and revision of this Lease with representation by counsel and such other
advisers as they have deemed appropriate. Material in brackets constitutes
parenthetical material within other parenthetical material and is intended to be
part of this Lease. The words "include" and "including" shall be construed to be
followed by the words: "without limitation." All Exhibits referred to in this
Lease are hereby incorporated in this Lease by this reference.
34.07 CAPTIONS. The captions of this Lease are for convenience and
reference only and in no way affect this Lease.
34.08 CUMULATIVE REMEDIES. The remedies to which either party may resort
under this Lease are cumulative and are not intended to be exclusive of any
other remedies or means of redress to which such party may lawfully be entitled
in the event of any breach or threatened breach by the other party of any
provision of this Lease.
34.09 RIGHT OF INJUNCTION. In the event of a breach by either party
of any of its obligations under this Lease, the other party shall have the right
to obtain an injunction, in addition to the rights and remedies provided for
under this Lease.
34.10 ENTIRE AGREEMENT. This Lease contains all the terms, covenants and
conditions relating to Tenant's leasing of the Premises.
34.11 AMENDMENT. Any modification or amendment to this Lease must be in
writing signed by Landlord and Tenant. Modifications or amendments of this Lease
executed by either party may be exchanged and delivered by facsimile
transmission, and shall be effective upon such transmission. The parties shall
promptly exchange original signature counterparts of amendments executed by
either party and initially exchanged and delivered by facsimile transmission.
34.12 PARTIAL INVALIDITY. If any term or provision of this Lease or
the application of such term or provision to any party or circumstance shall to
any extent be invalid or unenforceable, then the remainder of this Lease, or the
application of such term or provision to persons or circumstances other than
those as to which it is invalid or unenforceable, shall not be affected by such
invalidity, and each remaining term and provision of this Lease shall be valid
and be enforced to the fullest extent permitted by law.
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34.13 SUCCESSORS AND ASSIGNS. This Lease shall bind and benefit
Landlord and Tenant and their successors and assigns, but the foregoing shall
not limit or supersede any transfer restrictions contained in this Lease.
34.14 GOVERNING LAW. This Lease and its interpretation and
performance shall be governed, construed and regulated by the laws of the State,
without regard to principles of conflict of laws.
34.15 OBLIGATION TO PERFORM. Wherever this Lease requires either
party to perform any obligation, such party shall be entitled to discharge such
obligation by causing it to be performed by some other person, but the foregoing
shall in no way limit, restrict or excuse Landlord's or Tenant's obligations
under this Lease or the restrictions on assignment, conveyance or transfer
contained in this Lease.
34.16 COUNTERPARTS. This Lease may be executed in counterparts.
34.17 TIME PERIODS. Whenever this Lease requires either party to perform
within a specified period, if the last day of such period is not a Business Day,
then the period shall be deemed extended through the close of business on the
first Business Day following such period as initially specified. This 34.17
shall in no event delay or defer the effective date of any Rent adjustment or
the commencement of any period with respect to which interest on a payment shall
accrue.
34.18 ARBITRATION PROCEDURES. Upon the occurrence of any disputed claim of
Non-Monetary Default or a Monetary Default involving the calculations of
Percentage Rent, either party to this Lease may elect to have such dispute
submitted to binding arbitration under this Section 34.18, by delivery to the
other party of a Notice of intent to invoke arbitration. If any matter is
required to be arbitrated pursuant to this Section 34.18, such arbitration shall
be conducted as follows:
(a) The parties shall jointly select a mutually acceptable Qualified
Arbitrator. If the parties are unable to agree upon the designation of a
person as arbitrator, then either Tenant or Landlord or both parties may in
writing request the American Arbitration Association ("AAA") to appoint a
Qualified Arbitrator. The Arbitrator selected by AAA will not be a
resident of the Parish.
(b) Any arbitration hearing shall be held at a place in Shreveport,
Louisiana acceptable to the arbitrator.
(c) Upon appointment, the arbitrator shall settle disputes arising
from the Default giving rise to arbitration in accordance with the
Louisiana General Arbitration Act, applicable laws and the Commercial Rules
of the American Arbitration Act and the Commercial Rules of the American
Arbitration Association, to the extent such rules do not conflict with the
terms of such act and the terms hereof. The decision of the arbitrator
shall
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be binding upon the parties, and may be enforced in any court of competent
jurisdiction. Tenant and Landlord, respectively, shall bear their own legal
fees and other costs incurred in presenting their respective cases. The
charges and expenses of the arbitrator shall be paid by the losing party or
allocated by the arbitrator if the result is mixed.
(d) The arbitration shall commence within ten days after the
arbitrator is selected. In fulfilling any arbitration duties, the
arbitrator may consider such matters as in the opinion of the arbitrator
are necessary or helpful to make a proper evaluation. Additionally, the
arbitrator may consult with and engage disinterested third parties,
including, without limitation, engineers, attorneys, accountants and
consultants, to advise the arbitrator.
(e) If any arbitrator selected hereunder should die, resign or be
unable to perform his duties hereunder, the parties or the American
Arbitration Association shall select a replacement arbitrator. The
aforesaid procedure shall be followed from time to time as necessary.
(f) Arbitration proceedings shall be closed and judgment issued within
one hundred eighty (180) days of the arbitrator's appointment, unless the
period is extended by agreement of both Tenant and Landlord.
34.19 DOCKSIDE CASINO. If subsequent to the execution of this Lease, a
dockside casino is permitted under applicable Law, Tenant may propose to
Landlord the substitution of a dockside casino for any Riverboat Casino
operating from the Premises or the addition of a dockside casino. Such proposal
shall be in writing and shall include plans and specifications for the dockside
casino. Landlord will have thirty (30) days to review the proposal and give
Tenant a Notice approving or disapproving the substitution or deletion. If
approved, the substituted or additional dockside casino shall be deemed to be a
Riverboat Casino for all purposes of this Lease and this Lease shall continue in
effect as originally written, subject only to the changes approved by Landlord.
As used herein, "dockside" means a casino operation on a vessel, boat, barge or
other floating structure moored to a dock.
34.20 PROHIBITED PERSONS. Landlord shall provide Tenant at least twenty
(20) days' prior Notice of any proposed transfer of any interest in the Fee
Estate, together with such documentation and information regarding such transfer
and the proposed transferee as Tenant shall reasonably request, to enable Tenant
to confirm that the proposed transferee is not a Prohibited Person. Landlord
shall not transfer any interest in the Fee Estate to any Prohibited Person
without the prior written consent of Tenant.
34.21 SIGNS. Subject to approval by the City of Shreveport of design and
structure and in accordance with applicable city ordinances, Landlord shall
permit Tenant to place large full-colored directional and promotional signage on
land owned or controlled by Landlord at key downtown entry locations and to
enlarge and modify existing signage on Spring Street. Landlord shall use its
good offices to assist Tenant in obtaining from other state or federal
governmental entities any permits or
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approvals required for the placement of such signs at such locations, including
locations on state or interstate highways approaching Shreveport.
34.22 TAXES, PAYMENTS AND SERVICES.
(a) TAXES AND ASSESSMENTS. Landlord shall levy taxes and assessments
on Tenant, each Subtenant and the Premises at rates and in a manner no less
favorable to Tenant, such Subtenant and the Premises than the rates and
manners applied by Landlord to other persons and property.
(b) ADMISSION FEES. Landlord shall levy Admission Fees on Riverboat
Casino businesses owned or operated by Tenant or any Subtenant at rates and
in a manner no less favorable to Tenant and such Subtenant than the rates
and manners applied by Landlord to other persons or entities that own or
operate Riverboat Casinos located within the City of Shreveport.
(c) IN LIEU PAYMENTS. The combination of (1) the method used to
determine payments under Section 34.23(b)(i) and (2) the method used to
determine Rent due under this Lease shall be no less favorable to Tenant
from a monetary perspective than the combination of such methods used to
determine amounts payable as Rent and In Lieu Payments to Landlord by any
other persons or entities that own or operate one or more Riverboat
Casino/hotel operations located within the City of Shreveport. The agreed
upon test to make such "no less favorable determination" is the application
of the Rent and In Lieu Payment (or their equivalent) calculation methods
applicable to other persons or entities that own or operate one or more
Riverboat Casino/hotel operations located within the City of Shreveport to
Tenant in order to determine the hypothetical Rent and In Lieu Payments
that would be due Landlord from Tenant under such calculation methods;
provided, however, Tenant agrees and acknowledges that its payment to
Landlord of the amounts described in Section 34.23(b)(i) in an amount up to
.025% greater than that paid by other persons or entities that own or
operate one or more Riverboat Casino/hotel operations located within the
City of Shreveport does not constitute a "less favorable determination"
(the "Acceptable Payment Discrepancy"). If the application of such methods
to Tenant results in a lower total dollar amount due Landlord from Tenant
(other than solely as a result of the Acceptable Payment Discrepancy), then
Landlord shall only be entitled to collect such lower total dollar amount
from Tenant and Tenant shall only be obligated to pay such lower total
dollar amount to Landlord. In the event a Riverboat Casino/hotel operator
does not lease City-owned land for its operation, only In Lieu Payments
shall be considered for purposes of the "no less favorable
determination"related to such Riverboat Casino/hotel operator.
(d) COURTESIES AND SERVICES. Landlord shall extend to the operator
of any Riverboat Casino berthed at the Premises, whether Tenant or a
Subtenant, all courtesies and municipal services extended to any other
operator of a Riverboat Casino in the City of Shreveport on terms and
conditions no less favorable than those afforded such other operator.
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34.23 RIVERBOAT CASINO ADMISSION FEE.
(a) PROHIBITION ON STATUTORY ADMISSION FEE.
(i) PROHIBITION. Except as provided in Section 34.23(a)(ii),
from and after the Commencement Date and unless and until the In Lieu
Payment Termination Date has occurred, Landlord shall not levy any
Admission Fee with respect to any Riverboat Casino located at the Premises.
(ii) EXCEPTION. Landlord may levy an Admission Fee that is a
percentage of Net Gaming Proceeds; provided, however, that any such
Admission Fee shall not exceed, for any period, the maximum sum of In Lieu
Payments that would be payable for such period if such Admission Fee were
not levied. In the event of a breach of this Section 34.23(a)(ii), Tenant
shall be entitled to reduce its payment of Rent under this Lease by the
amount that any such Admission Fee exceeds the maximum sum of In Lieu
Payments that would be payable for such period if such Admission Fee were
not levied.
(b) PAYMENTS IN LIEU OF ADMISSION FEE.
(i) PAYMENTS TO LANDLORD. Subject to Section 34.23(d), Tenant
shall make a payment in lieu of Admission Fees (an "In Lieu Payment")
to Landlord for each month or partial month commencing on the Opening
Date and thereafter during the Term for each Riverboat Casino located
at the Premises and operated by Tenant. The amount of such In Lieu
Payment shall be determined in accordance with Section 34.22(c), but
shall in no event exceed 3.225% of Net Gaming Proceeds of such
Riverboat Casino for such month or partial month.
(ii) PAYMENTS TO BOSSIER PARISH SCHOOL BOARD. Subject to Section
34.23(d), Tenant shall make an In Lieu Payment to the Bossier Parish
School Board for each month or partial month commencing on the Opening
Date and thereafter during the Term for each Riverboat Casino located
at the Premises and operated by Tenant in an amount equal to 15% of
5/6th's of 4.3% of Net Gaming Proceeds.
(iii) TIME OF PAYMENTS. The In Lieu Payments for any month or
partial month shall be due on or before the 15th day of the next
succeeding month.
(c) TENANT'S ELECTION. Tenant may elect to terminate its obligation
to pay In Lieu Payments effective as of any date (the "In Lieu Payment
Termination Date") that is not less than two (2) years after the Opening
Date by giving Landlord a Notice of such election that designates the In
Lieu Payment Termination Date and that is given not less than ninety (90)
days before the In Lieu Payment Termination Date. Such election may be
made only one time. After the In Lieu Payment Termination Date, In Lieu
Payments shall no longer accrue or be payable. As provided in Section
34.23(a)(i), Landlord may levy an Admission Fee for any period after the In
Lieu Payment Termination Date.
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(d) REDUCTION OF IN LIEU PAYMENTS. The In Lieu Payments for any month
shall be reduced by the amount of any Admission Fees paid by Tenant for
such month with respect to any Riverboat Casino located at the Premises.
(e) SWEPCO PAYMENTS. Amounts payable under Section 34.23(b)(i) hereof
with respect to any month shall be reduced by the amount of any credits
available to Tenant under Section 34.29 hereof.
(f) RENEGOTIATION. Upon (i) the expiration date of the existing
agreement between the City of Bossier City and Horseshoe Casino relating to
payments by the Horseshoe Casino in lieu of Admission Fees, (ii) the tenth
anniversary of such date and (iii) after each succeeding period of ten (10)
years during the Term, upon request by either party hereto, Landlord and
Tenant will enter into good faith negotiations concerning modifications to
the amount of payments required under Section 34.23(b) during the
succeeding ten-year period; provided, however, that the amount payable by
Tenant during any such ten-year period shall not exceed 105% of the amounts
paid by Tenant during the preceding ten-year period.
(g) AGREED DAMAGES. If Landlord levies any Admission Fee except as
permitted under Section 34.23(a), then, in addition to any other remedies
that may be available to Tenant for breach of Section 34.23(a), Tenant
shall be entitled to receive from Landlord and Landlord shall be obligated
to pay to Tenant on the last day of each month with respect to which such
Admission Fee is levied the amount by which such Admission Fee exceeds the
In Lieu Payments that would otherwise be payable under Section 34.23(b) for
such month. Tenant may set off any payment due and payable by Tenant to
Landlord under this Lease against any amount due and payable by Landlord to
Tenant under this Section 34.23(g)
(h) OTHER JURISDICTIONS. If any entity other than Landlord, the
Bossier Parish Policy Jury or the Johnny Gray Jones Youth Shelter levies or
is deemed to be entitled to any Admission Fee with respect to any Riverboat
Casino located at the Premises and operated by Tenant, then Landlord shall
reimburse Tenant for one-half of the amount of each payment made by Tenant
thereunder within twenty (20) days after such payment is made. If the
Bossier Parish Policy Jury and the Johnny Gray Jones Youth Shelter levy or
are deemed to be entitled to any Admission Fee with respect to any
Riverboat Casino located at the Premises and operated by Tenant and the
amount of such Admission Fee levied by the Johnny Gray Jones Youth Shelter
or to which the Johnny Gray Jones Youth Shelter is entitled exceeds an
initial payment of $50,000 on or prior to the Opening Date and annual
payments thereafter of $50,000, then Landlord shall reimburse Tenant for
one-half of the amount of such excess payment made by Tenant thereunder
within twenty (20) days after such payment is made. Tenant may set off any
payment due and payable by Tenant to Landlord under this Lease against any
amount due and payable by Landlord to Tenant under this Section 34.23(h).
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34.24 HOTEL ROOM BLOCKAGE POLICY. The Hotel shall be operated subject
to the following room blockage policy: (a) 25% of rentable rooms shall be
reserved for convention business until six months before the scheduled opening
date of the convention; (b) within such six-month period all rooms will be
available on a first come, first served basis; and (c) the Hotel shall be
required to hold reservations made for convention purposes within thirty (30)
days of the reserved date only with a guaranteed reservation.
34.25 LANDLORD'S STATUS. This Lease governs the respective rights
and obligations of Landlord and Tenant under landlord-tenant relationship
created hereby and does not limit the exercise by the City of Shreveport of its
separate governmental authority or police powers.
34.26 EMPLOYEE OFF-SITE PARKING. Tenant shall establish a policy
requiring employees of Tenant to park in designated areas during the hours of
their employment. Such designated areas may include any parking garages
constructed by Tenant, as well as any off-site parking areas provided by Tenant.
Such policy will vigorously encourage employees not to park in parking areas
owned by the City of Shreveport and not controlled by Tenant. Tenant will
furnish Landlord a copy of such policy and an action plan for control and
enforcement of such policy.
34.27 REFERENCES TO SECTIONS, ARTICLES AND EXHIBITS. References in
this Lease to Sections, Articles and Exhibits are, unless otherwise indicated,
references to the Sections, Articles and Exhibits of this Lease.
34.28 BARNWELL AND CIVIC THEATER PARKING. Tenant agrees to allocate
and reserve (i) at all times no less than 15 parking spaces on the Expansion
Parcel or the South Parking Facility for employees of the Barnwell Center and
(ii) during events at the Barnwell Center, no less than 100 spaces for patrons
of such events at the Barwell Center. During periods that symphonies or operas
are conducted at the Civic Theater, Tenant shall provide up to fifteen (15)
handicapped parking spaces on the Expansion Parcel or the South Parking Facility
to handicapped patrons attending such events.
34.29 SWEPCO SERVITUDE. In further consideration for the lease to
Tenant of the Premises for the period commencing on the Construction
Commencement Date and continuing throughout the Term, Tenant hereby agrees to
pay to the Landlord on the Construction Commencement Date an amount equal to the
lesser of (i) $600,000 and (ii) one-third (_) of the documented, actual out-of-
pocket costs to the Landlord to relocate to a different location the SWEPCO
servitude currently existing along the bank of the Red River, provided, however,
in the event this Lease is terminated for any reason prior to the Construction
Commencement Date, Tenant shall be, and is hereby, released of its obligations
to make the payment to Landlord contemplated by this Section 34.29. Tenant
shall receive a credit against In Lieu Payments payable on and after the Opening
Date in an amount equal to the payment made by Tenant to Landlord pursuant to
this Section 34.29.
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ARTICLE XXXV - STIPULATION AS TO VENUE IN CADDO PARISH
For purposes of any litigation arising under or occurring as the
result of this Lease, or involving any interpretation of this Lease or the
declaration of a party's rights or obligations hereunder, the parties hereby
agree and stipulate to venue for such actions in the First Judicial District
Court in and for Caddo Parish, Louisiana, or, in the event federal jurisdiction
is available, the Shreveport Division of the United States District Court for
the Western District of Louisiana.
ARTICLE XXXVI - NOTICES
All Notices shall be in writing and shall be addressed to Landlord and
Tenant as set forth below. Notices shall be (i) delivered by Federal Express or
other courier service to the addresses set forth below, in which case they shall
be deemed delivered on the date of delivery (or when delivery has been attempted
twice, as evidenced by the written report of the courier service) to the
address(es) set forth below; (ii) sent by certified mail, return receipt
requested, in which case they shall be deemed delivered three Business Days
after deposit in the United States mail, provided that no postal strike is then
in effect; or (iii) transmitted by facsimile transmission (promptly followed by
delivery under option "i" or "ii"), in which case they shall be deemed delivered
the first Business Day after delivery has been electronically confirmed by the
recipient's facsimile machine, as evidenced by the written confirmation produced
by the sender's facsimile machine. No Notice shall be effective unless and
until a copy of such Notice has been delivered to the intended recipient's
Mortgagee(s), to the extent such delivery is otherwise required by this Lease.
Either party may change its address, its facsimile machine number, or the name
and address of its attorneys by giving Notice in compliance with this Lease.
Notice of such a change shall be effective only upon receipt. Notice given on
behalf of a party by any attorney purporting to represent a party shall
constitute Notice by such party if the attorney is, in fact, authorized to
represent such party. The addresses and facsimile machine numbers of the
parties are:
Landlord: Office of the Mayor
1234 Texas Street
Shreveport, LA 71130
Attention: Mayor
Fax: (318) 226-5854
with a copy to: Office of City Attorney
1234 Texas Street
Shreveport, LA 71130
Attention: City Attorney
Fax: (318) 673-5230
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Tenant: QNOV
_HWCC-Louisiana, Inc.
Two Galleria Tower
13455 Noel Road, Suite 2200
Dallas, TX 75240
Attention: General Counsel
Fax: (972) 386-7411
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IN WITNESS WHEREOF, Landlord and Tenant have duly executed and delivered
this Lease as of the Commencement Date.
CITY OF SHREVEPORT
By: /s/ KEITH HIGHTOWER
------------------------------------------
Name: Keith Hightower
Title: Mayor
QNOV
By: Sodak-Louisiana, L.L.C., its general partner
By: /s/ JACK E. PRATT
--------------------------------------------
Name: Jack E. Pratt
Title: Manager
By: HWCC-Louisiana, Inc., its general partner
By: /s/ JACK E. PRATT
--------------------------------------------
Name: Jack E. Pratt
Title: President
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ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF CADDO
BEFORE ME, the undersigned Notary Public, duly commissioned and qualified
and for the aforesaid Parish and State, personally came and appeared Keith
Hightower to me known, who declared and acknowledged to me, Notary, and the
undersigned competent witnesses that he is the Mayor of the City of Shreveport,
and that he is authorized to execute and deliver the foregoing Ground Lease on
behalf of the City of Shreveport, and that he signed and executed the foregoing
Ground Lease, as the free and voluntary act and deed of said entity, for and on
behalf of said entity and for the objects and purposes therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal and the
said appearer and the said witnesses have hereunto affixed their signatures this
19th day of May, 1999.
WITNESSES:
/s/ KEITH HIGHTOWER
____________________________
KEITH HIGHTOWER
____________________________
NOTARY PUBLIC
My Commission expires:________.
<PAGE>
ACKNOWLEDGMENT
STATE OF ______________
COUNTY OF ____________
BEFORE ME, the undersigned Notary Public, duly commissioned and qualified
and for the aforesaid County and State, personally came and appeared
________________, to me known, who declared and acknowledged to me, Notary, and
the undersigned competent witnesses that he is the ___________ of Sodak-
Louisiana, L.L.C., and that he is authorized to execute and deliver the
foregoing Ground Lease on behalf of Sodak-Louisiana, L.L.C. acting in its
capacity as a general partner of QNOV, and that he signed and executed the
foregoing Ground Lease, as the free and voluntary act and deed of said entity
acting in its capacity as a general partner of QNOV, for and on behalf of said
entity acting in its capacity as a general partner of QNOV and for the objects
and purposes therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal and the
said appearer and the said witnesses have hereunto affixed their signatures this
____ day of ___________________, 1999.
WITNESSES:
____________________________
_________________________
____________________________
NOTARY PUBLIC
My Commission expires:________.
<PAGE>
ACKNOWLEDGMENT
STATE OF ______________
COUNTY OF ____________
BEFORE ME, the undersigned Notary Public, duly commissioned and qualified
and for the aforesaid County and State, personally came and appeared
________________, to me known, who declared and acknowledged to me, Notary, and
the undersigned competent witnesses that he is the ___________ of HWCC-
Louisiana, L.L.C., and that he is authorized to execute and deliver the
foregoing Ground Lease on behalf of HWCC-Louisiana, L.L.C. acting in its
capacity as a general partner of QNOV, and that he signed and executed the
foregoing Ground Lease, as the free and voluntary act and deed of said entity
acting in its capacity as a general partner of QNOV, for and on behalf of said
entity acting in its capacity as a general partner of QNOV and for the objects
and purposes therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal and the
said appearer and the said witnesses have hereunto affixed their signatures this
____ day of ___________________, 1999.
WITNESSES:
____________________________
_________________________
____________________________
NOTARY PUBLIC
My Commission expires:________.
<PAGE>
EXHIBIT 10.14
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") is made and entered into this 10th
day of August 1999, by and between HOLLYWOOD CASINO CORPORATION, a Delaware
corporation (the "Licensor"), and HOLLYWOOD CASINO SHREVEPORT (formerly QNOV), a
Louisiana general partnership (the "Licensee").
RECITALS
A. The Licensor and its subsidiaries own, develop and operate dockside,
riverboat and land-based casinos and hotels and certain other
facilities relating thereto in emerging and established gaming
jurisdictions;
B. The Licensee (i) is in the process of developing, and upon completion
of construction will own, 100% of a certain Hollywood-themed riverboat
gaming casino and certain other facilities relating thereto
(collectively, "Hollywood-Shreveport") located on and adjoining the
Red River in Shreveport, Louisiana and (ii) holds a gaming license
under the laws of the State of Louisiana;
C. The Licensor is the owner of the trademark properties described on
Exhibit "A," which is attached hereto and made a part hereof (together
with all trademark properties subsequently acquired by the Licensor,
the "Trademarks"); and
D. The Licensor desires to grant to the Licensee, and the Licensee
desires to receive from the Licensor, a license to use the Trademarks,
subject to the terms and provisions hereof.
AGREEMENTS
In consideration of the premises and the mutual agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Grant of License. The Licensor hereby grants to the Licensee, and the
Licensee hereby accepts from the Licensor, the right to use the
Trademarks in the Exclusive Area (as specified in Paragraph 3 hereof)
in connection with casino and other related services.
2. Term. This Agreement shall commence on the date hereof (the
"Commencement Date") and shall continue in full force and effect for
an initial term of five (5) consecutive years thereafter, unless
sooner terminated or later extended pursuant to the provisions of this
Agreement (which initial term, as renewed and extended, is hereinafter
called the "Term"). This Agreement shall be automatically renewed for
<PAGE>
additional periods of one year each unless either party hereto shall
indicate its intention not to renew by written notice to the other
party given not less than thirty (30) days prior to the commencement
of any renewal period. Notwithstanding the foregoing, this Agreement
shall terminate concurrently with the termination of that certain
Management Services Agreement dated as of September 22, 1998, as
amended, by and between Licensee and HWCC-Shreveport, Inc. (the
"Management Agreement"); provided, however, that this Agreement shall
continue in effect for a period of six (6) months from the date the
Management Agreement is terminated pursuant to Section 11.01 thereof.
3. Geographical Exclusivity. The license granted by the Licensor to the
Licensee pursuant to Paragraph 1 of this Agreement shall be exclusive
to the Licensee in Bossier and Caddo Parishes, Louisiana only (the
"Exclusive Area"). The Licensee acknowledges and agrees that the
Licensor may grant to subsidiaries and affiliates of the Licensor or
other third parties the right to use the Trademarks in areas other
than the Exclusive Area during the Term.
4. Royalties. The Licensee shall pay to the Licensor an amount equal to
$100.00 per year during the Term. The initial installment shall be
payable on or before September 1, 1999 and the remaining installments
shall be payable on each and every anniversary of the Commencement
Date.
5. Quality Control; Protection.
(a) The Licensee will ensure that the quality of services it renders
in connection with the Trademarks shall be at least equal to the
quality of services provided by the Licensor or its other
subsidiaries in connection with the Trademarks in order to
protect the goodwill associated with the Trademarks. All use by
the Licensee of the Trademarks shall inure to the benefit of the
Licensor.
(b) The Licensee shall cause all advertising, promotional or display
material used in connection with Hollywood-Shreveport and any
other gaming project subsequently owned, developed or operated by
the Licensee to bear all such notices of copyrights, trademarks
or service marks and any other notices as may be appropriate or
necessary to preserve the rights of the Licensor with respect to
the Trademarks. The Licensee shall not vary, change or alter the
design or copy of any logos or artwork associated with any
Trademark.
(c) The Licensee hereby acknowledges the Licensor's full and
exclusive ownership of the Trademarks, whether or not such
ownership and other rights are now or may hereafter be
registered, and agrees that it will not attack the Trademarks or
the Licensor's rights therein, nor do anything which may
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diminish, dilute or otherwise adversely affect the Trademarks or
the Licensor's rights therein.
(d) The Licensor and its representatives shall have full and complete
access to and the right to examine Hollywood-Shreveport and any
other gaming project subsequently owned, developed or operated by
the Licensee and the books and records relating thereto at any
time and from time to time during reasonable business hours to
determine the compliance by the Licensee with its obligations
under this Agreement.
6. Assignment. The Licensee shall not assign this Agreement or its
rights or interests hereunder to a third party without the prior
written consent of the Licensor; provided, however, that the Licensor
has consented to the Licensee's pledge and assignment of this
Agreement as collateral in connection with Licensee's issuance of its
$150,000,000 of 13% First Mortgage Notes due 2006. Any purported
assignment in violation of this Paragraph 6 shall be deemed null and
void.
7. Successor. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective permitted
successors and assigns.
8. Interpretation. The preamble recitals of this Agreement are
incorporated into and made a part of this Agreement; titles of
paragraphs are for convenience only and are not to be considered a
part of this Agreement.
9. Arbitration. Any and all claims, disputes or controversies arising
between the parties hereto regarding or concerning any of the terms 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
binding and final arbitration held in Dallas, Texas, in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association and in accordance with the Federal Rules of Civil
Procedure and Evidence applicable thereto. This agreement to
arbitrate shall be specifically enforceable in any court of competent
jurisdiction.
10. Relationship. This Agreement shall not be construed as placing the
parties or any of them in a master/servant, principal/agent or other
agency relationship one as to the other, it being the intent and
purpose of this Agreement that each party shall be independent as to
the other.
11. Entire Agreement; Amendment. This Agreement sets forth all the
promises, agreements, conditions and understandings between the
parties hereto with respect to the subject matter hereof. There are
no other oral or written promises, agreements, conditions or
understandings between them. Except as otherwise provided herein,
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<PAGE>
no subsequent alteration, amendment, change or addition to this
Agreement shall be binding upon the parties unless in writing and
signed by them.
12. No Waiver. No delay or failure by any party to exercise any right
under this Agreement, and no partial or single exercise thereof, shall
constitute a waiver of that or any other right unless otherwise
expressly provided herein.
13. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
14. Severability. If any provision of this Agreement or the application
hereof to any person or circumstances shall to any extent be held
void, unenforceable or invalid, then the remainder of this Agreement
or the application of such provision to persons or circumstances other
than those as to which it is held void, unenforceable or invalid shall
not be affected thereby, and each provision of this Agreement shall be
valid and enforced to the fullest extent permitted by law.
15. Notices. All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing and
shall be: (i) personally delivered; (ii) transmitted by United States
Certified or Registered Mail, postage prepaid, return receipt
requested, or by commercial courier or express service; or (iii)
transmitted by telecopier, telegraphic, telex or cable communication
to the party to whom such notice, request, consent or other
communication is being given at the address of such party set forth
below, or at such other address as any party may designate by written
notice to the other parties:
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(a) If to the Licensor, to it at:
Hollywood Casino Corporation
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, Texas 75240
Attention: Mr. William D. Pratt
(b) If to the Licensee, to it at:
Hollywood Casino Shreveport
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, Texas 75240
Attention: Mr. William D. Pratt
All notices, requests, consents and other communications shall be
effective or deemed delivered upon (i) the date of receipt if
delivered personally, (ii) the earlier to occur of the actual receipt
thereof by the addressee or three (3) days after the date of deposit
if transmitted by mail or commercial courier or express service or
(iii) the date of transmission with confirmed answerback if
transmitted by telecopier, telegraphic, telex or cable communication.
16. Cost of Enforcement. In any action or proceeding brought by any party
against any other party under this Agreement (including arbitration
pursuant to Paragraph 10 hereof), the prevailing party shall be
entitled to recover from the other party attorneys' fees,
investigation costs, and other legal expenses and court and other
similar costs incurred by such party in such action or proceeding as
the court or other arbiter may find to be reasonable.
17. Governing Law. This Agreement shall be governed by the terms and
provisions hereof and the internal laws of the State of Texas, as the
same may exist from time to time. Each of the terms and provisions of
this Agreement is subject to and shall be enforced in compliance with
the provisions of applicable gaming laws and rules, regulations,
rulings and other similar pronouncements issued by applicable gaming
authorities.
18. Time is of the Essence. Time is and shall be of the essence of this
Agreement and of each term and provision hereof.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto have caused this Agreement
to be duly executed by its duly authorized officers or representatives on and
effective as of the day and year first above written.
LICENSOR
HOLLYWOOD CASINO CORPORATION,
a Delaware corporation
By: /s/ CHARLES F. LAFRANO
------------------------------------
Name: Charles F. LaFrano
Title: Vice President
LICENSEE
HOLLYWOOD CASINO SHREVEPORT
a Louisiana general partnership
By: HCS I, INC., its managing general partner
By: /s/ PAUL C. YATES
------------------------------------
Name: Paul C. Yates
Title: Executive Vice President and Chief
Financial Officer
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EXHIBIT "A"
TRADEMARKS
<PAGE>
EXHIBIT 10.16
AMENDED AND RESTATED FEDERAL INCOME TAX SHARING AGREEMENT
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This Amended and Restated Federal Income Tax Sharing Agreement (the
"Agreement") is made and entered into as of the 10th day of August, 1999, by and
among Hollywood Casino Corporation, a Delaware corporation ("HCC"), HWCC
Development Corporation, a Texas corporation, Hollywood Management, Inc., a
Texas corporation, HWCC-Tunica, Inc., a Texas corporation, HWCC-Golf Course
Partners, Inc., a Delaware corporation, Hollywood Casino-Aurora, Inc., an
Illinois corporation, HWCC-Shreveport, Inc., a Louisiana corporation,
HWCC-Argentina, Inc., a Texas corporation, HWCC-Louisiana, Inc., a Louisiana
corporation, HWCC-Holdings, Inc., a Texas corporation, HWCC-Aurora Management,
Inc., an Illinois corporation, HWCC-Transportation, Inc., a Texas corporation,
HCS I, Inc., a Louisiana corporation and HCS II, Inc., a Louisiana corporation
(each corporation other than HCC, a "Subsidiary" and together, the
"Subsidiaries").
RECITALS
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WHEREAS, HCC and the Subsidiaries are members of an affiliated group of
corporations, as defined in Section 1504(a) of the Internal Revenue Code of
1986, as amended (the "Code"), of which HCC is the common parent (the "Company
Group");
WHEREAS, HCC files and will continue to file consolidated federal income
tax returns with the Subsidiaries; and
WHEREAS, the parties hereto wish to provide for the allocation among
them of consolidated federal income tax liability for taxable years and certain
related matters;
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AGREEMENTS
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NOW THEREFORE, in consideration of the foregoing promises and of the
mutual covenants herein contained, the parties hereto agree as follows:
1. DEFINITIONS
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(a) Terms used in this Agreement shall have the meanings ascribed to
them in, and shall be interpreted in accordance with, the relevant provisions of
the Code and the regulations and rulings issued thereunder, as from time to time
in effect.
(b) For purposes of this Agreement, the terms set forth below shall be
defined as follows:
(i) Determination - The term "Determination" means and includes
any determination within the meaning of Section 1313(a) of the Code and any of
the events specified in Sections 6213(b) or (d) of the Code.
(ii) Hypothetical Tax Liability - The term "Hypothetical Tax
Liability" as it relates to any Subsidiary is the federal income tax liability
and federal estimated tax payments determined by HCC in its reasonable
discretion and computed as if such Subsidiary had filed its own separate federal
income tax returns or had been required to make its own separate estimated tax
payments (taking into account loss, deduction and credit carryforwards), but
subject to the modifications specified in Treas. Reg. Section
1.1552-1(a)(2)(ii), provided, that (i) such liability shall be computed using
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the highest marginal corporate tax rate in effect for such taxable year; and
(ii) if for any taxable year a Tax would be imposed on such Subsidiary pursuant
to Section 55 of the Code, such Subsidiary's Hypothetical Tax Liability shall be
increased by the amount of Tax that would be imposed under such section,
computed using the alternative minimum
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tax rates set forth in Section 55(b)(1) of the Code and taking into account
items specified in Section 55(b)(2) of the Code attributable to such Subsidiary.
2. ALLOCATION OF CONSOLIDATED
FEDERAL INCOME TAX LIABILITY
----------------------------
(a) If a consolidated federal income tax return is filed by HCC on
behalf of the Company Group for any taxable year, each Subsidiary shall pay to
HCC an amount equal to its Hypothetical Tax Liability for such taxable year. HCC
shall provide to each Subsidiary a schedule that sets forth in reasonable detail
the calculation of its Hypothetical Tax Liability for such taxable year.
(b) For purposes of the payment of such Hypothetical Tax Liability, HCC
shall calculate an amount that would be required to be paid under the estimated
tax requirements of Section 6655 of the Code and any other relevant sections of
the Code for each Subsidiary. The amount required to be paid by each Subsidiary
to HCC pursuant to this paragraph for such taxable year shall be paid on a
current basis not later than the date on which the Company Group's consolidated
federal income tax quarterly estimated tax payments are due to be paid for such
quarter of such taxable year. To the extent that any Subsidiary's Hypothetical
Tax Liability for a given year exceeds the aggregate of the quarterly estimated
tax payments made by such Subsidiary for such year, such Subsidiary shall make
an additional tax payment (together with any and all interest, additions to tax,
fines and penalties with respect thereto) under the requirements of Section 6151
of the Code. Such final tax payment shall be made to HCC no later than the date
the Company Group consolidated final tax payment is due. To the extent that the
quarterly estimated tax payments made by a Subsidiary during a particular tax
year exceed its Hypothetical
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Tax Liability for such year, the excess shall be refunded by HCC or credited
toward such Subsidiary's subsequent year's estimated tax payment.
(c) Each Subsidiary shall provide HCC with all of the tax related
information necessary for HCC to compute (i) such Subsidiary's quarterly
estimated tax payments no later than fifteen (15) days before the Company
Group's consolidated federal income tax quarterly estimated tax payments are due
for a particular quarter and (ii) such Subsidiary's share of the Company Group's
final tax payment for a taxable year no later than February 28 of the next
succeeding taxable year of the Company Group.
3. TAX SAVINGS
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(a) No payments shall be made by HCC to any Subsidiary for any loss,
deduction or credit generated by such Subsidiary in a taxable year, except if
such Subsidiary could carry back (under applicable principles of tax law), had
it filed a federal income tax return separate from the Company Group, all or a
portion of such loss, deduction or credit to a prior taxable year in respect of
which the Subsidiary had made payments to HCC pursuant to Section 2 hereof, and
if the carryback of such loss, deduction or tax credit would reduce (but not
below zero) the amount of such payments (the "Hypothetical Tax Reduction").
(b) The payments described in this Section 3 shall be paid by HCC to the
applicable Subsidiary five (5) days after the date on which the Company Group
consolidated federal income tax return is required to be filed (taking into
account any extension thereof) for the taxable year in which the conditions in
Section 3(a) above are met. The amount of the payment described in this Section
3 shall be equal to the Hypothetical Tax Reduction.
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4. ADJUSTMENTS TO CONSOLIDATED
FEDERAL INCOME TAX LIABILITY
----------------------------
If pursuant to a Determination, the filing of an amended tax return
or a claim for refund, a change or adjustment is made to items reported on a
consolidated federal income tax return of the Company Group, then the amount of
the payments required to be made pursuant to Section 2 hereof shall be
recomputed for such taxable year in accordance with the provisions of Section 2
hereof, taking into account such change or adjustment. The parties recognize
that the recomputed liability is not necessarily the final tax liability and
that there may be additional recomputations. Not later than (i) five (5) days
before the due date for any additional payment of tax by HCC, (ii) five (5) days
after the receipt of a refund or (iii) promptly following the event giving rise
to the recomputation if such event will not result in the payment of additional
tax or the receipt of a refund, HCC shall pay to the applicable Subsidiary or
Subsidiaries, or the applicable Subsidiary or Subsidiaries shall pay to HCC, as
the case may be, the difference between the amount originally paid under Section
2 hereof and the recomputed amounts.
5. NEW MEMBERS
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If sufficient stock of any corporation is acquired hereafter by any
member of the Company Group so that the corporation becomes a member of the
Company Group (the "New Member"), the New Member shall become a party to this
Agreement by delivering to HCC a written instrument to such effect. HCC and/or
such members of the Company Group which own stock of the New Member shall use
their best efforts to cause the delivery of such written instrument and the
execution of Form 1122, Authorization and Consent of Subsidiary Corporation to
be included in a
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Consolidated Income Tax Return. The parties hereto hereby agree to the inclusion
of any such New Member as a party to this Agreement.
6. TERM OF AGREEMENT
-----------------
This Agreement shall continue in effect until sixty days after the
expiration of the applicable statute of limitations (including all periods of
extension, whether automatic or permissive) with respect to the final taxable
year of the Company Group which includes any Subsidiary or New Member.
7. INTEREST ON LATE PAYMENTS
-------------------------
Any payment due and owing by one party hereto to another which is not
paid on or before the due date (if any) specified herein shall bear interest at
the blended rate in effect under Section 6621(a)(1) of the Code for the period
beginning on the day after the date the payment is due hereunder to the date on
which the payment is made.
8. EFFECTIVE DATE
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This Agreement shall be effective as of May 14, 1992.
9. MISCELLANEOUS PROVISIONS
------------------------
(a) This Agreement supersedes all prior written or oral understandings
between the parties hereto relating to the subject matter hereof and contains
the entire understanding of the parties hereto with respect to such subject
matter. No alteration, amendment, or modification of any of the terms of this
Agreement shall be valid unless made by an instrument signed in writing by an
authorized officer of each party hereto.
(b) This Agreement has been made in, and shall be construed and enforced
in accordance with the laws of, the State of Texas, without regard to Texas's
conflict of law principles.
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(c) As between the parties hereto, the provisions of this Agreement
shall fix the liability of each to the other as to the matters provided for
herein, regardless of whether such provisions are controlling for federal
income tax or other purposes (including, without limitation, computations of
earnings and profits).
(d) This Agreement shall be binding upon, enforceable by and
against, and inure to the benefit of, the parties hereto and their respective
successors and assigns, and no assignment shall relieve any party's obligation
hereunder without the written consent of the other party.
(e) In case any provision of this Agreement shall be held invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby.
(f) All determinations required hereunder for each taxable year
shall be made by HCC. Such determination shall be final and binding upon the
parties for the purposes hereof.
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In witness whereof, the parties hereto have caused this Agreement to be
duly executed as of the 10th day of August, 1999.
HOLLYWOOD CASINO CORPORATION
By: /s/ WILLIAM D. PRATT
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Name: William D. Pratt
Title: Executive Vice President
HWCC DEVELOPMENT CORPORATION
By: /s/ CHARLES F. LAFRANO
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Name: Charles F. LaFrano, III
Title: Vice President
HOLLYWOOD MANAGEMENT, INC.
By: /s/ WILLIAM D. PRATT
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Name: William D. Pratt
Title: Vice President
HWCC-TUNICA, INC.
By: /s/ CHARLES F. LAFRANO
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Name: Charles F. LaFrano III
Title: Vice President
HWCC-GOLF COURSE PARTNERS, INC.
By: /s/ CHARLES F. LAFRANO
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Name: Charles F. LaFrano, III
Title: Vice President
HOLLYWOOD CASINO-AURORA, INC.
By: /s/ CHARLES F. LAFRANO
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Name: Charles F. LaFrano, III
Title: Vice President
\
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HWCC-ARGENTINA, INC.
By: /s/ WILLIAM D. PRATT
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Name: William D. Pratt
Title: Vice President
HWCC-SHREVEPORT, INC.
By: /s/ PAUL C. YATES
-----------------------------------
Name: Paul C. Yates
Title: Executive Vice President
and Chief Financial Officer
HWCC-LOUISIANA, INC.
By: /s/ PAUL C. YATES
-----------------------------------
Name: Paul C. Yates
Title: Executive Vice President
and Chief Financial Officer
HWCC-HOLDINGS, INC.
By: /s/ WILLIAM D. PRATT
---------------------------------
Name: William D. Pratt
Title: Vice President
HWCC-AURORA MANAGEMENT, INC.
By: /s/ CHARLES F. LAFRANO
---------------------------------
Name: Charles F. LaFrano, III
Title: Vice President
HWCC-TRANSPORTATION, INC.
By: /s/ WILLIAM D. PRATT
---------------------------------
Name: William D. Pratt
Title: Vice President
<PAGE>
HCS I, INC.
By: /s/ PAUL C. YATES
----------------------------------
Name: Paul C. Yates
Title: Executive Vice President
and Chief Financial Officer
HCS II, INC.
By: /s/ PAUL C. YATES
----------------------------------
Name: Paul C. Yates
Title: Executive Vice President
and Chief Financial Officer
<PAGE>
EXHIBIT 10.17
MARINE SERVICES AGREEMENT
This Marine Services Agreement (the "Agreement") is made, effective
September 22, 1998, by and between QNOV, a Louisiana general partnership (the
"Venture") and Shreveport Paddlewheels, L.L.C. ("Consultant").
WITNESSETH
WHEREAS, the Venture holds a license to construct, own and operate a
riverboat gaming facility in Shreveport, Louisiana (the "Riverboat Casino") on
the site as expressly described in Exhibit A attached hereto, in accordance with
the Louisiana Riverboat Economic Development and Gaming Control Act and
regulations promulgated thereunder; and
WHEREAS, Consultant possesses special skills and knowledge of a maritime
and maritime regulatory nature; and
WHEREAS, Venture wishes to retain the services of Consultant in order to
avail itself of the special expertise and abilities of Consultant.
NOW THEREFORE, intending to be legally bound hereby, and in consideration
of mutual covenants contained herein, the parties herein mutually agree as
follows:
1. EMPLOYMENT. The Venture shall retain Consultant, and Consultant shall
serve the Venture upon the terms and conditions hereinafter set forth.
2. COMMENCEMENT. This Agreement shall commence on the Closing Date (as
defined in the Amended and Restated Joint Venture Agreement dated as of July 31,
1998 (as amended) by and among Consultant, Sodak Louisiana, L.L.C., and
HWCC-Louisiana, Inc. (the "Amended JV Agreement")).
3. DUTIES. During the term of this Agreement, Consultant shall provide
consultation services of a maritime nature and concerning marine regulatory
matters in connection with the Venture's construction, development and operation
of the Riverboat Casino only at such times as reasonably requested by the
Venture. Consultant shall report to the management committee of the Venture.
4. TIME REQUIREMENTS. The Venture acknowledges that Consultant may
provide services to other companies including any competitor with the Venture in
riverboat gaming operations. Consultant will diligently serve the Venture.
Consultant shall use its reasonable best efforts to be available to serve the
Venture pursuant hereto.
<PAGE>
5. COMPENSATION. Commencing on the opening date of the Complex, the
Venture shall pay to Consultant as compensation for its services hereunder, the
sum of THIRTY THOUSAND AND 00/100 ($30,000.00) DOLLARS per month (which amount
shall be pro rated in the month in which the Complex opens based on the number
of days the Complex is open during such month), payable in arrears within 15
days following the end of the applicable month for which such fee is paid. At
the option of Consultant, such payments of compensation may be directed to any
entity in which Consultant has an equity ownership interest, for the convenience
of Consultant.
6. EXPENSES. The reasonable and accountable out of pocket expenses of
Consultant incurred during the term of this Agreement in furtherance of Venture
business and as permitted by applicable laws will be reimbursed to Consultant if
such expenses have been previously approved by the management committee of the
Venture. Consultant agrees to present adequate records on the items submitted
for reimbursement and such other documentation as may be required by law or
regulation.
7. INDEPENDENT CONTRACTOR RELATIONSHIP. Consultant is retained by the
Venture only for the purposes and to the extent set forth in this Agreement, and
its relationship to the Venture shall, during the term hereof, be that of an
independent contractor. As an independent contractor, Consultant shall have no
authority, express or implied, to commit or obligate the Venture in any manner
whatsoever, except as specifically authorized from time to time by the
management committee of the Venture, which authorization may be general or
specific. Nothing contained in this Agreement shall be construed or applied to
create a partnership. Consultant shall be responsible for the payment of any and
all taxes resulting from the receipt by Consultant of the compensation provided
hereunder as required by any present or future statute, law, ordinance,
regulation, order, judgment or decree, and Consultant hereby indemnifies and
holds the Venture harmless from any and all liability therefor.
8. TERMINATION. This Agreement shall terminate immediately at such time
that the Consultant, any Affiliate thereof (as defined in the Amended JV
Agreement), and any permitted assignee of the Consultant's rights hereunder,
collectively own no JV Interests (as defined in the Amended JV Agreement). In
addition, this Agreement shall terminate immediately upon the determination of
the Louisiana State Gaming Control Board or any gaming authority of the State of
Louisiana or other State, that Consultant or any permitted assignee or
transferee of Consultant's rights hereunder is unsuitable.
9. BINDING EFFECT AND BENEFIT. This Agreement shall inure to the benefit
of and be binding upon the Venture, its successors and assigns, and this
Agreement shall be assignable and transferable by Consultant only to any current
joint venturer of the Venture, any Affiliate of the Consultant and any non-
Affiliate who, at the same time of such assignment or transfer, acquires all of
the JV Interests held by the Consultant and all Affiliates thereof; provided
that such assignment or transfer described in this Section 9 shall have been
approved by the Louisiana Gaming Control Board as required under
<PAGE>
applicable law. The Venture shall use its reasonable efforts to assist in the
preparation of any petition to the Louisiana Gaming Control Board for the
transfer or assignment of this Agreement.
10. ENTIRE AGREEMENT. This Agreement contains the entire agreement among
the parties regarding the subject matter hereof and may not be amended,
modified, or supplemented in any respect except by prior written agreement
entered into by both parties.
11. GOVERNING LAWS. This Agreement shall be construed in accordance with,
and governed by, the internal laws of the State of Louisiana.
12. NOTICES. Any notice or other communication under this Agreement shall
be in writing and shall be sufficient if sent by facsimile or by registered
mail, return receipt requested, to the parties, at the addresses set forth
below, or at such other address as the Venture or Consultant may from time
specify.
If to Consultant:
Shreveport Paddlewheels, L.L.C.
610 S. Peters St.
New Orleans, Louisiana
Facsimile: (504) 587-1740
Attention: Warren L. Reuther, Jr., Manager
With copy to:
Smith Martin
700 Camp Street
New Orleans, Louisiana
Facsimile: (504) 525-0163
Attention: James E. Smith, Jr. Esq.
If to the Venture:
Sodak Louisiana, L.L.C.
5301 South Highway 16
Rapid City, South Dakota 57701
Facsimile: (605) 355-4976
Attention: General Counsel
HWCC-Louisiana, Inc.
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
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Dallas, Texas 75240
Facsimile: (972) 716-3903
Attention: General Counsel
13. COUNTERPARTS. This Agreement may be executed in separate counterparts,
each of which will be an original and all of which taken together shall
constitute one and the same agreement, and any party hereto may execute this
Agreement by signing such counterpart.
14. MODIFICATION, AMENDMENT OR WAIVER. No provision of this Agreement may
be modified, amended, waived or terminated except by an instrument in writing
signed by the parties to this agreement. No course of dealing between the
parties, will be deemed to, modify, amend, waive or terminate any provision of
this Agreement. No delay on the part of the Venture or Consultant in exercising
any right hereunder shall operate as a waiver of such right.
15. HEADINGS. The headings contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
16. THIRD-PARTY BENEFIT. Nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights, remedies, obligations or
liabilities of any nature whatsoever.
17. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement or the breach hereof, other than matters pertaining to injunctive
relief, including, without limitation, temporary restraining orders, preliminary
injunctions, and permanent injunctions, shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and judgement upon the award rendered by the arbitrator shall be
and may be entered in any court having jurisdiction thereof. The dispute shall
be submitted to an arbitrator agreed to by the parties to the dispute or if such
parties cannot agree upon an arbitrator, an arbitrator selected for the parties
by the American Arbitration Association. The parties hereby agree that the
arbitrator shall not have jurisdiction to award punitive damages and shall be
without authority to award relief other than monetary damages. Such arbitration
shall take place in New Orleans, Louisiana, unless otherwise agreed to in
writing by the parties. In any such arbitration, discovery shall be allowed to
the full extent permitted under, and shall be governed by, the Federal Rules of
Civil Procedure and the Federal Rules of Evidence shall apply.
18. WAIVER OF JURY TRIAL. EACH PARTY IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
<PAGE>
19. ADVISE OF COUNSEL. Each party acknowledges that it has been advised by
counsel in the negotiation, execution and delivery of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement this 22nd day of
September, 1998.
QNOV
By: SODAK LOUISIANA, L.L.C.
By: /s/ KEVIN L. BURTON
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Its Manager
--------------------------------
By: HWCC-LOUISIANA, INC.
By: /s/ JACK E. PRATT
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Its Chairman and President
--------------------------------
SHREVEPORT PADDLE WHEELS, L.L.C.
By: /s/ [ILLEGIBLE]
-----------------------------------
Its CEO
--------------------------------
<PAGE>
EXHIBIT A
DEVELOPMENT PARCEL A parcel of land containing 91,703.0198 square feet, more or
less, located east of Clyde E. Fant Memorial Parkway, as recorded in Book 2100,
pages 279 and 329, records of Caddo Parish, Louisiana, south of the Easterly
extension of Fannin Street, as recorded in Book 50, page 537, Caddo Parish,
Louisiana, North of the Texas Street Bridge and West of the Ordinary High Water
Stage of Red River, being more particularly described as follows:
From an "x" cut in concrete at the point of intersection of the east right-of-
way line of said Clyde E. Fant Parkway and the Easterly extension of the
centerline of said Fannin Street; run South 39 degrees 38' 37" East, along said
east right-of-way, a distance of 422.28 feet, to the point of beginning (P.O.B.)
of the parcel herein described; run North 50 degrees 27' 16" East, along a line
common to the Shoreside Complex Parcel and the Development Parcel, a distance of
281.02 feet, to the point of intersection with the 155.50 foot contour meander
line of Red River, as of 7:15 a.m., December 13, 1996; run thence South 40
degrees 29' 46" East, along said meander line, a distance of 27.16 feet; run
thence South 44 degrees 08' 00" East, along said meander line, a distance of
44.13 feet; run thence South 39 degrees 47' 11" East, along said meander line, a
distance of 54.80 feet; run thence South 43 degrees 29' 22' East, along said
meander line, a distance of 39.06 feet; run thence South 43 degrees 13' 45"
East, along said meander line, a distance of 50.39 feet; run thence South 45
degrees 20' 03" East, along said meander line, a distance of 55.14 feet; run
thence South 51 degrees 11' 22" East, along said meander line, a distance of
47.26 feet, to the point of intersection with the north right-of-way line of the
Texas Street Bridge; run thence South 50 degrees 21' 23" West, along said right-
of-way line, a distance of 307.47 feet, to the point of intersection with the
said east right-of-way line of the Clyde E. Fant Memorial Parkway; run thence
North 39 degrees 38' 37" West, along said right-of-way line, a distance of
316.72 feet, to the point of beginning (P.O.B.).
BLOCK 72 A parcel of land containing 122,895.9879 square feet, more or less,
being bound on the West by Commerce Street, on the north by Texas Street Bridge,
On The east by Clyde E. Fant Memorial Parkway, And On The South by Milam Street,
being more particularly described as follows:
From the point of intersection of the north right-of-way line of Milam Street
and the east right-of-way line of Commerce Street, as recorded in book 50, page
537, and book 150, page 129, records of Caddo Parish, Louisiana, said point
being the point of beginning, (P.O.B.) run North 39 degrees 38' 37" West, along
the east right-of-way line of said Commerce Street, being 66.00 feet, east of
and parallel to the centerline of said Commerce Street, a distance of 320.00
feet, to the point of intersection of the south right-of-way line of the Texas
Street Bridge, as recorded in book 50, page 537 and book 150, page 129, records
of Caddo Parish, Louisiana; run thence North 50 degrees 21' 23" East, along said
right-of-way, line being 50.00 feet south of and parallel to the centerline of
said Texas Street Bridge, a distance of 384.05 feet, to the point of
intersection with the west right-of-way line of the Clyde E. Fant Memorial
Parkway, as recorded in book 2100, pages 329 through 335, records of Caddo
Parish, Louisiana; run thence South 39 degrees 38' 37" East, along the
<PAGE>
west right-of-way line of said Clyde E. Fant Memorial Parkway, a distance of
320.00 feet, to the point of intersection with the north right-of-way line of
Milam Street, as recorded in book 50, page 537 and book 150, page 129, records
of Caddo Parish, Louisiana; run thence South 50 degrees 21' 23" west, along said
right-of-way line of Milam Street, being 33.00 feet north of and parallel to the
centerline of said Milam Street, a distance of 384.05 feet, to the point of
beginning.
BARNWELL CENTER PARKING AREA A parcel of land containing 72,850.0384 square
feet, more or less, bounded on the West by the east right-of-way line of Clyde
E. Fant Memorial Parkway, on the North by the south right-of-way line of Texas
Street Bridge, on the East by the west 155.50 foot contour meander line of Red
River and on the South by the north face of the Barnwell Center building, being
more particularly described as follows:
From the point of intersection of the south right-of-way line of the Texas
Street Bridge, as recorded in book 50, page 537 and book 150, page 129, records
of Caddo Parish, Louisiana and the east right-of-way line of the Clyde E. Fant
Memorial Parkway, as recorded in book 2100, pages 329 through 335, records of
Caddo Parish, Louisiana, Said Point Being The Point Of Beginning (P.O.B.), run
North 50 degrees 21' 23" East, along said south right-of-way line, being 50.00
feet south of and parallel to the centerline of said Texas Street Bridge, a
distance of 306.25 feet, to the point of intersection with the 155.50 foot,
contour meander line of Red river, as of 7:15 a.m., December 13, 1996; run
thence South 38 degrees 41' 30" East, along said meander line, a distance of
88.90 feet; run thence South 35 degrees 15' 54" East, along said meander line, a
distance of 153.31 feet; run thence south 50 degrees 21' 23" West, a distance of
293.07 feet, to the point of intersection with the east right-of-way line, of
said Clyde E. Fant Memorial Parkway; run thence North 39 degrees 38' 37" West,
along said east right-of-way line a distance of 241.75 feet, to the point of
beginning.
EXPO HALL PARKING AREA A parcel of land containing 90,636.8985 square feet, more
of less, bounded on the north by the face of the Expo Hall building, on the east
by the west right-of-way line of the Clyde E. Fant Memorial Parkway, on the
south by the north right-of-way line of the Texas Street Bridge and on the west
by the east right-of-way line of Commerce Street, being more particularly
described as follows:
From the point of intersection of the north right-of-way line of the Texas
Street Bridge, and the east right-of-way line of Commerce Street, as recorded in
book 50, page 537 and book 150, page 129, records of Caddo Parish, Louisiana,
said point being the point of beginning (P.O.B.) run North 39 degrees 38' 37"
West, along said east right-of-way line of Commerce Street, being 66.00 feet
east of and parallel to the centerline of said Commerce Street, a distance of
230.01 feet; run thence North 50 degrees 21' 23" East, a distance of 394.05
feet, to the point of intersection with the west right-of-way line of Clyde E.
Fant Memorial Parkway, as recorded in book 2100, page 329 through 335, records
of Caddo Parish, Louisiana; run thence South 39 degrees 38' 37" East, along said
right-of-way line, a distance of 230.01 feet, to the point of intersection with
the north right-of-way line of the said Texas Street Bridge; run thence South 50
degrees 21' 23" West, along said north right-of-way line, being 50.00 feet,
north of and parallel to the centerline of said Texas Street Bridge a distance
of 394.05 feet, to the point of beginning.
<PAGE>
EXHIBIT 10.18
SIDE AGREEMENT
--------------
This Agreement is entered into by and among Queen of New Orleans at the
Hilton Joint Venture, a Louisiana Joint venture ("QNOV"), HWCC-Louisiana, Inc.,
a wholly-owned subsidiary of Hollywood Casino Corporation ("HWCC"), and Sodak
Louisiana, L.L.C., a wholly-owned subsidiary of Sodak Gaming, Inc. ("Sodak"),
Hollywood and Sodak are sometimes collectively referred to in this Agreement as
the "New Venturers."
RECITALS
--------
A. QNOV is the holder of a riverboat gaming license issued and regulated
by the Louisiana Gaming Control Board (the "Board").
B. QNOV has entered into a certain Compromise Agreement with the City of
New Orleans ("City") of even date herewith (the "Compromise Agreement"),
attached hereto as Exhibit "A". Capitalized terms not defined herein shall have
the same meanings set forth in the Compromise Agreement.
C. The parties desire to further document the obligations of QNOV in
connection with the Compromise Agreement.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the agreements of the parties regarding
the Shreveport Project, and for additional good and valuable consideration, the
parties agree as follows:
1. The New Venturers agree that upon consummation of their acquisition of
an ownership interest in QNOV, the New Ventures will recognize, ratify and cause
QNOV to comply with the terms and conditions of the Compromise Agreement,
including the requirements of Paragraphs 3.2 and 3.3 of the Compromise
Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement, in multiple
originals, in the presence of the undersigned witnesses as of the 16th day of
January, 1998.
QUEEN OF NEW ORLEANS AT THE HILTON JOINT
VENTURE, a Louisiana joint venture
By: HILTON NEW ORLEANS CORPORATION,
a Louisiana corporation
By:
------------------------------------
Name:
--------------------------------
Title:
-------------------------------
By: NEW ORLEANS PADDLEWHEELS, INC.,
a Louisiana corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
HWCC-LOUISIANA, L.L.C., a Louisiana corporation
By: /s/ Jack E. Pratt
--------------------------------
Name: Jack E. Pratt
------------------------------
Title: Chairman and President
-----------------------------
SODAK LOUISIANA, L.L.C., a Louisiana limited
liability company
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE>
QUEEN OF NEW ORLEANS AT THE HILTON JOINT
VENTURE, a Louisiana Joint Venture
By: HILTON NEW ORLEANS CORPORATION, a
Louisiana Corporation
By: [SIGNATURE ILLEGIBLE]
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
By: NEW ORLEANS PADDLEWHEELS, INC., a
Louisiana Corporation
By: /s/ Duane P. Smith
-------------------------------------
Name: Duane P. Smith
-----------------------------------
Title: President
----------------------------------
HWCC-LOUISIANA, INC., a Louisiana Corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
SODAK LOUISIANA, L.L.C., a Louisiana Limited
Liability Company
By: [SIGNATURE ILLEGIBLE]
-------------------------------------
Name: [ILLEGIBLE]
-----------------------------------
Title: [ILLEGIBLE]
----------------------------------
<PAGE>
EXHIBIT 10.19
_________________________________
LOAN AGREEMENT
between
SHREVEPORT PADDLEWHEELS, L.L.C.,
as BORROWER
and
HWCC-LOUISIANA, INC.,
as LENDER
_________________________________
Dated as of August 10, 1999
<PAGE>
THIS LOAN AGREEMENT (this "Agreement") dated as of August 10, 1999, between
----------
SHREVEPORT PADDLEWHEELS, L.L.C., a Louisiana limited liability company
("Borrower") and HWCC-LOUISIANA, INC. ("Lender"). Capitalized terms used herein
- ----------- -------
and defined in Section 7 of this Agreement are used herein as therein defined.
W I T N E S S E T H:
WHEREAS, New Orleans Paddlewheels, Inc. ("Paddlewheels"), Borrower,
-------------
Sodak Louisiana, L.L.C. ("Sodak") and Lender are parties to that certain Amended
-----
and Restated Master Agreement (the "Amended Master Agreement") dated July 31,
-------------------------
1998;
WHEREAS, Borrower, HCS I, Inc. and HCS II, Inc. are parties to that
certain Third Amended and Restated Joint Venture Agreement of Hollywood Casino
Shreveport (Formerly known as the "Queen of New Orleans at the Hilton Joint
Venture" and "QNOV") (the "Amended JVA") dated as of July 21, 1999;
------------
WHEREAS, under the terms of the Amended JVA, Borrower is obligated to
make certain capital contributions to Hollywood Casino Shreveport (formerly
known as the Queen of New Orleans at the Hilton Joint Venture and QNOV) (the
"Venture");
- ---------
WHEREAS, under the terms of the Amended Master Agreement, Sodak and
Lender have jointly, severally and solidarily agreed to make the Loan (as
hereinafter defined) to enable Borrower to make a capital contribution in the
amount of $1,000,000.00 to the Venture as required by the Amended JVA; and
WHEREAS, effective as of April 23, 1999, Lender acquired Sodak and
Sodak thereafter merged with and into Lender and therefore Lender shall make the
Loan to the Borrower as required by the Amended Master Agreement.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, Borrower and Lender hereby agree as follows:
SECTION 1. Amount and Terms of Credit.
---------------------------
1.01 The Loan. Subject to and upon the terms and conditions set forth
--------
herein, Lender agrees to make a term loan (the "Loan") to the Borrower in the
----
principal amount of $1,000,000.00 to enable the Borrower to make the capital
contribution required of it pursuant to Section 3.2(b) of the Amended JVA. All
proceeds of the Loan shall be advanced on the Funding Date.
1.02 Note.
----
(a) The Borrower's obligation to pay the principal of, and interest
on, the Loan shall be evidenced by a promissory note duly executed and
delivered by the Borrower substantially in the form of Exhibit "A" attached
hereto, with blanks appropriately completed in conformity herewith (the
"Note").
------
<PAGE>
(b) The Note shall (i) be executed by the Borrower, (ii) be payable to
the order of the Lender, (iii) be dated the Funding Date, (iv) be in the
stated principal amount of $1,000,000.00 and be payable in the outstanding
principal amount of the Loan evidenced thereby from time to time, (v)
mature on the Maturity Date, (vi) bear interest as provided in Section
1.03, (vii) be entitled to the benefits of this Agreement and the other
Loan Documents and (viii) be secured by the Security Documents.
1.03 Interest.
--------
(a) The Borrower agrees to pay interest in respect of the unpaid
principal amount of the Loan from the Commencement Date until paid at a
variable rate of interest per annum equal to the prime rate of interest
announced from time to time by the U.S. Bank National Association as its
prime rate.
(b) If the Borrower fails to make any payment under the Note in full
within 5 days of when due, the Borrower shall pay to the Lender a late
payment fee in an amount equal to 10% of the delinquent amount due.
(c) Overdue principal and any other overdue amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to the rate
which is 2% in excess of the rate borne by the Note, with such interest to
be payable by the Borrower upon demand.
(d) Accrued (but unpaid) interest shall be payable in respect of the
Loan, (i) monthly in arrears on the first day of each calendar month
commencing with the first calendar month following the calendar month in
which the Commencement Date occurs, (ii) on any repayment or prepayment
thereof (on the amount repaid or prepaid), (iii) on maturity (whether by
acceleration or otherwise) and (iv) after such maturity, on demand.
1.04 Repayments; Prepayments.
-----------------------
(a) All outstanding principal and all accrued and unpaid interest
shall be due and payable to the Lender in full on the Maturity Date.
(b) The Borrower shall have the right to prepay any or all of the
Note, without premium or penalty, in whole or in part, at any time and from
time to time, upon providing the Lender with notice of the amount to be
prepaid. Any voluntary repayment made pursuant to this Section 1.04(b)
shall be applied to outstanding principal owing under the Note.
1.05 Method and Place of Payment. Except as otherwise specifically
---------------------------
provided herein, all payments under this Agreement or the Note shall be made to
the Lender not later than 2:00 P.M., local time in Dallas, Texas, on the date
when due and shall be made in Dollars at Two Galleria Tower, Suite 2200, 13455
Noel Road, Dallas, Texas 75240, Attention: General Counsel. Whenever any
payment to be made hereunder or under the Note shall be stated to be due on a
day which is not a Business Day, the due date thereof
2
<PAGE>
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest shall be payable at the applicable rate during
such extension.
1.06 Net Payments.
------------
(a) All payments made by the Borrower hereunder or under the Note will
be made without setoff, counterclaim or other defense. All such payments
will be made free and clear of, and without deduction or withholding for,
any present or future taxes, levies, imposts, duties, fees, assessments or
other charges of whatever nature now or hereafter imposed by any
jurisdiction, or by any political subdivision or taxing authority thereof
or therein, with respect to such payments (but excluding any tax imposed on
or measured by the net income or profits of the Lender pursuant to the laws
of the jurisdictions in which either Lender is organized) and all interest,
penalties or similar liabilities with respect thereto.
1.07 Application of Payments. Except as otherwise specifically provided
-----------------------
herein, all payments under this Agreement or the Note received by the Lender
(other than regular monthly payments of interest on the Note, which will be
applied by the Lender to the Loan) shall be applied by the Lender, until the
Loan is paid in full, as follows:
(a) First, to any fees, costs or expenses (including, without
limitation, attorneys' fees) due and owing to the Lender under this
Agreement or any other Loan Document which remains unpaid five (5) Business
Days after receipt by Borrower of written demand therefor from Lender; and,
(b) Second, to interest then due and payable and otherwise to
principal on the Loan;
SECTION 2. Conditions Precedent to Advance. The obligation of the Lender
-------------------------------
to make the Advance on the Loan, is subject to the satisfaction of the following
additional conditions:
2.01 Execution of Agreement and Note. This Agreement and the Note shall
-------------------------------
have been duly authorized and executed by Borrower and delivered to the Lender.
2.02 Organization Documents; Proceedings; etc.
-----------------------------------------
(a) The Lender shall have received a certificate, dated the Funding
Date, signed by the Manager of the Borrower, certifying that attached
thereto are true, complete and correct copies of the Borrower's certificate
of formation, initial report and operating agreement, and the foregoing
shall be in form and substance satisfactory to the Lender.
(b) All limited liability company and legal proceedings (if any), and
all instruments and agreements, in each case related to the transactions
contemplated by this Agreement and the other Loan Documents, shall be
satisfactory in form and substance to the Lender, and the Lender shall have
3
<PAGE>
received all information and copies of all documents and papers, including
records of limited liability company proceedings, governmental approvals,
good standing certificates and bring-down telegrams or facsimiles, if any,
which the Lender reasonably may have requested in connection with the
transactions contemplated by this Agreement and the other Loan Documents,
such documents and papers, where appropriate, to be certified by proper
governmental or other authorities.
2.03 Security Agreement. Borrower shall have duly authorized and executed
------------------
and delivered to Lender a Security Agreement in substantially the form annexed
hereto as Exhibit "B" (as the same may be modified, supplemented or amended from
time to time, the "Security Agreement"), dated on or before the Funding Date,
covering all of the present and future Security Agreement Collateral of
Borrower, together with:
(i) proper financing statements (Form UCC-1) (collectively, the
"Financing Statement") fully executed by Borrower for filing under the UCC
---------------------
or other appropriate filing offices of each jurisdiction as may be
necessary or, in the opinion of the Lender, desirable to perfect the
security interests purported to be created by the Security Agreement;
(ii) evidence that the Borrower has obtained all necessary consents
to permit the Borrower to grant a security interest to the Lender, pursuant
to the Security Agreement, in all of the Borrower's right, title and
interest (a) in and to the Venture and under the Amended JVA, including,
without limitation, the right of Borrower to receive 10% of Net Realized
Value (as defined in Section 10.5 of the Amended JVA) pursuant to Section
10.5 of the Amended JVA, and (b) under the Assignment of Joint Venture
Interest, including, without limitation, the right of Borrower to receive
1% of Complex Net Revenues (as defined in Section 1.1 of the Assignment of
Joint Venture Interest) from the Venture pursuant to Section 1.1 of the
Assignment of Joint Venture Interest; and
(iii) evidence that all other actions necessary or, in the opinion of
the Lender, desirable to perfect and protect the security interests
purported to be created by the Security Agreement have been taken.
2.04 Guaranty. A guaranty (the "Guaranty") in substantially the form
-------- --------
annexed hereto as Exhibit "C" shall have been duly authorized and executed by
Paddlewheels and delivered to Lender, pursuant to which Paddlewheels guarantees
payment and performance of the Indebtedness until the earlier of (i) the payment
and performance of the Indebtedness in full, and (ii) the Commencement Date.
2.05 Approvals; Permits; etc. As of the date of the Advance under the
------------------------
Note, all necessary governmental and third party approvals and Permits required
in connection the transactions contemplated by the Loan Documents, and otherwise
referred to herein or therein, shall have been obtained and in full force and
effect on the date of such Advance, and no action shall have been taken by any
competent authority which restrains, prevents or imposes materially adverse
conditions upon the consummation of the other
4
<PAGE>
transactions contemplated by this Agreement and the other Loan Documents.
Additionally, there shall not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified (i) challenging the legality, validity or
enforceability of any such approval or Permit or the legality or validity of the
process pursuant to which such approval or Permit was issued or (ii) prohibiting
or imposing materially adverse conditions upon the consummation of the other
transactions contemplated by this Agreement and the other Loan Documents.
2.06 Litigation. As of the date of the Advance under the Note, no
----------
litigation by any entity (private or governmental) shall be pending or
threatened with respect to this Agreement, the other Loan Documents, the
transactions contemplated hereby or thereby, the Borrower, Paddlewheels, the
Venture or the Project.
2.07 Financial Statements. There shall have been delivered to the Lender
--------------------
current unaudited financial statements of each of the Borrower and Paddlewheels,
certified as being accurate by the Manager of the Borrower and an officer of
Paddlewheels, as applicable, completed and prepared in accordance with GAAP,
which financial statements shall be in form and substance satisfactory to the
Lender.
2.08 No Default; Representations and Warranties. As of the date of the
------------------------------------------
Advance under the Note and also after giving effect thereto, (i) there shall
exist no Default or Event of Default and (ii) all representations and warranties
contained herein and in the other Loan Documents shall be true and correct in
all material respects with the same effect as though such representations and
warranties had been made on such date (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such a specified date).
2.09 Adverse Change. As of the date of the Advance under the Note,
--------------
nothing shall have occurred (and the Lender shall have become aware of no facts,
conditions or other information not previously known) which the Lender
determines is reasonably likely to have a material adverse effect on (a) the
rights or remedies of the Lender under this Agreement and the other Loan
Documents, (b) the ability of the Borrower to perform its obligations to the
Lender under this Agreement and the other Loan Documents or (c) the business,
property, assets, liabilities, condition (financial or otherwise), prospects or
affairs of the Borrower from that set forth in the financial statements and
projections delivered to Lender hereunder.
SECTION 3. Representations, Warranties and Agreements of Borrower. In
------------------------------------------------------
order to induce the Lender to enter into this Agreement and to make the Loan as
provided herein, the Borrower makes the following representations, warranties
and agreements, all of which shall survive the execution and delivery of this
Agreement and the Note and the making of the Loan, with the making of the
Advance on the Funding Date being deemed to constitute a representation and
warranty that the matters specified in this Section 3 are true and correct in
all material respects on and as of the date of such Advance (it being understood
and agreed that any representation or warranty which by its terms is made as
5
<PAGE>
of a specified date shall be required to be true and correct in all material
respects only as of such specified date).
3.01 Status. The Borrower (i) is a duly organized and validly existing
------
limited liability company under the laws of the State of Louisiana, (ii) has the
power and authority to own its properties and assets and to transact the
business in which it is engaged and presently proposes to engage and (iii) is
duly qualified and is authorized to do business and is in good standing (if
applicable) in each jurisdiction where the conduct of its business requires such
qualification, except for failures to be so qualified which, individually or in
the aggregate, could not reasonably be expected to have a material adverse
effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise), prospects or affairs of the Borrower.
3.02 Power and Authority. The Borrower has the limited liability company
-------------------
power and authority to execute, deliver and perform the terms and provisions of
each of the Loan Documents to which it is party and has taken all necessary
limited liability company action to authorize the execution, delivery and
performance by it of each of such Loan Documents. The Borrower has duly
executed and delivered each of the Loan Documents to which it is party, and each
of such Loan Documents constitutes the legal, valid and binding obligation of
the Borrower enforceable in accordance with its terms, except to the extent that
the enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law).
3.03 No Violation. Neither the execution, delivery nor performance by the
------------
Borrower of the Loan Documents to which it is a party, nor compliance by it with
the terms and provisions thereof, (i) will contravene any provision of any
applicable law, statute, rule or regulation or any applicable order, writ,
injunction or decree of any court or governmental instrumentality, (ii) will
conflict with or result in any breach of any of the terms, covenants, conditions
or provisions of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien (except pursuant
to the Security Documents) upon any of the properties or assets of the Borrower
pursuant to the terms of any indenture, mortgage, deed of trust, credit
agreement or loan agreement, or any other material agreement, contract or
instrument to which the Borrower is a party or by which it or any of its
properties or assets is bound or to which it may be subject or (iii) will
violate any provision of the certificate of formation or operating agreement of
the Borrower.
3.04 Governmental Approvals. No order, consent, approval, license,
----------------------
authorization or validation of, or filing, recording or registration with
(except such as have been obtained or made and excluding any such items which
are not required to be obtained or in effect as of the date the representation
contained in this Section 3.04 is being made or deemed made), or exemption by,
any governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, (i) the execution,
delivery and performance of any Loan Document, (ii) the consummation of the
transactions contemplated by this Agreement and the other Loan
6
<PAGE>
Documents, or (iii) the legality, validity, binding effect or enforceability of
any Loan Document, except where the failure to so obtain would not (x) have a
material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise), prospects or affairs of the
Borrower or (y) adversely affect the Lender or its rights under, or the
legality, validity, binding effect or enforceability of, any Loan Document.
3.05 Financial Statements; Financial Condition; Undisclosed Liabilities;
-------------------------------------------------------------------
Financial Projections.
- ---------------------
(a) The balance sheet of the Borrower and the related statements of
operations and cash flows furnished to the Lender prior to the Funding Date
fairly present the financial condition of the Borrower as of the date of
such financial statements. All such financial statements have been
prepared in accordance with GAAP and practices consistently applied. Since
the date of such financial statements, there has been no material adverse
change in the business, operations, property, assets, liabilities,
condition (financial or otherwise), prospects or affairs of the Borrower.
(b) On and as of the Funding Date, (i) the Borrower has not incurred,
and does not intend to incur, and does not believe that it will incur,
debts beyond its ability to pay such debts as such debts mature and (ii)
the Borrower will have sufficient capital with which to conduct its
business. For purposes of this Section 3.05(b), "debt" means any liability
on a claim, and "claim" means (A) the right to payment, whether or not such
a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (B) the right to an equitable remedy for breach of
performance if such breach gives rise to a payment, whether or not such
right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.
(c) Except as fully disclosed in the financial statements delivered to
the Lender pursuant to or in connection with this Agreement, there are no
liabilities or obligations with respect to the Borrower of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether
or not due) which, either individually or in aggregate, would be material
to the Borrower. The Borrower does not know of any basis for the assertion
against it of any liability or obligation of any nature whatsoever that is
not fully disclosed in the financial statements delivered to the Lender
pursuant to or in connection with this Agreement which, either individually
or in the aggregate, is material to the Borrower.
3.06 Litigation. Except as otherwise disclosed to Lender in writing prior
----------
to the date of this Agreement, there are no actions, suits or proceedings
pending or, to the best knowledge of the Borrower, threatened (i) with respect
to any Loan Document or (ii) that could reasonably be expected to materially and
adversely affect the business, operations,
7
<PAGE>
property, assets, liabilities, condition (financial or otherwise), prospects or
affairs of the Borrower.
3.07 True and Complete Disclosure. All factual information (taken as a
----------------------------
whole) furnished by or on behalf of the Borrower in writing to the Lender for
purposes of or in connection with this Agreement, the other Loan Documents or
any transaction contemplated herein or therein is, and all other such factual
information (taken as a whole) hereafter furnished by or on behalf of the
Borrower in writing to the Lender, will be, true and accurate in all material
respects on the date as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make such information
(taken as a whole) not misleading in any material respect at such time in light
of the circumstances under which such information was provided.
3.08 Tax Returns and Payments. Except as otherwise disclosed to Lender in
------------------------
writing prior to the date of this Agreement, the Borrower has timely filed or
caused to be timely filed, on the due dates thereof or within applicable grace
periods, with the appropriate taxing authority, all U.S. federal, state, city
and other material returns, statements, K-1s, forms and reports for taxes (the
"Returns") required to be filed by or with respect to the income, properties or
- ---------
operations of the Borrower. The Returns accurately reflect in all material
respects all liability for taxes of the Borrower for the periods covered
thereby. The Borrower has paid all material taxes payable by it, other than
taxes which are not delinquent and other than taxes being contested in good
faith and for which adequate reserves have been established in accordance with
generally accepted accounting principles. There is no material action, suit,
proceeding, investigation, audit or claim now pending or, to the best knowledge
of the Borrower, threatened by any taxing authority regarding any taxes relating
to the Borrower. The Borrower has not entered into an agreement or waiver or
been requested to enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of taxes of the Borrower. The
Borrower has not provided, with respect to itself or property held by it, any
consent under Section 341 of the Code.
3.09 The Security Agreement. The Security Agreement executed by Borrower
----------------------
creates in favor of the Lender a legal, valid and enforceable security interest
in all right, title and interest of the Borrower in the Security Agreement
Collateral described therein, and such Security Agreement, upon the filing of
the Financing Statement relating thereto or the appropriate equivalent (which
filings have been made), creates a fully perfected first Lien on, and security
interest in, all right, title and interest of the Borrower in and to all of the
Security Agreement Collateral described therein, subject to no other Liens. The
Borrower has good and valid title to all Security Agreement Collateral described
in the Security Agreement, free and clear of all Liens, other than Liens in
favor of Lender.
3.10 Representations and Warranties in Documents. On the Funding Date,
-------------------------------------------
all material representations and warranties set forth in the Loan Documents will
be true and correct in all material respects at the time as of which such
representations and warranties were made (or deemed made).
8
<PAGE>
3.11 Properties. The Borrower has good, valid and merchantable title to
----------
all material properties owned by it, including, without limitation, the Security
Agreement Collateral, free and clear of all Liens, other than Liens in favor of
Lender.
3.12 Compliance with Statutes, etc.
------------------------------
(a) The Borrower is in compliance with all applicable statutes, laws,
ordinances, codes, rules, regulations and orders of, and all applicable
restrictions imposed by and all applicable Permits issued by, all
governmental bodies, in respect of the conduct of its business and the
ownership of its properties (including applicable statutes, regulations,
orders and restrictions relating to environmental standards and controls)
to the extent required as of the date upon which this representation is
being made or deemed made, except such instances of noncompliance as could
not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise), prospects or affairs of
the Borrower.
(b) There does not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified (i) challenging the legality, validity or
enforceability of any approval or Permit or the legality or validity of the
process pursuant to which such approval or Permit was issued or (ii)
prohibiting or imposing materially adverse conditions upon the consummation
of the transactions contemplated by this Agreement and the other Documents.
3.13 Investment Company Act. The Borrower is not an "investment company"
----------------------
or a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
3.14 Public Utility Holding Company Act. The Borrower is not a "holding
----------------------------------
company" or a "subsidiary company" of a "holding company" or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
SECTION 4. Affirmative Covenants. The Borrower hereby covenants and
---------------------
agrees that on and after the Funding Date and until the Indebtedness has been
paid in full:
4.01 Information Covenants. The Borrower will furnish to the Lender:
---------------------
(a) Quarterly Financial Statements. Within 60 days after the close of
------------------------------
each quarterly accounting period in each fiscal year of the Borrower, the
balance sheet of the Borrower as at the end of such quarterly accounting
period and the related statements of income and retained earnings and
statement of cash flows, in each case for such quarterly accounting period
and for the elapsed portion of the fiscal year ended with the last day of
such quarterly accounting period, in each case setting forth comparative
figures for the corresponding periods in the prior
9
<PAGE>
fiscal year, all of which shall be certified by the Manager of the
Borrower, subject to normal year-end audit adjustments.
(b) Annual Financial Statements. Within 90 days after the close of
---------------------------
each fiscal year of the Borrower, the balance sheet of the Borrower as of
the end of such fiscal year and the related statements of income and
retained earnings and statement of cash flows for such fiscal year setting
forth comparative figures for the preceding fiscal year and certified by
independent certified public accountants reasonably acceptable to the
Lender.
(c) Informational Returns. Promptly after the timely filing thereof,
---------------------
copies of the federal informational returns and K-1s of the Borrower,
including all related schedules, and if any extension is timely filed, a
copy of the extension application.
(d) Audit Reports. Promptly upon receipt thereof, if available, one
-------------
copy of each other report submitted to the Borrower by independent
accountants in connection with any annual, interim or special audit made by
them of the books of the Borrower.
(e) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Section 4.01(a), a certificate of the
Manager of the Borrower to the effect that, to the best of the Manager's
knowledge, no Default or Event of Default has occurred and is continuing
or, if any Default or Event of Default has occurred and is continuing,
specifying the nature and extent thereof.
(f) Notice of Default or Litigation. Promptly after the Manager of
-------------------------------
the Borrower obtains knowledge thereof, notice of (i) the occurrence of any
event which constitutes a Default or an Event of Default and (ii) any
litigation or governmental investigation or proceeding pending (x) against
the Borrower which could materially and adversely affect the business,
operations, property, assets, liabilities, condition (financial or
otherwise), prospects or affairs of the Borrower, (y) with respect to any
material Debt of the Borrower or (z) with respect to any Loan Document or
any transaction contemplated thereby.
(g) Notice of Casualty. Promptly after the Manager of the Borrower
------------------
obtains knowledge thereof, notification of any material fire or other
casualty to or accident involving the assets of Borrower, whether or not
such fire, casualty or accident is covered by insurance.
(h) Other Information. From time to time, such other information or
-----------------
documents (financial or otherwise) with respect to the Borrower as the
Lender may reasonably request.
4.02 Books Records and Inspections. The Borrower will keep proper books
-----------------------------
of record and account in which full, true and correct entries in conformity with
generally accepted accounting principles and all requirements of law shall be
made of all dealings and transactions in relation to its business and
activities. The Borrower will permit
10
<PAGE>
officers and designated representatives of the Lender to visit and inspect,
during regular business hours and under guidance of officers of the Borrower,
any of the properties of the Borrower, and to examine the books of account of
the Borrower and discuss the affairs, finances and accounts of the Borrower
with, and be advised as to the same by, its Manager and independent accountants,
all at such reasonable times and intervals and to such reasonable extent as the
Lender may request.
4.03 Maintenance of Property; Insurance. The Borrower will (i) keep all
----------------------------------
property necessary in its business in good working order and condition (ordinary
wear and tear excepted), (ii) maintain insurance on all its property in at least
such amounts and against at least such risks as is consistent and in accordance
with industry practice, including, without limitation, general liability
insurance and (iii) furnish to the Lender, upon written request, full
information as to the insurance carried.
4.04 Limited Liability Company Existence. The Borrower will do or cause
-----------------------------------
to be done all things necessary to preserve and keep in full force and effect
its existence and its material rights and licenses; provided, however, that
-------- -------
nothing in this Section 4.04 shall prevent (i) the withdrawal by the Borrower of
its qualification as a foreign limited liability company in any jurisdiction
where such withdrawal could not reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise), prospects or affairs of the Borrower or (ii)
the taking of any action respecting any right or license determined by the
members or the Manager of the Borrower to be in the best interests of the
Borrower.
4.05 Compliance with Statutes etc. The Borrower will (i) comply with all
-----------------------------
applicable statutes, laws, ordinances, codes, rules, regulations and orders of,
and all applicable restrictions imposed by and all applicable Permits issued by,
and (ii) obtain all necessary approvals and Permits from, all governmental
bodies in respect of the conduct of its business and the ownership of its
properties, except such instances of noncompliance as could not, individually or
in the aggregate, reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities, condition (financial or
otherwise), prospects or affairs of the Borrower.
4.06 End of Fiscal Years; Fiscal Quarters. The Borrower shall cause (i)
------------------------------------
its fiscal years to end on December 31 and (ii) its fiscal quarters to end on
the last day of each March, June, September and December.
4.07 Performance of Obligations. The Borrower will perform all of its
--------------------------
obligations under the terms of the Amended JVA and the Amended Master Agreement.
4.08 Payment of Taxes. The Borrower will pay and discharge or cause to be
----------------
paid and discharged all material taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits, or upon any material
properties belonging to it, in each case on a timely basis, and all lawful
claims which, if unpaid, might become a Lien or charge upon any properties of
the Borrower; provided that the Borrower shall not be required to pay any such
--------
tax, assessment, charge, levy or claim which is being contested in good faith
and by proper proceedings if the Borrower has maintained
11
<PAGE>
adequate reserves with respect thereto in accordance with generally accepted
accounting principles.
4.09 Further Assurances.
------------------
(a) The Borrower will, at Lender's expense, make, execute, endorse,
acknowledge, file and/or deliver to the Lender from time to time such
confirmatory assignments, financing statements, powers of attorney,
certificates, and other assurances or instruments and take such further
steps relating to the Security Agreement Collateral covered by the Security
Agreement as the Lender may reasonably require pursuant to this Section
4.09. Furthermore, the Borrower shall cause to be delivered to the Lender
such related documents as may be reasonably requested by the Lender to
assure itself that the requirements of this Section 4.09 have been
satisfied.
(b) The Borrower agrees that each action required by Section 4.09(a)
above shall be completed as soon as possible, but in no event later than 30
days after such action is requested to be taken by the Lender.
4.10 Use of Proceeds. All proceeds of the Loan shall be used by the
---------------
Borrower solely to make the capital contribution to the Venture required of
Borrower by Section 3.2(b) of the Amended JVA and Section 3(d)(ii) of the
Amended Master Agreement.
SECTION 5. Negative Covenants. The Borrower covenants and agrees that on
------------------
and after the Funding Date and until the Indebtedness has been paid and
performed in full:
5.01 Liens. The Borrower will not create, incur, assume or suffer to
-----
exist any Lien upon or with respect to any property or assets (real or personal,
tangible or intangible and specifically including the Property) of the Borrower,
whether now owned or hereafter acquired, or sell any such property or assets
subject to an understanding or agreement, contingent or otherwise, to repurchase
such property or assets, or assign any right to receive income or permit the
filing of any financing statement under the UCC or any other similar notice of
Lien under any similar recording or notice statute with respect to such property
or assets.
5.02 Consolidation, Merger, Purchase or Sale of Assets, etc. The Borrower
-------------------------------------------------------
will not wind up, liquidate or dissolve its affairs or enter into any
transaction of merger or consolidation, or convey, sell, lease or otherwise
dispose of (or agree to do any of the foregoing at any future time) all or any
part of its properties or assets, or enter into any sale-leaseback transactions,
or purchase or otherwise acquire (in one or a series of related transactions)
any part of the properties or assets of any Person.
5.03 Debt. The Borrower will not contract, create, incur, assume or
----
suffer to exist any Debt which is secured by the Security Agreement Collateral.
5.04 Advances, Investments and Loans. The Borrower will not, directly or
-------------------------------
indirectly, lend money or credit or make advances to any Person other than the
Venture,
12
<PAGE>
or purchase or acquire any stock, obligations or securities of, or any other
interest in, or make any capital contribution to, any Person other than the
Venture.
5.05 Capital Expenditures. The Borrower will not make any Capital
--------------------
Expenditures.
5.06 Limitation on Modifications. The Borrower will not, without the
---------------------------
prior written consent of the Lender, which consent shall not be unreasonably
withheld, amend, modify or change its certificate of formation or operating
agreement, except such modifications as could not be adverse to the interest of
the Lender in any material respect. The Borrower will not enter into any
settlement or compromise of any lawsuit that (x) adversely affects the interests
of the Borrower or the Lender, or (y) involves the payment by the Borrower of
any amount (not paid or fully covered by a reputable and solvent insurance
Company which has agreed in writing to pay the same) in excess of $100,000.00 in
the aggregate with respect thereto, without the prior written consent of the
Lender.
5.07 Change in Ownership or Management. The ownership interest in the
---------------------------------
Borrower of each of its members shall not change from that in existence on the
Funding Date, except with the prior written consent of the Lender, which consent
shall not be unreasonably withheld.
5.08 Business. The Borrower will not engage (directly or indirectly) in
--------
any business other than through its interest in the Venture.
SECTION 6. Events of Default. Upon the occurrence of any of the following
-----------------
specified events (each an "Event of Default"):
----------------
6.01 Payments. The Borrower shall default, and such default shall
--------
continue unremedied for 5 or more days after its receipt of written notice from
Lender, in the payment when due of any principal or interest on the Loan or the
Note, or any fees or any other amounts owing hereunder or thereunder; or
6.02 Representations, etc. Any material representation, warranty or
---------------------
statement made by or on behalf of the Borrower herein or in any other Loan
Document or in any certificate delivered pursuant hereto or thereto shall prove
to be untrue in any material respect on the date as of which made or deemed
made; or
6.03 Covenants. The Borrower shall default in the due performance or
---------
observance by it of any other term, covenant or agreement contained in this
Agreement or any other Loan Document and such default shall continue unremedied
for a period of 30 days after written notice to the Borrower by the Lender; or
6.04 Bankruptcy, etc. The Borrower shall commence a voluntary case
----------------
concerning itself under Title 11 of the United States Code entitled
"Bankruptcy", as now or hereafter in effect, or any successor thereto (the
"Bankruptcy Code"); or an involuntary case is commenced against the Borrower and
- ----------------
the petition is not controverted within 10 days, or is not dismissed within 60
days, after commencement of the case; or a
13
<PAGE>
custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge
of, all or substantially all of the property of the Borrower; or the Borrower
commences any other proceeding under any reorganization, arrangement, adjustment
of debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction, whether now or hereafter in effect, relating to the
Borrower; or there is commenced against the Borrower any such proceeding which
remains undismissed for a period of 60 days; or the Borrower is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any such
case or proceeding is entered; or the Borrower suffers any appointment of any
custodian or the like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or the Borrower makes a
general assignment for the benefit of creditors; or any action is taken by the
Borrower for the purpose of effecting any of the foregoing; or
6.05 Security Documents. At any time after the execution and delivery
------------------
thereof, any of the Security Documents shall cease to be in full force and
effect, or shall cease to give the Lender the Liens, rights, powers and
privileges purported to be created thereby (including, without limitation, a
perfected security interest in, and Lien on, all of the Security Agreement
Collateral in favor of the Lender), superior to and prior to the rights of all
third Persons, and subject to no other Liens, or the Borrower or Paddlewheels
shall default in the due performance or observance of any term, covenant or
agreement on its part to be performed or observed pursuant to any of the
Security Documents and such default shall continue beyond any grace period
specifically applicable thereto pursuant to the terms of such Security Document;
or
6.06 Judgments. One or more judgments or decrees shall be entered against
---------
the Borrower involving in the aggregate liabilities in excess of $100,000.00
(not fully covered by a reputable and solvent insurance company) and such
judgments and decrees either shall be final and non-appealable or shall not be
vacated, discharged or stayed or bonded pending appeal for any period of 60
consecutive days; or
6.07 Operating Agreement; Dissolution. The operating agreement of the
--------------------------------
Borrower or any material provision thereof shall cease to be in full force and
effect or any party thereto shall deny or disaffirm its obligations thereunder
or shall default in the due performance or observance of any material term,
covenant or agreement on its part to be performed or observed pursuant thereto
or the Borrower shall be liquidated, dissolved or terminated; or
6.08 Attachment. A writ or warrant of attachment, seizure or any similar
----------
process shall be issued by any court against any of the Security Agreement
Collateral, and such writ or warrant of attachment or any similar process is not
released or bonded within 30 days after its entry;
then, and in any such event, and at any time thereafter if any Event of Default
shall then be continuing, the Lender may, by written notice to the Borrower,
take any or all of the following actions (provided that, if an Event of Default
--------
specified in Section 6.04 shall occur, the result which would occur upon the
giving of written notice by the Lender to the Borrower as specified below shall
occur automatically without the giving of any such
14
<PAGE>
notice): (i) declare the principal of and all accrued interest in respect of the
Loan and the Note and all Indebtedness owing hereunder and thereunder to be
immediately due and payable, whereupon the same shall become forthwith due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower; (ii) enforce all of the Liens, security
interests and rights created pursuant to the respective Security Documents; and
(iii) avail itself of any other rights and remedies provided by contract or
applicable law.
SECTION 7. Definitions.
7.01 Defined Terms. As used in this Agreement, the following terms shall
-------------
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
"Advance" shall mean the disbursement of the loan proceeds under the
-------
Loan and all or any portion of such disbursement so long as the same remains
outstanding and unpaid.
"Agreement" shall mean this Loan Agreement, as modified, supplemented,
---------
amended, restated (including any amendment and restatement thereof), extended,
renewed, refinanced or replaced from time to time.
"Amended JVA" shall have the meaning set forth on the first page of
-----------
this Agreement.
"Amended Master Agreement" shall have the meaning set forth on the
------------------------
first page of this Agreement.
"Assignment of Joint Venture Interest" shall mean that certain Amended
------------------------------------
and Restated Assignment of Joint Venture Interest by and among each Lender,
Paddlewheels and Borrower dated September 21, 1998.
"Bankruptcy Code" shall have the meaning provided in Section 6.04.
---------------
"Borrower" shall have the meaning provided in the first paragraph of
--------
this Agreement.
"Business Day" shall mean any day except Saturday, Sunday and any day
------------
which shall be in New Orleans, Louisiana or Dallas, Texas a legal holiday or a
day on which banking institutions are authorized or required by law or other
government action to close.
"Capital Expenditures" shall mean, with respect to any Person, all
--------------------
expenditures by such Person which should be capitalized in accordance with
generally accepted accounting principles, including all such expenditures with
respect to fixed or capital assets (including, without limitation, expenditures
for maintenance and repairs which should be capitalized in accordance with
generally accepted accounting principles) and the amount of capitalized lease
obligations incurred by such Person.
15
<PAGE>
"Code" shall mean the Internal Revenue Code of 1986, as amended from
----
time to time, and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code as in effect at the date of this
Agreement and to any subsequent provision of the Code amendatory thereof,
supplemental thereto or substituted therefor.
"Commencement Date" shall mean the date upon which the Project opens
-----------------
to the public and public gaming commences.
"Contingent Obligation" shall mean, as to any Person, any obligation,
---------------------
contingent or otherwise, of such Person directly or indirectly guaranteeing
(including, without limitation, as a result of such Person being a general
partner of the other Person, unless the underlying obligation is expressly made
non-recourse as to such general partner) any Debt or other obligation of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep well, to purchase assets, goods, securities or services, to
take-or-pay or to maintain financial statement conditions or otherwise) or (ii)
entered into for the purpose of assuring in any other manner the obligee of such
Debt or other obligation of the payment thereof or to protect the obligee
against loss in respect thereof (in whole or in part), provided that the term
--------
Contingent Obligation shall not include endorsements for collection or deposit
in the ordinary course of business.
"Debt" shall mean, as to any Person, without duplication, (i) all
----
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such person as lessee which are capitalized in
accordance with generally accepted accounting principles, (v) all obligations of
such Person to reimburse or repay any bank or other Person in respect of amounts
paid or available to be drawn under a letter of credit, banker's acceptance,
surety, performance or appeal bond or any similar instrument (each such
obligation to be valued at the face amount of such instrument), (vii) all Debt
of others secured by a Lien on any asset of such Person and (vii) all Contingent
Obligations of such Person.
"Default" shall mean any event, act or condition which with notice or
-------
lapse of time, or both, would constitute an Event of Default.
"Distribution" with respect to any Person shall mean that such Person
------------
has declared or paid a dividend or returned any equity capital to its
stockholders, partners or members or authorized or made any other distribution,
payment or delivery of property (other than common stock or partnership or
membership interests of such Person) or cash to its stockholders, partners or
members as such, or redeemed, retired, purchased or otherwise acquired, directly
or indirectly, for a consideration, any shares of any class of its capital stock
or any partnership or membership interests outstanding on or after the
16
<PAGE>
Funding Date (or any options or warrants issued by such Person with respect to
its capital stock or any partnership or membership interests), or set aside any
funds for any of the foregoing purposes.
"Dollars" and the sign "$" shall each mean freely transferable lawful
------- -
money of the United States.
"Event of Default" shall have the meaning provided in Section 6.
----------------
"Financing Statement" shall have the meaning provided in Section
-------------------
2.03(i).
"Funding Date" shall mean the date that the Venture receives initial
------------
funding under any Loan Commitment.
"GAAP" shall have the meaning provided in Section 8.06(a).
----
"Guaranty" shall have the meaning provided in Section 2.04.
--------
"Indebtedness" shall mean any and all payment and/or performance
------------
obligations, amounts and/or liabilities owing from time to time by the Borrower
to the Lender pursuant to the terms of this Agreement, the Note and the other
Loan Documents.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
----
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" shall have the meaning provided in Section 1.01.
----
"Loan Commitments" shall have the meaning ascribed to such term in the
----------------
Amended JVA.
"Loan Documents" shall mean this Agreement and, after the execution
--------------
and delivery thereof pursuant to the terms of this Agreement, the Note and each
Security Document.
"Manager" shall mean the manager of the Borrower as set forth in the
-------
operating agreement of the Borrower, as such manager may be replaced in
accordance with the terms of such operating agreement.
"Maturity Date" shall mean the earlier of (i) the tenth (10th)
-------------
anniversary of the Commencement Date and (ii) the date of Borrower's receipt of
payments pursuant to Section 10.7 of the Amended JVA.
"Note" shall have the meaning set forth in Section 1.02 of this
----
Agreement.
17
<PAGE>
"Paddlewheels" means New Orleans Paddlewheels, Inc., a Louisiana
------------
corporation.
"Permits" shall mean any and all actions, approvals, certificates,
-------
consents, waivers, exemptions, variances, franchises, orders, permits,
authorizations, rights or licenses of or from any governmental authority or
agency.
"Person" shall mean any individual, partnership, limited liability
------
company, joint venture, firm, corporation, association, trust or other
enterprise or any government or political subdivision or any agency, department
or instrumentality thereof.
"Project" shall have the meaning ascribed to such term in the amended
-------
JVA.
"Returns" shall have the meaning provided in Section 3.08.
-------
"Security Agreement" shall have the meaning provided in Section 2.04.
------------------
"Security Agreement Collateral" shall mean all "Collateral" as defined
-----------------------------
in the Security Agreement.
"Security Documents" shall mean the Security Agreement, the Financing
------------------
Statement and the Guaranty.
"UCC" shall mean the Uniform Commercial Code as from time to time in
---
effect in the relevant jurisdiction.
"United States" and "U.S." shall each mean the United States of
------------- ----
America.
"Venture" shall have the meaning set forth on the first page of this
-------
Agreement.
SECTION 8. Miscellaneous.
-------------
8.01 Payment of Expenses, etc. The Borrower shall pay all reasonable out-
-------------------------
of-pocket costs and expenses of the Lender (including, without limitation, the
reasonable fees and disbursements of the Lender's counsel and all appraisal
fees, inspection fees, consultants' fees, documentary and recording taxes, and
recording, filing and other expenses) in connection with the enforcement of this
Agreement and the other Loan Documents and the documents and instruments
referred to herein and therein.
8.02 Right of Setoff. In addition to any rights now or hereafter granted
---------------
under applicable law or otherwise, and not by way of limitation of any such
rights, upon the occurrence of an Event of Default, the Lender is hereby
authorized, at any time or from time to time, without presentment, demand,
protest or other notice of any kind to the Borrower or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other Debt at any time
held or owing by the Lender (including, without limitation, by branches
18
<PAGE>
and agencies of the Lender wherever located) to or for the credit or the account
of the Borrower against and on account of the Indebtedness and liabilities of
the Borrower to the Lender under this Agreement or under any of the other Loan
Documents, irrespective of whether or not the Lender shall have made any demand
hereunder and although said Indebtedness shall be contingent or unmatured.
8.03 Notices. Except as otherwise expressly provided herein, all notices
-------
and other communications provided for hereunder shall be in writing (including
telegraphic, telex, telecopier or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered to the Borrower or the Lender, as
applicable, at the address specified opposite such party's signature below or at
such other address as shall be designated by either party hereto in a written
notice to the other party hereto. All such notices and communications shall,
when mailed, telegraphed, telexed, telecopied or cabled or sent by overnight
courier, be effective when deposited in the mails, delivered to the telegraph
company, cable company or overnight courier, as the case may be, or sent by
telex or telecopier.
8.04 Benefit of Agreement. This Agreement shall be binding upon and inure
--------------------
to the benefit of and be enforceable by the respective successors and assigns of
the parties hereto; provided, however, the Borrower may not assign or transfer
-------- -------
any of its rights, obligations or interest hereunder without the prior written
consent of the Lender; provided that Borrower may assign or transfer, without
--------
the consent of Lender, all of its rights, obligations and interest under this
Agreement to any affiliate of Borrower to which Borrower transfers all of the
Security Agreement Collateral so long as the Amended JVA is amended to admit
such transferee into the Venture and the transferee executes new loan documents
in substantially the form of the Loan Documents with such changes thereto as may
be necessary to reflect that the transferee is the borrower and debtor
thereunder and otherwise in form and substance satisfactory to the Lender. This
Agreement is for the benefit of the Lender and for such other Person or Persons
as may from time to time become or be the holders of any of the Indebtedness,
and this Agreement shall be transferable and negotiable with the same force and
effect and to the same extent as the Indebtedness may be transferrable, it being
understood that, upon the transfer or assignment by the Lender of any of the
Indebtedness, the legal holder of such Indebtedness shall have all of the rights
granted to the Lender under this Agreement. The Borrower hereby recognizes and
agrees that the Lender may, from time to time, one or more times, transfer all
or any portion of the Indebtedness to one or more third Persons. Such transfers
may include, but are not limited to, sales of participation interests in such
Indebtedness in favor of one or more third party lenders. The Borrower
specifically agrees and consents to all such transfers and assignments, and the
Borrower further waives any subsequent notice of and right to consent to any
such transfers and assignments as may be provided under applicable law. The
Borrower additionally agrees that the purchaser of a participation interest in
the Indebtedness will be considered as the absolute owner of a percentage
interest of such Indebtedness and that such a purchaser will have all of the
rights granted to the purchaser under any participation agreement governing the
sale of such participation interest.
19
<PAGE>
8.05 No Waiver; Remedies Cumulative. No failure or delay on the part of
------------------------------
the Lender or any holder of any of the Indebtedness in exercising any right,
power or privilege hereunder or under any other Loan Document, and no course of
dealing between any Borrower and the Lender or the holder of any of the
Indebtedness, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Loan
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights, powers and
remedies herein or in any other Loan Document expressly provided are cumulative
and not exclusive of any rights, powers or remedies which the Lender or the
holder of any of the Indebtedness would otherwise have. No notice to or demand
on the Borrower in any case shall entitle the Borrower to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of the Lender or the holder of any of the Indebtedness to any other or
further action in any circumstances without notice or demand.
8.06 Calculations; Computations.
--------------------------
(a) The financial statements to be furnished to the Lender pursuant
hereto shall be made and prepared in accordance with generally accepted
accounting principles in the United States consistently applied throughout
the periods involved (except as set forth in the notes thereto or as
otherwise disclosed in writing by the Borrower to the Lender)(with the
foregoing generally accepted accounting principles, subject to the
preceding provisos, herein called "GAAP").
-----
(b) All computations of interest and fees hereunder shall be made on
the basis of a year of 360 days for the actual number of days (including
the first day but excluding the last day) occurring in the period for which
such interest or fees are payable.
8.07 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY
TRIAL.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF LOUISIANA. ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF LOUISIANA OR OF THE
UNITED STATES FOR THE EASTERN DISTRICT OF LOUISIANA, AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE BORROWER HEREBY IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF THE PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. THE BORROWER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS
IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
20
<PAGE>
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT ITS
ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME
EFFECTIVE 15 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE LENDER UNDER THIS AGREEMENT OR THE HOLDER OF ANY OF THE
INDEBTEDNESS TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
(b) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER
AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED
TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE,
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 8.07.
8.08 Headings Descriptive. The headings of the several sections and
--------------------
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
8.09 Amendment or Waiver; etc. Neither this Agreement nor any other Loan
-------------------------
Document nor any terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is in writing
signed by each of the Borrower and the Lender.
8.10 Survival. All indemnities set forth herein including, without
--------
limitation, Section 8.01, shall survive the execution, delivery and termination
of this Agreement and the Note and the making and repayment of the Loan.
8.11 Invalidity. In the event that any one or more of the provisions
----------
contained in this Agreement or any of the other Loan Documents shall, for any
reason, be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or any of the other Loan Documents.
8.12 Renewal, Extension or Rearrangement. All provisions of this
-----------------------------------
Agreement relating to the Note shall apply with equal force and effect to each
and all promissory notes or security instruments hereinafter executed which in
whole or in part represent a renewal, extension for any period, increase or
rearrangement of all or any part of any or all of the Note.
21
<PAGE>
8.13 Relationship Between the Parties. The relationship between the
--------------------------------
Lender and the Borrower under this Agreement and the other Loan Documents shall
be solely that of lender and borrower, and such relationship shall not, under
any circumstances whatsoever, be construed to be a joint venture or partnership.
8.14 Entire Agreement. This Agreement and the other Loan Documents set
----------------
forth the entire agreement of the Lender and the Borrower with respect to the
Loan, and supersede all prior written or oral understandings with respect
thereto, including, without limitation, those set forth in the Amended Master
Agreement.
8.15 Conflict. In the event of an express conflict between the terms of
--------
this Agreement and the terms of any other Loan Document, the terms of this
Agreement shall prevail; provided, however, in the event that any other Loan
-------- -------
Document imposes requirements or limitations which are not in direct conflict
with, i.e., opposite, the requirements or limitations contained in this
Agreement, such requirements and limitations of such other Loan Document shall
be supplemental, and in addition to, the requirements and limitations set forth
in this Agreement.
8.16 Counterparts. This Agreement may be executed in two or more
------------
counterparts, and it shall not be necessary that the signatures of all parties
hereto be contained on any one counterpart hereof. Each counterpart shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute and deliver this Agreement as of the date
first above written.
Address for Borrower: Address for Lender:
610 South Peters, Suite 202 Two Galleria Tower, Suite 2200
New Orleans, Louisiana 71030 13455 Noel Road, LB 48
Dallas, Texas 75240
Telephone:_____________________ Telephone: (972) 392-7777
Fax: (504) 587-1697 Fax: (972) 386-7411
Attn: Legal Department Attn: Legal Department
22
<PAGE>
Borrower:
--------
SHREVEPORT PADDLEWHEELS, L.L.C.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Lender:
------
HWCC-LOUISIANA, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
23
<PAGE>
EXHIBIT 10.20
PROMISSORY NOTE
$1,000,000.00 New Orleans, Louisiana
August 10, 1999
FOR VALUE RECEIVED, the undersigned, Shreveport Paddlewheels, L.L.C., a
Louisiana limited liability company (the "Borrower"), hereby promises to pay to
--------
the order of HWCC-Louisiana, Inc ("Lender"), at , on the Maturity
------
Date, as defined in the Loan Agreement dated as of even date herewith (as
amended, restated, supplemented or otherwise modified from time to time, the
"Loan Agreement"), between the Borrower and Lender, the principal sum of One
- ---------------
Million and No/100 Dollars ($1,000,000.00), in lawful money of the United States
of America in same day funds, and to pay interest from the Commencement Date (as
defined in the Loan Agreement) on such principal amount from time to time
outstanding, in like funds, at said office, at a rate or rates per annum and
payable on such dates as set forth in the Loan Agreement.
The Borrower promises to pay interest, on demand, on any overdue principal
and, to the extent permitted by law, overdue interest from their due dates at a
rate or rates determined as set forth in the Loan Agreement. If the Borrower
fails to make any payment under this promissory note in full within five (5)
days of when due, Borrower shall pay to Lender a late payment fee in an amount
equal to ten percent (10%) of the delinquent amount due.
The Borrower hereby waives diligence, presentment, demand, protest, and
notice of any kind whatsoever. The nonexercise by the holder of any of its
rights hereunder in any particular instance shall not constitute a waiver
thereof in that or any subsequent instance.
This promissory note is the Note referred to in the Loan Agreement which,
among other things, contains provisions for the acceleration of the maturity
hereof upon the happening of certain events, for optional prepayment of the
principal hereof prior to the maturity thereof, and for the amendment or waiver
of certain provisions of the Loan Agreement, all upon the terms and conditions
therein specified. This promissory note and the borrowings evidenced hereby are
entitled to the benefits of the Security Documents (as defined in the Loan
Agreement). THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF LOUISIANA AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.
SHREVEPORT PADDLEWHEELS, L.L.C.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
<PAGE>
EXHIBIT 10.21
SECURITY AGREEMENT
------------------
THIS SECURITY AGREEMENT (this "Agreement") is entered into on the 10th
---------
day of August, 1999 by Shreveport Paddlewheels, L.L.C. (herein called "Debtor"),
------
in favor of HWCC-LOUISIANA, INC. (herein called "Secured Party").
-------------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Debtor and Secured Party are parties to a Loan Agreement
dated of even date herewith (herein called the "Loan Agreement"); and
--------------
WHEREAS, pursuant to the Loan Agreement, Secured Party has agreed to
extend credit to Debtor; and
WHEREAS, it is a condition precedent to such extension of credit by
Secured Party pursuant to the Loan Agreement that, among other things, Debtor
shall have executed and delivered to Secured Party a security agreement granting
to Secured Party a security interest in the Collateral as defined herein;
NOW, THEREFORE, in consideration of the premises and in order to
induce Secured Party to extend such credit under the Loan Agreement, Debtor
hereby agrees with Secured Party as follows:
ARTICLE I
DEFINITIONS AND REFERENCES
--------------------------
Section 1.1 General Definitions. As used herein, the terms
-------------------
"Agreement", "Debtor", "Secured Party", and "Loan Agreement" shall have the
meanings indicated above, and the following terms shall have the following
meanings:
"Amended JVA" means that certain Third Amended and Restated Joint
-----------
Venture Agreement of Hollywood Casino Shreveport (formerly known as the "Queen
of New Orleans at the Hilton Joint Venture" and "QNOV") dated as of July 21,
1999 by and among HCS I, Inc., HCS II, Inc. and Debtor.
"Assignment of Joint Venture Interest" shall mean that certain Amended
-------------------------------------
and Restated Assignment of Joint Venture Interest by and among Secured Party,
Sodak Louisiana, L.L.C., Paddlewheels and Debtor dated September 21, 1998.
"Code" means Chapter 9 of the Louisiana Commercial Laws, La. R.S. (S)
----
10:9-101 et seq.
-- ---
"Collateral" means all property of whatever type, in which Secured
----------
Party at any time has a security interest pursuant to Section 2.1.
"Event of Default" shall mean a "Default" or "Event of Default" under
----------------
the Loan Agreement.
"Indebtedness" means all present and future indebtedness, obligations
------------
and liabilities of whatever type which are or shall be secured pursuant to
Section 2.2.
"Other Liable Party" means any Person, other than Debtor, who may now
------------------
or may at any time hereafter be primarily or secondarily liable for any of the
Indebtedness or who may now or may at any
<PAGE>
time hereafter have granted to Secured Party a security interest or lien upon
any property as security for the Indebtedness, including, without limitation,
Paddlewheels.
"Paddlewheels" means New Orleans Paddlewheels, Inc., a Louisiana
------------
corporation.
"Person" means an individual, corporation, limited liability company,
------
partnership, limited liability partnership limited partnership, partnership in
commendam, association, joint stock company, trust, unincorporated organization
or joint venture, or a court or governmental unit or any agency or subdivision
thereof, or any other legally recognizable entity.
"Related Person" means Debtor, each subsidiary and affiliate of Debtor
--------------
and each Other Liable Party.
"Venture" means Hollywood Casino Shreveport, formerly known as Queen
-------
of New Orleans at the Hilton Joint Venture and QNOV, a Louisiana general
partnership.
Section 1. (a) References. Reference is hereby made to the Loan
----------
Agreement for a statement of the terms thereof. All capitalized terms used in
this Agreement which are defined herein shall have the meanings as set forth
herein and all capitalized terms used in this Agreement which are defined in the
Loan Agreement and not otherwise defined herein shall have the same meanings
herein as set forth therein. All uncapitalized terms used in this Agreement
which are defined in Chapter 9 of the Code and not otherwise defined herein or
in the Loan Agreement shall have the same meanings herein as set forth therein,
except where the context otherwise requires.
Section 1.2 Exhibits and Schedules. All exhibits and schedules
----------------------
attached to this Agreement are a part hereof for all purposes.
Section 1.3 Amendment of Defined Instruments. Unless the context
--------------------------------
otherwise requires or unless otherwise provided herein, references in this
Agreement to a particular agreement, instrument or document (including, but not
limited to, references in Section 1.1 or 2.1) also refer to and include all
renewals, extensions, amendments, modifications, supplements or restatements of
any such agreement, instrument or document, provided that nothing contained in
this Section shall be construed to authorize any Person to execute or enter into
any such renewal, extension, amendment, modification, supplement or restatement.
Section 1.4 References and Titles. All references in this Agreement
---------------------
to Exhibits, Articles, Sections, subsections, and other subdivisions refer to
the Exhibits, Articles, Sections, subsections and other subdivisions of this
Agreement unless expressly provided otherwise. Titles appearing at the
beginning of any subdivision are for convenience only and do not constitute any
part of any such subdivision and shall be disregarded in construing the language
contained in this Agreement. The words "this Agreement", "herein", "hereof",
"hereby", "hereunder" and words of similar import refer to this Agreement as a
whole and not to any particular subdivision unless expressly so limited. The
phrases "this Section" and "this subsection" and similar phrases refer only to
the Sections or subsections hereof in which the phrase occurs. The word "or" is
not exclusive. Pronouns in masculine, feminine and neuter gender shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa unless the context otherwise
requires.
2
<PAGE>
ARTICLE II
SECURITY INTEREST
-----------------
Section 2.1 Grant of Security Interest. As collateral security for
--------------------------
all of the Indebtedness, Debtor hereby pledges and assigns to Secured Party and
grants to Secured Party a continuing security interest in all of the following:
(a) Interest in Venture, Amended JVA and Assignment of Joint Venture
----------------------------------------------------------------
Interest. All of the Debtor's present and future right, title and interest (i)
- --------
in and to the Venture and under the Amended JVA, including, without limitation,
the right of Debtor to receive 10% of Net Realized Value (as defined in Section
10.5 of the Amended JVA) pursuant to Section 10.5 of the Amended JVA, and (ii)
under the Assignment of Joint Venture Interest, including, without limitation,
the right of Debtor to receive 1% of Complex Net Revenues (as defined in Section
1.1 of the Assignment of Joint Venture Interest) from the Venture pursuant to
Section 1.1 of the Assignment of Joint Venture Interest.
(b) Related Collateral and Proceeds. All accessions to, all payments
-------------------------------
of any type in lieu of or in respect of, and all documents and general
intangibles covering or relating to, any or all of the foregoing; all proceeds
of any and all of the foregoing Collateral and, to the extent not otherwise
included, all payments under any indemnity, warranty or guaranty by reason of
loss to or otherwise with respect to any of the foregoing Collateral.
In each case, the foregoing shall be covered by this Agreement,
whether Debtor's ownership or other rights therein are presently held or
hereafter acquired and howsoever Debtor's interests therein may arise or appear
(whether by ownership, security interest, claim or otherwise).
Debtor acknowledges and agrees that to the extent that Secured Party
makes advances to Debtor to enable Debtor to acquire rights in or use of any of
the Collateral described in this Section 2.1, the security interest herein
granted in such Collateral by Debtor in favor of Secured Party shall constitute
a purchase money security interest within the meaning of the Code.
Section 2.2 Indebtedness Secured. The security interest created
--------------------
hereby in the Collateral constitutes continuing collateral security for all of
the following obligations, indebtedness and liabilities, whether now existing or
hereafter incurred:
(a) Indebtedness. The Indebtedness, including, without limitation,
------------
the payment by Debtor, as and when due and payable, of all amounts from time to
time owing by Debtor under or in respect of the Loan Agreement, the Note, or any
of the other Loan Documents.
(b) Amounts Due Under This Agreement. The payment by Debtor, as and
--------------------------------
when due and payable, of all amounts from time to time owing by Debtor under or
with respect to this Agreement.
(c) Performance. The due performance and observance by Debtor of all
-----------
of its other obligations and liabilities from time to time existing under or in
respect of, this Agreement, the Loan Agreement, the Note or any of the other
Loan Documents or any other agreement or document evidencing any Indebtedness of
Debtor to Secured Party which relates to, or was executed in connection with,
the funding of the Venture.
(d) Renewals. All renewals, extensions, amendments, modifications,
--------
supplements, or restatements of or substitutions for any of the foregoing.
3
<PAGE>
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
Section 3.1 Representations and Warranties. Debtor represents and
------------------------------
warrants as follows:
(a) Ownership and Liens. Debtor has good and marketable title to the
-------------------
Collateral free and clear of all liens, security interests, encumbrances or
adverse claims, except for the security interest created by this Agreement. No
dispute, right of setoff, counterclaim or defense exists with respect to all or
any part of the Collateral. No effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on
file in any recording office except such as may have been filed in favor of
Secured Party relating to this Agreement and there are no effective pledges or
collateral assignments affecting all or any part of the Collateral except in
favor of Secured Party.
(b) No Conflicts or Consents. Neither the ownership nor the intended
------------------------
use of the Collateral by Debtor, nor the grant of the security interest by
Debtor to Secured Party herein, nor the exercise by Secured Party of its rights
or remedies hereunder, will (i) conflict with any provision of (a) any domestic
or foreign law, statute, rule or regulation, (b) the articles of organization or
operating agreement of Debtor, or (c) any agreement, judgment, license, order or
permit applicable to or binding upon Debtor, or (ii) result in or require the
creation of any lien, charge or encumbrance upon any assets or properties of
Debtor except as expressly contemplated in the Loan Agreement or the other Loan
Documents. Except as expressly contemplated in the Loan Agreement or the other
Loan Documents, no consent, approval, authorization or order of, and no notice
to or filing with any court, governmental authority or third party is required
in connection with the grant by Debtor of the security interest herein, or the
exercise by Secured Party of its rights and remedies hereunder.
(c) Security Interest. Debtor has and will have at all times full
-----------------
right, power and authority to grant a security interest in the Collateral to
Secured Party in the manner provided herein, free and clear of any lien,
security interest or other charge or encumbrance. This Agreement creates a
valid and binding security interest in favor of Secured Party in the Collateral
securing the Indebtedness. The taking possession by Secured Party of all
instruments and cash constituting Collateral from time to time and the filing of
the financing statements delivered concurrently herewith by Debtor to Secured
Party will perfect, and establish the first priority of Secured Party's security
interest hereunder in the Collateral securing the Indebtedness. No further or
subsequent filing, recording, registration, other public notice or other action
is necessary or desirable to perfect or otherwise continue, preserve or protect
such security interest except for continuation statements or filings as
contemplated in Section 3.3(c).
(d) Location of Debtor and Records. Debtor's chief executive office
------------------------------
and principal place of business and the office where the records concerning the
Collateral are kept is located at its address set forth in Section 5.1.
(e) Tax Identification Number. Debtor's federal tax identification
-------------------------
number is 72-1402232.
Section 3.2 Affirmative Covenants. Unless Secured Party shall
---------------------
otherwise consent in writing, Debtor will at all times comply with the covenants
contained in this Section 3.2 from the date hereof and so long as any part of
the Indebtedness is outstanding or Secured Party otherwise is obligated to loan
funds to Debtor:
(a) Ownership and Liens. Debtor will maintain good and marketable
-------------------
title to all Collateral free and clear of all liens, security interests,
encumbrances or adverse claims, except for the security interest created by this
Agreement. Debtor will not permit any dispute, right of setoff, counterclaim or
defense to exist with respect to all or any part of the Collateral. Debtor will
cause to be
4
<PAGE>
terminated any financing statement or other security instrument with respect to
the Collateral, except such as may exist or as may have been filed in favor of
Secured Party. Debtor will defend Secured Party's right, title and special
property and security interest in and to the Collateral against the claims of
any Person.
(b) Further Assurances. Debtor will, at its expense and at any time
------------------
and from time to time, promptly execute and deliver all further instruments and
documents and take all further action that may be necessary or desirable or that
Secured Party may request in order (i) to perfect and protect the security
interest created or purported to be created hereby and the first priority of
such security interest; (ii) to enable Secured Party to exercise and enforce its
rights and remedies hereunder in respect of the Collateral; or (iii) to
otherwise effect the purposes of this Agreement, including, without limitation:
(A) executing and filing such financing or continuation statements, other
instruments, or amendments thereto, as may be necessary or desirable or that
Secured Party may request in order to perfect and preserve the security interest
created or purported to be created hereby; and (B) furnishing to Secured Party
from time to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral as
Secured Party may reasonably request, all in reasonable detail.
(c) Inspection of Records Relating to Collateral. Debtor will keep
--------------------------------------------
adequate records concerning the Collateral and will permit Secured Party and all
representatives appointed by Secured Party, including independent accountants,
agents, attorneys, appraisers and any other persons, to inspect the books and
records of or relating to the Collateral at any time during normal business
hours, and to make photocopies and photographs thereof, and to write down and
record any information as such representatives shall obtain.
(d) Information. Debtor will furnish to Secured Party any information
-----------
which Secured Party may from time to time request concerning any covenant,
provision or representation contained herein or any other matter in connection
with the Collateral or Debtor's business, properties, or financial condition.
(e) Payment of Taxes, etc. Debtor (i) will timely pay all property
---------------------
and other taxes, assessments and governmental charges or levies imposed upon the
Collateral or any part thereof; (ii) will timely pay all lawful claims which, if
unpaid, might become a lien or charge upon the Collateral or any part thereof;
and (iii) will maintain appropriate accruals and reserves for all such
liabilities in a timely fashion in accordance with generally accepted accounting
principles. Debtor may, however, delay paying or discharging any such taxes,
assessments, charges, claims or liabilities so long as the validity thereof is
contested in good faith by proper proceedings and it has set aside on its books
adequate reserves therefor.
(f) Performance of Contracts. Debtor will duly perform or cause to be
------------------------
performed all of its obligations, if any, to be performed under or with respect
to the Amended JVA.
Section 3.3 Negative Covenants. Unless Secured Party shall otherwise
------------------
consent in writing, Debtor will at all times comply with the covenants contained
in this Section 3.3 from the date hereof and so long as any part of the
Indebtedness is outstanding or Secured Party is obligated to advance funds to
Debtor in accordance with the Loan Agreement:
(a) Transfer or Encumbrance. Debtor will not sell, assign (by
-----------------------
operation of law or otherwise), transfer, exchange, or otherwise dispose of any
of the Collateral, nor will Debtor grant a lien or security interest in or
execute, file or record any financing statement or other security instrument
with respect to the Collateral, nor will Debtor deliver actual or constructive
possession of the Collateral to any other Person, other than liens, security
interests or financing statements in favor of Secured Party; provided, however,
-------- -------
Debtor shall have the right, without the consent of Secured Party, to transfer
all of the Collateral to an affiliate of Debtor so long as (i) Debtor also
assigns to such transferee all of Debtor's rights and obligations under the Loan
Agreement, (ii) the Amended JVA is amended to admit the transferee into the
Venture, (iii) the interest acquired by Debtor pursuant to the Assignment of
Joint Venture Interest is assigned by Debtor to the transferee, and (iv) the
transferee executes and delivers a new loan agreement, note, security agreement
and financing statement in substantially the forms of the Loan Documents to
which Debtor is a party, with such changes thereto as may be necessary to
reflect that the transferee is the
5
<PAGE>
borrower and debtor thereunder and otherwise in form and substance reasonably
satisfactory to Secured Party.
(b) Impairment of Security Interest. Debtor will not take or fail to
-------------------------------
take any action which would in any manner impair the value or enforceability of
Secured Party's security interest in any Collateral.
(c) Financing Statement Filings. Debtor recognizes that financing
---------------------------
statements pertaining to the Collateral have been or may be filed where Debtor
maintains any Collateral, has its records concerning any Collateral or has its
chief executive office or principal place of business. Without limitation of
any other covenant herein, Debtor will not cause or permit any change to be made
in its name, identity, corporate structure or federal tax identification number,
or any change to be made to a jurisdiction other than as represented in Section
3.1(d) hereof in (i) the location of any records concerning any Collateral or
(ii) the location of its chief executive office or principal place of business.
ARTICLE IV
REMEDIES, POWERS AND AUTHORIZATIONS
-----------------------------------
Section 4.1 Provisions Concerning the Collateral.
(a) Additional Financing Statement Filings. Debtor hereby authorizes
--------------------------------------
Secured Party to file, without the signature of Debtor where permitted by law,
one or more financing or continuation statements, and amendments thereto,
relating to the Collateral. Debtor further agrees that a carbon, photographic
or other reproduction of this Security Agreement or any financing statement
describing any Collateral is sufficient as a financing statement and may be
filed in any jurisdiction Secured Party may deem appropriate.
(b) Power of Attorney. Debtor hereby irrevocably appoints Secured
-----------------
Party as Debtor's attorney-in-fact and proxy, coupled with an interest, with
full authority in the place and stead of Debtor and in the name of Debtor or
otherwise, from time to time in Secured Party's discretion, to take any action
and to execute any instrument which Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement including, without
limitation: (i) to ask, demand, collect, sue for, recover, compound, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral; (ii) to receive, indorse and collect any
drafts or other instruments, documents and chattel paper in connection with
clause (i) above; and (iii) to file any claims or take any action or institute
any proceedings which Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral.
(c) Performance by Secured Party. If Debtor fails to perform any
----------------------------
agreement or obligation contained herein, Secured Party may itself perform, or
cause performance of, such agreement or obligation, and the expenses of Secured
Party incurred in connection therewith shall be payable by Debtor under Section
4.6; provided Secured Party shall have no obligation to do any of the foregoing.
--------
(d) Collection Rights. Secured Party shall have the right at any
-----------------
time, upon the occurrence and during the continuance of an Event of Default, to
notify any or all account debtors and obligors under the Collateral, including,
without limitations the Venture and its present and future partners, of the
security interest thereon in favor of Secured Party and to direct such account
debtors and obligors to make payment of all amounts due or to become due to
Debtor thereunder directly to Secured Party and, upon such notification and at
the expense of Debtor and to the extent permitted by law, to enforce collection
of any such Collateral and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as Debtor may have done.
After Debtor receives notice that Secured Party has given any notice referred to
above in this subsection, (i) all amounts and proceeds (including
6
<PAGE>
instruments and writings) received by Debtor in respect of such Collateral shall
be received in trust for the benefit of Secured Party hereunder, shall be
segregated from other funds of Debtor and shall be forthwith paid over to
Secured Party in the same form as so received (with any necessary endorsement)
to be held as cash collateral and (A) applied as a payment on the Indebtedness
so long as no Event of Default shall have occurred and be continuing or (B) if
any Event of Default shall have occurred and be continuing, applied as specified
in Section 4.4, and (ii) Debtor will not adjust, settle or compromise the amount
or payment of any such Collateral or release wholly or partly any account debtor
or obligor thereof or allow any credit or discount thereon.
Section 4.2 Event of Default Remedies. If an Event of Default shall
-------------------------
have occurred and be continuing, Secured Party may from time to time in its
discretion, without limitation and without notice except as expressly provided
below or by non-waivable, applicable law:
(a) Exercise in respect of the Collateral, in addition to other rights
and remedies provided for herein, under the other Loan Documents or the Loan
Agreement or otherwise available to it, all the rights and remedies of a secured
party on default under the Code (whether or not the Code applies to the affected
Collateral) and other applicable law;
(b) Reduce its claim to judgment, execution, foreclose or otherwise
enforce, in whole or in part, the security interest created hereby by any
available judicial procedure;
(c) Dispose of, at its office, on the premises of Debtor or elsewhere,
all or any part of the Collateral, as a unit or in parcels, by public or private
proceedings, and by way of one or more contracts (it being agreed that the sale
of any part of the Collateral shall not exhaust Secured Party's power of sale,
but sales may be made from time to time, and at any time, until all of the
Collateral has been sold or until the Indebtedness have been paid and performed
in full), and at any such sale it shall not be necessary to exhibit any of the
Collateral;
(d) Buy the Collateral, or any part thereof, at any public sale;
(e) Buy the Collateral, or any part thereof, at any private sale if
the Collateral is of a type customarily sold in a recognized market or is of a
type which is the subject of widely distributed standard price quotations;
(f) Apply by appropriate judicial proceedings for appointment of a
receiver or keeper for the Collateral, or any part thereof, and Debtor hereby
consents to any such appointment; and
(g) At its discretion, retain the Collateral in satisfaction of the
Indebtedness whenever the circumstances are such that Secured Party is entitled
to do so under the Code or otherwise.
Debtor agrees that, to the extent notice of sale shall be required by law, at
least ten (10) days' notice to Debtor 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. Secured Party shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. 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.
Section 4.3 Executory Process. For purposes of executory process
-----------------
under applicable Louisiana law, Debtor hereby acknowledges the Indebtedness,
CONFESSES JUDGMENT thereon and consents that judgment be rendered and signed,
whether during the court's term or during vacation, in favor of the Secured
Party, for the full amount of the Indebtedness, including but not limited to,
the Note, and the other Indebtedness in principal, interest, and attorney's
fees, together with all charges and expenses whatsoever pursuant to this
instrument, the Loan Agreement and the other Loan Documents. Upon the
occurrence of an Event of Default, and in addition to all of its rights, powers
and remedies under this instrument and applicable law, Secured Party may, at its
option, cause all or any part of the Collateral
7
<PAGE>
to be seized and sold under executory process or under writ of fieri facias
issued in execution of an ordinary judgment obtained upon the Indebtedness,
without appraisement to the highest bidder, for cash or under such terms as
Secured Party deems acceptable. Debtor hereby waives all and every appraisement
of the Collateral and waives and renounces the benefit of appraisement and the
benefit of all laws relative to the appraisement of the Collateral seized and
sold under executory or other legal process. Debtor agrees to waive, and does
hereby specifically waive:
(a) the benefit of appraisement provided for in Articles 2332, 2336,
2723 and 2724, Louisiana Code of Civil Procedure, and all other laws conferring
such benefits;
(b) the demand and three (3) days delay accorded by Articles 2639 and
2721, Louisiana Code of Civil Procedure;
(c) the notice of seizure required by Articles 2293 and 2721,
Louisiana Code of Civil Procedure;
(d) the three (3) days delay provided by Articles 2331 and 2722,
Louisiana Code of Civil Procedure;
(e) the benefit of the other provisions of Articles 2331, 2722 and
2723, Louisiana Code of Civil Procedure;
(f) the benefit of the provisions of any other articles of the
Louisiana Code of Civil Procedure not specifically mentioned above; and
(g) all pleas of division and discussion with respect to the
Indebtedness.
In the event Secured Party elects, at its option, to enter suite via ordinaria
on the Indebtedness, in addition to the foregoing confession of judgment, Debtor
hereby waives citation, other legal process and legal delays and hereby consents
that judgment for the unpaid principal due on the Indebtedness, together with
interest, attorneys' fees, costs and other charges that may be due on the
Indebtedness, be rendered and signed immediately.
Pursuant to the authority contained in La. R.S. 9:5136 through
9:5140.1, as the same may be amended or supplemented, Debtor and Secured Party
do hereby expressly designate Secured Party or its designee to be keeper or
receiver ("Keeper") for the benefit of Secured Party or any assignee of Secured
------
Party, such designation to take effect immediately upon any seizure of any of
the Collateral under writ of executory process or under writ of sequestration or
fieri facias as an incident to an action brought by Secured Party.
Section 4.4 Application of Proceeds. If any Event of Default shall
-----------------------
have occurred and be continuing, Secured Party may in its discretion apply any
cash held by Secured Party as Collateral, and any cash proceeds received by
Secured Party in respect of any sale of, collection from, or other realization
upon all or any part of the Collateral, to payment of the Indebtedness or
otherwise, in the manner provided by the Code.
Section 4.5 Deficiency. In the event that the proceeds of any sale,
----------
collection or realization of or upon Collateral by Secured Party are
insufficient to pay all Indebtedness and any other amounts to which Secured
Party is legally entitled, Debtor shall be liable for the deficiency, together
with interest thereon as provided in the Loan Agreement or the governing Loan
Documents, or if no interest is so provided, at such other rate as shall be
fixed by applicable law, together with the costs of collection and the
reasonable fees of any attorneys employed by Secured Party to collect such
deficiency.
Section 4.6 Indemnity and Expenses. In addition to, and not in
----------------------
qualification of, any similar obligations under other Loan Documents or the Loan
Agreement. Debtor will upon demand
8
<PAGE>
pay to Secured Party the amount of any and all costs and expenses, including the
fees and disbursements of Secured Party's counsel and of any experts and agents,
which Secured Party may incur in connection with (i) the custody, preservation,
use or operation of, or the sale or lease of, collection from, or other
realization upon, any Collateral; (ii) the exercise or enforcement of any of the
rights of Secured Party hereunder; or (iii) the failure by Debtor to perform or
observe any of the provisions hereof, except expenses resulting from Secured
Party's negligence or willful misconduct.
Section 4.7 Non-Judicial Remedies. In granting to Secured Party the
---------------------
power to enforce its rights hereunder without prior judicial process or judicial
hearing, Debtor, to the extent permitted by the laws of the jurisdiction in
which the Collateral or any part thereof is located, including without
limitation the State of Louisiana, expressly waives, renounces and knowingly
relinquishes any legal right which might otherwise require Secured Party to
enforce its rights by judicial process and authorizes Secured Party to exercise
self help remedies to obtain possession of any or all of the Collateral. In so
providing for non-judicial remedies, Debtor recognizes and agrees that such
remedies are consistent with the usage of trade, are responsive to commercial
necessity, and are the result of a bargain at arm's length. Nothing herein is
intended to prevent Secured Party or Debtor from resorting to judicial process
at either party's option.
Section 4.8 Other Recourse. Debtor waives any right to require
--------------
Secured Party to proceed against any other Person, exhaust any Collateral or
other security for the Indebtedness, or to have any Other Liable Party joined
with Debtor in any suit arising out of the Indebtedness or this Agreement, or
pursue any other remedy in Secured Party's power. Debtor further waives any and
all notice of acceptance of this Agreement and of the creation, modification,
rearrangement, renewal or extension for any period of any of the Indebtedness
from time to time. Debtor further waives any defense arising by reason of any
disability or other defense of any Other Liable Party or by reason of the
cessation from any cause whatsoever of the liability of any Other Liable Party.
Until all of the Indebtedness shall have been paid and performed in full, Debtor
shall have no right to subrogation and Debtor waives the right to enforce any
remedy which Secured Party has or may hereafter have against any Other Liable
Party, and waives any benefit of and any right to participate in any other
security whatsoever now or hereafter held by Secured Party. Debtor authorizes
Secured Party, without notice or demand and without any reservation of rights
against Debtor without affecting Debtor's liability hereunder or on the
Indebtedness, from time to time to (a) take or hold any other property of any
type from any other Person as security for the Indebtedness, and exchange,
enforce, waive and release any or all of such other property, (b) subject to the
requirements of applicable law, apply the Collateral or such other property and
direct the order or manner of sale thereof as Secured Party may in its
discretion determine, (c) renew, extend for any period, accelerate, modify,
compromise, settle or release any of the obligations of any Other Liable Party
in respect to any or all of the Indebtedness or other security for the
Indebtedness, (d) waive, enforce, modify, amend or supplement any of the
provisions of the Loan Agreement or any Loan Document with any Person other than
Debtor, and (e) release or substitute any Other Liable Party.
ARTICLE V
MISCELLANEOUS
-------------
Section 5.1 Notices. Any notice or communication required or
-------
permitted hereunder shall be given in writing, sent by (a) personal delivery,
(b) expedited delivery service with proof of delivery, (c) registered or
certified United States mail, postage prepaid, or (d) telegram or telex,
addressed to the appropriate party as follows:
To Debtor: Shreveport Paddlewheels
610 South Peters, Suite 202
New Orleans, Louisiana 71030
Telecopier No. (504) 587-1697
9
<PAGE>
To Secured Party: HWCC-Louisiana, Inc.
Two Galleria Tower, Suite 2200
14335 Noel Road, LB 48
Dallas, Texas 75240
Telecopier No. (972) 386-7411
or to such other address or to the attention of such other individual as
hereafter shall be designated in writing by the applicable party sent in
accordance herewith. Any such notice or communication shall be deemed to have
been given either at the time of personal delivery or, in the case of delivery
service or mail, as of the date of first attempted delivery at the address and
in the manner provided herein, or in the case of telegram or telex, upon
receipt.
Section 5.2 Amendments. No amendment of any provision of this
----------
Agreement shall be effective unless it is in writing and signed by Debtor and
Secured Party, and no waiver of any provision of this Agreement, and no consent
to any departure by Debtor therefrom, shall be effective unless it is in writing
and signed by Secured Party, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given and
to the extent specified in such writing.
Section 5.3 Preservation of Rights. No failure on the part of
----------------------
Secured Party to exercise, and no delay in exercising, any right hereunder or
under any other Loan Document or the Loan Agreement shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right. Neither
the execution nor the delivery of this Agreement shall in any manner impair or
affect any other security for the Indebtedness. The rights and remedies of
Secured Party provided herein, in the other Loan Documents and in the Loan
Agreement and in any other agreement or document evidencing Indebtedness are
cumulative and are in addition to, and not exclusive of, any rights or remedies
provided by contract, law or equity. The rights of Secured Party under the Loan
Agreement, any Loan Document or any other agreement or document evidencing
Indebtedness against any party thereto are not conditional or contingent on any
attempt by Secured Party to exercise any of its other rights under the Loan
Agreement or any Loan Document or under any other agreement or document
evidencing Indebtedness against such party or against any other Person.
Section 5.4 Unenforceability. 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 invalidity
without invalidating the remaining portions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
Section 5.5 Survival of Agreements. All representations and
----------------------
warranties of Debtor herein, and all covenants and agreements herein shall
survive the execution and delivery of this Agreement, the execution and delivery
of the Loan Agreement, any other Loan Documents and any other agreement or
document evidencing Indebtedness and the creation of the Indebtedness.
Section 5.6 Other Liable Party. Neither this Agreement nor the
------------------
exercise by Secured Party or the failure of Secured Party to exercise any right,
power or remedy conferred herein or by law shall be construed as relieving any
Other Liable Party from liability on the Indebtedness or any deficiency thereon.
This Agreement shall continue irrespective of the fact that the liability of any
Other Liable Party may have ceased or irrespective of the validity or
enforceability of the Loan Agreement, any other Loan Document or any other
agreement or document evidencing Indebtedness to which Debtor or any Other
Liable Party may be a party, and notwithstanding the reorganization, death,
incapacity or bankruptcy of any Other Liable Party, and notwithstanding the
reorganization or bankruptcy or other event or proceeding affecting any Other
Liable Party.
Section 5.7 Binding Effect and Assignment. This Agreement creates a
-----------------------------
continuing security interest in the Collateral and (a) shall be binding on
Debtor and its successors and permitted assigns and (b) shall inure, together
with all rights and remedies of Secured Party hereunder, to the benefit of
Secured Party and its successors, transferees and assigns. Without limiting the
generality of the foregoing, Secured Party may pledge, assign or otherwise
transfer any or all of its rights under any or all of
10
<PAGE>
the Loan Agreement or the Loan Documents or any other agreement or document
evidencing Indebtedness to any other Person, and such other Person shall
thereupon become vested with all of the benefits in respect thereof granted
herein or otherwise. None of the rights or duties of Debtor hereunder may be
assigned or otherwise transferred without the prior written consent of Secured
Party.
Section 5.8 Termination. Upon (i) the satisfaction in full of the
-----------
Indebtedness, (ii) the termination or expiration of the Loan Agreement and any
other commitment of Secured Party to extend credit to Debtor, and (iii) upon
written request for the termination hereof delivered by Debtor to Secured Party,
this Agreement and the security interest created hereby shall terminate and all
rights to the Collateral shall revert to Debtor. Thereafter, Secured Party
will, upon Debtor's request and at Debtor's expense, execute and deliver to
Debtor such documents as Debtor shall reasonably request to evidence such
termination.
Section 5.9 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Louisiana applicable to
contracts made and to be performed entirely within such state, except as
required by mandatory provisions of law and except to the extent that the
perfection and the effect of perfection or non-perfection of the security
interest created hereby hereunder, in respect of any particular Collateral, are
governed by the laws of a jurisdiction other than the State of Louisiana.
Section 5.10 Counterparts. This Agreement may be separately executed
------------
in any number of counterparts, all of which when so executed shall be deemed to
constitute one and the same Agreement.
Section 5.11 Loan Document. This Agreement is a "Loan Document", as
-------------
defined in the Loan Agreement, and, except as expressly provided herein to the
contrary, this Agreement is subject to all provisions of the Loan Agreement
governing such Loan Documents.
11
<PAGE>
IN WITNESS WHEREOF, Debtor has caused this Agreement to be executed
and delivered by its officer thereunto duly authorized, as of the date first
above written.
DEBTOR:
SHREVEPORT PADDLEWHEELS, L.L.C.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
SECURED PARTY:
HWCC-LOUISIANA, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
12
<PAGE>
ACKNOWLEDGMENT
--------------
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, duly commissioned, qualified
and empowered to act in and for the Parish and State aforesaid, personally came
and appeared _________________ to me known, who declared and acknowledged before
me, Notary, and the undersigned competent witnesses, that he is the
_________________ of Shreveport Paddlewheels, L.L.C., that as such duly
authorized agent, by and with the authority of the members of Shreveport
Paddlewheels, L.L.C.., he signed and executed the foregoing instrument, as the
free and voluntary act and deed of Shreveport Paddlewheels, L.L.C.., for and on
behalf of Shreveport Paddlewheels, L.L.C.., and for the objects and purposes
therein set forth.
THUS DONE AND PASSED in the State and Parish aforesaid, on this ____
day of August, 1999, after due reading of the whole.
WITNESSES:
- -------------------------------------
- -------------------------------------
- -------------------------------------
----------------------------------------
Notary Public
13
<PAGE>
ACKNOWLEDGMENT
--------------
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, duly commissioned, qualified
and empowered to act in and for the Parish and State aforesaid, personally came
and appeared _________________ to me known, who declared and acknowledged before
me, Notary, and the undersigned competent witnesses, that he is the
_________________ of HWCC-Louisiana, Inc., that as such duly authorized agent,
by and with the authority of the Board of Directors of HWCC-Louisiana, Inc., he
signed and executed the foregoing instrument, as the free and voluntary act and
deed of HWCC-Louisiana, Inc., for and on behalf of HWCC-Louisiana, Inc., and for
the objects and purposes therein set forth.
THUS DONE AND PASSED in the State and Parish aforesaid, on this ____
day of August, 1999, after due reading of the whole.
WITNESSES:
- ------------------------------------
- ------------------------------------
- ------------------------------------
----------------------------------
Notary Public
14
<PAGE>
EXHIBIT 10.22
GUARANTY AGREEMENT
------------------
(Corporate)
THIS GUARANTY AGREEMENT (this "Guaranty") is made and entered into
--------
this 10th day of August, 1999 by NEW ORLEANS PADDLEWHEELS, INC., a Louisiana
corporation (the "Guarantor"), in favor of HWCC-LOUISIANA, INC. (the "Lender").
--------- ------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Shreveport Paddlewheels, L.L.C., a Louisiana limited
liability company ("Borrower"), is a wholly-owned subsidiary of Guarantor;
--------
WHEREAS, Borrower and Lender are parties to a Loan Agreement of even
date herewith (herein, as from time to time amended, supplemented or restated,
referred to as the "Loan Agreement"), pursuant to which Lender has agreed to
--------------
advance funds to Borrower which are to be used by Borrower for the purposes
described in the Loan Agreement;
WHEREAS, pursuant to the Loan Agreement, Borrower has executed or will
execute in favor of Lender a certain Note;
WHEREAS, as a condition precedent to Lender's obligation to advance
funds pursuant to the Loan Agreement, Borrower and Guarantor, among others, have
agreed to execute and deliver to Lender certain Loan Documents to evidence and
provide security for, among other things, the indebtedness of Borrower under the
Note and the Loan Agreement; and
WHEREAS, one of said Loan Documents to be executed by Guarantor is
this Guaranty;
NOW, THEREFORE, in consideration of the premises and the benefits to
be derived by Guarantor as an affiliate of Borrower as a consequence of the Loan
to be made by Lender to Borrower pursuant to the Loan Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Guarantor does hereby covenant and agree with Lender as follows:
<PAGE>
ARTICLE I
REPRESENTATIONS, WARRANTIES AND PARTICULAR
------------------------------------------
COVENANTS OF THE GUARANTOR
--------------------------
SECTION 1.1 Representations and Warranties of Guarantor. The Guarantor
-------------------------------------------
represents and warrants that:
(a) The recitals at the beginning of this Guaranty are true and correct
in all respects;
(b) Guarantor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Louisiana and Guarantor has
all requisite corporate power and authority to execute, deliver and perform
this Guaranty;
(c) The execution, delivery and performance of this Guaranty have been
duly authorized by all proper proceedings and do not require the further
consent or authorization of or notice to or filing with any governmental
authority or other regulatory body or third party;
(d) This Guaranty is, in accordance with its terms, the legal, valid
and binding obligation of Guarantor, enforceable against Guarantor in
accordance with its terms, and the execution and delivery of this Guaranty
and compliance with the provisions hereof will not conflict with or
constitute on the part of Guarantor a violation of, breach of, or default
under (i) any provision of any indenture, mortgage, loan agreement or other
instrument to which it is a party or by which any of its properties are
bound, (ii) any law, order, injunction or decree of any court or
governmental authority, or (iii) the Articles of Incorporation or Bylaws of
Guarantor;
(e) Except as otherwise disclosed to Lender in writing prior to the
date of this Guaranty, there is no action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public board or
body, pending or threatened against Guarantor or which would adversely
affect the validity or enforceability of this Guaranty or any agreement or
instrument to which Guarantor is a party or which is used or contemplated
for use in consummation of the transactions contemplated hereunder, or
which would materially adversely affect Guarantor's financial condition or
its ability to perform its obligations hereunder;
(f) Guarantor is not "insolvent" on the date hereof (that is the sum of
Guarantor's absolute and contingent liabilities, including any Debt, does
not exceed the fair market value of Guarantor's assets). Guarantor's
capital is adequate for the businesses in which Guarantor is engaged and
intends to be
2
<PAGE>
engaged. Guarantor has not hereby incurred, nor does Guarantor intend to
incur or believe that it will incur, debts which will be beyond its ability
to pay as such debts mature; and
(g) All balance sheets, earning statements, financial data and other
information concerning Guarantor which have been furnished to Lender to
induce it to accept this Guaranty (or otherwise furnished by Guarantor in
connection with the transactions contemplated hereby or associated
herewith) fairly represent the financial condition of Guarantor as of the
dates thereof and the results of Guarantor's business operations for the
periods for which the same are furnished.
SECTION 1.2 Covenants of Guarantor. The Guarantor hereby covenants and
agrees that as long this Guaranty shall remain in effect, it will pay or cause
to be paid when due all its indebtedness, taxes, assessments and other
liabilities, except indebtedness, taxes, assessments, charges, and other
liabilities being contested in good faith.
ARTICLE II
GUARANTY
SECTION 2.1 Guarantee of Payment and Performance. Guarantor hereby
jointly, severally and in solido unconditionally and irrevocably guarantees to
Lender, the full and prompt payment and performance of all of the Indebtedness,
as defined in the Loan Agreement, including principal, interest, costs and
expenses, provided in no event shall the Indebtedness guaranteed hereunder
exceed Fifty Million and No/100 Dollars ($50,000,000.000). All payments by
Guarantor under this Guaranty shall be made in lawful money of the United States
of America. The guarantee under this Section 2.1 is an absolute and continuing
guarantee of payment and performance and not of collection.
Guarantor's business operations for the periods for which the same are
furnished.
SECTION 2.2 Nature of Guarantee. The obligations of the Guarantor under
-------------------
this Guaranty shall be absolute, unconditional, joint and several and in solido
-- ------
with the Borrower. This Guaranty shall be absolute and unconditional
irrespective of any other agreement or instrument to which the Guarantor is a
party and shall remain in full force and effect until the earlier of (i) the
date the Indebtedness is paid and performed in full or (ii) the Commencement
Date, and until such event, the Indebtedness secured hereby and payment and
performance hereunder shall not be subject to rescission or repayment pursuant
to any bankruptcy, insolvency, arrangement, reorganization, moratorium,
receivership or similar proceeding affecting the Guarantor. Such Indebtedness
and this Guaranty shall not be affected, modified or impaired upon the happening
from time to time of any event, including without limitation any of the
following, whether or not such event shall occur with notice to, or the consent
of, the Guarantor:
3
<PAGE>
(a) the waiver, surrender, compromise, settlement, discharge, release
or termination of any Indebtedness or any or all of the obligations,
covenants or agreements of Borrower or any other Person contained in the
Loan Agreement, any Loan Document or any other documents executed in
connection therewith or of payment, performance or observance thereof;
(b) any defect in notice to the Guarantor of the occurrence of a
default under this Guaranty or of any event of default under the terms and
provisions of any Indebtedness, including without limitation, the Loan
Agreement, the Note or any other Loan Document;
(c) the validity, unenforceability or termination of the Loan
Agreement, the Note, any other Loan Document or any other Indebtedness;
(d) the waiver, compromise, surrender, settlement, release or
termination of the obligations, covenants or agreements of the Guarantor
contained in this Guaranty or of payment, performance or observance
thereof;
(e) the extension of the time for payment of any of the Indebtedness or
of the time of performance of any representation, covenant or agreement
under or arising out of the Loan Agreement, the Note, this Guaranty, or any
other Loan Document or other documents executed in connection therewith or
evidencing any other Indebtedness or any extension or renewal thereof;
(f) the modification or amendment (whether material or otherwise) of
any representation, obligation, covenant or agreement set forth in the Loan
Agreement, the Note, any other Loan Document, or any other documents
executed in connection therewith or evidencing any other Indebtedness;
(g) the taking or the omission to take any action referred to in the
Loan Agreement, the Note, any other Loan Document, or any other documents
executed in connection therewith or evidencing any other Indebtedness or of
any action under this Guaranty;
(h) any failure, omission, delay or lack of diligence on the part of
Lender in the enforcement, assertion or exercise of any right, power or
remedy conferred on Lender in the Loan Agreement, the Note, any other Loan
Document, or any other documents executed in connection therewith or
evidencing any other Indebtedness or in this Guaranty, or the inability of
Lender to enforce any provision of any such documents or Indebtedness for
any other reason, or any other act or omission on the part of Lender or any
allegation or contest of the validity or enforceability of this Guaranty in
any proceedings;
(i) the voluntary or involuntary liquidation, dissolution, sale or
other disposition of all or substantially all the assets and liabilities,
the marshalling of
4
<PAGE>
assets and liabilities, receivership, insolvency, assignment for the
benefit of creditors, bankruptcy, reorganization, arrangement, adjustment,
composition or other similar proceedings affecting Borrower or Guarantor,
or any of the assets of either of them, or any allegation or contest of the
validity of the Loan Agreement, the Note, this Guaranty or any other Loan
Document or document executed in connection therewith or evidencing any
other Indebtedness in any proceeding;
(j) the default or failure of the Guarantor fully to perform any of its
obligations set forth in this Guaranty;
(k) the failure of Borrower to perform any obligation contained in the
Loan Agreement, the Note or any other Loan Document, or in any other
document evidencing any other Indebtedness, for any reason whatsoever,
including, without limiting the generality of the foregoing, insufficiency
of funds, negligence or willful misconduct on the part of Borrower, its
agents or independent contractors, legal action of any nature which
prohibits or delays payment or performance of any Indebtedness, labor
disputes, war, insurrection, natural catastrophe or laws, rules or
regulations of any body, governmental or otherwise; or,
(l) to the extent permitted by law, any other act or delay or failure
to act, or any other thing which may or might in any manner, or to any
extent vary the risk or release or discharge the Guarantor from the
performance of observance of any obligation, covenant or condition
contained in this Guaranty by operation of law.
It is the purpose and intent of the parties hereto that the guaranty of the
Guarantor hereunder shall be absolute and unconditional under any and all
circumstances and shall not be discharged except in accordance with Section 5.2
hereof or by payment as herein provided.
SECTION 2.3 Waivers by Guarantor. The Guarantor waives presentment,
--------------------
demand for protest, all pleas of division and discussion and notice of
nonpayment or dishonor and all other notices and demands whatsoever and any
other act or thing or omission or delay to do any other act or thing which might
in any manner or to any extent vary the right of the Guarantor or which might
otherwise operate as a discharge of the Guarantor.
SECTION 2.4 Subrogation and Subordination. Notwithstanding any
-----------------------------
payment or payments made by the Guarantor by reason of this Guaranty, the
Guarantor shall not be subrogated to any rights of Lender against Borrower until
all of the Indebtedness shall have been paid and performed in full. Any claim of
the Guarantor against Borrower arising from payments made by the Guarantor by
reason of this Guaranty shall be in all respects subordinated to the full and
complete payment, discharge and performance of all Indebtedness guaranteed
hereby, including, without limitation, that Indebtedness
5
<PAGE>
evidenced by the Loan Agreement, the Note and the other Loan Documents, and no
payment or performance by the Guarantor by reason of this Guaranty shall give
rise to any claim of the Guarantor against Lender. Unless and until the
Indebtedness shall have been paid and performed or deemed to have been paid and
performed, the Guarantor will not assign or otherwise transfer any such claim
against Borrower or any other party to any Loan Document to any other person.
SECTION 2.5 Payments. The Guarantor hereby agrees to make all payments
--------
and to perform all obligations at any time due and payable or to be performed
hereunder directly to or for the benefit of Lender. No set-off, counterclaim,
reduction or diminution of any obligation or any defense of any kind or nature
which the Guarantor may have or assert against Lender shall be available
hereunder to Guarantor against Lender.
ARTICLE III
DEFAULT AND REMEDIES
--------------------
SECTION 3.1 Events of Default. The following shall be "Events of Default"
-----------------
under this Guaranty and the term "Event of Default" shall mean, whenever it is
used in this Guaranty, any one or more of the following events:
(a) Failure of the Guarantor to make any payment required to be made
under the provisions of this Guaranty;
(b) Failure of the Guarantor to remedy any misrepresentation, or to
observe and perform any covenant, condition or agreement in this Guaranty
on its part to be observed or performed, other than referred to in
Subsection (a) of this Section;
(c) Proof that any material warranty, representation or other statement
on behalf of Guarantor contained in this Guaranty or hereafter signed and
furnished by or on behalf of Guarantor in the Loan Agreement, any Loan
Document or otherwise at the time such warranty, representation or other
statement is made, is false or misleading in any material respect; or
(d) The institution of any voluntary or involuntary liquidation,
dissolution, sale of all or substantially all assets, marshalling of assets
or liabilities, receivership, conservatorship, assignment for the benefit
of creditors, insolvency, bankruptcy, reorganization, arrangement, or
composition of Guarantor under any provision of the Federal Bankruptcy Code
or under any other bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction,
whether now or hereafter in effect.
SECTION 3.2 Remedies. Upon the occurrence of an Event to Default, Lender
--------
may take any action at law or in equity to collect amounts then due and
thereafter to
6
<PAGE>
become due or to enforce performance and observance of any obligation, agreement
or covenant of the Guarantor under this Guaranty.
ARTICLE IV
ENFORCEMENT OF GUARANTY
-----------------------
SECTION 4.1 No Remedy Exclusive. No remedy conferred upon or reserved to
-------------------
Lender herein is intended to be exclusive of any other available remedy or
remedies, but each and every such remedy shall be cumulative and shall be in
additional to every other remedy given under this Guaranty or now or hereafter
existing at law or in equity.
SECTION 4.2 Right to Proceed Against Guarantor. Each and every default in
----------------------------------
payment or performance of any of the Indebtedness shall give rise to a separate
cause of action hereunder, and separate suits may be brought hereunder as each
cause of action arises but it shall not be necessary to sue on each and every
cause. In the event of such a default, Lender in its sole discretion shall have
the right to proceed first and directly against the Guarantor under this
Guaranty without proceeding against Borrower or any other Person, without
exhausting any other remedies which it may have and without resorting to any
other security held by Lender.
SECTION 4.3 Guarantor to Pay Costs of Enforcement. Guarantor
-------------------------------------
unconditionally and irrevocably agrees to pay all costs, expenses, fees,
including all reasonable attorneys' fees, and disbursements of counsel which may
be paid or incurred by Lender in realizing upon any of the amounts or other
Indebtedness guaranteed hereunder in enforcing or attempting to enforce this
Guaranty or in protecting the rights of Lender whether the same shall be
enforced by suit or otherwise.
SECTION 4.4 No Waiver of Rights. No delay or omission to exercise any
-------------------
right or power accruing upon any default, omission or failure of performance
hereunder shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right or power may be exercised from time to time
and as often as may be deemed expedient. In the event any provision contained
in this Guaranty should be breached by the Guarantor and thereafter duly waived
by Lender, such waiver shall be limited to the particular breach so waived and
shall not be deemed to waive any other breach hereunder. No waiver, amendment,
release or modification of this Guaranty shall be established by conduct, custom
or course of dealing, but solely by an instrument in writing duly executed by
the parties thereunder.
7
<PAGE>
ARTICLE V
GENERAL
-------
SECTION 5.1 Definitions. All capitalized terms used in this Guaranty
-----------
which are defined in the Loan Agreement and not otherwise defined herein shall
have the meanings herein as set forth therein.
SECTION 5.2 Term of Guarantee. Guarantor further jointly, severally and
-----------------
in solido agrees that this Guaranty shall remain in full force and effect until
- -- ------
the earlier of (i) the date all of the Indebtedness shall have been paid,
discharged and performed in full and (ii) the Commencement Date.
SECTION 5.3 Benefitted Parties. This Guaranty shall not be deemed to
------------------
create any right in, or to be in whole or in part for the benefit of, any person
other than Lender and their permitted successors and assigns.
SECTION 5.4 Entire Agreement; Counterparts; Governing Law. This Guaranty
---------------------------------------------
(a) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and every party hereof shall be binding on the Guarantor
and on its successors or assigns; (b) may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument; and (c) shall be governed in all
respects, including validity, interpretation and effect, by, and shall be
enforceable in accordance with, the laws of the State of Louisiana.
SECTION 5.5 Consent to Jurisdiction. Guarantor covenants and agrees that
-----------------------
it will remain subject to service of process in Louisiana so long as this
Guaranty shall be in full force and effect. If for any reason Guarantor should
not be so subject to service of process, Guarantor hereby designates and
appoints, without power of revocation except in conjunction with a substitute
appointment, the Secretary of State of the State of Louisiana as the agent of
Guarantor upon whom may be served all notices, process, pleadings or other
papers which may be served upon Guarantor as a result of any of its obligations,
covenants or agreements contained in this Guaranty.
Any legal suit, action or proceeding arising out of or relating to
this Guaranty or any transaction contemplated hereby may be instituted in any
state or federal court in the State of Louisiana, and Guarantor waives any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding, and irrevocably submits to the jurisdiction of
any such court in any such suit, action or proceeding.
SECTION 5.6 Approval of Documents. The Loan Agreement, the Note and the
---------------------
other Loan Documents have been submitted to the Guarantor for examination and
Guarantor acknowledges that, by execution of this Guaranty, Guarantor has
approved the terms and provisions of the Loan Agreement, the Note and the other
Loan Documents.
8
<PAGE>
SECTION 5.7 Amendment. This Guaranty may only be amended by an instrument
---------
in writing executed by Guarantor and Lender.
SECTION 5.8 Severability. The invalidity or unenforceability of any one
------------
or more phrases, sentences, clauses or sections in this Guaranty shall not
-------
affect the validity or enforceability of the remaining portions of this Guaranty
or any part thereof.
SECTION 5.9 Notices. All notices, certificates or other communications
-------
hereunder shall be sufficiently given and shall be deemed given when hand
delivered to the addressee or mailed by certified mail-return receipt requested,
postage prepaid, addressed as follows:
If to Lender:
HWCC-Louisiana, Inc.
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, Texas 75240
Telecopier No.: (972) 386-7411
If to Guarantor:
New Orleans Paddlewheels, Inc.
610 South Peters, Suite 202
New Orleans, Louisiana 71030
Telecopier No.: (504) 587-1697
The Guarantor and Lender may, by notice given hereunder, designate any
further or different address to which subsequent notices or other communications
shall be sent.
SECTION 5.10 Interpretations. The articles and section headings of this
---------------
Guaranty are for reference purposes only and shall not affect its interpretation
in any manner.
9
<PAGE>
IN WITNESS WHEREOF, Guarantor has executed this Guaranty and Lender
has accepted the same, as of the date first above written.
"GUARANTOR"
NEW ORLEANS PADDLEWHEELS, INC.
By:
---------------------------------
Name:
---------------------------------
Title:
--------------------------------
Accepted this ____ day of ____________, 1999.
"LENDER"
HWCC-LOUISIANA, INC.
By:
---------------------------------
Name:
---------------------------------
Title:
--------------------------------
10
<PAGE>
ACKNOWLEDGMENT
--------------
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, duly commissioned, qualified
and empowered to act in and for the Parish and State aforesaid, personally came
and appeared _________________ to me known, who declared and acknowledged before
me, Notary, and the undersigned competent witnesses, that he is the
_________________ of New Orleans Paddlewheels, Inc., that as such duly
authorized agent, by and with the authority of the Board of Directors of New
Orleans Paddlewheels, Inc., he signed and executed the foregoing instrument, as
the free and voluntary act and deed of New Orleans Paddlewheels, Inc., for and
on behalf of New Orleans Paddlewheels, Inc., and for the objects and purposes
therein set forth.
THUS DONE AND PASSED in the State and Parish aforesaid, on this ____
day of August, 1999, after due reading of the whole.
WITNESSES:
- -------------------------------------
- -------------------------------------
- -------------------------------------
------------------------------------
Notary Public
11
<PAGE>
ACKNOWLEDGMENT
--------------
STATE OF LOUISIANA
PARISH OF ORLEANS
BEFORE ME, the undersigned Notary Public, duly commissioned, qualified
and empowered to act in and for the Parish and State aforesaid, personally came
and appeared _________________ to me known, who declared and acknowledged before
me, Notary, and the undersigned competent witnesses, that he is the
_________________ of HWCC-Louisiana, Inc., that as such duly authorized agent,
by and with the authority of the Board of Directors of HWCC-Louisiana, Inc., he
signed and executed the foregoing instrument, as the free and voluntary act and
deed of HWCC-Louisiana, Inc., for and on behalf of HWCC-Louisiana, Inc., and for
the objects and purposes therein set forth.
THUS DONE AND PASSED in the State and Parish aforesaid, on this ____
day of August, 1999, after due reading of the whole.
WITNESSES:
- -------------------------------------
- -------------------------------------
- -------------------------------------
------------------------------------
Notary Public
12
<PAGE>
EXHIBIT 10.23
AMENDED AND RESTATED
ASSIGNMENT OF JOINT VENTURE INTEREST
This Amended and Restated Assignment of Joint Venture Interest (the
"Agreement") is executed this 22nd day of September, 1998 between Sodak
Louisiana, L.L.C., a Louisiana limited liability company ("Sodak") and HWCC-
Louisiana, Inc., a Louisiana corporation ("HWCC") as assignees (individually
"Assignee" and collectively "Assignees"), and New Orleans Paddlewheels, Inc., a
Louisiana corporation ("NOP"), and Shreveport Paddlewheels, L.L.C., a Louisiana
limited liability company ("SPL"), as assignors (individually "Assignor" and
collectively "Assignors").
W I T N E S S E T H:
-------------------
WHEREAS, Assignors collectively own partnership interests in a joint
venture named "Queen of New Orleans at the Hilton Joint Venture" ("QNOV")
pursuant to a Joint Venture Agreement dated May 20, 1992, as amended January 14,
1994 (the "Original Joint Venture Agreement") and as the same is to be further
amended following the assignment effected hereby, in accordance with that
certain Amended and Restated Joint Venture Agreement, dated as of July 31, 1998
(as amended), a copy of which is attached hereto as Exhibit "A" ("Amended JV");
-----------
WHEREAS, pursuant to the terms and conditions of a Loan and Settlement
Agreement, executed as of January 16, 1998, by and between Hilton New Orleans
Corporation ("HNOC"), Assignees and Assignors; an Indemnity Agreement, dated
January 16, 1998, among the same parties ("Indemnity Agreements"); a Compromise
Agreement, dated January 16, 1998, among HNOC, NOP, QNOV, and the City of New
Orleans; and a Side Agreement among QNOV and Assignees (the aforesaid Loan and
Settlement Agreement, Compromise Agreement, Indemnity Agreement, and Side
Agreement are hereinafter collectively referred to as the "Pre-Transfer
Documents"), and subject to the approval of the Louisiana Gaming Control Board
("LGCB"), Assignors have agreed to transfer to Assignees all of their respective
ownership interest in QNOV other than (a) the interest retained by SPL (or an
affiliate thereof) as expressly provided in the Amended JV, which is a 10%
interest in Net Realized Value as defined in the Amended JV, and (b) the "Pre-
Transfer Assets" as defined in the Indemnity Agreements retained by NOP (such
interest that is hereby assigned is hereinafter referred to as the "Assigned
Interest");
WHEREAS, QNOV intends to own and operate a riverboat gaming casino, hotel
and related shoreside facilities in Shreveport, Louisiana (the "Complex") as
provided for and contemplated under the Amended JV;
1
<PAGE>
WHEREAS, the LGCB has approved the transfer contemplated hereby, and
Assignors desire to assign, and each of the Assignees desire to acquire the
Assigned Interest; and
WHEREAS, the Assignees and NOP have entered into an Assignment of Joint
Venture Interest dated July 31, 1998 (the "Original Agreement"), and the parties
hereto desire to amend and restate the Original Agreement in its entirety as set
forth in this Agreement.
NOW THEREFORE, subject to the terms and conditions of this Agreement and
the execution by QNOV of that certain Marine Services Agreement to be entered
into between QNOV and SPL or an affiliate of SPL, the form of which is attached
as Exhibit I to the Amended and Restated Master Agreement dated as of July 31,
1998 by and among Sodak, HWCC and Assignors (the "Amended Master Agreement"),
for the consideration stated herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged and for which
acquittance is granted, each Assignor and each Assignee hereby agree, effective
as of the Closing Date as defined in the Amended Master Agreement, intending to
be legally bound, as follows:
ARTICLE I
Assignment
1.1 Assignment of Venture Interest. Assignors hereby transfer, assign,
------------------------------
set over, convey and deliver the Assigned Interest unto the Assignees and their
respective successors and assigns, and each Assignee hereby purchases and
accepts from the Assignors the Assigned Interest, and Assignees hereby agree,
and bind and obligate themselves, to cause QNOV, as the same may now or
hereafter be constituted, (a) to pay to SPL (or an affilate thereof) one percent
(1%) of any "Complex Net Revenues" (the "Complex Net Revenue Amount") (as used
herein, Complex Net Revenues means the gross revenues from casino operations,
hotel operations and all other Complex facilities and amenities including
without limitation, all revenues and proceeds from business interruption or
other loss of income insurance, less promotional allowances and less (i) any
gratuities, or service charges added to a customer's bill or statement in lieu
of gratuities, which are payable to Complex employees, (ii) an amount equal to
all credits or refunds made to customers, guests or patrons, (iii) all sums and
credits received in settlement of claims for loss or damage of FF&E or to the
physical plant of the Complex, (iv) any and all income from the sale of FF&E and
any capital assets, (v) any compensation payments for claims against third
parties arising out of or during the course of the operation of the Complex, and
(vi) investment income); (b) to enter into the Marine Services Agreement, a
specimen of which is attached hereto as Exhibit "B"; and (c) to assume all Post-
-----------
Transfer Obligations as defined in the Indemnity Agreement. At the option of
SPL, payments of the
<PAGE>
Complex Net Revenue Amount may be directed to any entity in which an Assignor
has an equity ownership interest.
1.2 Termination of Payment. The parties hereto agree and acknowledge
----------------------
that SPL shall have no right to receive any further payments of the Complex Net
Revenue Amount pursuant to Section 1.1 above immediately upon the occurrence of
any event as expressly described in Section 10.7 of the Amended JV, and SPL's
right to receive such payments shall thereafter be null, void and of no further
legal effect.
1.3 Ownership of Interest. Each Assignor hereby represents to each
---------------------
Assignee that the Assignors collectively have full title to the Assigned
Interest and have the authority to transfer the Assigned Interest to Assignees
as provided herein without the approval or consent of any other person or entity
other than the LGCB.
1.4 Deliveries by Assignor at Closing. Each Assignor hereby delivers to
---------------------------------
Assignees: (a) this duly executed Agreement; and (b) agrees to deliver any
other document necessary or required to be delivered by such Assignor to
Assignees to effect the transactions contemplated by this Agreement.
1.5 Pre-Transfer Obligations. Nothing in this Agreement is intended to
------------------------
affect each Assignor's continuing obligation with respect to the "Pre-Transfer
Obligations" as defined in the Indemnity Agreements.
ARTICLE II
Affirmative Covenants
2.1 Further Assurances. Each Assignor shall execute and deliver the
------------------
Amended JV and any notices and other documents as may be reasonably requested by
an Assignee from time to time to (i) reflect the admission of an Assignee as a
partner or member in QNOV and (ii) to effect the consummation of the
transactions contemplated by this Agreement.
2.2 Assignee as Partner/Member. Each Assignor and each Assignee hereby
--------------------------
agree that each Assignee shall become a substituted partner/member of QNOV in
place of the Assignors with respect to the Assigned Interest acquired by each
Assignee, and that SPL shall remain a member/partner of QNOV under the Amended
JV.
2.3 Distributions in Trust. To the extent any Assignor receives any
----------------------
financial benefits, cash, cash equivalents, revenues, monies, fees, commissions,
profits, proceeds, payments or other sums payable in connection with or
attributable to the Assigned Interest due and owed for periods after the
effective date hereof, the same shall be held in trust for
3
<PAGE>
the benefit of each Assignee and shall be promptly delivered to each Assignee,
without interest, when and as received and in the form received.
ARTICLE III
Miscellaneous
3.1 Governing Law. This Agreement is made in and shall be governed by the
-------------
laws of the State of Louisiana in all respects, including matters of
construction, validity, enforcement and performance.
3.2 Counterparts. This Agreement may be executed in any number of
------------
counterparts, which taken together shall constitute one and the same instrument
and each of which shall be considered an original for all purposes.
3.3 Amendments; Waivers. This Agreement may not be amended nor may any of
-------------------
its terms be waived except by written instrument signed by the parties hereto.
3.4 Survival Upon Unenforceability. In the event any one or more of the
------------------------------
provisions contained in this Agreement shall for any reason be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions hereof.
3.5 Notices. All notices, requests, demands and other communications
-------
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered by hand or mailed, certified or
registered mail with postage prepaid to the address of each party set forth
below or by facsimile or other electronic means of communication upon receipt
thereof.
3.6 Supersede. The parties hereto agree and acknowledge that this
---------
Agreement shall supersede, in its entirety, the Original Agreement, and that
the Original Agreement shall be null, void and of no further legal effect.
3.7 Indemnification. HWCC and Sodak shall cause QNOV to indemnify,
---------------
defend and hold harmless SPL and/or NOP from any tax liability either or both
parties may incur as a result of HNOC's transfer of its interest in QNOV to NOP
and/or SPL except for any tax liability arising from SPL's, or an affiliate's,
receipt of the Complex Net Revenue Amount pursuant to Section 1.1 above.
4
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written to be effective as of the Closing Date (as defined in the Amended Master
Agreement).
ASSIGNORS:
NEW ORLEANS PADDLEWHEELS, INC.
By:
---------------------------------
Its
---------------------------
SHREVEPORT PADDLEWHEELS, L.L.C.
By:
---------------------------------
Its
---------------------------
ASSIGNEES:
SODAK LOUISIANA, L.L.C.
By:
---------------------------------
Its
---------------------------
HWCC-LOUISIANA, INC.
By:
---------------------------------
Its
---------------------------
5
<PAGE>
ACKNOWLEDGMENT
STATE OF ___________________
PARISH/COUNTY OF _________________
Before me, the undersigned authority, personally came and appeared
_________________ known to me to be the person who executed the foregoing
instrument and who, being duly sworn, acknowledged and declared in my presence
and in the presence of the undersigned witnesses that he is a duly authorized
officer of New Orleans Paddlewheels, Inc. and that he did execute the foregoing
instrument as the free act and deed of such entity.
IN WITNESS WHEREOF, the appearers, witnesses and I have hereunder affixed
our signatures on the _____ day of September, 1998.
WITNESSES:
___________________________________________
NOTARY PUBLIC
6
<PAGE>
ACKNOWLEDGMENT
STATE OF ___________________
PARISH/COUNTY OF _________________
Before me, the undersigned authority, personally came and appeared
__________________ known to me to be the person who executed the foregoing
instrument and who, being duly sworn, acknowledged and declared in my presence
and in the presence of the undersigned witnesses that he is a duly authorized
officer of HWCC-Louisiana, Inc. and that he did execute the foregoing instrument
as the free act and deed of such entity.
IN WITNESS WHEREOF, the appearers, witnesses and I have hereunder affixed
our signatures on the _____ day of September, 1998.
WITNESSES:
___________________________________________
NOTARY PUBLIC
7
<PAGE>
ACKNOWLEDGMENT
STATE OF ___________________
PARISH/COUNTY OF _________________
Before me, the undersigned authority, personally came and appeared
__________________ known to me to be the person who executed the foregoing
instrument and who, being duly sworn, acknowledged and declared in my presence
and in the presence of the undersigned witnesses that he is a duly authorized
officer of Sodak Louisiana, L.L.C. and that he did execute the foregoing
instrument as the free act and deed of such entity.
IN WITNESS WHEREOF, the appearers, witnesses and I have hereunder affixed
our signatures on the _____ day of September, 1998.
WITNESSES:
___________________________________________
NOTARY PUBLIC
8
<PAGE>
ACKNOWLEDGMENT
STATE OF ___________________
PARISH/COUNTY OF _________________
Before me, the undersigned authority, personally came and appeared
_________________ known to me to be the person who executed the foregoing
instrument and who, being duly sworn, acknowledged and declared in my presence
and in the presence of the undersigned witnesses that he is a duly authorized
officer of Shreveport Paddlewheels, L.L.C.,. and that he did execute the
foregoing instrument as the free act and deed of such entity.
IN WITNESS WHEREOF, the appearers, witnesses and I have hereunder affixed
our signatures on the _____ day of September, 1998.
WITNESSES:
___________________________________________
NOTARY PUBLIC
9
<PAGE>
EXHIBIT 10.24
CONTRIBUTION AND ASSUMPTION AGREEMENT
This Contribution and Assumption Agreement (this "Agreement") is entered
into by and among HWCC-Louisiana, Inc. ("HCL"), a Louisiana corporation, HCS I,
Inc., a Louisiana corporation ("HCS I"), HCS II, Inc., a Louisiana corporation
("HCS II") and Shreveport Paddlewheels, L.L.C., a limited liability company
organized under the laws of the State of Louisiana ("Paddlewheels"), as of this
21st day of July, 1999.
WHEREAS, HCL has determined that it is in its best interest to
contribute its JV Interest, as such term is defined in the Second Amended and
Restated Joint Venture Agreement of Hollywood Casino Shreveport entered into as
of July 9, 1999, by and between HCL and Paddlewheels (the "JV Agreement"), in
Hollywood Casino Shreveport (the "Venture") to HCS I and HCS II in accordance
with Section 3.1 of the JV Agreement and subject to the terms and conditions
contained in this Agreement; and
WHEREAS, Paddlewheels desires to consent to the contribution of HCL's JV
Interest in the Venture and to the admission of HCS I and HCS II as partners of
the Venture, subject to the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the premises contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows.
1. Contribution of Interest. HCL hereby contributes its JV Interests in
------------------------
the Venture ninety-nine percent (99%) to HCS I and one percent (1%) to HCS II.
HCS I and HCS II accept this interest subject to all of the obligations of HCL
to Paddlewheels and hereby grant to Paddlewheels all rights and privileges of
Paddlewheels against HCL.
2. Assumption of HCL Obligations to Paddlewheels. In connection with the
---------------------------------------------
contribution by HCL of ninety-nine percent (99%) of its JV Interests to HCS I
and one percent (1%) of its JV Interests to HCS II, HCS I and HCS II agree to,
and do hereby, assume the obligations of HCL under (i) Amended and Restated
Assignment of Joint Venture Interest entered into as of September 22, 1998,
among Sodak Louisiana, L.L.C. ("Sodak") and HCL (as assignees) and New Orleans
Paddlewheels, Inc. ("NOP") and Paddlewheels (as assignors); (ii) the Loan and
Settlement Agreement entered into as of January 16, 1998 among NOP,
Paddlewheels, HCL, Sodak and Hilton New Orleans Corporation; and (iii) the Side
Agreement entered into as of January 16, 1998 among Queen of New Orleans at the
Hilton Joint Venture, HCL and Sodak.
3. JV Agreement Consent. In connection with the contribution by HCL of
--------------------
its JV Interest to HCS I and HCS II as aforesaid, and pursuant to the terms of
Section 7.5 of the JV Agreement, each of HCS I and HCS II hereby consent to be
bound by the terms and conditions contained in Sections 6.1 and 10.2 of the JV
Agreement.
<PAGE>
4. Paddlewheels Consent and Release. In accordance with the
--------------------------------
provisions contained in this Agreement, Paddlewheels hereby acknowledges and
consents to HCL's contribution of its JV Interest to HCS I and HCS II.
Paddlewheels further consents to the assumption by HCS I and HCS II of the
obligations that HCL had with respect to Paddlewheels as described in the
agreements listed in Section 2 of this Agreement. Paddlewheels further consents
to the admission of HCS I and HCS II as partners of the Venture succeeding to
HCL's JV Interest. Paddlewheels further agrees that following the execution of
this Agreement that HCL will be released from any further liability with respect
to its obligations described in the agreements listed in Section 2 of this
Agreement.
5. Consideration. Each of HCS I and HCS II does hereby issue to HCL
-------------
1,000 shares of its common stock, $1.00 par value per share, in consideration
of payment of $1.00 per share and the other actions of HCL described hereunder.
6. Governing Law. This Agreement shall be governed by and continued
-------------
in accordance with the laws of the State of Louisiana.
7. Counterparts. This Agreement may be executed by the parties in
------------
counterparts.
{Remainder of Page Intentionally Left Blank]
2
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date set forth above.
HWCC-LOUISIANA, INC.
By: /s/ PAUL C. YATES
-------------------------------
Name: Paul C. Yates
Title: Executive Vice President and
Chief Financial Officer
HCS I, INC.
By: /s/ PAUL C. YATES
-------------------------------
Name: Paul C. Yates
Title: Executive Vice President and
Chief Financial Officer
HCS II, INC.
By: /s/ PAUL C. YATES
-------------------------------
Name: Paul C. Yates
Title: Executive Vice President and
Chief Financial Officer
SHREVEPORT PADDLEWHEELS, L.L.C.
By: Signature Illegible
-------------------------------
Name:
Title:
<PAGE>
Exhibit 21.1
Hollywood Casino Shreveport
List of Subsidiaries
--------------------
1. Shreveport Capital Corporation (LA)
<PAGE>
Exhibit 21.2
HWCC-Louisiana, Inc.
List of Subsidiaries
--------------------
1. HCS I, Inc. (LA)
2. HCS II, Inc. (LA)
<PAGE>
Exhibit 21.3
HCS I, Inc.
List of Subsidiaries
--------------------
NONE
<PAGE>
Exhibit 21.4
HCS II, Inc.
List of Subsidiaries
--------------------
NONE
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Hollywood Casino
Shreveport and Shreveport Capital Corporation on Form S-4 of our reports dated
June 28, 1999 appearing in the Prospectus, which is part of this Registration
Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Dallas, Texas
October 8, 1999
<PAGE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
_________
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2)
STATE STREET BANK AND TRUST COMPANY
(Exact name of trustee as specified in its charter)
Massachusetts 04-1867445
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification No.)
225 Franklin Street, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(Name, address and telephone number of agent for service)
Hollywood Casino Shreveport
Shreveport Capital Corporation
(Exact name of obligor as specified in its charter)
HCS - 75-1225563
Louisiana SCC - 75-2830167
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two Galleria Tower, Suite 2200
13455 Noel Road
Dallas, TX 75240
(Address of principal executive offices) (Zip Code)
13% First Mortgage Notes due 2006
with Contingent Interest
(Title of indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory authority to
which it is subject.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with Obligor.
If the Obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee or of its parent,
State Street Corporation.
(See note on page 2.)
Item 3. through Item 15. Not applicable.
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of eligibility.
1. A copy of the articles of association of the trustee as now in
effect.
A copy of the Articles of Association of the trustee, as now
in effect, is on file with the Securities and Exchange
Commission as Exhibit 1 to Amendment No. 1 to the Statement
of Eligibility and Qualification of Trustee (Form T-1) filed
with the Registration Statement of Morse Shoe, Inc. (File No.
22-17940) and is incorporated herein by reference thereto.
2. A copy of the certificate of authority of the trustee to commence
business, if not contained in the articles of association.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the
trustee to commence business was necessary or issued is on
file with the Securities and Exchange Commission as Exhibit 2
to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc. (File No. 22-
17940) and is incorporated herein by reference thereto.
3. A copy of the authorization of the trustee to exercise corporate
trust powers, if such authorization is not contained in the documents specified
in paragraph (1) or (2), above.
A copy of the authorization of the trustee to exercise
corporate trust powers is on file with the Securities and
Exchange Commission as Exhibit 3 to Amendment No. 1 to the
Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Morse
Shoe, Inc. (File No. 22-17940) and is incorporated herein by
reference thereto.
4. A copy of the existing by-laws of the trustee, or instruments
corresponding thereto.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4
to the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Eastern
Edison Company (File No. 33-37823) and is incorporated herein
by reference thereto.
1
<PAGE>
5. A copy of each indenture referred to in Item 4. if the obligor is
in default.
Not applicable.
6. The consents of United States institutional trustees required by
Section 321(b) of the Act.
The consent of the trustee required by Section 321(b) of the
Act is annexed hereto as Exhibit 6 and made a part hereof.
7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining authority.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising
or examining authority is annexed hereto as Exhibit 7 and made a
part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the 5th of October, 1999.
STATE STREET BANK AND TRUST COMPANY
By: Robert J. Dunn
------------------
NAME : Robert J. Dunn
TITLE: Vice President
2
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture Act
of 1939, as amended, in connection with the proposed issuance by Hollywood
Casino Shreveport and Shreveport Capital Corporation of its 13% First Mortgage
Notes due 2006 with Contingent Interest, we hereby consent that reports of
examination by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
STATE STREET BANK AND TRUST COMPANY
By: Robert J. Dunn
----------------
NAME: Robert J. Dunn
TITLE: Vice President
Dated: October 5, 1999
3
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business June 30, 1999, published
-------------
in accordance with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act and in accordance with a
call made by the Commissioner of Banks under General Laws, Chapter 172, Section
22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin............................................. 1,755,237
Interest-bearing balances...................................................................... 14,209,161
Securities.......................................................................................... 13,027,148
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary............................................................ 7,840,413
Loans and lease financing receivables:
Loans and leases, net of unearned income ............ 8,134,756
Allowance for loan and lease losses.................. 88,351
Allocated transfer risk reserve...................... 0
Loans and leases, net of unearned income and allowances.................................................... 8,046,405
Assets held in trading accounts..................................................................... 1, 753,511
Premises and fixed assets....................................................................................... 529,247
Other real estate owned............................................................................. 0
Investments in unconsolidated subsidiaries.......................................................... 603
Customers' liability to this bank on acceptances outstanding.................................................... 76,078
Intangible assets................................................................................... 223,035
Other assets........................................................................................ 1,481,250
---------
Total assets......................................................................................... 48,942,088
==========
LIABILITIES
Deposits:
In domestic offices........................................................................................ 13,006,374
Noninterest-bearing............................................................................ 9,462,505
Interest-bearing............................................................................... 3,543,869
In foreign offices and Edge subsidiary.................................................................... 19,913,151
Noninterest-bearing............................................................................ 444,189
Interest-bearing............................................................................... 19,468,962
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary....................................................................... 10,510,055
Demand notes issued to the U.S. Treasury....................................................................... 0
Trading liabilities........................................................................... 1,151,604
Other borrowed money................................................................................ 198,253
Subordinated notes and debentures................................................................... 0
Bank's liability on acceptances executed and outstanding............................................ 76,078
Other liabilities.................................................................................... 1,291,791
Total liabilities.............................................................................................. 46,147,306
----------
EQUITY CAPITAL
Perpetual preferred stock and related
surplus....................................................................................................... 0
Common stock........................................................................................ 29,931
Surplus............................................................................................. 489,739
Undivided profits and capital reserves/Net unrealized holding gains (losses)........................ 2,313,006
Net unrealized holding gains (losses) on available-for-sale securities....................... (25,610)
Cumulative foreign currency translation adjustments........................................................... (12,284)
Total equity capital.......................................................................................... 2,794,782
----------
Total liabilities and equity capital.......................................................................... 48,942,088
----------
</TABLE>
4
<PAGE>
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Truman S. Casner
5
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
To Exchange any and all Outstanding
13% First Mortgage Notes due 2006
for
13% First Mortgage Notes due 2006
HOLLYWOOD CASINO SHREVEPORT
AND
SHREVEPORT CAPITAL CORPORATION
Pursuant to the Exchange Offer and Prospectus dated , 1999
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1999 (THE "EXPIRATION DATE"), UNLESS
THE EXCHANGE OFFER IS EXTENDED BY THE COMPANY.
The Exchange Agent for the Exchange Offer is:
State Street Bank and Trust Company
By Mail: Overnight Courier:
State Street Bank and Trust State Street Bank and Trust Company
Company Corporate Trust Department
Corporate Trust Department 2 Avenue de Lafayette
P.O. Box 778 Fifth Floor, Corporate Trust Window
Boston, Massachusetts 02102 Boston, Massachusetts 02111-1724
Attention: Mackenzie Elijah Attention: Mackenzie Elijah
By Hand in New York (as Drop By Hand in Boston:
Agent) State Street Bank and Trust Company
State Street Bank and Trust 2 Avenue de Lafayette
Company Fifth Floor, Corporate Trust Window
61 Broadway Boston, Massachusetts 02111-1724
15th Floor, Corporate Trust
Window
Confirm by telephone:
New York, New York 10006 (617) 662-1525
Facsimile Transmission Number
(for Eligible Institutions Only)
(617) 662-1452
Delivery of this Letter of Transmittal to an address or transmission of
instructions via facsimile other than as set forth above will not constitute a
valid delivery.
The undersigned acknowledges that it has received the Prospectus, dated
, 1999 (the "Prospectus"), of Hollywood Casino Shreveport, a Louisiana joint
venture ("Shreveport"), and Shreveport Capital Corporation, a Louisiana
corporation ("Shreveport Capital" and together with Shreveport, the "Issuers")
and this Letter of Transmittal, which together constitute the Issuers' offer
(the "Exchange Offer")to exchange an aggregate principal amount of up to
$150 million of their 13% First Mortgage Notes due 2006 (the "Registered
Notes"), which have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), for a like principal amount of their issued
and outstanding 13% First Mortgage Notes due 2006 (the "Original Notes").
IF YOU WISH TO EXCHANGE YOUR ORIGINAL NOTES FOR AN EQUAL AGGREGATE PRINCIPAL
AMOUNT OF REGISTERED NOTES PURSUANT TO THE EXCHANGE OFFER, YOU MUST VALIDLY
TENDER, AND NOT WITHDRAW, YOUR ORIGINAL NOTES TO THE EXCHANGE AGENT PRIOR TO
THE EXPIRATION DATE.
SIGNATURES MUST BE PROVIDED.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY BEFORE COMPLETING THIS
LETTER OF TRANSMITTAL.
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus.
1
<PAGE>
This Letter of Transmittal is to be completed by holders of Original Notes
either if Original Notes are to be forwarded herewith or if tenders of
Original Notes are to be made by book-entry transfer to an account maintained
by State Street Bank and Trust Company (the "Exchange Agent") at the
Depository Trust Company (the "Book-Entry Transfer Facility" or "DTC")
pursuant to the procedures set forth in the section entitled "Description of
the Exchange Offer--Procedures for Tendering Original Notes" in the
Prospectus.
Holders of Original Notes whose certificates (the "Certificates") for such
Original Notes are not immediately available or who cannot deliver their
Certificates and all other required documents to the Exchange Agent on or
prior to the Expiration Date or who cannot complete the procedures for book-
entry transfer on a timely basis, must tender their Original Notes according
to the guaranteed delivery procedures set forth in the section entitled
"Description of the Exchange Offer--Guaranteed Delivery Procedures" in the
Prospectus.
DESCRIPTION OF ORIGINAL NOTES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name(s) and
Address(es)
of
Registered
Owner(s)
as it
appears on
the
Original
Notes Aggregate
(Please Certificate Principal Amount
fill in, if Number(s) of Original Notes
blank) of Original Notes Tendered
- -------------------------------------------------------
--------------
--------------
--------------
--------------
--------------
<S> <C> <C>
Total Principal
Amount
of Notes Tendered
</TABLE>
2
<PAGE>
BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY
[_] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-
ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution _______________________________________________
Account Number ______________________________________________________________
Transaction Code Number _____________________________________________________
[_] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name of Registered Holder(s) ________________________________________________
Window Ticket Number (if any) _______________________________________________
Date of Execution of Notice of Guaranteed Delivery __________________________
Name of Institution which Guaranteed Delivery _______________________________
If Guaranteed Delivery is to be made By Book-Entry Transfer:
Name of Tendering Institution _______________________________________________
Account Number ______________________________________________________________
Transaction Code Number _____________________________________________________
[_] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED ORIGINAL
NOTES ARE TO BE RETURNED BY CREDITING THE BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER SET FORTH ABOVE.
[_] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE ORIGINAL NOTES FOR
ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A
"PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF
THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name: _________________________________________________________________________
Address: ______________________________________________________________________
3
<PAGE>
Ladies and Gentlemen:
1. The undersigned hereby tenders to Hollywood Casino Shreveport, a
Louisiana joint venture ("Shreveport"), and Shreveport Capital Corporation, a
Louisiana corporation ("Shreveport Capital" and, together with Shreveport, the
"Issuers"), its 13% First Mortgage Notes due 2006 of the Issuers (the
"Original Notes"), pursuant to the Issuers' offer to exchange $1,000 principal
amount of their registered 13% First Mortgage Notes due 2006 (the "Registered
Notes"), for each $1,000 principal amount of Original Notes, upon the terms
and subject to the conditions contained in the Prospectus dated , 1999
(the "Prospectus"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which together with the Prospectus constitute the
"Exchange Offer").
2. THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS
FULL POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE
ORIGINAL NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR
EXCHANGE, THE COMPANY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE
THERETO, FREE AND CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES,
AND THAT THE ORIGINAL NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE
CLAIMS OR PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY
ADDITIONAL DOCUMENTS DEEMED BY THE COMPANY OR THE EXCHANGE AGENT TO BE
NECESSARY OR DESIRABLE TO COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF
THE ORIGINAL NOTES TENDERED HEREBY, AND THE UNDERSIGNED WILL COMPLY WITH ITS
OBLIGATIONS UNDER THE REGISTRATION RIGHTS AGREEMENT. THE UNDERSIGNED HAS READ
AND AGREES TO ALL OF THE TERMS OF THE EXCHANGE OFFER.
3. The undersigned understands that the tender of the Original Notes
pursuant to any one of the procedures set forth in the Prospectus and in the
instructions, attached hereto, will, upon the Issuers' acceptance for exchange
of such tendered Original Notes, constitute a binding agreement between the
undersigned and the Issuers as to the terms and conditions set forth in the
Prospectus.
4. Unless the box under the heading "Special Registration Instructions" is
checked, the undersigned hereby represents and warrants that:
(i) the Registered Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of the undersigned,
whether or not the undersigned is the holder;
(ii) neither the undersigned nor any such other person is engaging in or
intends to engage in a distribution of such Registered Notes;
(iii) neither the undersigned nor any such other person has an
arrangement or understanding with any person to participate in the
distribution of such Registered Notes; and
(iv) neither the holder nor any such other person is an "affiliate," as
such term is defined under Rule 405 promulgated under the Securities Act of
1933, as amended (the "Securities Act"), of the Company.
5. The undersigned may, if, and only if, unable to make all of the
representations and warranties contained in Item 4 above, elect to have its
Original Notes registered in the shelf registration described in the
Registration Rights Agreement, dated as of August 10, 1999, by and among the
Issuers, the Guarantors and Initial Purchasers in the form filed as an exhibit
to the Registration Statement (the "Registration Agreement"). All terms used
in this Item 5 with their initial letters capitalized, unless otherwise
defined herein, shall have the meanings given them in the Registration
Agreement. Such election may be made by checking the box under "Special
Registration Instructions" below. By making such election, the undersigned
agrees, as a Holder participating in a Shelf Registration, to indemnify and
hold harmless (i) the Issuers and the Guarantors, (ii) each person, if any,
who controls either of the Issuers or any of the Guarantors within the meaning
of Section 15 of the Act or Section 20(a) of the Securities Exchange Act of
1934 (the "Exchange Act") and (iii) the officers, directors, partners,
employees, representatives and agents of the Issuers and the Guarantors,
against any losses, liabilities, claims, damages and expenses whatsoever
(including but not limited to reasonable attorneys' fees and any and
4
<PAGE>
all expenses reasonably incurred in investigating, preparing or defending
against any investigation or litigation, commenced or threatened, or any claim
whatsoever and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the preliminary prospectus or the Prospectus, or in
any amendment thereof or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading in each case to
the extent, but only to the extent, that any such loss, liability, claim,
damage or expense arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with information relating to the Holder
furnished to the Issuers and the Guarantors in writing by or on behalf of the
Holder expressly for use therein. In no event shall the Holder, its directors,
officers or any Person who controls such Holder be liable or responsible for
any amount in excess of the amount by which the total amount received by such
Holder with respect to its sale of Transfer Restricted Securities pursuant to
a Registration Statement exceeds (i) the amount paid by such Holder for such
Transfer Restricted Securities and (ii) the amount of any damages that such
Holder, its directors, officers or any Person who controls such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
6. If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
Registered Notes. If the undersigned is a broker-dealer that will receive
Registered Notes for its own account in exchange for Original Notes that were
acquired as a result of market-making activities or other trading activities,
it acknowledges that it will deliver a prospectus in connection with any
resale of such Registered Notes; however, by so acknowledging and delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. If the undersigned is
a broker-dealer and Original Notes held for its own account were not acquired
as a result of market-making or other trading activities, such Original Notes
cannot be exchanged pursuant to the Exchange Offer.
7. Any obligation of the undersigned hereunder shall be binding upon the
successors, assigns, executors, administrators, trustees in bankruptcy and
legal and personal representatives of the undersigned.
8. Unless otherwise indicated herein under "Special Delivery Instructions,"
the certificates for the Registered Notes will be issued in the name of the
undersigned.
9. Holders of Original Notes whose Original Notes are accepted for exchange
will not receive accrued interest on such Original Notes for any period from
and after the last Interest Payment Date to which interest has been paid or
duly provided for on such Original Notes prior to the original issue date of
the Registered Notes or, if no such interest has been paid or duly provided
for, will not receive any accrued interest on such Original Notes, and the
undersigned waives the right to receive any interest on such Original Notes
accrued from and after such Interest Payment Date or, if no such interest has
been paid or duly provided for, from and after , 1999.
10. The undersigned will, upon request, execute and deliver any additional
documents deemed by the Issuers or the Exchange Agent to be necessary or
desirable to complete the sale, assignment and transfer of the Original Notes
tendered hereby. All authority herein conferred or agreed to be conferred in
this Letter of Transmittal shall survive the death or incapacity of the
undersigned and any obligation of the undersigned hereunder shall be binding
upon the heirs, executors, administrators, personal representatives, trustees
in bankruptcy, legal representatives, successors and assigns of the
undersigned. Except as stated in the Prospectus, this tender is irrevocable.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF ORIGINAL
NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE
ORIGINAL NOTES AS SET FORTH IN SUCH BOX.
5
<PAGE>
SPECIAL DELIVERY INSTRUCTIONS
(See Instruction 1)
To be completed ONLY IF the Registered Notes are to be issued or sent to
someone other than the undersigned or to the undersigned at an address
other than that provided above.
Mail [_] Issue [_] (check appropriate boxes) certificates to:
Name: _____________________________________________________________________
(Please Print)
Address: __________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
(Including Zip Code)
SPECIAL REGISTRATION INSTRUCTIONS
(See Item 5)
To be completed ONLY IF (i) the undersigned satisfies the conditions set
forth in Item 5 above, (ii) the undersigned elects to register its
Original Notes in the shelf registration described in the Registration
Rights Agreement and (iii) the undersigned agrees to indemnify certain
entities and individuals as set forth in Item 5 above.
[_] By checking this box the undersigned hereby (i) represents that it
is unable to make all of the representations and warranties set forth in
Item 4 above, (ii) elects to have its Original Notes registered pursuant
to the shelf registration described in the Registration Rights Agreement,
and (iii) agrees to indemnify certain entities and individuals identified
in, and to the extent provided in, Item 5 above.
6
<PAGE>
SIGNATURE
To be completed by all exchanging noteholders. Must be signed by
registered holder exactly as name appears on Original Notes. If signature
is by trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, please set forth full title. See Instruction 3.
X _________________________________________________________________________
X _________________________________________________________________________
Signature(s) of Registered Holder(s) or Authorized Signature
Dated: ____________________________________________________________________
Name(s):___________________________________________________________________
___________________________________________________________________________
Please Type or Print
Capacity: _________________________________________________________________
Address: __________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
Including Zip Code
Area Code and Telephone No.: ______________________________________________
SIGNATURE GUARANTEE (If Required by Instruction 1 below)
Certain Signatures Must be Guaranteed by an Eligible Institution
___________________________________________________________________________
Name of Eligible Institution Guaranteeing Signatures
___________________________________________________________________________
Address (including zip code) and Telephone Number (including area code) of Firm
___________________________________________________________________________
Authorized Signature
___________________________________________________________________________
Printed Name
___________________________________________________________________________
Title
Dated: ____________________________________________________________________
PLEASE READ THE INSTRUCTIONS ON THE REVERSE SIDE HEREOF, WHICH FORM A PART OF
THIS LETTER OF TRANSMITTAL.
7
<PAGE>
INSTRUCTIONS
1. Guarantee of Signatures. Signatures on this Letter of Transmittal must be
guaranteed by an eligible guarantor institution that is a member or
participant in the Securities Transfer Agents Medallion Program, the Stock
Exchange Medallion Program, the New York Stock Exchange Medallion Signature
Guarantee Program, or by an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 promulgated under the Exchange Act (an "Eligible
Institution") unless the box entitled "Special Delivery Instructions" has not
been completed or the Original Notes described above are tendered for the
account of an Eligible Institution.
2. Delivery of Letter of Transmittal and Original Notes; Guaranteed Delivery
Procedures. The Original Notes, together with a properly completed and duly
executed Letter of Transmittal (or copy thereof), should be mailed or
delivered to the Exchange Agent at the address set forth above.
Holders who wish to tender their Original Notes and (i) whose Original Notes
are not immediately available or (ii) who cannot deliver their Original Notes,
this Letter of Transmittal and all other required documents to the Exchange
Agent on or prior to the Expiration Date or (iii) who cannot complete the
procedures for delivery by book-entry transfer on a timely basis, may tender
their Original Notes by properly completing and duly executing a Notice of
Guaranteed Delivery pursuant to the guaranteed delivery procedures set forth
in the section entitled "Description of the Exchange Offer--Guaranteed
Delivery Procedures" in the Prospectus. Pursuant to such procedures: (i) such
tender must be made by or through an Eligible Institution; (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in
the form made available by the Issuers, must be received by the Exchange Agent
from such Eligible Institution on or prior to the Expiration Date; and (iii) a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other documents required thereby, along with the Certificates
(or a Book-Entry Confirmation (as defined in the Prospectus)) representing all
tendered Original Notes, in proper form for transfer, must be received by the
Exchange Agent within three New York Stock Exchange, Inc. trading days after
the date of execution of such Notice of Guaranteed Delivery, all as provided
in the section entitled "Description of the Exchange Offer--Guaranteed
Delivery Procedures" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile or mail to the Exchange Agent, and must include a guarantee by an
Eligible Institution in the form set forth in such Notice. For Original Notes
to be properly tendered pursuant to the guaranteed delivery procedure, the
Exchange Agent must receive a Notice of Guaranteed Delivery on or prior to the
Expiration Date.
THE METHOD OF DELIVERY OF ORIGINAL NOTES AND THE LETTER OF TRANSMITTAL OR
THE NOTICE OF GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS TO THE
EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER. INSTEAD OF DELIVERY
BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY
SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO
THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR
ORIGINAL NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR
RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, OR NOMINEES TO
EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
3. Signature on Letter of Transmittal, Bond Powers and Endorsements. If this
Letter of Transmittal is signed by a person other than a registered holder of
any Original Notes, such Original Notes must be endorsed or accompanied by
appropriate bond powers, signed by such registered holder exactly as such
registered holder's name appears on such Original Notes.
8
<PAGE>
If this Letter of Transmittal or any Original Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations, or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Company, proper evidence satisfactory to the Company of their authority to
so act must be submitted with this Letter of Transmittal.
4. Inadequate Space. If the space provided in the box captioned "Description
of Original Notes" is inadequate, the Certificate number(s) and/or the
principal amount of Original Notes and any other required information should
be listed on a separate signed schedule which is attached to this Letter of
Transmittal.
5. Questions, Requests for Assistance and Additional Copies. Questions and
requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the Prospectus, the Notice of Guaranteed Delivery and the
Letter of Transmittal may be obtained from the Exchange Agent or from your
broker, dealer, commercial bank, trust company or other nominee.
6. Miscellaneous. All questions as to the validity, form, eligibility
(including time of receipt), acceptance, and withdrawal of tendered Original
Notes will be resolved by the Issuers in their sole discretion, which
determination will be final and binding. The Issuers reserve the absolute
right to reject any or all Original Notes not properly tendered or any
Original Notes the Issuers' acceptance of which would, in the opinion of
counsel for the Issuers, be unlawful. The Company also reserves the right to
waive any defects, irregularities, or conditions of tender as to particular
Original Notes. The Issuers' interpretation of the terms and conditions of the
Exchange Offer, including the instructions in this Letter of Transmittal, will
be final and binding. Unless waived, any defects or irregularities in
connection with tenders of Original Notes must be cured within such time as
the Issuers shall determine. Neither the Company, the Exchange Agent, nor any
other person shall be under any duty to give notification of defects in such
tenders or shall incur any liability for failure to give such notification.
Tenders of Original Notes will not be deemed to have been made until such
defects or irregularities have been cured or waived. Any Original Notes
received by the Exchange Agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned
by the Exchange Agent to the tendering holder thereof as soon as practicable
following the Expiration Date.
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<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
To Exchange any and all Outstanding
13% First Mortgage Notes due 2006
for
13% First Mortgage Notes due 2006
of
HOLLYWOOD CASINO SHREVEPORT
AND
SHREVEPORT CAPITAL CORPORATION
Pursuant to the Exchange Offer and Prospectus dated , 1999
This Notice of Guaranteed Delivery, or one substantially equivalent to this
form, must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the 13% First Mortgage Notes due 2006 (the "Original Notes"),
of Hollywood Casino Shreveport, a Louisiana joint venture ("Shreveport") and
Shreveport Capital Corporation, a Louisiana corporation ("Shreveport Capital"
and, together with Shreveport, the "Issuers"), are not immediately available,
(ii) Original Notes, the Letter of Transmittal and all other required
documents cannot be delivered to State Street Bank and Trust Company (the
"Exchange Agent") on or prior to 5:00 P.M., New York City time, on the
Expiration Date (as defined in the Prospectus) or (iii) the procedures for
delivery by book-entry transfer cannot be completed on a timely basis. This
Notice of Guaranteed Delivery may be delivered by hand, overnight courier or
mail, or transmitted by facsimile transmission, to the Exchange Agent. See the
section entitled "Description of the Exchange Offer--Guaranteed Delivery
Procedures" in the Issuers' prospectus dated , 1999 (as the same may be
amended or supplemented from time to time, the "Prospectus"). Capitalized
terms not defined herein have the meanings assigned to them in the Prospectus.
The Exchange Agent for the Exchange Offer is:
State Street Bank and Trust Company
By Mail: Overnight Courier:
State Street Bank and Trust Company State Street Bank and Trust Company
Corporate Trust Department Corporate Trust Department
P.O. Box 778 2 Avenue de Lafayette
Boston, Massachusetts 02102 Fifth Floor, Corporate Trust Window
Attention: Mackenzie Elijah Boston, Massachusetts 02111-1724
Attention: Mackenzie Elijah
By Hand in New York (as Drop Agent)
State Street Bank and Trust Company By Hand in Boston:
61 Broadway State Street Bank and Trust Company
15th Floor, Corporate Trust Window 2 Avenue de Lafayette
New York, New York 10006 Fifth Floor, Corporate Trust Window
Boston, Massachusetts 02111-1724
Facsimile Transmission Number
(for Eligible Institutions Only) Confirm by telephone:
(617) 662-1452 (617) 662-1525
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of this Notice of Guaranteed Delivery via
facsimile to a number other than as set forth above will not constitute a
valid delivery.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
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<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Hollywood Casino Shreveport, a Louisiana
joint venture ("Shreveport"), and Shreveport Capital Corporation, a Louisiana
corporation ("Shreveport Capital" and, together with Shreveport, the
"Issuers"), upon the terms and subject to the conditions set forth in the
Issuers' Prospectus dated , 1999 (as the same may be amended or
supplemented from time to time, the "Prospectus"), and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the aggregate principal
amount of Original Notes set forth below pursuant to the guaranteed delivery
procedures set forth in the Prospectus under the caption "Description of the
Exchange Offer--Guaranteed Delivery Procedures."
Name(s) of Registered Holder(s): __________________________________________
Aggregate Principal Amount Amount Tendered: $ _____________________________
Certificate No.(s) (if available): ________________________________________
Total Principal Amount Represented by Original Notes Certificate(s): $ ____
If Original Notes will be tendered by book-entry transfer, provide the
following information:
DTC Account Number: _______________________________________________________
Date: _____________________________________________________________________
--------
* Must be in denominations of $1,000 and any integral multiple thereof.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs personal representatives, successors
and assigns of the undersigned.
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<PAGE>
PLEASE SIGN HERE
X
------------------------------------- -------------------------------
X
------------------------------------- ------------------------------
Signature(s) of Owner(s) or Authorized
Signatory Date
Area Code and Telephone Number: ___________________________________________
Must be signed by the holder(s) of the Original Notes as their name(s)
appear(s) on certificates for Original Notes or on a security position
listing, or by person(s) authorized to become registered holder(s) by
endorsement and documents transmitted with this Notice of Guaranteed
Delivery. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title
below.
Please print name(s) and address(es)
Name(s):
-------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Capacity:
------------------------------------------------------------------
Address(es):
---------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
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<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of or participant in the Securities Transfer
Agents Medallion Program, the Stock Exchange Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or a firm or other entity
identified in Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, as an "eligible guarantor institution," including (as such terms are
defined therein): (i) a bank; (ii) a broker, dealer, municipal securities
broker, municipal securities dealer, government securities broker, government
securities dealer; (iii) a credit union; (iv) a national securities exchange,
registered securities association or learning agency; or (v) a savings
association that is a participant in a Securities Transfer Association
recognized program (each of the foregoing being referred to as an "Eligible
Institution"), hereby guarantees to deliver to the Exchange Agent, at one of
its addresses set forth above, either the Original Notes tendered hereby in
proper form for transfer, or confirmation of the book-entry transfer of such
Original Notes to the Exchange Agent's account at The Depositary Trust Company
("DTC"), pursuant to the procedures for book-entry transfer set forth in the
Prospectus, a properly completed and duly executed Letter of Transmittal and
any other documents required by the Letter of Transmittal within three New
York Stock Exchange, Inc. trading days after the date of execution of this
Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Letter(s) of
Transmittal and the Original Notes tendered hereby to the Exchange Agent
within the time period set forth above and that failure to do so could result
in a financial loss to the undersigned.
--------------------------------- ---------------------------------
Name of Firm Authorized Signature
--------------------------------- ---------------------------------
Address Title
--------------------------------- ---------------------------------
Zip Code (Please Type or Print)
Area Code and Telephone No. _____ Dated: __________________________
NOTE: DO NOT SEND CERTIFICATES FOR ORIGINAL NOTES WITH THIS FORM.
4
