<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1997
Commission file number 0-10619
HOLLYWOOD PARK, INC. HOLLYWOOD PARK OPERATING COMPANY
(Exact Name of Registrant (Exact Name of Registrant
as Specified in Its Charter) as Specified in Its Charter)
Delaware Delaware
(State or Other Jurisdiction of (State or Other Jurisdiction of
Incorporation of Organization) Incorporation of Organization)
95-3667491 95-3667220
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
1050 South Prairie Avenue Inglewood, California 90301
(Address of Principal Executive Offices) (Zip Code)
(310) 419-1500
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrants: (a) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) have been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
The number of outstanding shares of the Hollywood Park, Inc.'s common stock, as
of the date of the close of business on August 13, 1997: 23,851,936.
<PAGE>
Hollywood Park, Inc.
Table of Contents
Part I
<TABLE>
<S> <C>
Item 1. Financial Information
Consolidated Balance Sheets as of June 30, 1997
and December 31, 1996..................................... 1
Consolidated Statements of Operations for the
three and six months ended June 30, 1997 and 1996......... 2
Consolidated Statements of Cash Flows for the six months
ended June 30, 1997 and 1996.............................. 3
Notes to Consolidated Financial Statements................. 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
General.................................................... 9
Results of Operations...................................... 10
Liquidity and Capital Resources............................ 11
Part II
Item 5. Other Information............................................. 15
Item 6.a Exhibits...................................................... 15
Other Financial Information................................... 17
Signatures.................................................... 20
</TABLE>
<PAGE>
Hollywood Park, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------ ------------
(unaudited)
Assets (in thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 38,409 $ 11,922
Restricted cash 11,096 4,486
Short term investments 1,275 4,766
Other receivables, net of allowance for doubtful accounts
of $780,000 in 1997, and $1,089,000 in 1996 10,625 7,110
Prepaid expenses and other assets 21,686 6,215
Deferred tax assets 6,587 6,422
Current portion of notes receivable 40 38
------------ ------------
Total current assets 89,718 40,959
Notes receivable 9,464 819
Property, plant and equipment, net 277,084 130,835
Goodwill, net 32,685 20,370
Other assets 17,147 12,903
------------ ------------
$426,098 $205,886
============ ============
- ------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 13,163 $ 10,043
Accrued lawsuit settlement 2,750 2,750
Accrued compensation 4,803 4,198
Accrued liabilities 35,499 9,733
Gaming liabilities 2,545 2,499
Racing liabilities 15,672 6,106
Current portion of notes payable 6,222 35
------------ ------------
Total current liabilities 80,654 35,364
Notes payable 116,396 282
Deferred tax liabilities 9,411 9,065
------------ ------------
Total liabilities 206,461 44,711
Minority interests 3,030 3,015
Stockholders' Equity:
Capital stock --
Preferred - $1.00 par value, authorized 250,000 shares;
27,499 issued and outstanding 28 28
Common - $.10 par value, authorized 40,000,000 shares;
23,793,636 issued and outstanding in 1997, and 18,332,016
in 1996 2,380 1,833
Capital in excess of par value 221,222 167,074
Accumulated deficit (7,023) (10,775)
Total stockholders' equity 216,607 158,160
------------ ------------
$426,098 $205,886
============ ============
</TABLE>
- --------
See accompanying notes to consolidated financial statements.
1
<PAGE>
Hollywood Park, Inc.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
--------------------- ---------------------
1997 1996 1997 1996
--------- --------- --------- ---------
(in thousands, except per share data - unaudited)
<S> <C> <C> <C> <C>
REVENUES:
Gaming $14,165 $12,962 $26,847 $24,803
Racing 26,239 27,128 35,868 38,353
Food and beverage 4,292 4,463 6,860 7,637
Other income 1,628 1,874 3,564 3,487
------- ------- ------- -------
46,324 46,427 73,139 74,280
------- ------- ------- -------
EXPENSES:
Gaming 8,112 7,152 15,161 14,489
Racing 10,465 10,709 15,409 15,996
Food and beverage 5,091 4,985 8,819 9,082
Administrative 9,696 11,451 18,531 21,589
Other 680 501 1,439 1,099
------- ------- ------- -------
34,044 34,798 59,359 62,255
------- ------- ------- -------
Income before interest, income taxes, depreciation,
amortization and other non-recurring expenses 12,280 11,629 13,780 12,025
Write off of investment in Sunflower 0 66 0 11,412
Depreciation and amortization 2,896 2,487 5,780 5,400
Interest expense 65 54 129 898
------- ------- ------- -------
Income (loss) before minority interests and income taxe 9,319 9,022 7,871 (5,685)
Minority interests 41 0 63 0
Income tax expense 3,675 3,773 3,100 2,444
------- ------- ------- -------
Net income (loss) $ 5,603 $ 5,249 $ 4,708 ($8,129)
======= ======= ======= =======
=====================================================================================================
Dividend requirements on convertible preferred stock $ 481 $ 481 $ 962 $ 962
Net income (loss) attributable to (allocated to)
common shareholders $ 5,122 $ 4,768 $ 3,746 ($ 9,091)
Per common share:
Net income (loss) - primary $ 0.28 $ 0.26 $ 0.20 ($ 0.49)
Net income (loss) - fully diluted $ 0.27 $ 0.25 $ 0.20 ($ 0.49)
Number of shares - primary 18,462 18,610 18,366 18,613
Number of shares - fully diluted 20,754 20,902 20,657 20,904
</TABLE>
- --------
See accompanying notes to consolidated financial statements.
2
<PAGE>
Hollywood Park, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the six months ended June 30,
---------------------------------
1997 1996
------------ ------------
(in thousands - unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $4,708 ($8,129)
Adjustment to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization 5,780 4,901
Issuance of note payable for repurchase of common stock 3,428 0
Retirement of repurchased common stock (3,465) 0
Issuance of common stock for Pacific Casino Management, Inc. 500 0
Changes in accounts due to deconsolidation of subsidiary
in bankruptcy:
Property, plant and equipment 0 58,380
Secured notes payable 0 (28,904)
Unsecured notes payable 0 (15,373)
Goodwill and lease with TRAK East 0 6,908
Changes in assets and liabilities, net of the effects of the
purchase of a business:
Minority interests 15 0
Unrealized gain (loss) on short term bond investing 8 (7)
Gain on sale or disposal of property, plant and equipment (24) (5)
Increase in restricted cash (6,610) (7,028)
Increase in other receivables, net (1,520) (759)
(Increase) decrease in prepaid expenses and other assets (1,287) 3,689
(Increase) decrease in deferred tax assets (165) 2,684
Increase in accounts payable 387 629
Decrease in accrued lawsuit settlement 0 (2,482)
Increase in accrued compensation 605 346
Increase (decrease) in accrued liabilities 3,001 (4,262)
Increase (decrease) in gaming liabilities 46 (1,207)
Increase in racing liabilities 9,566 11,436
Decrease in deferred tax liabilities (24) (5,313)
------- -------
Net cash provided by operating activities 14,949 15,504
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (3,927) (9,132)
Receipts from sale of property, plant and equipment 0 6
Principal collected on notes receivable 18 16
Purchase of short term investments (1,937) (11,154)
Proceeds from short term investments 5,428 13,548
Long term gaming assets 0 598
Cash acquired in the purchase of a business, net of
transaction and other costs 12,264 0
------- -------
Net cash provided by (used in) investing activities 11,846 (6,118)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock options exercised 654 0
Dividends paid to preferred stockholders (962) (962)
------- -------
Net cash provided by (used in) financing activities (308) (962)
------- -------
Increase in cash and cash equivalents 26,487 8,424
Cash and cash equivalents at the beginning of the period 11,922 22,406
------- -------
Cash and cash equivalents at the end of the period $38,409 $30,830
======= =======
</TABLE>
- ---------
See accompanying notes to consolidated financial statements.
3
<PAGE>
Hollywood Park, Inc.
Notes to Consolidated Financial Statements
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial information included herein has been prepared in conformity with
generally accepted accounting principles as reflected in the financial
statements included in Hollywood Park, Inc.'s ("Hollywood Park" or the
"Company") consolidated Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1996. This Quarterly Report
on Form 10-Q does not include certain footnotes and financial presentations
normally presented annually and should be read in conjunction with the Company's
1996 Annual Report on Form 10-K.
The information furnished herein is unaudited; however, in the opinion of
management reflects all normal and recurring adjustments that are necessary to
present a fair statement of the financial results for the interim periods. It
should be understood that accounting measurements at interim dates inherently
involve greater reliance on estimates than at year end. The interim racing
results of operations are not indicative of the results for the full year, due
to the seasonality of the horse racing business.
ACQUISITION OF BOOMTOWN, INC. On June 30, 1997, pursuant to the Agreement and
Plan of Merger dated as of April 23, 1996, by and among Hollywood Park, HP
Acquisition, Inc., a wholly owned subsidiary of the Company, and Boomtown, HP
Acquisition, Inc. was merged with and into Boomtown (the "Merger"). As a result
of the Merger, Boomtown became a wholly owned subsidiary of the Company and each
share of Boomtown common stock was converted into the right to receive 0.625 of
a share of Hollywood Park's common stock. Approximately 5,362,850 shares of
Hollywood Park common stock, valued at $9.8125, (excluding shares repurchased
from Edward P. Roski, Jr. ("Roski") and subsequently retired, as described
below) were issued in the Merger.
The Merger was accounted for under the purchase method of accounting for a
business combination, and thus the balance sheet of Boomtown as of June 30,
1997, is consolidated with Hollywood Park's, but not Boomtown's statement of
operations. The Merger generated approximately $2,683,000 of excess acquisition
cost over the recorded value of the net assets acquired, all of which was
allocated to goodwill, to be amortized over 40 years. The amortization of the
goodwill is not deductible for income tax purposes.
The Company acquired three of the four Boomtown properties, Boomtown Reno,
Boomtown New Orleans, and Boomtown Biloxi. Boomtown's Las Vegas property was
divested following the Merger on July 1, 1997. Boomtown's Las Vegas property was
divested because it had generated significant operating losses since it opened,
thus reducing the overall profitability of Boomtown. Boomtown and its
subsidiaries exchanged substantially all of their interest in the Las Vegas
property, including substantially all of the operating assets and notes
receivable of approximately $27,300,000 from the landowner/lessor of the Las
Vegas property, IVAC, a California general partnership of which Roski, a former
Boomtown director, is a general partner, for, among other things, two unsecured
notes receivable totaling approximately $8,465,000, cash, assumption of certain
liabilities and release from certain lease obligations. The first note
receivable is for $5,000,000, bearing interest at Bank of America National Trust
and Savings Association's ("Bank of America") reference rate plus 1.5% per year,
with annual principal receipts of $1,000,000 plus accrued interest commencing on
July 1, 1998. The second note is for approximately $3,465,000, bearing interest
at Bank of America's reference rate plus 0.5% per year, with the principal and
accrued interest payable to the Company, in full, on July 1, 2000. In addition,
concurrently with the divestiture of the Las Vegas property, Hollywood Park
purchased and retired 446,491 shares of Hollywood Park common stock received by
Roski in the Merger for a price of approximately $3,465,000, payable in the form
of a Hollywood Park promissory note. The promissory note bears interest at Bank
of America's reference rate plus 1.0%. Interest is payable quarterly
4
<PAGE>
and annual principal payments in five equal installments of approximately
$693,000 are due commencing July 1, 1998.
Boomtown Reno is situated on 569 acres (though current operations presently
utilize approximately 61 acres) in Verdi Nevada, two miles from the California
border and seven miles west of downtown Reno, on Interstate 80, the major
highway connecting northern California and Nevada. Boomtown Reno draws a
significant portion of its customers from Interstate 80 traffic. Boomtown Reno
offers a 40,000-square foot casino, with 1,320 slot machines and 44 table games,
a 122-room hotel, a 35,000-square foot family entertainment center, a 16-acre
truck stop, a full-service recreational vehicle park, a newly renovated service
station and mini-mart, and other related amenities.
Boomtown New Orleans opened in August 1994 on a 50 acre site in Harvey,
Louisiana, approximately ten miles form the French Quarter of New Orleans.
Gaming operations are conducted from a 250-foot replica of a paddle-wheel
riverboat, offering 911 slot machines and 55 table games in a 30,000-square foot
casino. The land-based facility includes a 20,000-square foot family
entertainment center, a western saloon and dance hall, with restaurant and
buffet services.
As of August 8, 1997, Boomtown New Orleans is wholly owned by the Company.
Previously, Boomtown New Orleans was owned and operated by a Louisiana limited
partnership (the "Louisiana Partnership"), of which 92.5% was owned by Hollywood
Park with the remaining 7.5% owned by Eric Skrmetta ("Skrmetta"). On November
18, 1996, Boomtown entered into an agreement with Skrmetta under which it would
pay approximately $5,670,000 in return for Skrmetta's interest in the Louisiana
Partnership. Under the terms of the agreement, Boomtown made a down payment of
$500,000, and the Company paid the remaining $5,170,000 on August 8, 1997.
Boomtown Biloxi opened in July 1994 and occupies 19 acres on Biloxi,
Mississippi's historic Back Bay. The dockside property consists of a land-based
facility which houses all non-gaming amenities including a 20,000-square foot
family entertainment center, food and beverage facilities and a western themed
dance hall and cabaret. Gaming operations are conducted on a 40,000-square foot
barge, which is permanently moored to the land-based facility. The casino
covers 33,632-square feet, offering 1,038 slot machines, 35 table games and
related amenities.
Boomtown Biloxi is operated by a Mississippi limited partnership (the
"Mississippi Partnership"), of which 85% is owned and controlled by Hollywood
Park, with the remaining 15% owned by Skrmetta. Both Hollywood Park and
Skrmetta have an option, exercisable over a four year period beginning July
1997, to exchange Skrmetta's interest in the Mississippi Partnership, at
Skrmetta's option, for either cash and/or shares of Hollywood Park common stock
with an aggregate value equal to the value of Skrmetta's 15% interest in the
Mississippi Partnership, with such value determined by a formula set forth in
the relevant partnership agreements. In August 1997, Hollywood Park is planning
to notify Skrmetta of the Company's intention to exercise this option and
acquire Skrmetta's 15% interest in the partnership.
The Boomtown Biloxi barge and building shell were owned by National Gaming
Mississippi, Inc., a subsidiary of Chartwell Leisure, Inc. ("National Gaming").
Boomtown Biloxi leased these assets from National Gaming under a 25-year lease
with a 25-year renewal option, and also received marketing services from
National Gaming. National Gaming received 16% of the adjusted earnings before
interest, taxes, depreciation and amortization ("Adjusted EBITDA"), as defined
in the relevant contract. On August 4, 1997, Hollywood Park executed an
agreement pursuant to which one of the Hollywood Park entities repurchased the
assets for $5,250,000, payable through a down payment of approximately
$1,500,000, with the balance paid in three equal annual installments of
$1,250,000. The Adjusted EBITDA participation and other related agreements were
terminated upon repurchase of the assets.
PRO FORMA RESULTS OF OPERATIONS The following pro forma results of operations
were prepared under the assumption that the acquisition of Boomtown had occurred
at the beginning of the period presented. The
5
<PAGE>
historical results of operations of Boomtown (excluding the results of
operations of Boomtown's Las Vegas property, which was divested in connection
with the Merger) were combined with Hollywood Park's. Pro forma adjustments were
made for the following: interest income earned on the excess net proceeds from
the issuance of $125,000,000 of 9.5% Hollywood Park Senior Subordinated Notes
(the "Notes") (see Item 2. Liquidity and Capital Resources); elimination of the
amortization of the issuance costs associated with Boomtown's First Mortgage
Notes; amortization of the issuance costs of the Notes; amortization of the
excess purchase price over net assets acquired in the Merger; elimination of the
amortization of the discount associated with the Boomtown First Mortgage Notes;
interest expense associated with the promissory notes from Hollywood Park to the
former lessor of Boomtown's Las Vegas property; elimination of the interest
expense associated with the Boomtown First Mortgage Notes; amortization of the
up-front loan fees associated with the Company's Bank Credit Facility; interest
expense associated with the Notes at 9.5%; and the estimated 40% tax benefit
associated with the pro forma adjustments.
HOLLYWOOD PARK, INC.
Unaudited Pro Forma Combined Consolidated Results of Operations
<TABLE>
<CAPTION>
For the three months ended
June 30,
-------------------------------------
1997 1996
------------ -------------
<S> <C> <C>
Revenues:
Gaming $ 56,976,000 $ 53,521,000
Racing 26,239,000 27,128,000
Other 16,203,000 18,159,000
------------ -------------
99,418,000 98,808,000
------------ -------------
Operating income (loss) (a) 28,796,000 (19,688,000)
Net income (loss) $ 6,166,000 ($27,730,000)
============ =============
Dividend requirements on convertible preferred stock $ 481,000 $ 481,000
Net income (loss) available to (allocated to) common shareholders $ 5,685,000 ($28,211,000)
============ =============
Per common share:
Net income (loss) - primary $0.24 ($1.18)
Net income (loss) - fully diluted $0.24 ($1.18)
<CAPTION>
For the six months ended
June 30,
-------------------------------------
1997 1996
------------ -------------
<S> <C> <C>
Revenues:
Gaming $110,196,000 $ 103,412,000
Racing 35,868,000 38,353,000
Other 28,179,000 29,960,000
------------ -------------
174,243,000 171,725,000
------------ -------------
Operating income (loss) (b) 32,946,000 (29,607,000)
Net income (loss) $ 6,538,000 ($40,674,000)
============ =============
Dividend requirements on convertible preferred stock $ 962,000 $ 962,000
Net income (loss) available to (allocated to) common shareholders $ 5,576,000 ($41,636,000)
============ =============
Per common share:
Net income (loss) - primary $0.23 ($1.74)
Net income (loss) - fully diluted $0.23 ($1.74)
</TABLE>
_____
(a) The 1996 operating loss included the non-recurring loss on Boomtown's sale
of its Las Vegas property of $36,562,000.
(b) The 1996 operating loss included the non-recurring write off of Hollywood
Park's investment in Sunflower of $11,412,000, and the non-recurring loss on
Boomtown's sale of its Las Vegas property of $36,562,000.
6
<PAGE>
RESTRICTED CASH Restricted cash as of June 30, 1997, and as of December 31,
1996, was for amounts due to horsemen for purses, stakes and awards.
GAMING REVENUE AND PROMOTIONAL ALLOWANCES Hollywood Park-Casino gaming revenue
consisted of fees collected from patrons on a per seat or per hand played basis.
Revenues in the accompanying statements of operations exclude the retail value
of food and beverage provided to players on a complimentary basis. The
estimated cost of providing these promotional allowances during the three and
six months ended June 30, 1997, was $339,000, and $665,000 respectively. The
estimated cost of providing these promotional allowances during the three and
six months ended June 30, 1996, was $888,000 and $1,668,000, respectively.
ESTIMATES Financial statements prepared according to generally accepted
accounting principles require the use of management estimates, including
estimates used to evaluate the recoverability of property, plant and equipment,
to determine the fair value of financial instruments, to account for the
valuation allowance for deferred tax assets and to determine litigation related
obligations. Actual results could differ from these estimates.
EARNINGS PER SHARE Primary earnings per share were computed by dividing net
income (loss) available to (allocated to) common shareholders (net income (loss)
less preferred dividend requirements) by the weighted average number of common
shares outstanding during the period. Fully diluted per share amounts were
similarly computed, but include the effect, when dilutive, of the conversion of
the convertible preferred shares and exercise of stock options.
CASH FLOWS Cash and cash equivalents consisted of certificates of deposit and
short term investments with maturities of 90 days or less.
RECLASSIFICATIONS Certain reclassifications have been made to the 1996 balances
to be consistent with the 1997 financial statement presentation.
NOTE 2 -- SHORT TERM INVESTMENTS
As of June 30, 1997, short term investments consisted of corporate bonds valued
at $1,275,000, with Moody's ratings of B3 to BA3, and Standard and Poors ratings
of B to BB-, though some of the bonds are not rated by either agency.
Investments in corporate bonds carry a greater amount of principal risk than
other investments made by the Company, and yield a correspondingly higher
return. The corporate bond investment as of June 30, 1997, had a weighted
average maturity of 1.2 years, and because the Company reasonably expects to
liquidate these investments in its normal operating cycle, the investments are
classified as short term, are held as available for sale and are recorded in the
accompanying financial statements at their fair value, as determined by the
quoted market price.
For the six months ended June 30, 1997, proceeds from the sale or redemption of
corporate bond investments were approximately $5,428,000, and gross realized
gains and gross realized losses were $2,000 and $82,000, respectively. The net
unrealized holding gain for the six months ended June 30, 1997, was
approximately $8,000.
7
<PAGE>
NOTE 3 -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment held as of June 30, 1997, and December 31, 1996,
consisted of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1997 (a) 1996
------------ ------------
<S> <C> <C>
Land and land improvements $ 49,471,000 $ 32,215,000
Buildings and building improvements 259,298,000 150,935,000
Equipment 74,566,000 31,531,000
Vessel 18,925,000 0
Construction in progress 5,548,000 128,000
------------ ------------
407,808,000 214,809,000
Less accumulated depreciation 130,724,000 83,974,000
------------ ------------
$277,084,000 $130,835,000
============ ============
</TABLE>
(a) Inclusive of Boomtown assets.
NOTE 4 -- SECURED AND UNSECURED NOTES PAYABLE
Notes payable as of June 30, 1997, and December 31, 1996, consisted of the
following:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------ -------------
<S> <C> <C>
Secured notes payable (a) $114,879,000 $ 0
Unsecured notes payable 3,745,000 317,000
Capital lease obligations (a) 3,994,000 0
------------ --------
122,618,000 317,000
Less current maturities 6,222,000 35,000
------------ --------
$116,396,000 $282,000
============ ========
</TABLE>
(a) The balances as of June 30, 1997, include amounts for notes payable related
to Boomtown.
NOTE 5 -- DEVELOPMENT EXPENSES
Included in Administrative expenses for the three and six months ended June 30,
1997, was $64,000 and $114,000 of development expenses, respectively; primarily
related to the master site plan for the Inglewood property.
Included in Administrative expenses for the three and six months ended June 30,
1996, was $665,000 and $317,000 of development expenses, respectively; primarily
related to the proposed stadium, the master site plan for the Inglewood
property, and card clubs in Stockton and Hawaiian Gardens.
NOTE 6 -- ACCOUNTING FOR STOCK-BASED COMPENSATION
Statement of Financial Accounting Standards No. 123, ("SFAS 123") Accounting for
Stock-Based Compensation, requires that the Company disclose additional
information about employee stock-based compensation plans. The objective of
SFAS 123 is to estimate the fair value, based on the stock price at the grant
date, of the Company's stock options to which employees become entitled when
they have rendered the requisite service and satisfied any other conditions
necessary to earn the right to benefit from the stock options. The fair market
value of a stock option is to be estimated using an option-pricing model that
takes into account, as of the grant date, the exercise price and expected life
of the option, the current price of the underlying stock and its expected
volatility, expected dividends on the stock and the risk-free interest rate for
the expected term of the options.
8
<PAGE>
The Company has calculated the pro forma financial results as required under
SFAS 123 and noted that the impact on net income (loss) for the three and six
months ended June 30, 1997 and 1996 was immaterial.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- ------- -----------------------------------------------------------------------
OF OPERATIONS
- -------------
Except for the historical information contained herein, the matters addressed in
this Quarterly Report on Form 10-Q may constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities and Exchange Act of 1934, as amended. Such
forward-looking statements are subject to a variety of risks and uncertainties
that could cause actual results to differ materially from those anticipated by
the Company's management, including the failure to obtain or retain gaming
licenses or regulatory approvals, the inability to directly operate the
Hollywood Park-Casino beyond December 31, 1998, or to find a suitable operator
if the Company can no longer directly operate the Hollywood Park-Casino, failure
to utilize Hollywood Park's financial resources to improve the financial
position of its newly acquired subsidiary Boomtown, failure to complete or
successfully operate anticipated expansion projects, the failure to obtain
adequate financing to meet the Company's strategic goals, difficulties in
completing integration of Hollywood Park and Boomtown, and the failure to
implement a REIT/Paired-Share Structure (as described herein), or to realize the
potential benefits to be derived therefrom. The Private Securities Litigation
Reform Act of 1995 (the "Act") provides certain "safe harbor" provisions for
forward-looking statements. All forward-looking statements made in this
Quarterly Report on Form 10-Q are made pursuant to the Act. For more
information on the potential factors which could affect the Company's financial
results, please review the Company's filings with the Securities and Exchange
Commission, including the Company's 1996 Annual Report on Form 10-K, and the
Company's other filings including the Joint Proxy/Prospectus dated September 20,
1996.
GENERAL Hollywood Park is a gaming, sports and entertainment company engaged in
the ownership and operation of casinos, California card club casinos, pari-
mutuel racing facilities, and the development of other gaming, sports and
entertainment opportunities. As of June 30, 1997, the Company owns and operates
a casino and hotel in Verdi, Nevada ("Boomtown Reno"), a riverboat casino in
Harvey, Louisiana ("Boomtown New Orleans") and a dockside casino in Biloxi,
Mississippi ("Boomtown Biloxi"). The Company also owns and operates the
Hollywood Park-Casino, a California card club located in the Los Angeles
metropolitan area, and owns 89.8% of Crystal Park Hotel and Casino Development
Company LLC, ("Crystal Park LLC") which built and presently leases, to an
unaffiliated third party, the Crystal Park Hotel and Casino ("Crystal Park"),
also located in the Los Angeles metropolitan area. Hollywood Park owns and
operates the Hollywood Park Race Track, located on the same premises as the
Hollywood Park-Casino, which for the past 58 years has been ranked among the
country's most distinguished thoroughbred racing facilities. On November 8,
1997, Hollywood Park Race Track will host the prestigious Breeders' Cup
championship racing series for a third time. In 1994, the Company acquired Turf
Paradise, Inc. ("Turf Paradise"), a thoroughbred racing facility located in
Phoenix, Arizona, and Sunflower Racing, Inc. ("Sunflower"), a greyhound and
thoroughbred racing facility located in Kansas City, Kansas. On May 17, 1996,
as a result of intense competition from Missouri riverboat gaming, Sunflower
filed for reorganization under Chapter 11 of the Bankruptcy Code. Sunflower is
operating as a debtor in possession during the bankruptcy.
Hollywood Park's strategic plan is to grow its gaming, sports and entertainment
businesses by (i) increasing the utilization of its existing properties, (ii)
developing excess real estate at its existing sites, and (iiI) making
acquisitions, principally in the gaming industry, to diversify its operations
and to achieve economies of scale.
PROPOSED EXPANSION The Company is planning an approximately $25,000,000
expansion of Boomtown Reno, to include an additional 200 hotel rooms, a 13,000-
square foot gaming floor addition, allowing for an additional 200 slot machines,
an entertainment lounge, meeting facilities, and renovation of the existing
gaming floors and food and beverage facilities. Construction is expected to
begin in the fourth quarter of 1997 and is expected to be completed by year end
1998.
9
<PAGE>
Renovations to Boomtown New Orleans, at a cost of approximately $10,000,000,
will include the build out and furnishing of the second story of the land-based
facility, to include a second story entrance onto the gaming boat, enhanced food
and beverage services, meeting facilities and renovation of the gaming floors.
Construction is expected to begin during the fourth quarter of 1997 and conclude
in mid-1998.
The Company, through a joint venture with Hilton Gaming Corporation, has an
application pending for the remaining riverboat gaming license to be awarded for
operations on the Ohio River in Indiana. The Company filed an updated
application (as a result of the Merger) in August 1997, which will be reviewed
by the Indiana Gaming Commission over a 60-day period, as of the date of filing.
The Indiana Gaming Commission is presently scheduled to meet between October 15,
1997 and November 15, 1997, and render its decision regarding granting of the
final gaming license within three weeks of this meeting. There can be no
assurance that Hollywood Park will be granted the gaming license, and if granted
the initial gaming license will receive all other required approvals and
environmental permits to proceed with this project.
POSSIBLE RESTORATION OF REAL ESTATE INVESTMENT TRUST/PAIRED-SHARE STRUCTURE
From 1982 to 1991, the Company was operated as a Real Estate Investment Trust
("REIT") known as Hollywood Park Realty Enterprises, Inc. ("HPRE"), and its
stock was paired with, or stapled to, that of Hollywood Park Operating Company
("HPOC"). HPRE was primarily an owner and lessor of real property. HPOC was
primarily engaged in the active conduct of racing operations and leased a
significant amount of real property from HPRE to conduct those racing
operations. Generally, a REIT is required to distribute, as dividends to its
stockholders, 95% of its taxable income (other than net capital gains), and such
amounts distributed are not subject to federal income tax at the corporate
level. Effective as of January 1, 1992, as part of a corporate reorganization,
HPRE and HPOC ceased operating in a REIT/Paired-Share Structure, HPOC became a
wholly owned subsidiary of HPRE and HPRE was renamed Hollywood Park, Inc.
In May 1997, the Company announced that it was exploring the possibility of
restoring the REIT/Paired-Share Structure. Any decisions to proceed with
restoring the REIT/Paired-Share Structure will depend on a variety of factors,
including tax consequences and receipt of board, stockholder, regulatory and
other required approvals. The Company has yet to determine whether it will
submit a ruling request to the Internal Revenue Service on certain aspects of
the restored REIT/Paired-Share Structure. There can be no assurance that the
Company will elect to proceed with the restoration of the REIT/Paired-Share
Structure, or that the benefits expected from the restoration will be achieved.
RESULTS OF OPERATIONS
Three months ended June 30, 1997, compared to
---------------------------------------------
the three months ended June 30, 1996
------------------------------------
Total revenues for the three months ended June 30, 1997, decreased by $103,000
as compared with the three months ended June 30, 1996. Gaming revenues
increased by $1,203,000, or 9.3%, due primarily to Crystal Park lease rent
revenue of $900,000 recorded during the three months ended June 30, 1997, with
no corresponding lease rent revenue in the operating results for the three
months ended June 30, 1996. Crystal Park opened on October 25, 1996, under a
triple net lease between Crystal Park LLC and Compton Entertainment, Inc.
("CEI") (the lessee/operator of Crystal Park). The balance of the increase in
Gaming revenues was attributable to the Hollywood Park-Casino. Racing revenues
decreased by $889,000, or 3.3%, primarily due to one fewer live race day at
Hollywood Park and five fewer live race days at Turf Paradise in 1997 as
compared to 1996. Other income decreased by $246,000, or 13.1%, primarily due
to declines in interest earned on excess funds.
Total operating expenses decreased by $754,000, or 2.2%. Gaming expenses
increased by $960,000, or 13.4%, primarily due to increased marketing costs
associated with tournament play. Racing expenses decreased by $244,000, or
2.3%, due primarily to fewer live race days in 1997 as compared to 1996.
Administrative expenses decreased by $1,755,000, or 15.3%, due primarily to
reduced expansion disbursements in 1997 and cost savings programs implemented at
all of Hollywood Park's properties.
10
<PAGE>
Depreciation and amortization increased by $409,000, or 16.4%, primarily due to
depreciation and amortization associated with Crystal Park recorded in 1997 with
no corresponding expense in 1996.
Six months ended June 30, 1997 compared to the six months ended June 30, 1996
-----------------------------------------------------------------------------
As of April 1, 1996, Sunflower's results of operations were no longer
consolidated with Hollywood Park's results; therefore, the results of operations
for the six months ended June 30, 1997, are exclusive of Sunflower's results of
operations and the financial results for the six months ended June 30, 1996,
included Sunflower's results of operations through March 31, 1996.
Total revenue for the six months ended June 30, 1997, decreased by $1,141,000,
or 1.5%, as compared to the six months ended June 30, 1996, due primarily to the
inclusion of $1,782,000 of Sunflower revenues in 1996 with no corresponding
revenues in the 1997 results. Gaming revenues increased by $2,044,000, or 8.2%,
primarily due to $1,500,000 of Crystal Park lease rent revenue during the six
months ended June 30, 1997, with no corresponding revenue during the six months
ended June 30, 1996. Crystal Park opened on October 25, 1996, under a triple
net lease between Crystal Park LLC and CEI (the lessee/operator of Crystal
Park). Racing revenues decreased by $2,485,000, or 6.5%, due primarily to one
fewer live race day at Hollywood Park, on-track attendance declines, and the
inclusion of $1,317,000 of Racing revenues attributable to Sunflower in 1996 and
no corresponding revenues in 1997. Food and beverage revenues declined by
$777,000, or 10.2%, due primarily to the inclusion of Sunflower revenues in
1996, and no corresponding revenues in 1997.
Total operating expenses decreased by $2,896,000, or 4.7%, primarily due to the
inclusion of $1,703,000 of Sunflower expenses in 1996 with no corresponding
expenses in 1997. Gaming expenses increased by $672,000, or 4.6%, due primarily
to increased marketing expenses related to tournament play. Racing expenses
decreased by $587,000, or 3.7%, due primarily to fewer live race days in 1997 as
compared to 1996, and cost saving programs implemented at all of Hollywood
Park's properties. Administrative expenses decreased by $3,058,000, or 14.2%,
due primarily to decreased expansion disbursements in 1997, and the inclusion of
Sunflower's expenses in 1996 with no corresponding expenses in 1997.
Depreciation and amortization increased by $380,000, or 7.0%, primarily due to
depreciation and amortization associated with Crystal Park recorded in 1997 with
no corresponding expense in 1996, offset by the inclusion of Sunflower's
depreciation and amortization expenses in 1996 and not in 1997. Interest
expense decreased by $769,000, or 85.6%, due to the inclusion of Sunflower's
interest expense in 1996 and no corresponding expense in 1997.
LIQUIDITY AND CAPITAL RESOURCES
Hollywood Park's principal source of liquidity as of June 30, 1997, was cash and
cash equivalents of $38,409,000. Cash and cash equivalents increased by
$26,487,000 during the six months ended June 30, 1997, primarily due to cash
acquired in the acquisition of Boomtown and normal operating cash flows.
Cash and cash equivalents increased by $8,424,000, during the six months ended
June 30, 1996, primarily due to normal operating cash flows, netted against
capital expenditures related to the construction of Crystal Park.
HOLLYWOOD PARK On June 30, 1997, Hollywood Park and a bank syndicate lead by
Bank of America finalized the reducing revolving credit facility (the "Bank
Credit Facility") for up to $225,000,000. On August 7, 1997, the Bank Credit
Facility was reduced to approximately $104,500,000 by the net cash proceeds
received from the issuance of the Hollywood Park Senior Subordinated Notes (the
"Notes") (as described below). The Bank Credit Facility is secured by
substantially all of the assets of Hollywood Park and its significant
subsidiaries, and imposes certain customary affirmative and negative covenants.
11
<PAGE>
The Bank Credit Facility has been amended twice. First, among other matters, to
reduce the availability of the facility until the Bank Credit Facility was
approved by the Louisiana Gaming Control Board. The Company received this
approval on July 10, 1997. Second, among other matters, to allow the co-
issuance of the Notes by HPOC with Hollywood Park.
Debt service requirements on the Bank Credit Facility consist of current
interest payments on outstanding indebtedness through September 30, 1999. As of
September 30, 1999, and on the last day of each third calendar month thereafter,
through June 30, 2001, the Bank Credit Facility will decrease by 7.5% of the
commitment in effect on September 30, 1999. As of September 30, 2001, and on
the last day of each third calendar month thereafter, the Bank Credit Facility
will decrease by 10% of the commitment in effect on September 30, 1999. Any
principal amounts outstanding in excess of the Bank Credit Facility commitment,
as so reduced, will be payable on such quarterly reduction rates.
The Bank Credit Facility provides for a letter of credit sub-facility of
$10,000,000, of which $2,035,000 is currently outstanding for the benefit of
Hollywood Park's California self insured workers' compensation program. The
facility also provides for a swing sub-facility of up to $10,000,000.
Borrowings under the Bank Credit Facility bear interest at an annual rate
determined, at the election of the Company, by reference to the "Eurodollar
Rate" (for interest periods of 1, 2, 3 or 6 months) or the "Reference Rate", as
such terms are respectively defined in the Bank Credit Facility, plus margins
which vary depending upon Hollywood Park's ratio of funded debt to earnings
before interest, taxes, deprecation and amortization ("EBITDA"). The margins
start at 1.25% for Eurodollar loans and at 0.25% for Base Rate loans, at funded
debt to EBITDA ratio of less than 1.50%. Thereafter, the margins for each type
of loan increases by 25 basis points for each increase in the ratio of funded
debt to EBITDA of 50 basis points or more, up to 2.625% for Eurodollar loans and
1.625% for Base Rate loans. However, if the ratio of senior funded debt to
EBITDA exceeds 2.50, the applicable margins will increase to 3.25% for
Eurodollar loans, and 2.25% for Base Rate loans. Thereafter, the margins would
increase by 25 basis points for each increase in the ratio of senior funded debt
to EBITDA of 50 basis points or more, up to a maximum of 4.25% for Eurodollar
loans and 3.25% for Base Rate loans. The applicable margins as of June 30,
1997, were 1.75% with respect to the Eurodollar Rate based interest rate and
0.75% with respect to the Base Rate interest rate.
Hollywood Park pays a quarterly commitment fee for the average daily amount of
unused portions of the Bank Credit Facility. The commitment fee is also
dependent upon the Company's ratio of funded debt to EBITDA. The commitment fee
for the Bank Credit Facility starts at 31.25 basis points when the ratio is less
than 1.00, and increases by 6.25 basis points for each increase in the ratio of
0.50, up to a maximum of 50 basis points. For the quarter beginning July 1,
1997, this fee is 43.75 basis points.
On July 3, 1997, Hollywood Park borrowed $112,000,000 from the Bank Credit
Facility to fund Boomtown's offer to purchase its First Mortgage Notes, and
repaid this amount on August 7, 1997, with a portion of the proceeds from the
August 6, 1997, issuance of $125,000,000 of 9.5% Senior Subordinated Notes due
2007. The Notes were co-issued by Hollywood Park and HPOC (the "Obligors").
The balance of the proceeds from the issuance are expected to be used primarily
for expansion projects.
Interest on the Notes is payable semi-annually, on February 1st and August 1st.
The Notes will be redeemable at the option of the Company, in whole or in part,
on or after August 1, 2002, at a premium to face amount, plus accrued interest,
with the premium to the face amount decreasing on each subsequent anniversary
date. The Notes are unsecured obligations of Hollywood Park and HPOC,
guaranteed by all other material restricted subsidiaries of either Hollywood
Park or HPOC.
The indenture governing the Notes contains certain covenants that, among other
things, limit the ability of the Obligors and their restricted subsidiaries to
incur additional indebtness and issue preferred stock, pay dividends or make
other distributions, repurchase equity interests or subordinated indebtness,
create certain
12
<PAGE>
liens, enter into certain transactions with affiliates, sell assets, issue or
sell equity interests in their respective subsidiaries or enter into certain
mergers and consolidations.
On July 1, 1997, in connection with the divestiture of Boomtown's Las Vegas
property, Hollywood Park issued an unsecured promissory note of approximately
$3,465,000. The promissory note bears interest equal to the Bank of America
reference rate plus 1.0%. Interest is payable quarterly with five annual
principal payments of approximately $693,000 commencing July 1, 1998.
During the six months ended June 30, 1997, the Company paid dividends of
$962,000 on its convertible preferred stock, representing $70.00 per share, or
$0.70 per depositary share. On July 1, 1997, the Company declared the regular
quarterly preferred stock dividend of $481,000, payable on August 15, 1997.
Effective August 28, 1997, the Company will exercise its option to covert all
2,749,900 of its outstanding depositary shares into approximately 2,291,492
shares of its common stock; thereby; eliminating the annual preferred cash
dividend payment of approximately $1,924,000.
As of June 30, 1997, the Company had invested $1,275,000 in corporate bonds,
with Moody's ratings of B3 to BA3, and Standard and Poors ratings of B to BB-,
though some of the bonds are not rated by either agency. Investments in
corporate bonds carry a greater amount of principal risk than other investments
made by the Company, and yield a corresponding higher return. The corporate
bond investment as of June 30, 1997, had a weighted average maturity of 1.2
years, and because the Company reasonably expects to liquidate these investments
in its normal operating cycle, the investments are classified as short term, are
held as available for sale, and recorded in the accompanying financial
statements at their fair value, as determined by the quoted market price.
BOOMTOWN In November 1993, Boomtown sold $103,500,000 of 11.5% First Mortgage
Notes due November 1, 2003 (the "First Mortgage Notes"). On July 3, 1997,
pursuant to a tender offer, Boomtown repurchased and retired approximately
$102,142,000 in principal amount of the First Mortgage Notes, at a purchase
price of $1,085 per $1,000 in principal amount, along with accrued interest
thereon.
As a result of the Merger, Boomtown, as required under the indenture governing
the First Mortgage Notes, initiated a change in control purchase offer at a
price of $1,010 for each $1,000 for the remaining approximately $1,358,000
aggregate principal amount of First Mortgage Notes outstanding. This change in
control purchase offer was completed on August 12, 1997, and only a portion of
the remaining First Mortgage Notes were tendered.
On August 4, 1997, Hollywood Park executed a purchase agreement pursuant to
which one of the Hollywood Park entities repurchased the barge and the building
shell at Boomtown Biloxi for at total cost of $5,250,000. A payment of
$1,500,000 was made on August 4, 1997, with the balance payable in three equal
annual installments of $1,250,000.
As of August 8, 1997, Boomtown New Orleans is wholly owned by the Company.
Previously, Boomtown New Orleans was owned and operated by the Louisiana
Partnership, of which 92.5% was owned by Hollywood Park with the remaining 7.5%
owned by Skrmetta. On November 18, 1996, Boomtown entered into an agreement
with Skrmetta under which it would pay approximately $5,670,000 in return for
Skrmetta's interest in the Louisiana Partnership. Under the terms of the
agreement, Boomtown made a down payment of $500,000, and the Company paid the
remaining $5,170,000 on August 8, 1997.
As of June 30, 1997, Boomtown had four outstanding notes payable totaling
approximately $2,704,000. Two of the notes, which total $223,000, are secured
by furniture, fixtures and equipment, bear interest at 11.5% and mature in
September 1997. One note, in the amount of $2,294,000, was secured by the
Boomtown New Orleans riverboat, bore interest at 13.0% and was set to mature in
January 1999. On August 7, 1997, Boomtown elected to pre-pay this note and
incurred a 1.0% penalty. The remaining note, in the amount of
13
<PAGE>
$187,000, is secured by gaming equipment, bears interest at 12.25% and matures
December 1997. In addition to the notes payable, Boomtown also has capital lease
obligations for equipment with a total balance of approximately $3,994,000.
In connection with the sale its Las Vegas property, Boomtown took back two notes
receivable from Roski, the former lessor of the Las Vegas property, totaling
approximately $8,465,000. The first note receivable is for $5,000,000, bearing
interest at Bank of America's reference rate plus 1.5% per year, with annual
principal receipts of $1,000,000 plus accrued interest commencing on July 1,
1998. The second note is for approximately $3,465,000, bearing interest at Bank
of America's reference rate plus 0.5% per year, with the principal and accrued
interest payable, in full, on July 1, 2000.
SUNFLOWER On March 24, 1994, an Amended and Restated Credit and Security
Agreement (the "Sunflower Senior Credit") was executed between Sunflower and
five banks in connection with the Company's acquisition of Sunflower. As of
June 30, 1997, the outstanding balance of the Sunflower Senior Credit was
$28,667,000. The Sunflower Senior Credit is non-recourse to Hollywood Park.
On May 17, 1996, Sunflower filed for reorganization under Chapter 11 of the
Bankruptcy Code. The Cash Collateral Agreement suspended any interest or
principal payments on the Sunflower Senior Credit until August 12, 1997.
Sunflower is scheduled to appear at court on August 12, 1997, regarding the
extension of the Cash Collateral Agreement. As of the date of this filing the
court had not yet made a decision. On July 15, 1997, Sunflower presented to the
Bankruptcy Court a plan of reorganization (the "Plan") which provides for the
sale of Sunflower's property to the Wyandotte Indians of Oklahoma (the
"Wyandotte Indians"). Under the Plan, the land would be held by the United
States Government in trust for the Wyandotte Indians, and a casino would be
built on the property. Upon completion of the casino, Hollywood Park and a
partner (North American Sports Management) would operate the facility in return
for 30% of the profits. The Company would guarantee certain bank debt of
Sunflower of up to $28,667,000 to allow the property to be released as
collateral and then transferred to the Wyandotte Indians. The Company's
guaranty would not go into effect unless, and until, all material regulatory
approvals have been obtained for operation of the casino, and approval has been
obtained under the Bank Credit Facility, as well.
In 1995, under a promissory note executed in December 1994, between Hollywood
Park and Sunflower, Hollywood Park advanced $2,500,000 to Sunflower to make
certain payments due on the Sunflower Senior Credit. The amounts borrowed under
the promissory note, along with accrued interest, are subordinate to the
Sunflower Senior Credit. Although the Company will continue to pursue payment
of the promissory note, for financial reporting purposes the outstanding balance
of the promissory note was written off as of March 31, 1996.
EXPANSION In addition to the financing needs discussed above, Hollywood Park
has other capital needs with respect to the $25,000,000 Boomtown Reno expansion
and the $10,000,000 Boomtown New Orleans expansion. Longer term capital needs
may include such projects as development of the excess land at Hollywood Park
and/or Turf Paradise, and the Indiana riverboat project (see Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Proposed Expansion).
GENERAL Hollywood Park is continually evaluating future growth opportunities in
the gaming, sports and entertainment industries. The Company expects that
funding for growth opportunities, payment of interest on the Notes, payments on
notes payable or capital expenditure needs will come from existing cash
balances, cash generated from operating activities and borrowings from the
credit facilities. In the opinion of management, these resources will be
sufficient to meet the Company's anticipated cash requirements for the
foreseeable future and in any event for at least the next twelve months.
14
<PAGE>
PART II
Other Information
Item 5. OTHER INFORMATION
- ------- -----------------
Effective August 28, 1997, the Company will exercise its option to convert all
2,749,900 of its outstanding Depositary Shares into approximately 2,291,492
shares of its common stock; thereby, eliminating the annual preferred cash
dividend of approximately $1,925,000.
As previously discussed in the Company's Annual Report on Form 10-K, under
current California law Hollywood Park can own and operate a card club only on
the same premises as the Hollywood Park Race Track, and unless the California
Legislature enacts a comprehensive scheme for the regulation of gaming under the
jurisdiction of a gaming control commission, prior to January 1, 1999, the
Company will no longer be allowed to operate the Hollywood Park-Casino, and will
have to once again lease it for a fixed monthly rent to an unaffiliated third
party operator.
The Company supports Senate Bill ("SB") 990, currently pending in the California
Legislature, which would among other things, allow the Company to operate the
Hollywood Park-Casino through December 31, 1999. SB 990 has passed out of the
Senate and is pending in the Assembly. It is too early in the legislative
session to comment on the prospects of SB 990.
In addition to SB 990, there are two other bills pending in the California
Legislature (SB 8 and Assembly Bill 28) which would comprehensively regulate the
card gaming industry and at the same time allow the Company to operate the
Hollywood Park-Casino in perpetuity. Both bills are proceeding through the
legislative process, although no assurance can be given that either will be
enacted this year.
ITEM 6.a EXHIBITS
- -------- --------
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- --------- ----------------------
<C> <S>
10.28 Agreement of Limited Partnership for Huron Gaming, LP, a Delaware
Limited Partnership, Kansas Project, dated July 14, 1997.
10.29 Amendment No. 1 to Reducing Revolving Loan Agreement, dated
June 30, 1997.
10.30 Amendment No. 2 to Reducing Revolving Loan Agreement, dated
July 30, 1997.
10.31 Amended and Restated Agreement of Limited Partnership of Mississippi
Gaming-I Gaming, L.P.
10.32 Amended Equity Conversion Agreement, dated July 18, 1994, by and
between Boomtown, Inc., and Eric Skrmmetta.
10.33 Ground Lease, dated October 19, 1993, between Raphael Skrmetta as
Landlord and Mississippi-I Gaming, L.P. as Tenant.
10.34 First Amendment to Ground Lease dated October 19, 1993, between
Raphael Skrmetta and Mississippi-I Gaming, L.P.
10.35 Second Amendment to Ground Lease dated October 19, 1993, between
Raphael Skrmetta and Mississippi-I Gaming, L.P.
10.36 Purchase Agreement, dated August 1, 1997, by and among the Company,
HPOC, Hollywood Park Food Services, Inc., HP/Compton, Inc., Crystal
Park Hotel and Casino Development Company, LLC, Hollywood Park Fall
Operating Company, HP Yakama, Inc., Turf Paradise, Inc., Boomtown,
Inc., Boomtown Hotel & Casino, Inc., Louisiana-I Gaming, Louisiana
Gaming Enterprises, Inc., Mississippi-I Gaming, L.P., Bayview Yacht
Club, Inc., and the Initial Purchasers named therein.
</TABLE>
<PAGE>
<TABLE>
<C> <S>
10.37 Indenture, dated August 1, 1997, by and among the Company, HPOC,
Hollywood Park Food Services, Inc., HP/Compton, Inc., Crystal Park
Hotel and Casino Development Company, LLC, HP Yakama, Inc., Turf
Paradise, Inc., Boomtown, Inc., Boomtown Hotel & Casino, Inc.,
Louisiana-I Gaming, Louisiana Gaming Enterprises, Inc., Mississippi-I
Gaming, L.P., Bayview Yacht Club, Inc. and The Bank of New York, as
trustee.
10.38 Registration Rights Agreement, dated August 1, 1997, by and among the
Company, HPOC, Hollywood Park Food Services, Inc., HP/Compton, Inc.,
Crystal Park Hotel and Casino Development Company, LLC, Hollywood
Park Fall Operating Company, HP Yakama, Inc., Turf Paradise, Inc.,
Boomtown, Inc., Boomtown Hotel & Casino, Inc., Louisiana-I Gaming,
Louisiana Gaming Enterprises, Inc., Mississippi-I Gaming, L.P.,
Bayview Yacht Club, Inc., and the Initial Purchasers named therein.
27.1 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
A Current Report on Form 8-K was filed July 15, 1997, to report the
June 30, 1997, acquisition of Boomtown, Inc. and the disposition of
Boomtown's Las Vegas property. A Current Report on Form 8-K was filed
August 12, 1997, to report the redemption of each Depositary Share in
exchange for 0.8333 shares of Common Stock.
16
<PAGE>
Hollywood Park, Inc.
Calculation of Earnings Per Share
<TABLE>
<CAPTION>
For the three months ended June 30,
---------------------------------------------------------
Primary Assuming full dilution (a)
------------------------- ---------------------------
1997 1996 1997 1996
------------ ---------- ------------ ------------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Average number of common shares outstanding 18,462 18,613 18,462 18,613
Average common shares due to assumed conversion
of convertible preferred shares 0 0 2,291 2,291
------------ ---------- ------------ ------------
Total shares 18,462 18,613 20,753 20,904
============ ========== ============ ===========
Net income $5,603 $5,249 $5,603 $5,249
Less dividend requirements on convertible preferred shares 481 481 0 0
------------ ---------- ------------ ------------
Net income available to common shareholders $5,122 $4,768 $5,603 $5,249
============ ========= =========== ===========
Net income per share $0.28 $0.26 $0.27 $0.25
============ ========= =========== ===========
<CAPTION>
For the six months ended June 30,
---------------------------------------------------------
Primary Assuming full dilution (a)
------------------------- ---------------------------
1997 1996 1997 1996
------------ ---------- ------------ ------------
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Average number of common shares outstanding 18,366 18,613 18,366 18,613
Average common shares due to assumed conversion
of convertible preferred shares 0 0 2,291 2,291
------------ ---------- ------------ ------------
Total shares 18,366 18,613 20,657 20,904
============ ========== ============ ============
Net income (loss) $4,708 ($8,129) $4,708 ($8,129)
Less dividend requirements on convertible preferred shares 962 962 0 0
------------ ---------- ------------ ------------
Net income (loss) attributable to (allocated to) common
shareholders $3,746 ($9,091) $4,708 ($8,129)
============ ========== ============ ============
Net income (loss) per share $0.20 ($0.49) $0.23 ($0.39)
============ ========== ============ ============
</TABLE>
- ------------------------
(a) The computed values assuming full dilution are anti-dilutive; therefore, the
primary share values are presented on the face of the consolidated statements of
operations.
17
<PAGE>
Hollywood Park, Inc.
Selected Financial Data by Operational Location
<TABLE>
<CAPTION>
For the three months ended For the six months ended
June 30 June 30,
----------------------- -----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
(in thousands, except per share data - unaudited)
<S> <C> <C> <C> <C>
REVENUES:
Hollywood Park, Inc. - Casino Division $15,323 $15,173 $29,317 $28,946
HP/Compton, Inc. - Crystal Park Hotel and Casino 900 0 1,500 0
Hollywood Park Race Track 26,747 27,710 32,193 32,992
Turf Paradise, Inc. 3,143 3,219 9,705 9,816
Hollywood Park, Inc. - Corporate 211 325 424 744
Sunflower Racing, Inc. 0 0 0 1,782
------- ------- ------- -------
46,324 46,427 73,139 74,280
------- ------- ------- -------
EXPENSES:
Hollywood Park, Inc. - Casino Division 12,927 12,576 25,506 24,873
HP/Compton, Inc. - Crystal Park Hotel and Casino 18 0 41 0
Hollywood Park Race Track 16,735 17,034 24,018 25,224
Turf Paradise, Inc. 2,670 2,700 6,900 6,822
Hollywood Park, Inc. - Corporate 1,558 2,488 2,894 3,633
Sunflower Racing, Inc. 0 0 0 1,703
------- ------- ------- -------
33,908 34,798 59,359 62,255
------- ------- ------- -------
INCOME (LOSS) BEFORE INTEREST, INCOME TAXES, DEPRECIATION,
AMORTIZATION AND OTHER NON-RECURRING EXPENSES:
Hollywood Park, Inc. - Casino Division 2,396 2,597 3,811 4,073
HP/Compton, Inc. - Crystal Park Hotel and Casino 882 0 1,459 0
Hollywood Park Race Track 10,012 10,676 8,175 7,768
Turf Paradise, Inc. 473 519 2,805 2,994
Hollywood Park, Inc. - Corporate (1,347) (2,163) (2,470) (2,889)
Sunflower Racing, Inc. 0 0 0 79
------- ------- ------- -------
12,416 11,629 13,780 12,025
------- ------- ------- -------
NON-RECURRING EXPENSES:
Write off of investment in Sunflower Racing, Inc. 0 66 0 11,412
DEPRECIATION AND AMORTIZATION:
Hollywood Park, Inc. - Casino Division 900 736 1,530 1,411
HP/Compton, Inc. - Crystal Park Hotel and Casino 402 0 802 0
Hollywood Park Race Track 1,001 1,008 1,991 1,960
Turf Paradise, Inc. 297 301 592 610
Hollywood Park, Inc. - Corporate 431 442 865 883
Sunflower Racing, Inc. 0 0 0 536
------- ------- ------- -------
3,031 2,487 5,780 5,400
------- ------- ------- -------
INTEREST EXPENSE:
Hollywood Park Race Track 7 7 13 14
Hollywood Park, Inc. - Corporate 58 47 116 103
Sunflower Racing, Inc. 0 0 0 781
------- ------- ------- -------
65 54 129 898
------- ------- ------- -------
MINORITY INTERESTS:
HP/Compton, Inc. - Crystal Park Hotel and Casino 42 0 63 0
INCOME (LOSS) BEFORE INCOME TAXES:
Hollywood Park, Inc. - Casino Division 1,496 1,861 2,281 2,662
HP/Compton, Inc. - Crystal Park Hotel and Casino 480 0 657 0
Hollywood Park Race Track 9,004 9,661 6,171 5,794
Turf Paradise, Inc. 176 218 2,213 2,384
Hollywood Park, Inc. - Corporate (1,836) (2,652) (3,451) (3,875)
Minority interests (42) 0 (63) 0
Sunflower Racing, Inc. 0 0 0 (1,238)
Write off of investment in Sunflower Racing, Inc. 0 (66) 0 (11,412)
------- ------- ------- -------
9,278 9,022 7,808 (5,685)
Income tax expense 3,675 3,773 3,100 2,444
------- ------- ------- -------
Net income (loss) $ 5,603 $ 5,249 $ 4,708 ($8,129)
======= ======= ======= =======
Dividend requirements on convertible preferred stock $ 481 $ 481 $ 962 $ 962
------- ------- ------- -------
Net income (loss) attributable to (allocated to) common shareholders $ 5,122 $ 4,768 $ 3,746 ($9,091)
======= ======= ======= =======
Per common share:
Net income (loss) - primary $ 0.28 $ 0.26 $ 0.20 ($0.49)
Net income (loss) - fully diluted $ 0.27 $ 0.25 $ 0.20 ($0.49)
Number of shares - primary 18,462 18,613 18,366 18,613
Number of shares - fully diluted 20,754 20,904 20,657 20,904
</TABLE>
18
<PAGE>
Boomtown, Inc.
Selected Pro Forma Data by Operational Location
Excludes Financial Results of Boomtown's Las Vegas Property
<TABLE>
<CAPTION>
For the three months ended For the six months ended
June 30, June 30,
------------------------------- -----------------------------
1997 1996 1997 1996
------------- ------------- ------------ ------------
(in thousands, unaudited)
<S> <C> <C> <C> <C>
REVENUES:
Boomtown - Reno $17,314 $18,838 $31,783 $32,271
Boomtown - New Orleans 19,908 18,111 38,731 37,125
Boomtown - Biloxi 14,480 13,339 28,934 25,708
Boomtown - Corporate 749 1,218 1,509 1,957
------------- ------------- ------------ ------------
52,451 51,506 100,957 97,061
------------- ------------- ------------ ------------
EXPENSES (EXCLUDING NON-RECURRING EXPENSES)
Boomtown - Reno 15,227 15,403 28,344 28,414
Boomtown - New Orleans 13,950 13,022 27,421 26,689
Boomtown - Biloxi 12,321 12,235 24,613 23,648
Boomtown - Corporate 477 908 884 1,313
------------- ------------- ------------ ------------
41,975 41,568 81,262 80,064
------------- ------------- ------------ ------------
INCOME BEFORE INTEREST, INCOME TAXES, DEPRECIATION,
AMORTIZATION AND OTHER NON-RECURRING EXPENSES:
Boomtown - Reno 2,087 3,435 3,439 3,857
Boomtown - New Orleans 5,958 5,089 11,310 10,436
Boomtown - Biloxi 2,159 1,104 4,321 2,060
Boomtown - Corporate 272 310 625 644
------------- ------------- ------------ ------------
$10,476 $9,938 $19,695 $16,997
============= ============= ============ ============
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
HOLLYWOOD PARK, INC.
(Registrant)
By: /s/R.D. Hubbard Dated: August 13,1997
---------------------------------------
R.D. Hubbard
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
By: /s/G. Michael Finnigan Dated: August 13, 1997
---------------------------------------
G. Michael Finnigan
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
HOLLYWOOD PARK OPERATING COMPANY
(Registrant)
By: /s/R.D. Hubbard Dated: August 13,1997
---------------------------------------
R.D. Hubbard
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
By: /s/G. Michael Finnigan Dated: August 13, 1997
---------------------------------------
G. Michael Finnigan
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
20
<PAGE>
HOLLYWOOD PARK, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description Page
- ------ ----------- ----
<S> <C> <C>
10.28 Agreement of Limited Partnership for Huron Gaming, LP, a Delaware Limited Partnership, Kansas
Project, dated July 14, 1997.
10.29 Amendment No. 1 to Reducing Revolving Loan Agreement, dated June 30, 1997.
10.30 Amendment No. 2 to Reducing Revolving Loan Agreement, dated July 30, 1997.
10.31 Amended and Restated Agreement of Limited Partnership of Mississippi Gaming-I Gaming, L.P.
10.32 Amended Equity Conversion Agreement, dated July 18, 1994, by and between Boomtown, Inc., and Eric
Skrmmetta.
10.33 Ground Lease, dated October 19, 1993, between Raphael Skrmetta as Landlord and Mississippi-I Gaming,
L.P. as Tenant.
10.34 First Amendment to Ground Lease dated October 19, 1993, between Raphael Skrmetta and Mississippi-I
Gaming, L.P.
10.35 Second Amendment to Ground Lease dated October 19, 1993, between Raphael Skrmetta and Mississippi-I
Gaming, L.P.
10.36 Purchase Agreement, dated August 1, 1997, by and among the Company, HPOC, Hollywood Park Food
Services, Inc., HP/Compton, Inc., Crystal Park Hotel and Casino Development Company, LLC, Hollywood
Park Fall Operating Company, HP Yakama, Inc., Turf Paradise, Inc., Boomtown, Inc., Boomtown Hotel &
Casino, Inc., Louisiana-I Gaming, Louisiana Gaming Enterprises, Inc., Mississippi-I Gaming, L.P.,
Bayview Yacht Club, Inc., and the Initial Purchasers named therein.
10.37 Indenture, dated August 1, 1997, by and among the Company, HPOC, Hollywood Park Food Services, Inc.,
HP/Compton, Inc., Crystal Park Hotel and Casino Development Company, LLC, HP Yakama, Inc., Turf
Paradise, Inc., Boomtown, Inc., Boomtown Hotel & Casino, Inc., Louisiana-I Gaming, Louisiana Gaming
Enterprises, Inc., Mississippi-I Gaming, L.P., Bayview Yacht Club, Inc. and The Bank of New York, as
trustee.
10.38 Registration Rights Agreement, dated August 1, 1997, by and among the Company, HPOC, Hollywood Park
Food Services, Inc., HP/Compton, Inc., Crystal Park Hotel and Casino Development Company, LLC,
Hollywood Park Fall Operating Company, HP Yakama, Inc., Turf Paradise, Inc., Boomtown, Inc.,
Boomtown Hotel & Casino, Inc., Louisiana-I Gaming, Louisiana Gaming Enterprises, Inc., Mississippi-I
Gaming, L.P., Bayview Yacht Club, Inc., and the Initial Purchasers named therein.
27.1 Financial Data Schedule
</TABLE>
<PAGE>
EXHIBIT 10.28
AGREEMENT OF LIMITED PARTNERSHIP
FOR
HURON GAMING, LP
A DELAWARE LIMITED PARTNERSHIP
KANSAS PROJECT
<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP
FOR
HURON GAMING, LP
A DELAWARE LIMITED PARTNERSHIP
This Agreement of Limited Partnership is made as of July 14, 1997, by and
among HP Kansas, Inc., a Delaware corporation (the "HP General Partner") and
North American Sports Management of Kansas, Inc., a Florida corporation (in its
capacity as a General Partner, the "NORAM General Partner"), as General
Partners, and Hollywood Park, Inc., a Delaware corporation ("HP"), and North
American Sports Management of Kansas, Inc., (in its capacity as a Limited
Partner, "NORAM"), as Limited Partners, with reference to the following facts:
A. Sunflower Racing, Inc., a Kansas corporation and a wholly-owned
subsidiary of HP ("Sunflower"), owns a pari-mutuel greyhound and horse racing
track named The Woodlands, located in Kansas City, Kansas (including the
facilities and improvements thereon, the "Land"). Sunflower is currently
involved in a bankruptcy proceeding under Chapter 11 of the United States
Bankruptcy Code.
B. The Wyandotte Tribe of Oklahoma (the "Tribe") desires to obtain
approval to conduct gaming in Kansas City and has entered into an agreement with
NORAM pursuant to which the Tribe has engaged NORAM on a sole and exclusive
basis to provide consulting services with respect to designing, developing,
financing, constructing and operating the Tribe's gaming facilities in Kansas.
While the Tribe, with NORAM's assistance, has secured the right to conduct
gaming on several parcels of real property in Kansas City, Kansas, the Tribe is
seeking an alternate site on which to operate its gaming facility.
C. Subject to the terms and conditions described herein, the Partners
(as defined below) wish to form a limited partnership to acquire the Land and
sell it to the Tribe; and concurrently with the execution of this Agreement, or
as soon as practicable following such execution, the Partnership (as hereinafter
defined) will enter into an arrangement with the Tribe, whereby the Partnership
will agree, subject to certain conditions, to sell the Land to the Tribe and to
develop and operate a gaming facility on the Land.
D. The Partners have executed, and have filed or will cause to be filed
with the Delaware Secretary of State, a Certificate of Formation (the
"Certificate") of Huron Gaming, LP, a Delaware limited partnership (the
"Partnership"), pursuant to the provisions of the Delaware Revised Limited
Partnership Act (the "Act").
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the Partners (as hereinafter defined) by this Agreement
set forth the operating agreement for the Partnership under the laws of the
State of Delaware.
-1-
<PAGE>
ARTICLE 1
DEFINITIONS
When used in this Agreement, the following terms shall have the meanings
set forth below (all terms used in this Agreement that are not defined in this
Section shall have the meanings set forth elsewhere in this Agreement):
"1933 ACT" shall mean the Securities Act of 1933, as amended, or any
--------
future comparable law.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended, or
--------
any future comparable law.
"ACQUIRED INTEREST" has the meaning set forth in Section 9.10.
-----------------
"ACT" means the Delaware Revised Limited Partnership Act, codified in the
---
Delaware Code, Title 6, chapter 17, Section 17-101 et seq., as the same may be
-- ---
amended from time to time.
"ADDITIONAL CAPITAL CONTRIBUTIONS" shall mean the amounts which each
--------------------------------
Partner may be obligated or entitled to provide to the Partnership in accordance
with Section 0.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any Limited
--------------------------------
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant Fiscal Year, after giving effect to the following
adjustments:
(a) Credit to such Capital Account any amounts that such Partner is
obligated to restore pursuant to any provision of this Agreement or is deemed to
be obligated to restore pursuant to the penultimate sentences of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-
- - - -
1(b)(2)(ii)(d)(6).
- -
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Regulations Section 1.704-
1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
-
"ADVANCES" has the meaning set forth in Section 0.
--------
"AFFILIATE" means any individual, partnership, corporation, trust or
---------
other entity or association, directly or indirectly, through one or more
intermediaries, controlling, controlled by, or under common control with, a
Partner. The term "control," as used in the immediately preceding sentence,
means, with respect to a corporation or limited liability company, the right to
exercise, directly or indirectly, fifty percent (50%) of the voting rights
attributable to the controlled corporation or limited liability company and,
with respect to any individual, partnership, trust, other entity or association,
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of the controlled entity.
-2-
<PAGE>
"AGREEMENT" means this Agreement of Limited Partnership, as originally
---------
executed and as amended and/or restated from time to time.
"BANKRUPTCY" means: (i) being adjudicated bankrupt or insolvent in
----------
proceedings filed against a Person or its ultimate "parent" entity under any
section or chapter of the United States Bankruptcy Code, as amended from time to
time, or any similar law or statute of any state thereof (collectively
"Bankruptcy Laws"); (ii) any petition for reorganization or arrangement under
any Bankruptcy Laws; (iii) proceedings under any Bankruptcy Laws to have a
Person adjudicated as bankrupt or insolvent, which proceedings are not dismissed
within ninety (90) days of commencement; (iv) the general assignment by any
Person for the benefit of creditors; (v) the appointment of a receiver for all
or substantially all of the assets of any Person and the failure to have such
receiver discharged within ninety (90) days after appointment; (vi) the
suffering by any Partner of any assignment by operation of law, or any
attachment, sequestration, garnishment or lien against, or the occurrence of a
levy on, such Person's interest in the Partnership, or any portion thereof, with
the same not being discharged of record by bonding or otherwise within ninety
(90) days after notice to such Partner of such event.
"BANKRUPTCY COURT APPROVAL" means that The Woodlands shall have obtained
-------------------------
all approvals required by applicable bankruptcy law for a plan of reorganization
whereby the Partnership shall purchase the Land for the Purchase Price,
including, without limitation, the approval of the bankruptcy court and the
requisite affirmative vote of all creditors entitled to vote on such matters.
"BOARD" has the meaning set forth in Section 8.2.1.
-----
"CAPITAL ACCOUNT" means with respect to any Partner the capital account
---------------
that the Partnership establishes and maintains for such Partner pursuant to
Section 0.
"CAPITAL CONTRIBUTION" means the total value of cash and the fair market
--------------------
value of property (including promissory notes or other obligations to contribute
cash or property) or services contributed by Partners (with the fair market
value of such property or services being determined by the Board or by agreement
of the Partners).
"CASINO" means the gaming facilities, including the greyhound and horse
------
racing tracks, that may be established on the Land.
"CERTIFICATE" means the Certificate of Limited Partnership for the
-----------
Partnership originally filed with the Delaware Secretary of State, as amended
and/or restated from time to time.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
----
time, the provisions of succeeding law and to the extent applicable, the
Regulations.
"COMPACT APPROVAL" means publication by the Secretary of the Interior in
----------------
the Federal Register of a Notice of Approval of a Compact signed by the Tribe
and the Governor of Kansas and ratified by both the Kansas Legislature (or the
Legislative Coordinating Council) and the Tribe's Business Committee.
"CONTRACT APPROVAL" means the written approval, in form and substance
-----------------
acceptable to the Partnership, of any and all contracts, agreements and
instruments by and between either
-3-
<PAGE>
the Tribe or the Tribal Gaming Corporation and the Partnership, by any
governmental agency with jurisdiction over (i) the Tribe or the Tribal Gaming
Corporation, (ii) the Land, (iii) the Partnership or any Partner, or (iv) the
Casino, including, without limitation, the National Indian Gaming Commission and
the Bureau of Indian Affairs.
"DEFAULTING PARTNER" means any Partner that has committed a Material
------------------
Breach of this Agreement.
"DEVELOPMENT COMMITTEE" means the committee, consisting of three
---------------------
representatives of the Tribe and two representatives of the Partnership (one
designated by each of the HP General Partner and the NORAM General Partner),
which committee shall make recommendations, subject to the approval of the
Tribal Gaming Corporation, regarding, among other things, the budget for
developing, constructing and equipping the Casino.
"DISSOLUTION EVENT" means (i) the death, insanity, Bankruptcy or
-----------------
dissolution of any Partner or the commission by a Partner of a Material Breach
under this Agreement which is incapable of cure or (ii) the withdrawal,
resignation or retirement of a Partner without the prior consent of all of the
other Partners.
"ECONOMIC INTEREST" means a Partner's or Economic Interest Owner's share
-----------------
of one or more of the Partnership's Net Profits, Net Losses and distributions of
the Partnership's assets pursuant to this Agreement and the Act, but shall not
include any other rights of a Partner including, without limitation, the right
to vote or participate in the management or, except as provided in Section 17-
305 of the Act, any right to information concerning the business and affairs of
Partnership.
"ECONOMIC INTEREST OWNER" means the owner of an Economic Interest who is
-----------------------
not a Partner.
"EFFECTIVE DATE" means the date by which all of the following have
--------------
occurred: (a) Alan H. Ginsburg and any of his Affiliates who are involved with
the development of the Casino shall have complied, in the reasonable discretion
of HP, with the background investigation required by applicable gaming
authorities; (b) the Partnership, the Tribe and/or the Tribal Gaming
Corporation, as applicable, shall have received Bankruptcy Court Approval, Trust
Approval, Contract Approval and Compact Approval; and (c) the Partnership, and
all Partners, shall have complied with any licensing requirements imposed
pursuant to the terms of an effective compact between the Tribe and the State of
Kansas in accordance with Section 10 of IGRA, 25 U.S.C. (S) 2710.
"EQUALIZATION PAYMENT" has the meaning set forth in Section 0.
--------------------
"EXCLUDED PARTNER" means a Partner that caused a Dissolution Event.
----------------
"EXPENSES" shall include, without limitation, attorneys' fees,
--------
disbursements and retainers, court costs, transcript costs, fees of accountants,
experts and witnesses, travel expenses, duplicating costs, printing and binding
costs, telephone charges, postage, delivery service fees, and all other expenses
of the types customarily incurred in connection with prosecuting, defending,
preparing to prosecute or defend, investigating, or being or preparing to be a
witness or other participant in a Proceeding.
"FAIR VALUE" shall be determined in accordance with Section 9.10.
----------
-4-
<PAGE>
"FIRST OPPORTUNITY OFFER" has the meaning set forth in Section 9.4.
-----------------------
"FISCAL YEAR" means (i) the period commencing upon the formation of the
-----------
Partnership and ending on December 31, 1997, (ii) any subsequent twelve (12)
month period commencing on January 1 and ending on December 31, or (iii) any
portion of the period described in Clause (ii) of this sentence for which the
Partnership is required to allocate Profits, Losses, and other items of
Partnership income, gain, loss, or deduction pursuant to Article 0 hereof.
"GENERAL PARTNER" refers to each of the HP General Partner, and the NORAM
---------------
General Partner, or any Person who has been admitted to the Partnership as a
substitute General Partner.
"GOOD CAUSE" means the incompetence, malfeasance, misfeasance or
----------
nonfeasance of a General Partner, in each case which remains uncorrected
following written demand for correction thereof by the Limited Partner not
affiliated with such General Partner.
"HP" means Hollywood Park, Inc., a Delaware corporation.
--
"HP'S EXPENSES" has the meaning set forth in Section 0.
-------------
"HP GENERAL PARTNER" means HP Kansas, a Delaware corporation.
------------------
"IGRA" means the Indian Gaming Regulatory Act of 1988.
----
"INDEMNIFYING PARTY" has the meaning set forth in Section 0.
------------------
"INITIAL CAPITAL CONTRIBUTIONS" has the meaning set forth in Section 0.
-----------------------------
"INITIAL PAYMENT" has the meaning set forth in Section 0.
---------------
"LAND" has the meaning set forth in Recital A.
----
"LEASE" has the meaning set forth in Section 0 hereof.
-----
"LIMITED PARTNER" refers to any of the Persons listed in Exhibit A under
--------------- ---------
the heading "Limited Partners" and any Person admitted to the Partnership as an
additional Limited Partner or a substituted Limited Partner, except any former
Partner to whom the entire balance of his or her Capital Account has been
distributed and who has not subsequently been readmitted to the Partnership as a
Limited Partner.
"MAJORITY INTEREST" means, for purposes of Section 0, more than fifty
-----------------
percent (50%) of both the capital and profit interests in the Partnership held
by the Remaining Partners.
"MATERIAL BREACH" means (i) the failure to make Additional Capital
---------------
Contributions pursuant to Section 3.3 hereof, (ii) the failure to comply with
the applicable provisions of Article 9 hereof, (iii) the failure to guarantee
the Construction Loan, or (iv) conduct that results in a breach under any
agreement between the Partnership and the Tribe.
-5-
<PAGE>
"NET PROFITS" and "NET LOSSES" mean the income, gain, loss, deductions
----------- ----------
and credits of the Partnership in the aggregate or separately stated, as
appropriate, determined in accordance with the method of accounting used on the
Partnership's information tax return filed for federal income tax purposes.
"NONCOMPLYING PERSON" has the meaning set forth in Section 9.9.
-------------------
"NONRECOURSE LIABILITY" has the meaning set forth in Regulations Section
---------------------
1.752-1(a)(2).
"NORAM" means North American Sports Management of Kansas, Inc.
-----
"NORAM GENERAL PARTNER" means North American Sports Management of Kansas,
---------------------
Inc., a Florida corporation.
"NORAM'S VERIFIABLE EXPENSES" has the meaning set forth in Section 0.
---------------------------
"OFFEREES" has the meaning set forth in Section 9.4.
--------
"PARTNER" means any Person owning a Partnership Interest.
-------
"PARTNERSHIP" means Huron Gaming, LP, a Delaware limited partnership.
-----------
"PARTNERSHIP INTEREST" means a Partner's entire interest in the
--------------------
Partnership or any portion thereof, including without limitation the Partner's
Economic Interest, the right to vote on or participate in the management and the
right to receive information concerning the business and affairs of the
Partnership.
"PARTNERSHIP MINIMUM GAIN" has the meaning ascribed to the term
------------------------
"Partnership Minimum Gain" in the Regulations Section 1.704-2(d).
"PARTNER NONRECOURSE DEBT" has the meaning ascribed to the term "Partner
------------------------
Nonrecourse Debt" in Regulations Section 1.704-2(b)(4).
"PARTNER NONRECOURSE DEDUCTIONS" means items of Partnership loss,
------------------------------
deduction or Code Section 705(a)(2)(B) expenditures that are attributable to
Partner Nonrecourse Debt or to other loans by a Partner to the Partnership for
which no other Partner bears the economic risk of loss.
"PARTNERSHIP PERSON" means a Partner or a director or officer of the
------------------
Partnership or of any Partner.
"PERSON" means an individual, general partnership, limited partnership,
------
limited liability company, corporation, trust, estate, real estate investment
trust association or any other entity.
"PROCEEDING" means any action, suit, arbitration, alternative dispute
----------
resolution mechanism, investigation, administrative hearing or other proceeding,
whether civil, criminal, administrative or investigative in nature.
-6-
<PAGE>
"PROFIT PERCENTAGE INTEREST" means the percentage interest of a Partner
--------------------------
in Net Profits, as set forth in Section 0 and as adjusted from time to time in
accordance with Section 0.
"PURCHASE PRICE" means the purchase price to acquire the Land from the
--------------
bankruptcy estate of The Woodlands, which price shall equal the aggregate amount
required by a court-approved plan of reorganization to satisfy The Woodlands'
obligations to its creditors.
"RATE" means interest at an annual rate equal to ChaseManhattan Bank's
----
prime interest rate in effect from time to time (but in no event greater than
the maximum rate permitted under applicable law).
"REGULATIONS" means, unless the context clearly indicates otherwise, the
-----------
regulations currently in force from time to time as final or temporary that have
been issued by the U.S. Department of Treasury pursuant to its authority under
the Code.
"REMAINING PARTNERS" means the Partners other than the Excluded Partner.
------------------
"SUNFLOWER" has the meaning set forth in Recital A of this Agreement.
---------
"SUNFLOWER'S NET REVENUES" has the meaning set forth in Section 0.
------------------------
"SUPER MAJORITY INTEREST" means Partners holding in the aggregate at
-----------------------
least eighty percent (80%) of all Profit Percentage Interests.
"TAX MATTERS PARTNER" shall be the HP General Partner or its successor as
-------------------
designated pursuant to Section 0.
"THIRD PARTY LOANS" has the meaning set forth in Section 0.
-----------------
"TRANSFER" means any sale, transfer, assignment, hypothecation or other
--------
voluntary disposition, whether by gift, bequest or otherwise. In the case of a
hypothecation, the Transfer shall be deemed to occur both at the time of the
initial pledge and at any pledgee's sale or a sale by any secured creditor.
"TRANSFERABLE INTEREST" has the meaning set forth in Section 9.4.
---------------------
"TRIBAL CONSTRUCTION LOAN" has the meaning set forth in Section 0.
------------------------
"TRIBAL GAMING CORPORATION" means the corporation chartered by the Tribe,
-------------------------
pursuant to Section 17 of the Indian Reorganization Act of 1934, 25 U.S.C. (S)
465 et. seq., to own and operate the Casino.
-- ---
"TRIBE" has the meaning set forth in Recital B.
-----
"TRUST APPROVAL" means (i) a determination by the Secretary of the
--------------
Interior or his designee that the United States will accept title to the Land in
trust for the benefit of the Tribe for gaming purposes pursuant to Section 20 of
IGRA, 25 U.S.C. (S) 2719(b)(1)(B), (ii) all applicable waiting periods with
respect to such acceptance have expired and there are no
-7-
<PAGE>
pending challenges to such acceptance, (iii) the Land is formally taken into
trust by the Secretary of the Interior, and (iv) the Governor of the State of
Kansas has given his written concurrence to such acceptance.
ARTICLE 2
ORGANIZATIONAL MATTERS
2.1 FORMATION. Pursuant to the Act, the Partners have formed a Delaware
---------
limited partnership under the laws of the State of Delaware. The rights and
liabilities of the Partners shall be determined pursuant to the Act and this
Agreement. To the extent that the rights or obligations of any Partner are
different by reason of any provision of this Agreement than they would be in the
absence of such provision, this Agreement shall, to the extent permitted by the
Act, control.
2.2 NAME. The name of the Partnership shall be "Huron Gaming, LP." The
----
business of the Partnership may be conducted under that name or, upon compliance
with applicable laws, any other name that the General Partners deem appropriate
or advisable. The General Partners shall file any fictitious name certificates
and similar filings, and any amendments thereto, that the General Partners
consider appropriate or advisable.
2.3 TERM. The Partnership will commence on the date hereof and will
----
continue until July 14, 2047, unless extended or sooner terminated as
hereinafter provided. Notwithstanding the foregoing, unless both General
Partners otherwise agree, in the event that the Effective Date does not occur
within 24 months of the date hereof, this Agreement shall terminate and the
General Partners shall dissolve the Partnership in accordance with the
provisions hereof.
2.4 PARTNERSHIP PROPERTY. No Partner, individually, shall have any
--------------------
ownership of the Partnership's property.
2.5 OFFICE AND AGENT. The Partnership shall continuously maintain an
----------------
office and registered agent in the State of Delaware as required by the Act. The
principal office of the Partnership shall be as determined by the General
Partners. The Partnership also may have such offices, anywhere within and
without the State of Delaware, as the General Partners from time to time may
determine. The registered agent shall be as stated in the Certificate or as
otherwise determined by the General Partners.
2.6 ADDRESSES OF THE PARTNERS. The respective names and addresses of the
-------------------------
Partners are set forth on Exhibit A. The General Partners shall revise Exhibit A
--------- ---------
from time to time as changes in the information on that Exhibit occur.
2.7 PURPOSE OF PARTNERSHIP. The purpose of the Partnership is to engage
----------------------
in any lawful activity for which a limited partnership may be organized under
the Act. Notwithstanding the foregoing, without the written consent of all of
the Partners, the Partnership shall not engage in any business other than the
following:
(a) Purchasing the Land, and concurrently therewith, effecting a
transaction with the Tribe to sell and leaseback the Land;
-8-
<PAGE>
(b) Obtaining all necessary licenses and approvals to develop and
operate the Casino thereon;
(c) Subsequent to the activities described in paragraphs (a) and (b)
above, the business of developing, constructing, operating, contracting for the
operation of and/or leasing other improvements at the Casino or such other
property as may be acquired and/or leased by the Tribe in the State of Kansas to
conduct gaming activities; and
(d) Such other activities directly related to the foregoing
businesses as may be necessary, advisable or appropriate to further the
foregoing business.
ARTICLE 3
CAPITAL CONTRIBUTIONS
3.1 CONTRIBUTIONS BY GENERAL PARTNERS. Each General Partner shall
---------------------------------
contribute, and shall at all times maintain, a Capital Account equal to at least
one-half of one percent (0.5%) of the aggregate Capital Accounts of the
Partners. In the event that a General Partner's Capital Account no longer equals
or exceeds such amount at the end of any quarter, such General Partner shall
immediately make a Capital Contribution to the Partnership sufficient to cause
such General Partner's Capital Account to equal such amount.
3.2 INITIAL CAPITAL CONTRIBUTIONS OF LIMITED PARTNERS. The Limited
-------------------------------------------------
Partners shall make the following capital contributions in cash to the
Partnership on the execution of this Agreement:
HP $49.00
NORAM $49.00
The foregoing contributions, together with the contributions made pursuant to
Section 0, are referred to herein as "Initial Capital Contributions."
3.3 ADDITIONAL CAPITAL CONTRIBUTIONS OF LIMITED PARTNERS.
----------------------------------------------------
(a) PURCHASE PRICE. Within ten (10) business days following Trust
--------------
Approval, Contract Approval and Bankruptcy Court Approval (or at such earlier
time as may be necessary to obtain Bankruptcy Court Approval), each Limited
Partner shall be obligated to contribute as additional Capital Contributions an
amount equal to one-half of the Purchase Price, or if approved by the Board, the
Partnership may obtain a loan in the amount of the Purchase Price. If requested
or permitted by the bankruptcy court presiding over The Woodlands, at any time
prior to the closing of the sale of the Land to the Tribe, each Limited Partner
shall provide adequate, verifiable assurances of such Limited Partner's ability
to fund such additional Capital Contribution. Notwithstanding anything to the
contrary contained herein, it is the intention of the Partners that the
following transactions shall occur simultaneously: (i) the Partnership's
acquisition of the Land from the bankruptcy estate of The Woodlands; (ii) the
Partnership's conveyance of the Land to the Tribe; and (iii) the Tribe's
conveyance of title to the Land to the United States in trust for the benefit of
the Tribe. Notwithstanding anything to the contrary contained herein, the
Partnership shall not acquire the
-9-
<PAGE>
Land from the bankruptcy estate of The Woodlands until the Board has determined
that the transactions referenced in the foregoing sentence have been prepared
for simultaneous closings.
(b) CONSTRUCTION COSTS. To the extent that the Construction Loan (as
------------------
defined below) is insufficient to fund the development, construction and
equipping of the Casino, each Limited Partner shall be obligated to contribute
as additional Capital Contributions an amount equal to one-half of such
shortfall when and as needed, as determined by the Board.
(c) BANKRUPTCY COSTS. To the extent that Sunflower's Net Revenues
----------------
(as defined below) are insufficient to make any required payments to its bank
creditors, each Limited Partner shall be obligated to contribute as additional
Capital Contributions an amount equal to one-half of such shortfall when and as
needed, as determined by the Board, which additional Capital Contributions shall
be loaned or otherwise provided to Sunflower by the Partnership. For purposes
of this Section, "Sunflower's Net Revenues" shall mean the total revenue
received by Sunflower in connection with or from the operation of The Woodlands,
(i) less (A) amounts paid as or for prizes, and (B) total operating expenses of
The Woodlands (excluding any fees paid to the HP General Partner or any
Affiliate thereof, including, without limitation, Sunflower), as determined in
accordance with generally accepted accounting principles, consistently applied,
and (ii) plus the amount of any depreciation, amortization and interest expense
which is included in total operating expenses. All additional Capital
Contributions required or permitted by this Section 0 are referred to as
"Additional Capital Contributions."
(d) NO FURTHER CONTRIBUTIONS. Except as set forth in this Section 0
------------------------
or as may be explicitly agreed in writing by a Limited Partner and the
Partnership, no Limited Partner shall be required to make any Additional Capital
Contributions. The Board (including the affirmative vote of at least one NORAM
representative) shall determine whether any Additional Capital Contributions are
required, and the timing and amount of such Additional Capital Contributions.
If any Limited Partner fails to make an Additional Capital Contribution in
accordance with this Section (the "Non-participating Partner Contribution"),
then the other Limited Partner shall be entitled to contribute as an Additional
Capital Contribution an amount equal to the Non-participating Partner
Contribution. To the extent that any Limited Partner does not contribute its
required share of Additional Capital Contributions, the Profit Percentage
Interests shall be adjusted in accordance with Section 0.
3.4 CAPITAL ACCOUNTS. The Partnership shall establish an individual
----------------
Capital Account for each Partner, including a separate capital account for North
American Sports Management of Kansas, Inc. as a Limited Partner and as a General
Partner. The Partnership shall determine and maintain each Capital Account in
accordance with Regulations Section 1.704-1(b)(2)(iv).
3.5 NO INTEREST ON OR WITHDRAWAL OF CAPITAL. No Partner shall be
---------------------------------------
entitled to receive any interest on such Partner's Capital Contributions. Except
as otherwise provided by law, no Partner shall be entitled to withdraw or reduce
its Capital Contribution or to demand or receive property other than cash in
return for its Capital Contribution. No Partner shall have any obligation, upon
winding up of the Partnership, to restore any deficit balance in its Capital
Account for the benefit of the other Partners.
3.6 THIRD PARTY LOANS. The Partnership may seek debt financing from
-----------------
banks, savings and loan associations or other financial institutions from time
to time if the General Partners determine that the Additional Capital
Contributions are insufficient for the conduct of
-10-
<PAGE>
its business or if the General Partners otherwise determine in good faith that
such financing is necessary or desirable ("Third Party Loans"), provided that
--------
subject to Section 0 hereof, no Partner shall be required to guarantee any Third
Party Loan unless if such Partner agrees to do so. Third Party Loans may be
secured by liens on the Partnership Property and shall have such other terms and
conditions as may be determined and agreed upon by both General Partners.
3.7 SHORT-TERM ADVANCES. Any Partner may, but shall be under no
-------------------
obligation to, advance funds in excess of its obligation to make Initial Capital
Contributions and Additional Capital Contributions ("Advances") in order to pay
operational expenditures on a short-term basis in contemplation of income from
operations or a disbursement of funds from Third Party Loans, if, in the
judgment of the Board, payment of expenditures cannot or should not be delayed
until such funds are obtained by the Partnership. Advances shall not constitute
Initial Capital Contributions or Additional Capital Contributions, and the Board
shall determine whether such Advances are required and the timing and amount of
such Advances. Amounts funded by a Partner pursuant to this Section 0 shall bear
interest at the Rate plus 200 basis points (but in no event greater than the
maximum rate permitted under applicable law), and shall be repaid immediately
upon receipt of funds contemplated to be received as provided above or from
other Partnership assets as agreed by all of the Partners.
3.8 DILUTION. In the event that either Limited Partner contributes its
--------
required share of an Additional Capital Contribution and the other Limited
Partner does not contribute its required share of such Additional Capital
Contribution, the Profit Percentage Interests shall be recalculated such that
(a) the non-contributing Limited Partner's Profit Percentage Interest shall
equal (i) one-hundred (100) multiplied by a fraction, the numerator of which
shall equal the non-contributing Limited Partner's Capital Contribution and the
denominator of which shall equal the total of all Capital Contributions by all
Partners multiplied by 1.25, minus (ii) one percent; and (b) the Profit
Percentage Interest of the contributing Limited Partner shall equal (x) the
result obtained by subtracting the non-contributing Limited Partner's revised
Profit Percentage Interest from 100, minus (y) one percent. Each Partner
acknowledges and agrees that the remedies described in this Section bear a
reasonable relationship to the damages that the Partners estimate may be
suffered by the Partnership and the contributing Limited Partner by reason of
the failure of a Limited Partner to make an Additional Capital Contribution.
-11-
<PAGE>
ARTICLE 4
ACQUISITION, LEASING AND DEVELOPMENT OF LAND;
TRANSACTIONS WITH THE TRIBE
4.1 NORAM'S EXPENSES. The parties acknowledge that NORAM has provide HP
----------------
with documentation to determine the verifiable amount of actual, out-of-pocket
expenses (excluding any overhead costs or charges) that NORAM has incurred as of
the date of this Agreement with respect to (i) negotiating its business
relationship with the Tribe and (ii) efforts to establish a tribal gaming
facility in the State of Kansas ("NORAM's Verifiable Expenses"). Upon the
execution of this Agreement, HP shall pay NORAM the sum of five hundred thousand
dollars ($500,000) (the "Initial Payment"). Within ten (10) business days after
the date of this Agreement, HP shall have the right to request, in writing,
additional information and/or documentation as necessary to determine NORAM's
Verifiable Expenses, and NORAM shall provide all such information or
documentation in NORAM's possession to HP within ten (10) business days after
receipt of HP's written request for additional information. Within ten (10)
business days after the date of this Agreement, HP shall provide NORAM with
appropriate documentation to determine the amount of actual, out-of-pocket
expenses (excluding any overhead costs or charges) that HP has incurred as of
the date of this Agreement with respect to (i) negotiating its business
relationship with NORAM and the Tribe and (ii) efforts to establish a tribal
gaming facility in the State of Kansas ("HP's Expenses"). Within ten (10)
business days after receipt of such documentation, NORAM shall have the right to
request, in writing, additional information and/or documentation as necessary to
determine HP's Expenses, and HP shall provide all such information or
documentation in HP's possession to NORAM within ten (10) business days after
receipt of NORAM's written request for additional information.
Within forty-five (45) business days after the date of this Agreement, or
(if later) within five (5) business days after both parties have received all
additional information and documentation requested hereunder, HP shall pay NORAM
one-half of the amount, if any, by which NORAM's Verifiable Expenses exceeds the
sum of HP's Expenses and five hundred thousand dollars ($500,000) (such payment,
if any, an "Equalization Payment"). All of the payments and expenses described
in this Section shall constitute Capital Contributions by the relevant parties
hereunder. The Initial Payment and the Equalization Payment, if any, shall be
treated as contributed by HP to the Partnership and distributed by the
Partnership to NORAM.
4.2 PLAN OF REORGANIZATION; ACQUISITION OF LAND.
-------------------------------------------
4.2.1 CONDITIONS PRECEDENT. HP and NORAM shall cooperate in
--------------------
developing a plan of reorganization for The Woodlands which shall be proposed to
the bankruptcy court. Prior to submission of a plan of reorganization to the
bankruptcy court, the Partners shall use their best efforts to negotiate and
finalize the terms of the sale of the Land to the Tribe whereby the Partnership,
upon acquiring the Land from the bankruptcy estate of The Woodlands, will sell
the Land to the Tribe, on the terms set forth in Section 0 hereof. Such plan of
reorganization shall provide, among other things, for the Partnership to acquire
the Land from the bankruptcy estate of The Woodlands, and subject to Section 0
hereof, the Partnership's subsequent sale of the Land to the Tribe upon
satisfaction of the following conditions: (i) Bankruptcy Court Approval; (ii)
Trust Approval; and (iii) Contract Approval.
4.2.2 SECURING REQUIRED APPROVALS. HP shall use its best efforts to
---------------------------
-12-
<PAGE>
obtain Bankruptcy Court Approval as soon as practicable following the date
hereof. The Partners shall use their best efforts to assist the Tribe in
obtaining Trust Approval, Contract Approval and Compact Approval as soon as
practicable following execution of this Agreement.
4.3 SALE OF LAND TO THE TRIBE; TERMS OF NOTE. As soon as practicable
----------------------------------------
after satisfaction of the conditions precedent set forth in Section 0 hereof,
and simultaneously with the Partnership's acquisition of the Land from the
bankruptcy estate of The Woodlands, the Partnership shall convey all right,
title and interest in the Land to the Tribe, free and clear of any liens or
encumbrances, in consideration of a recourse promissory note in the principal
amount of no more than Twenty-Nine Million Dollars (the "Land Purchase Note").
Simultaneously with the Partnership's acquisition of the Land and conveyance of
same to the Tribe, the Tribe shall convey title to the Land to the United States
in trust for the benefit of the Tribe for gaming purposes pursuant to Section 20
of IGRA. The property and structures of the Land will not be stripped of FF&E
and will be delivered to the Tribe in the same condition as the Land is
purchased by the Partnership from the bankruptcy estate of The Woodlands. The
Land Purchase Note shall contain such terms and provisions as are approved by
the Board, including, without limitation, terms and conditions that are
customary or appropriate for transactions involving unsecured land sales.
4.4 LEASE OF THE LAND. As a condition to, and concurrently with, the
-----------------
sale of the Land to the Tribe and the Tribe's conveyance of title to the Land to
the United States in trust for the benefit of the Tribe for gaming purposes, the
Tribe shall lease the Land to the Partnership (the "Lease") for a term ending
fifteen (15) years later (the "Lease Termination Date"). On the date on which
the Casino commences operations, the Partnership shall sublease the Land to the
Tribal Gaming Corporation until the Lease Termination Date. Such Lease and
sublease shall contain such other terms and conditions as are, in the judgment
of the Board, customary for such documents and permitted by applicable law.
4.5 CONSTRUCTION LOAN. In order to fund the development, construction
-----------------
and equipping of the Casino ("Construction Activities"), the Partnership shall
obtain a loan in the amount of the full costs of such construction and
development, with such costs being reasonably estimated by the Tribal Gaming
Corporation and approved by the General Partners (the "Construction Loan"). Each
of the Limited Partners agrees to guarantee one-half of the Construction Loan.
Upon Contract Approval, the Partnership shall loan the entire amount of the
Construction Loan to the Tribal Gaming Corporation (the "Tribal Construction
Loan"). The Tribal Construction Loan shall be evidenced by a promissory note
executed by the Tribal Gaming Corporation and shall contain such terms and
conditions as are determined by the Board, provided, however, that (a) the
Tribal Construction Loan shall be amortized over the same period as the
Construction Loan, with the first payment due on the first day of the month
following the month in which the Casino is open to the general public, and (b)
the Tribal Construction Loan shall be secured by furniture, fixtures and
equipment and by "Available Distributable Cash" (as defined below) of the
Casino. "Available Distributable Cash" shall mean the cash flow of the Casino
after (i) payment of operating expenses of the Casino, calculated in accordance
with generally accepted accounting principles, consistently applied, (ii)
establishment of a reasonable reserve for the Casino's operating and contingent
needs, and (iii) rental payments to the Tribe under the Lease. The Partnership
and the Tribal Gaming Corporation shall enter into such agreements and
instruments as are necessary and appropriate to evidence the Tribal Construction
Loan and the security interest related thereto. The Tribal Gaming Corporation
shall pay interest on the Tribal Construction Loan as an operating expense of
the Casino, and the principal of the Tribal Construction Loan shall be repaid
solely from the Available Distributable Cash of the Casino; subject to the
foregoing, no assets or revenue of
-13-
<PAGE>
the Tribe shall be used to repay the Tribal Construction Loan.
4.6 CONSTRUCTION. NORAM shall cause CED Construction, Inc. ("CED") to
------------
act as construction manager for the alterations and improvements required to
establish and operate the Casino. In consideration of its services, CED shall be
reimbursed for its actual, out-of-pocket expenses paid to third parties
(excluding overhead, salaries and employee benefits). The Partners shall jointly
consult with the Tribal Gaming Corporation on the establishment of a mutually
acceptable budget with respect to such alterations and improvements and on the
selection of a general contractor for such construction.
4.7 CONSULTING AGREEMENT. Prior to the sale of the Land to the Tribe,
--------------------
the Partnership shall enter into a consulting agreement with the Tribal Gaming
Corporation (the "Consulting Agreement"), pursuant to which the Partnership
shall provide the Tribal Gaming Corporation with such consulting services as the
Tribal Gaming Corporation shall reasonably request in connection with the
development, construction, renovation, management, operation and maintenance of
the Casino. The Consulting Agreement shall include such provisions as the Board
shall agree upon (including, without limitation, the right of the Partnership to
provide consulting services to the Tribe at any other casinos owned by the Tribe
in the State of Kansas), provided, however, that the Partnership's compensation
under the Consulting Agreement shall be $1.00 annually.
4.8 OPERATIONS. The Tribal Construction Loan, or such other agreements
----------
between the Partnership and the Tribe and/or the Tribal Gaming Corporation,
shall provide that the Tribe or the Tribal Gaming Corporation and the
Partnership will continue operating mutually acceptable pari-mutuel greyhound
and horse racing schedules. Such agreement between the Partnership and the Tribe
and/or the Tribal Gaming Corporation shall further provide that (i) such racing
will occur on trust land, (ii) the revenue generated in connection with such
racing shall be deemed to be revenue of the Casino, and (iii) the expenses
associated with such racing shall be deemed operating expenses of the Casino and
shall be accounted for under the appropriate terms and provisions of the
agreement governing the Construction Loan. Upon approval of the Tribe's lease of
the Land to the Partnership, the Tribe and the Partnership shall jointly make
all decisions with respect to all development activities relating to the Land.
4.9 GENERAL MANAGER. As between the Partners, the HP General Partner
---------------
shall at all times have the right to make recommendations to the Tribal Gaming
Corporation regarding the on-site general manager of the Casino, who shall at
all times be an employee of the Tribal Gaming Corporation and whose salary and
benefits will be considered operating expenses of the Casino. Such general
manager shall be responsible for the day-to-day management of the operations of
the Casino and shall make all the decisions required to be made regarding the
day-to-day administration, supervision, management and control of the operations
of the Casino.
4.10 OTHER GAMING FACILITIES. The Partners acknowledge that the Tribe may
-----------------------
receive the right to conduct gaming and ancillary activities within the State of
Kansas at locations in lieu of or in addition to The Woodlands. In consideration
of the agreements contained herein, each of NORAM and HP hereby agrees that the
other shall have the right to participate, as a joint venture partner on a 50/50
basis (or such different percentage based on the financial contribution of such
partner to such other project), in developing, operating or financing any other
Indian gaming facility in the State of Kansas with any Indian nation or tribe
(including, without limitation, any location other than The Woodlands within the
State of Kansas for which NORAM or any of its Affiliates receives or has the
right to receive an
-14-
<PAGE>
economic interest therein), on terms that are substantially similar to the terms
contained herein, or in the alternative, each of NORAM and HP shall have the
right to share in the proceeds obtained by the other or any of its Affiliates in
the event that such Partner or such Affiliates decide to transfer its right to
receive an economic interest in such other location.
ARTICLE 5
ALLOCATIONS OF NET PROFITS AND NET LOSSES
5.1 ALLOCATIONS OF INCOME AND NET PROFITS. After giving effect to the
-------------------------------------
special allocations set forth in Sections 0 and 0 hereof, Net Profits shall be
allocated in accordance with the Partners' Profit Percentage Interests, which
shall initially be as follows:
HP 43.167%
HP General Partner 00.50%
NORAM 55.833%
NORAM General Partner 00.50%
The foregoing Profit Percentage Interests shall be subject to adjustment from
time to time upon the admission of new Partners or in accordance with Section 0.
5.2 ALLOCATIONS OF NET LOSSES. After giving effect to the special
-------------------------
allocations set forth in Sections 0 and 0 hereof, Net Losses shall be allocated
to the Partners as follows:
5.2.1 CHARGEBACKS. Net Losses shall first be allocated to the
-----------
Partners in proportion to and to the extent allocations of Net Profits with
respect to which no prior allocation has been made pursuant to this Section 0.
5.2.2 POSITIVE CAPITAL ACCOUNTS. Net Losses shall next be allocated
-------------------------
to the Partners in proportion to and to the extent of their positive Capital
Account balances.
5.2.3 PROFIT PERCENTAGE INTERESTS. Except as provided in Section 0,
---------------------------
Net Losses shall then be allocated to the Partners in proportion to their Profit
Percentage Interests; provided, however, that Net Losses shall not be allocated
to a Limited Partner if such allocation would create or increase an Adjusted
Capital Account Deficit and any such Net Losses shall instead be allocated to
the General Partners in proportion to their Profit Percentage Interests. To the
extent that Net Losses that would have been allocated to the Limited Partners
but for the proviso in the preceding sentence have instead been allocated to the
General Partners, Net Profits shall thereafter be allocated to the General
Partners prior to any other allocation of Net Profits pursuant to Section 0.
5.3 SPECIAL ALLOCATIONS.
-------------------
5.3.1 PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse
------------------------------
Deductions for any Fiscal Year shall be specially allocated to the Partner who
bears the economic risk of loss with respect to the Partner Nonrecourse Debt or
other liability to which such Partner Nonrecourse Deductions or other deductions
are attributable in accordance with Regulations Section 1.704-2(i) and
Regulations Section 1.704-1(b).
-15-
<PAGE>
5.3.2 NONRECOURSE DEDUCTIONS REFERABLE TO LIABILITIES OWED TO NON-
-----------------------------------------------------------
PARTNERS. Any Nonrecourse Deductions for any Fiscal Year and any other
- --------
deductions or losses for any Fiscal Year referable to a liability owed by the
Partnership to a Person other than a Partner for which no Partner bears the
economic risk of loss shall be specially allocated to the Partners in proportion
to their Profit Percentage Interests.
5.3.3 PARTNER MINIMUM GAIN CHARGEBACK. Except as otherwise provided
-------------------------------
in Regulation Section 1.704-2(i)(4), notwithstanding any other provision of this
Article 0, if there is a net decrease in Partner Nonrecourse Debt Minimum Gain
(as defined in Regulations Section 1.704-2(i)(2)) attributable to a Partner
Nonrecourse Debt during any Fiscal Year, each Partner who has a share of the
Partner Nonrecourse Minimum Gain attributable to such Partner Nonrecourse Debt
(which share shall be determined in accordance with Regulations Section 1.704-
2(i)(5)) shall be specially allocated items of Partnership income and gain for
such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount equal
to that portion of such Partner's share of the net decrease in Partner
Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse Debt,
determined in accordance with Regulations Section 1.704-2(i)(4). Allocations
pursuant to the previous sentence shall be made in proportion to the amounts
required to be allocated to each Partner pursuant thereto. The items to be so
allocated shall be determined in accordance with Regulations Section 1.704-
2(i)(4) and 1.704-2(j)(2). This Section 0 is intended to comply with the minimum
gain chargeback requirement contained in Regulations Section 1.704-2(i)(4) and
shall be interpreted consistently therewith.
5.3.4 MINIMUM GAIN CHARGEBACK. Except as otherwise provided in
-----------------------
Regulations Section 1.704-2(f), notwithstanding any other provision of this
Article 0, if there is a net decrease in Partnership Minimum Gain during any
Fiscal Year, each Partner shall be specially allocated items of Partnership
income and gain for such Fiscal Year (and, if necessary, in subsequent Fiscal
Years) in an amount equal to the portion of such Partner's share of the net
decrease in Partnership Minimum Gain which share of such net decrease shall be
determined in accordance with Regulations Section 1.704-2(g)(2). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Partner pursuant thereto. The items to
be so allocated shall be determined in accordance with Regulations Section 1.70
4-2(f)(6) and 1.704-2(g)(2). This Section 0 is intended to comply with the
minimum gain chargeback requirement contained in Regulations Section 1.704-2(f)
and shall be interpreted consistently therewith.
5.3.5 QUALIFIED INCOME OFFSET. In the event a Limited Partner
-----------------------
unexpectedly receives any adjustments, allocations, or distributions described
in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) or any other event
creates an Adjusted Capital Account Deficit, items of Partnership income and
gain shall be specially allocated to such Partner in an amount and manner
sufficient to eliminate such excess deficit balance as quickly as possible. This
Section 0 is intended to comply with the qualified income offset requirement
contained in Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
5.4 CURATIVE ALLOCATIONS. The allocations set forth in Section 0 hereof
--------------------
(the "Regulatory Allocations") are intended to comply with certain requirements
of the Regulations. It is the intent of the Partners that, to the extent
possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of Partnership
income, gain, loss, or deduction pursuant to this Section 0. Therefore,
notwithstanding any other provision of this Article 0 (other than the Regulatory
Allocations), the Partners shall make such offsetting special allocations of
Partnership income, gain, loss, or
-16-
<PAGE>
deduction in whatever manner they determine appropriate so that, after such
offsetting allocations are made, a Partner's Capital Account balance is, to the
extent possible, equal to the Capital Account balance such Partner would have
had if the Regulatory Allocations were not part of this Agreement and all
Partnership items were allocated pursuant to Sections 0 and 0.
5.5 APPLICATION OF SECTION 704(c) PRINCIPLES. Notwithstanding the
----------------------------------------
preceding sections of this Article 0:
(a) Section 704(c) of the Code shall apply to the allocation of items
of income, gain, deduction and loss related to contributed property having a tax
basis at the time of contribution that differs from its fair market value; and
(b) Regulations Section 1.704-1(b)(2)(iv)(f) shall apply to the items
of income, gain, deduction and loss related to property the book value of which
is adjusted pursuant to that Regulations Section.
5.6 ALLOCATION OF EXCESS NON-RECOURSE LIABILITIES. For purposes of
---------------------------------------------
Section 752 of the Code and Section 1.752-3(a)(3) of the Regulations, "excess
non-recourse liabilities" shall be allocated among the Partners in accordance
with their Profit Percentage Interests.
5.7 ALLOCATION OF NET PROFITS AND LOSSES IN RESPECT OF A TRANSFERRED
----------------------------------------------------------------
INTEREST. If any Partnership Interest is Transferred, or is increased or
- --------
decreased by reason of the admission of a new Partner, Additional Capital
Contributions or otherwise, during any Fiscal Year of the Partnership, each item
of income, gain, loss, deduction or credit of the Partnership for such Fiscal
Year shall be allocated among the Partners by the Board in accordance with any
method permitted by Section 706(d) of the Code and the applicable Regulations in
order to take into account the Partners' varying Profit Percentage Interests
during the Year.
5.8 OBLIGATIONS OF PARTNERS TO REPORT ALLOCATIONS. The Partners hereby
---------------------------------------------
agree to be bound by the provisions of this Agreement in reporting their shares
of Partnership income and loss for income tax purposes.
ARTICLE 6
DISTRIBUTIONS
6.1 DISTRIBUTION OF ASSETS BY THE PARTNERSHIP. Subject to applicable law
-----------------------------------------
and any limitations contained elsewhere in this Agreement, no distribution shall
be made if, after giving effect to the distribution, (a) the Partnership would
not be able to pay its debts as they become due in the usual course of business,
or (b) the Partnership's total assets would be less than the sum of its total
liabilities.
6.2 CASH PROCEEDS. Subject to Section 0 and except for amounts, if any,
-------------
that may be reserved for debt service obligations as determined by the Board,
cash proceeds of the Partnership, including, without limitation the profit
participation interests of the Partnership in the Casino, shall be distributed
within thirty (30) days after the end of each calendar quarter to
-17-
<PAGE>
the Partners in proportion to their respective Profit Percentage Interests.
6.3 PERSONS TO RECEIVE DISTRIBUTION. All distributions shall be made to
-------------------------------
the Persons who, according to the books and records of the Partnership, are the
holders of record of the Economic Interests in respect of which such
distributions are made on the actual date of distribution. Neither the
Partnership nor any Partnership Person shall incur any liability for making
distributions in accordance with this Section 0.
6.4 FORM OF DISTRIBUTION. A Partner, regardless of the nature of the
--------------------
Partner's Capital Contribution, has no right to demand and receive any
distribution from the Partnership in any form other than money. No Partner may
be compelled to accept from the Partnership a distribution of any asset in kind
in lieu of a proportionate distribution of money being made to other Partners.
6.5 WITHHOLDING ON DISTRIBUTIONS. Each Partner consents and agrees that
----------------------------
the Partnership may deduct and withhold amounts for tax or other obligations of
such Partner on any amount distributed or allocated by the Partnership to such
Partner, and to any assignee of a Partner's Partnership Interest (or the related
Economic Interest), if the Partnership believes in good faith that it is
required by law to do so. All amounts so withheld with respect to such Partner,
substitute Partner, or Economic Interest Owner shall be treated as amounts
distributed to such Person pursuant to Section 0 or 0 for all purposes under
this Agreement. In addition, the affected Partner, substitute Partner or
Economic Interest Owner shall, immediately upon demand, reimburse the
Partnership for any such amounts so withheld to the extent not deducted from a
distribution.
6.6 RETURN OF DISTRIBUTIONS. Except for distributions made in violation
-----------------------
of the Act or this Agreement, no Partner or Economic Interest Owner shall be
obligated to return any distribution to the Partnership or pay the amount of any
distribution for the account of the Partnership or to any creditor of the
Partnership. The amount of any distribution returned to the Partnership by a
Partner or Economic Interest Owner or paid by a Partner or Economic Interest
Owner for the account of the Partnership or to a creditor of the Partnership for
the account of the Partnership shall be added to the account or accounts from
which it was subtracted when it was distributed to the Partner or Economic
Interest Owner.
ARTICLE 7
PARTNERS
7.1 LIMITED LIABILITY. Except as required under the Act or as expressly
-----------------
set forth in this Agreement, no Limited Partner shall be personally liable for
any debt, obligation or liability of the Partnership, whether that liability or
obligation arises in contract, tort or otherwise.
7.2 ADMISSION OF ADDITIONAL PARTNERS. No additional Partners shall be
--------------------------------
admitted unless approved by Partners holding a Super Majority Interest. No
additional Partner shall become a Partner until such additional Partner has made
any required Capital Contribution and has become a party to this Agreement by
executing a signature page agreeing to the terms and provisions hereof, and
substitute Partners may only be admitted in accordance with Article 0.
-18-
<PAGE>
7.3 TRANSACTIONS WITH THE PARTNERSHIP. A Partnership Person or any
---------------------------------
Affiliate may lend money to and transact other business with the Partnership
only in accordance with this Agreement or with the prior approval of holders of
a majority of the Profit Percentage Interests held by the disinterested Partners
after full disclosure of the Partner's involvement. Subject to other applicable
law, such Partner has the same rights and obligations with respect thereto as a
person who is not a Partner.
7.4 POWERS OF LIMITED PARTNERS. Pursuant to Article 0, the management of
--------------------------
the Partnership is vested in the General Partners. Except as otherwise provided
in this Agreement, no Limited Partner shall (in that capacity) take part in, or
interfere in any manner with, the management or control of the business of the
Partnership, transact any business for the Partnership, or have the right, power
or authority to act for, sign for, or bind the Partnership in any way.
7.5 VOTING RIGHTS.
-------------
7.5.1 GENERAL RULE. Except as expressly provided in this Agreement,
------------
the Certificate or the Act, Limited Partners shall have no voting, approval or
consent rights. Except as otherwise expressly provided in this Agreement, in all
instances in which a vote, approval, consent or agreement of the Limited
Partners is required, a vote, approval or consent of both Limited Partners or,
if there are more than two Limited Partners, by a Super Majority Interest (or,
in instances in which there are Defaulting Limited Partners or an assignment of
a Partnership Interest, non-Defaulting Limited Partners or Limited Partners who
are not assignors of a Partnership Interest, respectively, who hold eighty (80%)
of the Profit Percentage Interests held by all such non-Defaulting or non-
assigning Partners) shall be required.
7.5.2 MEETINGS OF PARTNERS. No annual or regular meetings of
--------------------
Partners are required. A meeting of the Partners may be called by either General
Partner or by either Limited Partner. Meetings of Partners may be held at such
date, time and place within or without the State of California as the General
Partners may fix from time to time. Notice of any meeting shall be given in
accordance with Section 222 of the Delaware General Corporation Law. At any
Partners' meeting, a duly authorized officer of one of the General Partners
shall preside at the meeting and shall designate an officer or representative of
the other General Partner to act as secretary of the meeting. The secretary of
the meeting shall prepare minutes of the meeting, which shall be placed in the
minute books of the Partnership. Any action that may be taken at a meeting of
Partners may be taken without a meeting, if a consent in writing setting forth
the action so taken, is signed and delivered to the Partnership by Partners
having not less than the minimum number of votes that would be necessary to
authorize or take that action at a meeting at which all Partners entitled to
vote on that action at a meeting were present and voted. All such consents shall
be filed with the Partnership and shall be maintained in the Partnership
records. Partners may participate in any Partners' meeting through the use of
any means of conference telephones or similar communications equipment as long
as all Partners participating can hear one another. A Partner so participating
is deemed to be present in person at the meeting.
7.5.3 PROXIES. Every Partner entitled to vote at a meeting may
-------
authorize another person or persons to act by proxy with respect to his, her or
its Partnership Interest. No proxy shall be valid after the expiration of 11
months from the date thereof unless otherwise provided in the proxy. Every proxy
continues in full force and effect until revoked by the Partner executing it
prior to the vote pursuant thereto, except as otherwise herein
-19-
<PAGE>
provided. Suchrevocation may be effected by a writing delivered to the
Partnership stating that the proxy is revoked or by a subsequent proxy executed
by the Partner executing the prior proxy and presented at the meeting, or as to
any meeting by attendance at such meeting and voting in person by the person
executing the proxy. The dates contained on the forms of proxy presumptively
determine the order of execution, regardless of the postmark dates on the
envelopes in which they are mailed. A proxy is not revoked by the death or
incapacity of the Partner unless, before the vote is counted, written notice of
such death or incapacity is received by the Partnership. The revocability of a
proxy that states on its face that it is irrevocable shall be governed by the
provisions of Section 212(e) of the Delaware General Corporation Law.
7.6 WITHDRAWAL, RESIGNATION AND RETIREMENT. Except as required by law,
--------------------------------------
no Partner may withdraw, resign or retire from the Partnership without the
express consent of both General Partners, or if there are more than two General
Partners, by a majority of such General Partners.
7.7 REGULATORY COMPLIANCE. The Partners hereby agree to use their best
---------------------
efforts to cooperate with each other in obtaining and maintaining applicable
gaming and other regulatory approvals.
ARTICLE 8
MANAGEMENT AND CONTROL OF THE PARTNERSHIP
8.1 MANAGEMENT OF THE PARTNERSHIP BY THE GENERAL PARTNERS.
-----------------------------------------------------
8.1.1 EXCLUSIVE MANAGEMENT BY THE GENERAL PARTNERS. Subject to the
--------------------------------------------
provisions of the Certificate and this Agreement, the business, property and
affairs of the Partnership shall be managed, and all powers of the Partnership
shall be exercised, by or under the direction of the Board acting through the
General Partners. Notwithstanding the foregoing, each General Partner hereby
covenants and agrees that it shall not (i) take any actions in contravention of
this Agreement or (ii) sign any documents or take any other actions on behalf of
the Partnership unless and until the Board has approved such action.
8.1.2 LIMITATION ON OFFICERS OF THE GENERAL PARTNERS. No officer of
----------------------------------------------
a General Partner, acting solely in such capacity and without the approval or
authorization of the Board, shall have any signing authority with respect to any
matters on behalf of the Partnership, including without limitation the authority
to endorse checks, drafts and other evidences of indebtedness made payable to
the order of the Partnership or to sign checks, drafts and other instruments
obligating the Partnership to pay money, or sign agreements or other documents.
-20-
<PAGE>
8.2 BOARD OF DIRECTORS.
------------------
8.2.1 NUMBER, TERM, AND QUALIFICATIONS OF DIRECTORS. The
---------------------------------------------
Partnership shall initially have a Board of Directors (the "Board") consisting
of two representatives of each of the General Partners (each a "Director"). The
authorized number of Directors constituting the Board shall be fixed from time
to time by the affirmative vote or written consent of both General Partners;
provided, however, that in no event may the authorized number of Directors be
- -------- -------
reduced except if a Director has been removed or has resigned as provided for in
this Agreement and the General Partners do not desire to elect a substitute
Director to succeed such removed or resigned Director. Unless a Director resigns
or is removed, each Director shall hold office for a term commencing on the date
of election (or in the case of the current Directors, commencing on the date
hereof) and expiring upon the earlier of (i) the date on which such Director is
removed, (ii) the date on which such Director resigns or becomes disabled and
unable to serve, or (iii) the election and qualification of such Director's
successor. A Director need not be an officer of a General Partner. Each General
Partner agrees to be bound by the actions and agreements taken or entered into
by the Partnership that have been approved by the Board.
8.2.2 DESIGNATION OF DIRECTORS. Initially, the Directors shall be
------------------------
Alan Ginsburg, G. Michael Finnigan, Bruce Rimbo and an individual to be
designated by NORAM (which individual shall take office only after complying, in
the reasonable discretion of HP, with the background investigation required by
applicable gaming authorities). At all times, each of the General Partners shall
have the right to designate and appoint fifty percent (50%) of the authorized
number of Directors, provided, however, that a General Partner shall forfeit
-------- -------
such right in the event that the Limited Partner associated with such General
Partner fails to make the Capital Contributions or Additional Capital
Contributions required by this Agreement, and provided, further, that each
-------- -------
designee of a General Partner shall not be a Noncomplying Person (as defined
below). The Partners agree to take any action necessary to ensure that the
Certificate does not conflict with the foregoing provision.
8.2.3 RESIGNATION. Any Director may resign at any time by giving
-----------
written notice to the General Partners and remaining Directors without prejudice
to the rights, if any, of the Partnership under any contract to which the
Director is a party. The resignation of any Director shall take effect upon
receipt of that notice or at such later time as shall be specified in the
notice; and, unless otherwise specified in the notice, the acceptance of the
resignation shall not be necessary to make it effective. A Director who has an
incapacity shall be deemed to have resigned. For purposes of this Section 0,
"incapacity" shall mean, as to any Director, (i) the death or adjudication or
incompetence or insanity in the case of a natural person, (ii) the inability of
a Director to fulfill his obligations under this Agreement because of injury or
physical or mental illness and such incapacity shall exist for ninety (90)
working days in the aggregate during any consecutive twelve (12) month period,
or (iii) the Bankruptcy of such Director. The resignation of a Director shall
not by itself constitute a withdrawal of a Partner.
8.2.4 REMOVAL Any single Director may be removed at any time
-------
and for any reason by the General Partner which designated such Director,
provided that if the Limited Partner associated with a General Partner fails to
- --------
make the Capital Contributions or Additional Capital Contributions required by
this Agreement, such General Partner shall forfeit the foregoing right and the
other General Partner shall be entitled to remove any of the Directors
designated by such defaulting General Partner. Any removal shall be without
prejudice to the rights, if any, of the Director and the Partnership under any
employment contract and, if the Director is also a Partner, shall not affect the
Director's rights as a Partner or constitute a
-21-
<PAGE>
withdrawal of a Partner, except as otherwise provided in this Agreement or any
other contract with such Partner.
8.2.5 VACANCIES. Any vacancy occurring for any reason in the number
---------
of Directors may be filled by the General Partner entitled to designate and
appoint the departing Director, or, if such General Partner does not act within
thirty (30) days of notice of such vacancy, by a majority of the remaining
Directors subject to the right of such General Partner to remove the replacement
selected by the remaining Directors in favor of its own replacement.
8.2.6 MEETINGS. Meetings of the Board may be called by any
--------
Director or officer of the Partnership. All meetings shall be held upon four (4)
days notice by mail or seventy-two (72) hours notice delivered personally or by
telephone, telegraph or facsimile. A notice need not specify the purpose of any
meeting. Notice of a meeting need not be given to any Director who signs a
waiver of notice or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meeting, or who attends the meeting
without protesting, prior to its commencement, the lack of notice to such
Director. All such waivers, consents and approvals shall be filed with the
Partnership records or made a part of the minutes of the meeting. A majority of
the Directors present, whether or not a quorum is present, may adjourn any
meeting to another time and place. If the meeting is adjourned for more than
twenty-four (24) hours, notice of any adjournment shall be given prior to the
time of the adjourned meeting to the Directors who are not present at the time
of the adjournment. Meetings of the Board may be held at any place within or
without the State of California that has been designated in the notice of the
meeting or at such place as may be approved by the Board. Directors may
participate in a meeting through the use of conference telephone or similar
communications equipment, so long as all Directors participating in such meeting
can hear one another. Participation in a meeting in such manner constitutes a
presence in person at such meeting. A majority of the authorized number of
Directors constitutes a quorum of the Board for the transaction of business, and
every act or decision done or made with the approval of at least a majority of
the number of Directors present at a meeting duly held at which a quorum is
present, is the act of the Board. A meeting at which a quorum is initially
present may continue to transact business notwithstanding the withdrawal of
Directors. Any action required or permitted to be taken by the Board may be
taken by the Board without a meeting, if such action is approved in writing by
all the Directors. Such action by written consent shall have the same force and
effect as a determination of the Board.
8.2.7 CERTAIN MATTERS RESERVED TO THE BOARD. In addition to such
-------------------------------------
other matters as are submitted to the Board, the Partnership shall be authorized
to undertake the following matters only if such matter has been approved by the
Board:
(a) Any transaction outside the ordinary course of the
Partnership's business;
(b) The approval of any and all loans obtained by the
Partnership (other than ordinary course trade credit);
(c) The loaning of any money by the Partnership or the
guaranty by the Partnership of any obligation of a third party (other than in
the ordinary course of the Partnership's business);
(d) Institution, settlement or compromise of any claim or
litigation in excess of $5,000;
-22-
<PAGE>
(e) The expenditure of any amount for capital items in
excess of $5,000, either individually or with respect to a group of related
items;
(f) The incurring of any obligation or entering into any
contract or agreement that by its terms (i) will not or is not reasonably
expected to be fully performed or completed within six (6) months after it is
incurred or entered into or (ii) involves an expenditure of more than $5,000;
(g) The hiring of any employees or professionals;
(h) Entering into any contract with a Partner or an
Affiliate of a Partner or as to which a Partner would have a conflict of
interest or any other contract that is not "arms-length", and notwithstanding
anything contained herein, with respect to any such contract, the declaration of
default, institution or settlement of a claim with respect thereto, waiver of
Partnership rights against any party thereto, or consent to assignment of rights
or delegation of duties by the other party thereto, shall be within the
exclusive authority (by majority vote) of the Directors who are not associated
with the General Partner that has the conflict of interest; provided, however,
-------- -------
that all such non-arms-length contracts shall be at competitive rates and
provide for competitive terms;
(i) The determination and timing of distributions
hereunder;
(j) The determination as to whether Additional Capital
Contributions are required or permitted, and the amount and timing thereof;
(k) The acquisition of an equity interest in any other Person
or the issuance of any additional equity interest in the Partnership;
(l) The making of any federal or state income tax elections or
choices of methods of reporting income or loss for federal or state income tax
purposes;
(m) Any matter having to do with the kind, amount and terms of
insurance carried by the Partnership; and
(n) The adoption of a budget for operating the Partnership and
any material modification thereof.
-23-
<PAGE>
8.3 OFFICERS
--------
8.3.1 APPOINTMENT OF OFFICERS. The Board may appoint officers at
-----------------------
any time. The officers of the Partnership, if deemed necessary by the Board, may
include a Chairperson, President, Vice President, Construction and Regulatory
Matters (to be designated by the NORAM General Partner), Vice President,
Operations (to be designated by the HP General Partner), Secretary and
Treasurer. Initially, Alan Ginsburg shall serve as President, Bruce Rimbo as
Vice President, Operations, and Secretary, and G. Michael Finnigan as Treasurer.
In addition, an individual designated by NORAM shall serve as Vice President,
Construction and Regulatory Matters, provided that such individual shall have
complied, in the reasonable discretion of HP, with the background investigation
required by applicable gaming authorities. Until such designation, Alan Ginsburg
shall serve as Vice President, Construction and Regulatory Matters. The officers
shall serve at the pleasure of the Board, subject to all rights, if any, of an
officer under any contract of employment. Any individual may hold any number of
offices. The officers shall have such duties and powers as are approved by the
Board. The officers shall exercise such powers and perform such duties as
specified in this Agreement and as shall be determined from time to time by the
Board.
8.3.2 REMOVAL, RESIGNATION AND FILING OF VACANCY OF OFFICERS. Any
------------------------------------------------------
officer may be removed, either with or without cause, by the Board at any time.
Any officer may resign at any time by giving written notice to the Board. Any
resignation or removal is without prejudice to the rights, if any, of the
parties under any contract to which the officer is a party. A vacancy in any
office because of death, resignation, removal, disqualification or any other
cause shall be filled in the manner prescribed in this Agreement for regular
appointments to that office.
8.3.3 ACTS OF OFFICERS AS CONCLUSIVE EVIDENCE OF AUTHORITY. Any
----------------------------------------------------
note, mortgage, evidence of indebtedness, contract, certificate, statement,
conveyance or other instrument in writing, and any assignment or endorsement
thereof, executed or entered into between the Partnership and any other Person,
when signed by any two officers (one representing each of the General Partners
and one of which must be the President or the Chief Financial Officer or
Treasurer of the Partnership), is not invalidated as to the Partnership by any
lack of authority of the signing officer(s) in the absence of actual knowledge
on the part of the other Person that the signing officer(s) had no authority to
execute the same.
8.3.4 SIGNING AUTHORITY OF OFFICERS Subject to any restrictions
-----------------------------
imposed by the Board: (a) any officer, acting alone, is authorized to endorse
checks, drafts, and other evidences of indebtedness made payable to the order of
the Partnership, but only for the purpose of deposit into the Partnership's
accounts; and (b) all checks, drafts, and other instruments obligating the
Partnership to pay money (i) in an amount up to $1,000 may be signed by any one
officer acting alone and (ii) in an amount in excess of $1,000 must be signed by
any two officers acting together.
-24-
<PAGE>
8.4 LIMITATIONS ON THE BOARD'S AUTHORITY. Notwithstanding the
------------------------------------
foregoing, the Board shall not, without the written consent of both Limited
Partners, which consent shall not be unreasonably delayed or withheld:
(a) do any act in contravention of this Agreement in its present
form or as amended;
(b) confess a judgment against the Partnership;
(c) cause the Partnership to enter into any arrangement with itself
or any of its affiliates or other related entities as principal on terms less
favorable to the Partnership as would be obtained from an unaffiliated third
party;
(d) dissolve the Partnership except in accordance with Article 0
hereof;
(e) change the nature of the business of the Partnership (provided,
---------
however, that to the extent agreed to by both General Partners, the Partnership
- -------
may determine to undertake additional businesses at the Casino);
(f) restrict the rights of any Economic Interest Owner under this
Agreement.
8.5 REMUNERATION AND REIMBURSEMENT OF PARTNERS. Except as otherwise
------------------------------------------
authorized in, or pursuant to, this Agreement, no Partner is entitled to
remuneration for acting on behalf of the Partnership or in connection with the
Partnership's business.
8.6 BUDGETS. The Board shall prepare an initial capital budget and
-------
annual capital and operating budgets and operating plans for the Casino, for
each fiscal year, which annual budgets and plans shall be delivered to the
Partners for informational purposes.
8.7 BANK ACCOUNTS. All funds of every kind and nature received by the
-------------
Partnership, including capital contributions, loan proceeds, and operating
receipts shall be deposited in such bank accounts in the name of the Partnership
as shall be determined from time to time by the Board. Partnership funds shall
not be commingled with funds of any Partner or others.
8.8 INSURANCE. The General Partners shall, or shall cause the Tribe to,
---------
procure and maintain in full force and effect insurance on the Casino, including
liability, fire, extended property and business interruption insurance, naming
the Partnership and the General Partners as insureds thereunder (the terms and
coverage amounts of which shall be that customary in the industry). The
Partnership shall procure and maintain any additional insurance coverage
required by applicable ordinances or written order.
8.9 PLEDGE OF ASSETS. Notwithstanding anything to the contrary in this
----------------
Agreement, the Partners hereby acknowledge that HP and the HP General Partner
are obligated to and will pledge their respective Partnership Interests in
connection with certain existing credit agreements of HP (the "Credit
Agreement"), and such pledge shall not constitute a breach of any of HP or HP
General Partner's obligations hereunder. In addition, in the event that HP
becomes the owner of more than fifty percent (50%) of all Profit Percentage
Interests, (i) the Partners hereby acknowledge that, pursuant to the Credit
Agreement, the Partnership will be required to pledge all of the Partnership's
assets to secure
-25-
<PAGE>
HP's obligations under the Credit Agreement (although none of the Partnership's
assets will be pledged without the prior written consent of NORAM, which consent
shall not be unreasonably withheld), and (ii) each of the Partners hereby agrees
to negotiate in good faith and to use its best efforts to permit HP and the
Partnership to comply with the foregoing requirement of the Credit Agreement.
ARTICLE 9
TRANSFER AND ASSIGNMENT OF INTERESTS
9.1 RESTRICTIONS ON TRANSFER; TRANSFERS OF ECONOMIC INTERESTS. No
---------------------------------------------------------
Partner may Transfer its Partnership Interest or Economic Interest in the
Partnership, in whole or in part, without the prior written consent of both
General Partners, which consent may be given or withheld, conditioned or delayed
by either General Partner in its sole discretion; provided that any Partner may
Transfer its Economic Interest to another Partner or to an Affiliate without
consent. The Transfer of an Economic Interest to an Affiliate or another Partner
shall not effect a Transfer of the Partnership Interest of the transferring
Partner and the transferee shall in no event be deemed substituted as a Partner
of the Partnership, except to the extent of the Economic Interest so Transferred
unless otherwise agreed by both General Partners. No Transfer of an Economic
Interest permitted by this Agreement shall effect a novation or release any of
the transferor Partner's obligations hereunder, and the Transferring Partner
shall continue to be obligated under each and every provision of this Agreement.
No Economic Interest Owner of the Partnership shall have any right to
participate in the management of the business and affairs of the Partnership or
to become a Partner thereof.
9.2 TRANSFERS BY GENERAL PARTNER. Other than with the prior written
----------------------------
consent of the other General Partner(s), no General Partner shall Transfer its
Partnership Interest to any Person, except to an Affiliate or its successor in
connection with a transaction for the purpose of changing its state of
incorporation or form of entity or a Transfer pursuant to Section 9.9 hereof.
9.3 REMOVAL AND ADMISSION OF A GENERAL PARTNER
------------------------------------------
9.3.1 REMOVAL. A General Partner may be removed (i) upon the
-------
Bankruptcy of such General Partner, (ii) upon the failure of its affiliated
Limited Partner to make Additional Capital Contributions pursuant to Section 0
hereof, (iii) for failure to comply with Section 0 hereof, (iv) for failure of
such General Partner or any officer, director or employee thereof to comply with
the provisions of Section 0 hereof, (v) for Good Cause, or (vi) for conduct by
such General Partner or any officer, director or employee thereof that results
in a breach under any agreement between the Partnership and the Tribe.
Notwithstanding any other term or provision of this Agreement, prior to being
removed pursuant to either subsections (iv) or (vi) of this Section, a General
Partner shall have the right, within two business days following the request
from the other General Partner, to sever its relationship with the offending
officer, director or employee, and upon the severing of such relationship, the
General Partner shall not be removed. Such removal of a General Partner shall in
no way derogate from any rights or powers of such General Partner, or the
exercise thereof, or the validity of any actions taken pursuant thereto, prior
to the date of such removal. In the event of removal of a General Partner, such
General Partner's interest in the Partnership shall be converted to an Economic
Interest.
-26-
<PAGE>
9.3.2 ADMISSION OF A SUCCESSOR GENERAL PARTNER. In the event of
----------------------------------------
removal of a General Partner pursuant to clauses (i), (iv) or (vi) of Section 0,
the Limited Partner affiliated with such removed General Partner shall be
entitled to designate any Person to be the successor to such General Partner. In
the event of the removal of a General Partner pursuant to clauses (ii), (iii) or
(v) of Section 0, the Limited Partner which is not affiliated with such removed
General Partner may, in its sole discretion, designate any Person to be the
successor to such General Partner. Notwithstanding the foregoing, (a) no Person
may be designated a successor General Partner unless and until such Person has
obtained all licenses and approvals necessary for the ownership and operation of
the Facility from any necessary or applicable licensing authorities and has
executed an agreement to be bound by all provisions of this Agreement; and (b)
the interests of the Limited Partners shall not be affected by the admission of
any successor General Partner; and (c) a Defaulting Partner may not exercise the
rights granted by this Section 9.3.2, in which case the Board shall exercise
such rights.
9.4 RIGHTS OF FIRST REFUSAL ON TRANSFERS BY LIMITED PARTNERS. If a
--------------------------------------------------------
Limited Partner has received the prior written consent of the General Partners,
to a proposed Transfer in accordance with Section 0, prior to seeking to sell
all or any portion of its Partnership Interest (the "Transferable Interest"),
(i) such Limited Partner must first offer the other Limited Partner (the
"Offeree") the right to purchase the Transferable Interest on the same terms and
conditions as the selling Partner intends to sell such interest, or on the same
terms and conditions as the offer received from a prospective purchaser, as the
case may be (herein, the "First Opportunity Offer"). The First Opportunity
Offer, once made, shall constitute an irrevocable binding offer by the selling
Partner to sell the Transferable Interest to the Offeree, who shall have thirty
(30) days after receipt of the First Opportunity Offer within which to accept
same in writing. If the Offeree timely accepts the First Opportunity Offer, the
selling Partner shall sell the Transferable Interest to the Offeree on the same
terms and conditions as the First Opportunity Offer; provided, however, that
--------
such sale shall be consummated within ninety (90) days of the Offeree's
acceptance of the First Opportunity Offer. If the Offeree fails to timely accept
the First Opportunity Offer or does not agree to purchase all of the
Transferable Interest, the selling Partner shall be free to sell the entire
Transferable Interest to any third party, subject to the terms of this Agreement
and of the Purchase Agreement.
9.5 TRANSFERS SUBJECT TO LICENSES AND APPROVALS. Notwithstanding any
-------------------------------------------
other provision of this Agreement, no Transfer of a Partnership Interest or an
Economic Interest in the Partnership may be made unless and until the transferee
has obtained all licenses and approvals necessary for the ownership and
operation of the Casino from any necessary or applicable licensing authorities
and has executed an agreement to be bound by all provisions of this Agreement.
9.6 EFFECT OF NON-COMPLIANCE. Any purported Transfer not permitted by
------------------------
this Agreement shall be void ab initio and of no effect against the Partnership,
---------
any other Partner or any creditor of or claimant against the Partnership.
9.7 EFFECT OF TRANSFER. A transferee of a Partnership Interest shall
------------------
have the right to become a substitute Partner only if (a) the requirements of
Sections 0 and 0, and as applicable, Section 0 and 0, are met, (b) such Person
executes an instrument satisfactory to both General Partners (or to the
remaining General Partner in the case of a Transfer by a General Partner)
accepting and adopting the terms and provisions of this Agreement, and (c) such
Person pays any reasonable expenses in connection with its admission as a new
Partner. The admission of a substitute Partner shall not result in the release
of the Partner who
-27-
<PAGE>
assigned the Partnership Interest from any liability that such Partner may have
to the Partnership or to any Partner prior to such Transfer.
9.8 RIGHTS OF LEGAL REPRESENTATIVES. Subject to the provisions of
-------------------------------
Section 0, if a Partner which is a corporation, trust, or other entity is
dissolved or terminated, such Partner's legal representative or successor shall
have all the rights of a holder of an Economic Interest, but shall have no right
to become a substitute Partner without the consent otherwise required pursuant
to this Agreement. If a Partner who is an individual dies or is adjudged by a
court of competent jurisdiction to be incompetent to manage the Partner's person
or property, the Partner's executor, administrator, guardian, conservator, or
other legal representative may exercise the powers described in the preceding
sentence.
9.9 OBLIGATION TO COMPLY WITH APPLICABLE LAW. As soon as practicable
----------------------------------------
after Trust Approval and Bankruptcy Court Approval, the Partnership shall
promptly apply to obtain licensing and the necessary approvals to operate the
Casino and related businesses and all Partners hereby agree to obtain (and to
cause each of their directors, officers, equity owners and other Affiliates, as
applicable, to obtain) all required licenses and approvals as promptly as
possible. If any Partner or any director, officer, equity owner or other
Affiliate of any Partner (collectively a "Noncomplying Person") is unable, at
any time, to obtain or maintain such licensing or otherwise comply with
applicable law, such Partner shall take such action, including without
limitation, a corporate restructuring or the severing of its relationship with
the Noncomplying Person, in order to comply with applicable law within thirty
(30) days of the date on which the Noncomplying Person was unable or ceased to
comply with such law. If a Partner is unable to satisfy the requirements of the
preceding sentence, then the Partnership (or, if the Partnership is unable to do
so, one of the other Partners) shall purchase such Partner's Partnership
Interest. The purchase price of the sale required by the previous sentence shall
equal the Fair Value of such Partner's Partnership Interest determined in
accordance with the procedures set forth in Section 9.10 and, subject to
applicable law, shall be payable in equal quarterly installments over the
shorter of the remainder of the term of the Lease or five (5) years, in each
case with interest at the Rate. A Partner that is removed from the Partnership
pursuant to this Section shall have no further right to participate, in any way,
in the business of the Partnership (specifically including the right to receive
distributions from, or to share in the Net Profits, Net Losses or similar items
of, the Partnership or to approve Partnership actions).
9.10 DETERMINATION OF FAIR VALUE. The Fair Value of a Partnership
---------------------------
Interest for purposes hereof shall equal the greater of:
(a) the result obtained by multiplying the Partner's Profit
Percentage Interest by the total Capital Contributions to the Partnership of all
of the Partners from its inception to the date of the purchase of such interest;
or
(b) the price that an unaffiliated third party would be willing to pay
for the Partnership Interest of the applicable Partner (the "Acquired
Interest"), considering the value of the Partnership's business and assets at
the time and its liabilities (with no minority discount applied). The General
Partners shall attempt to agree on the Fair Value during the sixty (60) day
period after the date on which such a determination becomes necessary. If the
General Partners cannot agree on the Fair Value during such sixty (60) day
period, then the Fair Value of the Acquired Interest shall be determined by an
appraisal. Either General Partner may initiate an appraisal by notifying the
other in writing of its designation of a nationally recognized investment
banking firm to determine the Fair Value of the Acquired Interest. Within ten
(10) days following receipt of such designation, the receiving Partner shall
-28-
<PAGE>
notify the other of its designated appraiser, which shall also be a nationally
recognized investment banking firm, or, in the absence of notice, shall be
deemed to have accepted the investment banking firm designated by the other.
The investment banking firm (or firms) so appointed shall make a determination
of the Fair Value within thirty (30) days after the deemed acceptance of the
first designated investment banking firm or, if applicable, the appointment of
the second investment banking firm, and shall concurrently exchange and/or
deliver such determinations to the Partners. If only one investment banking
firm has been appointed, the determination by such firm of the Fair Value shall
be final and binding. If two firms have been appointed, and the determinations
of the two firms are within ten percent (10%) of each other, the average of the
two determinations shall be the Fair Value. If the two determinations are not
within ten percent (10%) of each other, then the two investment banking firms
shall select a third investment banking firm within fifteen (15) days after the
determinations have been exchanged; and if the two investment banking firms are
unable to agree within that period on a third firm, such appointment will be
made by the American Arbitration Association. If a third investment banking
firm is appointed, the third investment banking firm shall make the
determination of the Fair Value, which shall be within the range of the
determinations made by the first two firms, within fifteen (15) days after the
appointment of the third firm. If an appraisal is required pursuant to this
Section, each of the General Partners shall pay one-half ( 1/2) of the cost of
the investment banking firm, if only one is appointed; if two firms are
appointed, each General Partner shall pay the fees and costs of the investment
banking firm appointed by such Person; and the fees and costs of a third
investment banking firm shall be divided equally between them.
9.10.1 CLOSING. The closing (the "Closing") of any sale pursuant
-------
hereto shall be held at a mutually acceptable place, on a date (the "Closing
Date") not more than thirty (30) days after the final determination of the Fair
Value of the applicable Partnership Interest. Conveyance shall be made by an
appropriate assignment, duly and validly executed by the selling Partner
conveying the Acquired Interest, free and clear of all liens, claims,
encumbrances and rights of others and containing customary representations and
warranties, including without limitation, representations and warranties that
(i) there are no outstanding options, warrants or other rights to purchase such
Partnership Interest; and (ii) such Partner has full power and authority to sell
its Partnership Interest and such sale is not prohibited by and will not
conflict with the terms of any other understanding, agreement or arrangement to
which such Partner is a party or by which it is bound.
-29-
<PAGE>
9.11 TAG-ALONG RIGHTS
----------------
9.11.1 RIGHT TO PARTICIPATE IN SALE. Following compliance with all
----------------------------
applicable requirements of this Agreement governing the Transfer of Partnership
Interests, if any Limited Partner ("Selling Partner") enters into an agreement
to transfer, sell or otherwise dispose of any portion of its Partnership
Interest (other than a Transfer of an Economic Interest to an Affiliate or
another Partner as permitted by Section 0 or a Transfer required by Section 9.9)
(such transfer, sale or other disposition being referred to as a "Tag-Along
Sale"), then the other Limited Partner ("Tag-Along Partner") shall have the
right, but not the obligation, to participate in such Tag-Along Sale. The
portion of its Partnership Interest that the Tag-Along Partner will be entitled
to include in such Tag-Along Sale (the "Partner's Allotment") shall be
determined by multiplying (i) the Profit Percentage Interest represented by the
Partnership Interest proposed to be sold, transferred or otherwise disposed of
pursuant to the Tag-Along Sale, by (ii) such Tag-Along Partner's Profit
Percentage Interest on the day immediately preceding the Tag-Along Notice Date
(as defined below). Any sales of any portion of its Partnership Interest by a
Tag-Along Partner as a result of the foregoing "Tag-Along Rights" shall be on
the same terms and conditions as the proposed Tag-Along Sale by the Selling
Partner. The "Tag-Along Notice Date" shall be the date that the Tag-Along Sale
Notice (as defined below) is delivered to Partners.
9.11.2 SALE NOTICE. The Selling Partner shall provide the Tag-Along
-----------
Partner with written notice (the "Tag-Along Sale Notice") not more than sixty
(60) nor less than thirty (30) days prior to the proposed date of the Tag-Along
Sale (the "Tag-Along Sale Date"). Each Tag-Along Sale Notice shall set forth:
(i) the name and address of each proposed transferee or purchaser of a
Partnership Interest in the Tag-Along Sale; (ii) the Profit Percentage Interest
represented by the Partnership Interest proposed to be transferred or sold by
the Selling Partner; (iii) the proposed amount and form of consideration to be
paid for such Partnership Interest and the terms and conditions of payment
offered by each proposed transferee or purchaser; (iv) confirmation that the
proposed purchaser or transferee has been informed of the "Tag-Along Rights"
provided for herein and has agreed to purchase the Partnership Interest in
accordance with the terms hereof; and (v) the Tag-Along Sale Date.
9.11.3 TAG-ALONG NOTICE. If the Tag-Along Partner wishes to
----------------
participate in the Tag-Along Sale, such Partner shall provide written notice
(the "Tag-Along Notice") to the Selling Partner no less than ten (10) business
days prior to the Tag-Along Sale Date. If a Tag-Along Notice is not received by
the Selling Partner from the Tag-Along Partner prior to the ten (10) day period
specified above, the Selling Partner shall have the right to sell or otherwise
transfer the Partnership Interest specified in the Tag-Along Sale Notice to the
proposed purchaser or transferee without any participation by such Partner. The
Tag-Along Notice shall set forth the Profit Percentage Interest represented by
the Partnership Interest that such Partner elects to include in the Tag-Along
Sale. The Tag-Along Notice given by the Selling Partner shall constitute such
Partner's binding agreement to sell such Partnership Interest on the terms and
conditions applicable to the Tag-Along Sale, subject to the provisions of this
Section 9.11.
9.11.4 VOID TRANSFERS. If the Selling Partner sells or otherwise
--------------
Transfers its Partnership Interest or any portion thereof on terms and
conditions which are more favorable in any material respect to the Selling
Partner than as stated in the Tag-Along Sale Notice on or prior to the Tag-Along
Sale Date, such sale or Transfer shall be null and void, and any subsequent sale
or Transfer of such Partnership Interest must comply with all of the
requirements of this Agreement.
9.11.5 EXEMPT TRANSFERS. The provisions of this Section 9.11 shall
----------------
not
-30-
<PAGE>
apply to any Transfer, sale or other disposition by any Limited Partner to
one of its Affiliates (provided that prior to any such disposition the Limited
Partner complies with the requirements of this Agreement regarding Transfers).
ARTICLE 10
ACCOUNTING, RECORDS, REPORTING BY PARTNERS
10.1 FISCAL YEAR. The fiscal year of the Partnership shall be the
-----------
calendar year. The decision to engage outside accountants for the Partnership
and the selection of such outside accountants, if any, shall be made by both
General Partners.
10.2 BOOKS AND RECORDS. Each Limited Partner and each Economic Interest
-----------------
Owner, and their duly authorized representatives shall at all times, during
regular business hours, have reasonable access to and may inspect and copy at
its own expense any of the books and records of the Partnership set forth in
this Section, for purposes reasonably related to such person's interest in the
Partnership. Each Limited Partner shall be entitled at any time to have the
Partnership's books and records examined or audited at such Partner's expense,
and the General Partners shall cooperate fully with the party or parties making
such examination or audit on behalf of such Partner. The books of account of the
Partnership shall be maintained and prepared in accordance with generally
accepted accounting principles, consistently applied. The Partnership shall
maintain at its principal office in the State of Kansas all of the following:
(a) A current list of the full name and last known business or
residence address of each Partner and Economic Interest Owner set forth in
alphabetical order, together with the Capital Contributions, Capital Account and
Profit Percentage Interest of each Partner and Economic Interest Owner;
(b) A current list of the full name and business or residence
address of the General Partners and each officer thereof;
(c) A copy of the Certificate and any and all amendments thereto
together with executed copies of any powers of attorney pursuant to which the
Certificate or any amendments thereto have been executed;
(d) Copies of the Partnership's federal, state and local income tax
or information returns and reports, if any, for the six (6) most recent taxable
years;
(e) A copy of this Agreement and any and all amendments thereto
together with executed copies of any powers of attorney pursuant to which this
Agreement or any amendments thereto have been executed;
(f) Copies of the financial statements of the Partnership, if any,
for the six (6) most recent Fiscal Years;
(g) The Partnership's books and records as they relate to the
internal affairs of the Partnership for at least the current and past four (4)
Fiscal Years;
(h) Originals or copies of all minutes, actions by written consent,
consents to action and waivers of notice to Partners and Partner votes, actions
and consent, if
-31-
<PAGE>
any;
(i) Any other information required to be maintained by the
Partnership pursuant to the Act; and
(j) Any notices from and correspondence with any gaming regulatory
authorities.
10.3 STATEMENTS
----------
10.3.1 ANNUAL REPORT. Within one-hundred twenty (120) days after
-------------
the end of each calendar year, the General Partners shall cause to be delivered
to each of the Partners audited financial statements of the Partnership,
certified by Arthur Anderson & Co., Inc. or such other "Big Six" accounting firm
selected by the General Partners.
10.3.2 TAX INFORMATION. The General Partners shall cause to be
---------------
prepared at least annually, at Partnership expense, information necessary for
the preparation of the Partners' and Economic Interest Owners' federal and state
income tax returns. The General Partners shall send or cause to be sent to each
Partner or Economic Interest Owner within ninety (90) days after the end of each
taxable year such information as is necessary to complete federal and state
income tax or information returns and a copy of the Partnership's federal,
state, and local income tax or information returns for that year.
10.3.3 ANNUAL STATE REPORT. The General Partners shall cause to be
-------------------
filed at least annually with the Delaware Secretary of State the statement
required under the Act.
10.3.4 MONTHLY REPORTS. As soon as practicable following the end of
---------------
each month, the General Partners shall cause to be delivered to each of the
Partners a copy of such monthly financial reports of income and expense of the
Partnership as are prepared with respect to the Partnership.
10.4 FILINGS. The General Partners, at Partnership expense, shall cause
-------
the income tax returns for the Partnership to be prepared and timely filed with
the appropriate authorities. The General Partners, at Partnership expense, shall
cause to be prepared and timely filed, with appropriate federal and state
regulatory and administrative bodies, amendments to, or restatements of, the
Certificate and all reports required to be filed by the Partnership with those
entities under the Act or other then current applicable laws, rules, and
regulations. If the General Partners or any officer required by the Act to
execute or file any document fails, after demand, to do so within a reasonable
period of time or refuses to do so, any other officer or Partner may prepare,
execute and file that document with the Delaware Secretary of State.
10.5 BANK ACCOUNTS. The General Partners shall maintain the funds of the
-------------
Partnership in one or more separate bank accounts in the name of the
Partnership, and shall not permit the funds of the Partnership to be commingled
in any fashion with the funds of any other Person.
10.6 TAX MATTERS FOR THE PARTNERSHIP HANDLED BY THE GENERAL PARTNERS AND
-------------------------------------------------------------------
TAX MATTERS PARTNER. The General Partners shall from time to time cause the
- -------------------
Partnership to make such tax elections as the General Partners deem to be in the
best interests of the Partnership and the Partners. The Tax Matters Partner, as
defined in Code Section 6231, shall
-32-
<PAGE>
represent the Partnership (at the Partnership's expense) in connection with all
examinations of the Partnership's affairs by tax authorities, including
resulting judicial and administrative proceedings, and shall expend the
Partnership funds for professional services and costs associated therewith. The
Tax Matters Partner shall oversee the Partnership's tax affairs in the overall
best interests of the Partnership. If for any reason the Tax Matters Partner
resigns or can no longer serve in that capacity, the General Partners may
designate another Partner to be Tax Matters Partner.
ARTICLE 11
DISSOLUTION AND WINDING UP
11.1 EVENTS OF DISSOLUTION. The Partnership shall be dissolved, its
---------------------
assets shall be disposed of, and its affairs wound up on the first to occur of
the following:
11.1.1 The happening of any event of dissolution specified in the
Certificate;
11.1.2 The entry of a decree of judicial dissolution pursuant to
Section 17-802 of the Act;
11.1.3 The vote of a Super Majority Interest;
11.1.4 The occurrence of a Dissolution Event unless there are at
least two Remaining Partners in addition to the Excluded Partner (it being
agreed that, if there are not at that time at least two Remaining Partners in
addition to the Excluded Partner, the sole Remaining Partner shall in its sole
and absolute discretion have the right to admit another Partner to the
Partnership) and a Majority Interest consent within ninety (90) days of the
Dissolution Event to the continuation of the business of the Partnership; or
11.1.5 The expiration of the period fixed for the duration of the
Partnership as stated in the Certificate.
11.2 EFFECT OF A DISSOLUTION EVENT (OTHER THAN DISSOLUTION). If following
------------------------------------------------------
a Dissolution Event, the Remaining Partners vote to continue the business of the
Partnership, such Remaining Partner(s) shall purchase the Excluded Partner's
interest in the Partnership, on a pro rata basis in accordance with their
respective Profit Percentage Interests, for an aggregate purchase price equal to
the amount that the Excluded Partner would be entitled to receive for the Fair
Value of the Excluded Partner's Partnership Interest as determined in accordance
with the procedures for determining the Fair Value set forth in Section 9.10,
payable in equal quarterly installments over five (5) years with interest at the
Rate. Following such purchase, the Remaining Partners shall continue the
operation of the Partnership independently of the Excluded Partner. Upon such
vote by the Remaining Partners to continue the business of the Partnership, the
Excluded Partner shall have no further right to participate, in any way, in the
business of the Partnership (specifically including the right to receive
distributions from, or to share in the Net Profits, Net Losses or similar items
of, the Partnership or to approve Partnership actions). Election of the
Remaining Partner(s) to continue the business of the Partnership under this
Section 0 shall not preclude such Remaining Partner(s) from pursuing any and all
other remedies available to it or them under this Agreement, at law or in
equity.
11.3 CERTIFICATE OF DISSOLUTION. As soon as possible after the occurrence
--------------------------
of any
-33-
<PAGE>
of the events specified in Section 0 above, any Partner shall execute a
Certificate of Dissolution in such form as shall be prescribed by the Delaware
Secretary of State and file the Certificate as required by the Act.
11.4 WINDING UP. Upon the occurrence of any event specified in Section 0
----------
above, the Partnership shall continue solely for the purpose of winding up its
affairs in an orderly manner, liquidating its assets, and satisfying the claims
of its creditors. The General Partners shall be responsible for overseeing the
winding up and liquidation of Partnership, shall take full account of the
liabilities of Partnership and assets, shall either cause its assets to be sold
or distributed, and if sold as promptly as is consistent with obtaining the fair
market value thereof, shall cause the proceeds therefrom, to the extent
sufficient therefor, to be applied and distributed as provided in Section 0. The
General Partners shall give written notice of the commencement of winding up by
mail to all known creditors and claimants whose addresses appear on the records
of the Partnership. The General Partners shall be entitled to reasonable
compensation for their services in winding up the Partnership's affairs.
11.5 DISTRIBUTIONS IN KIND. Any non-cash asset distributed to one or more
---------------------
Partners shall first be valued at its fair market value to determine the Net
Profit or Net Loss that would have resulted if such asset were sold for such
value, such Net Profit or Net Loss shall then be allocated pursuant to Article
0, and the Partners' Capital Accounts shall be adjusted to reflect such
allocations. The amount distributed and charged to the Capital Account of each
Partner receiving an interest in such distributed asset shall be the fair market
value of such interest (which shall mean the price that an independent third
party would pay for such asset, net of any liability secured by such asset that
such Partner assumes or takes subject to). The fair market value of such asset
shall be determined by the Board or if there is an objection by any Partner, the
fair market value shall be determined by an independent appraiser (which must be
recognized as an expert in valuing the type of asset involved) selected by the
General Partners or liquidating trustee and approved by a Super Majority
Interest.
11.6 ORDER OF PAYMENT UPON DISSOLUTION. After determining that all known
---------------------------------
debts and liabilities of the Partnership in the process of winding-up,
including, without limitation, debts and liabilities to Partners who are
creditors of the Partnership, have been paid or adequately provided for, the
remaining assets shall be distributed to the Partners in accordance with their
positive Capital Account balances, after taking into account income and loss
allocations for the Partnership's taxable year during which liquidation occurs.
Such liquidating distributions shall be made by the end of the Partnership's
taxable year in which the Partnership is liquidated, or, if later, within ninety
(90) days after the date of such liquidation.
11.7 CAPITAL ACCOUNT DEFICIT RESTORATION. The amount of any deficit
-----------------------------------
balance in the Capital Account of a General Partner shall represent an
obligation to and asset of the Partnership and shall be paid in cash by the
General Partner to the Partnership within ninety (90) days after the occurrence
of a Dissolution Event (unless the Partners have voted pursuant to Section 0 not
to dissolve the Partnership); provided, however, that the amount payable by a
General Partner pursuant to this Section shall not exceed the sum of the
positive Capital Account balances of Limited Partners and provided, further,
that upon receipt of the General Partner's payment the Partnership shall
distribute the same to those Limited Partners with positive Capital Accounts in
the proportion thereof. No Limited Partner shall have any obligation to restore
or make up any deficit in its Capital Account.
11.8 COMPLIANCE WITH REGULATIONS. All payments to the Partners upon the
---------------------------
winding up and dissolution of the Partnership shall be strictly in accordance
with the positive capital account balance limitation and other requirements of
Regulations Section 1.704-1(b)(2)(ii)(d).
-34-
<PAGE>
11.9 LIMITATIONS ON PAYMENTS MADE IN DISSOLUTION. Except as otherwise
-------------------------------------------
specifically provided in this Agreement, each Partner shall be entitled to look
solely at the assets of the Partnership for the return of its positive Capital
Account balance and shall have no recourse for such Partner's Capital
Contribution and/or share of Net Profits (upon dissolution or otherwise) against
the General Partners, officers, or any other Partner.
11.10 CERTIFICATE OF CANCELLATION. The Persons who filed the Certificate
---------------------------
of Dissolution shall cause to be filed in the office of, and on a form
prescribed by, the Delaware Secretary of State, a certificate of cancellation of
the Certificate upon the completion of the winding up of the affairs of the
Partnership.
11.11 NO ACTION FOR DISSOLUTION. No Partner or Economic Interest Owner
-------------------------
has any interest in specific property of the Partnership. Without limiting the
foregoing, each Partner and Economic Interest Owner irrevocably waives during
the term of the Partnership any right that he or it may have to maintain any
action for partition with respect to the property of the Partnership. Except as
expressly permitted in this Agreement, a Partner or Economic Interest Owner
shall not take any voluntary action that directly causes a Dissolution Event.
The Partners acknowledge that irreparable damage would be done to the goodwill
and reputation of the Partnership if any Partner should bring an action in court
to dissolve the Partnership under circumstances where dissolution is not
required by Section 0. This Agreement has been drawn carefully to provide fair
treatment of all parties and equitable payment in liquidation of the Economic
Interests. Accordingly, except where the Partners have failed to liquidate the
Partnership as required by this Article 0, each Partner hereby waives and
renounces such Partner's right to initiate legal action to seek the appointment
of a receiver or trustee to liquidate the Partnership or to seek a decree of
judicial dissolution of the Partnership on the ground that (a) it is not
reasonably practicable to carry on the business of the Partnership in conformity
with the Articles or this Agreement, or (b) dissolution is reasonably necessary
for the protection of the rights or interests of the complaining Partner.
Damages for breach of this Section 0 shall be monetary damages only (and not
specific performance), and the damages may be offset against distributions by
the Partnership to which such Partner would otherwise be entitled.
-35-
<PAGE>
ARTICLE 12
INDEMNIFICATION AND INSURANCE
12.1 INDEMNIFICATION OF PARTNERSHIP PERSONS. The Partnership shall
--------------------------------------
indemnify any Partnership Person who was or is a party or is threatened to be
made a party to, or otherwise becomes involved in, any Proceeding (including a
Proceeding by or in the right of the Partnership) by reason of the fact that
such Partnership Person is or was an agent of the Partnership against all
Expenses, amounts paid in settlement, judgments, fines, penalties and ERISA
excise taxes actually and reasonably incurred by or levied against such
Partnership Person in connection with such Proceeding if such Partnership Person
acted in good faith and in a manner such Partnership Person reasonably believed
to be in or not opposed to the best interests of the Partnership and, with
respect to any criminal Proceeding, had no reasonable cause to believe such
Partnership Person's conduct was unlawful. The termination of any Proceeding,
whether by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that a
Partnership Person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Partnership or,
with respect to any criminal Proceeding, that a Partnership Person had
reasonable cause to believe that such Partnership Person's conduct was unlawful.
To the fullest extent permitted by applicable law, a Partnership Person shall be
conclusively presumed to have met the relevant standards of conduct, as defined
by the laws of the State of Delaware or other applicable jurisdictions, for
indemnification pursuant to this Section 0, unless and until a court of
competent jurisdiction, after all appeals, finally determines to the contrary,
and the Partnership shall bear the burden of proof of establishing by clear and
convincing evidence that such Partnership Person failed to meet such standards
of conduct. In any event, the Partnership Person shall be entitled to
indemnification from the Partnership to the fullest extent permitted by
applicable law, including, without limitation, any amendments thereto subsequent
to the date of this Agreement that increase the protection of Partnership
Persons allowable under such laws.
12.2 SUCCESSFUL DEFENSE. Notwithstanding any other provision of this
------------------
Agreement, to the extent that a Partnership Person has been successful on the
merits or otherwise in defense of any Proceeding referred to in Section 0, or in
defense of any claim, issue or matter therein, such Partnership Person shall be
indemnified against Expenses actually and reasonably incurred in connection
therewith to the fullest extent permitted by the laws of Delaware or other
applicable jurisdictions, including, without limitation, any amendments thereto
subsequent to the date of this Agreement that increase the protection of
Partnership Persons allowable under such laws.
12.3 INDEMNIFICATION OF OTHER AGENTS. The Partnership may, but shall not
------------------------------
be obligated to, indemnify any Person (other than a Partnership Person) who was
or is a party or is threatened to be made a party to, or otherwise becomes
involved in, any Proceeding (including any Proceeding by or in the right of the
Partnership) by reason of the fact that such Person is or was an agent of the
Partnership, against all Expenses, amounts paid in settlement, judgments, fines,
penalties and ERISA excise taxes actually and reasonably incurred by such Person
in connection with such Proceeding under the same circumstances and to the same
extent as is provided for or permitted in this Article 0 with respect to a
Partnership Person, or with respect to such circumstances and on such terms as
the General Partners may determine.
12.4 INDEMNIFICATION BY GENERAL PARTNER. Any General Partner that
----------------------------------
violates
-36-
<PAGE>
the covenant contained in Section 0 hereof shall indemnify the Partnership and
any Partnership Person (other than the Limited Partner associated with such
General Partner and any affiliates of such General Partner or such Limited
Partner) against all Expenses, amounts paid in settlement, judgments, fines,
penalties and ERISA excise taxes arising out of or in connection with such
violation.
12.5 RIGHT TO INDEMNIFICATION UPON APPLICATION
-----------------------------------------
12.5.1 TIMING. Any indemnification or advance under Section 0, 0 or
------
0 shall be made promptly, and in no event later than sixty (60) days, after the
receipt by the party obligated to provide indemnification (the "Indemnifying
Party") of the written request therefor from a party entitled to
indemnification, unless, in the case of an indemnification pursuant to Section
0, a determination shall have been made as provided in Section 0 that such
Partnership Person has not met the relevant standard for indemnification set
forth in that Section.
12.5.2 ENFORCEMENT. The right of a Person to indemnification or an
-----------
advance of Expenses as provided by this Article 0 shall be enforceable in any
court of competent jurisdiction. The burden of proving by clear and convincing
evidence that indemnification or advances are not appropriate shall be on the
Indemnifying Party. Neither the failure by the General Partners or Partners of
the Partnership or its independent legal counsel to have made a determination
that indemnification or an advance is proper in the circumstances, nor any
actual determination by the General Partners or Partners of the Partnership or
its independent legal counsel that indemnification or an advance is not proper,
shall be a defense to the action or create a presumption that the relevant
standard of conduct has not been met. In any such action, the Person seeking
indemnification or advancement of Expenses shall be entitled to recover from the
Indemnifying Party any and all expenses of the types described in the definition
of Expenses actually and reasonably incurred by such Person in such action, but
only if such Person prevails therein. A Person's Expenses incurred in connection
with any Proceeding concerning such Person's right to indemnification or
advances in whole or in part pursuant to this Agreement shall also be
indemnified by the Indemnifying Party regardless of the outcome of such a
Proceeding, unless a court of competent jurisdiction finally determines that
each of the material assertions made by such Person in the Proceeding was not
made in good faith or was frivolous.
12.6 PAYMENT OF EXPENSES IN ADVANCE. Expenses incurred by a Partnership
------------------------------
Person in connection with a Proceeding shall be paid by the Indemnifying Party
in advance of the final disposition of such Proceeding upon receipt of a written
undertaking by or on behalf of such Partnership Person to repay such amount if
it shall ultimately be determined that such Partnership Person is not entitled
to be indemnified by the Indemnifying Party as authorized in this Article 0.
12.7 LIMITATIONS ON INDEMNIFICATION. No payments pursuant to this
------------------------------
Agreement shall be made by the Indemnifying Party:
(a) With respect to indemnification pursuant to Sections 0 or 0, to
indemnify or advance funds to any Person with respect to a Proceeding initiated
or brought voluntarily by such Person and not by way of defense, except as
provided in Section 0 with respect to a Proceeding brought to establish or
enforce a right to indemnification under this Agreement, otherwise than as
required under Delaware law, but indemnification or advancement of Expenses may
be provided by the Partnership in specific cases if a determination is made that
such indemnification or advancement is appropriate. With respect
-37-
<PAGE>
to indemnification pursuant to Sections 0 or 0, the determination as to whether
any such indemnification or advancement of Expenses is appropriate shall be made
(i) by the General Partners by a majority vote of a quorum consisting of General
Partners who were not parties to such Proceeding, or (ii) if such quorum is not
obtainable or, even if obtainable, a quorum of such disinterested General
Partners so directs, by independent legal counsel in a written opinion, or (iii)
by the Partners by a vote of Partners holding a Super Majority Interest, whether
or not constituting a quorum, who were not parties to such Proceeding;
(b) To indemnify or advance funds to any Person for any Expenses,
judgments, amounts paid in settlement, fines, penalties or ERISA excise taxes
resulting from the such Person's conduct which is finally adjudged to have been
willful misconduct, knowingly fraudulent or deliberately dishonest; or
(c) If a court of competent jurisdiction finally determines that any
indemnification or advance of Expenses hereunder is unlawful.
12.8 OTHER TERMS OF INDEMNIFICATION.
------------------------------
12.8.1 PARTIAL INDEMNIFICATION. If a Person is entitled under any
-----------------------
provision of this Article 0 to indemnification by the Indemnifying Party for a
portion of Expenses, amounts paid in settlement, judgments, fines, penalties or
ERISA excise taxes incurred by such Person in any Proceeding but not, however,
for the total amount thereof, the Indemnifying Party shall nevertheless
indemnify such Person for the portion of such Expenses, amounts paid in
settlement, judgments, fines, penalties or ERISA excise taxes to which such
Person is entitled, except that no indemnification shall be given for Expenses
in connection with a Proceeding brought by the Indemnifying Party if the Person
is found liable on any portion of the claims in such Proceeding.
12.8.2 INDEMNITY NOT EXCLUSIVE. The indemnification and advancement
-----------------------
of Expenses provided by, or granted pursuant to, the provisions of this Article
0, shall not be deemed exclusive of any rights to which any Person seeking
indemnification or advancement of Expenses may be entitled under any agreement,
vote of Partners, determination of the Board, or otherwise, both as to action in
such Person's capacity as an agent of the Partnership and as to action in
another capacity while serving as an agent.
12.8.3 INSURANCE. The Partnership shall have the power to purchase
---------
and maintain insurance or other financial arrangement on behalf of any Person
who is or was an agent of the Partnership against any liability asserted against
such Person and incurred by such Person in any such capacity, or arising out of
such Person's status as an agent, whether or not the Partnership would have the
power to indemnify such Person against such liability under the provisions of
this Article 0 or of Section 145 of the Delaware General Corporation Law. In the
event a Person shall receive payment from any insurance carrier or from the
Plaintiff in any action against such Person with respect to indemnified amounts
after payment on account of all or part of such indemnified amounts having been
made by the Partnership pursuant to this Article 0, such Person shall reimburse
the Partnership for the amount, if any, by which the sum of such payment by such
insurance carrier or such plaintiff and payments by the Partnership to such
Person exceeds such indemnified amounts; provided, however, that such portions,
if any, of such insurance proceeds that are required to be reimbursed to the
insurance carrier under the terms of its insurance policy shall not be deemed to
be payments to such Person hereunder. In addition, upon payment of indemnified
amounts under the terms and conditions of this Agreement, the Partnership shall
be subrogated to such Person's rights against any insurance carrier with respect
to such indemnified amounts (to the extent permitted
-38-
<PAGE>
under such insurance policies). Such right of subrogation shall be terminated
upon receipt by the Partnership of the amount to be reimbursed by such Person
pursuant to the second sentence of this Section 0.
12.8.4 HEIRS, EXECUTORS AND ADMINISTRATORS. The indemnification and
-----------------------------------
advancement of Expenses provided by, or granted pursuant to, this Article 0
shall, unless otherwise provided when authorized or ratified, continue as to a
Person who has ceased to be an agent of the Partnership and shall inure to the
benefit of such Person's heirs, executors and administrators.
ARTICLE 13
MISCELLANEOUS
13.1 SURVIVAL. Notwithstanding anything to the contrary herein, the
--------
provisions of Section 0 shall survive, and remain in full force and effect
following, the termination of this Agreement.
13.2 OTHER VENTURES; COMPETITION.
---------------------------
(a) Subject to the provisions of Section 0, nothing contained in
this Agreement or in law shall be construed to limit or restrict in any way the
freedom of any Partner, or any shareholders or affiliates of a Partner, to
conduct any other business venture or activity whatsoever, including the
ownership, development, leasing, sale, financing, operation and management of
other card clubs or casinos nor to require any accountability to the Partnership
or to any other Partner, whether or not such other business ventures are in
direct or indirect competition with the business of the Partnership.
(b) Subject to the provisions of Section 0, no Partner need afford
the Partnership or any other Partner or any affiliate of a Partner the
opportunity to acquire or invest in any other property, project or enterprise,
regardless of whether such property, project or enterprise would, but for this
sentence, be deemed an opportunity of the Partnership.
13.3 COUNSEL TO THE PARTNERSHIP. Counsel to the Partnership may also be
--------------------------
counsel to any Partner or any Affiliate of a Partner. The officers of the
Partnership may execute on behalf of the Partnership and the Partners any
consent to the representation of the Partnership that counsel may request
pursuant to the California Rules of Professional Conduct or similar rules in any
other jurisdiction.
13.4 GENERAL PROVISIONS.
------------------
13.4.1 COMPLETE AGREEMENT. This Agreement and any documents
------------------
referred to herein or executed contemporaneously herewith constitute the
parties' entire agreement with respect to the subject matter hereof and
supersede all prior or contemporaneous agreements, representations, warranties,
statements, promises and understandings, whether oral or written, with respect
to the subject matter hereof.
-39-
<PAGE>
13.4.2 DISPUTES
--------
13.4.2.1 GOVERNING LAW; JURISDICTION. All questions with
---------------------------
respect to the Agreement and the rights and liabilities of the parties will be
governed by the laws of the State of Kansas, regardless of the choice of law
provisions of Delaware or any other jurisdiction. Any and all disputes between
the parties which may arise pursuant to this Agreement will be heard and
determined before an appropriate federal or state court located in Kansas City,
Kansas. The parties hereto acknowledge that such court has the jurisdiction to
interpret and enforce the provisions of this Agreement and the parties waive any
and all objections that they may have as to personal jurisdiction or venue in
any of the above courts.
13.4.2.2 ARBITRATION. Except for actions seeking injunctive
-----------
relief and for actions pursuant to Sections 0 and 0, which may be brought before
any court having jurisdiction, upon mutual agreement of the parties, any claim
arising out of or relating to (i) this Agreement, including without limitation
its validity, interpretation, enforceability or breach, or (ii) the relationship
between the parties (including without limitation its commencement and
termination) whether based on breach of covenant, breach of an implied covenant
or intentional infliction of emotional distress or other tort or contract
theories, which are not settled by agreement between the parties, may be settled
by arbitration in Kansas City, Kansas, before a sole arbitrator who shall be a
retired judge of the Kansas City Superior Court or retired justice of the Kansas
Court of Appeal or Supreme Court. The sole arbitrator shall be selected by
mutual agreement of the parties within fifteen (15) days after service of a
notice of intent to arbitrate by any party. If the parties are unable to select
a mutually agreeable arbitrator, then a retired judge or justice of the Kansas
state courts shall be selected by order of the court pursuant to applicable law.
The parties hereby (i) consent to the in personam jurisdiction of the Superior
Court of the State of Kansas for purposes of the enforcement of this arbitration
provision and confirming any such award and entering judgment thereof; (ii)
agree to use their best efforts to keep all matters relating to any arbitration
hereunder confidential; and (iii) agree that the arbitrators may not assess any
remedy other than the awarding of actual out-of-pocket damages suffered and/or
punitive damages when appropriate. Each party shall share equally the fees of
the arbitrator during the arbitration, but the fees of the arbitrator shall be
borne by the losing party. Any arbitration shall be commenced within forty-five
(45) days, and completed within ninety (90) days, of the appointment of the
arbitrator.
13.4.3 ADDITIONAL DOCUMENTS. Each party hereto agrees to execute
--------------------
any and all further documents and writings and to perform such other actions
which may be or become necessary or expedient to effectuate and carry out this
Agreement. Without limiting the generality of the foregoing, each party agrees
to execute, deliver and if necessary record any and all additional instruments,
certifications, amendments, modifications and other documents as may be required
by any governmental or regulatory authorities (including, without limitation,
the Secretary of the Interior, the Bureau of Indian Affairs, the National Indian
Gaming Commission or the State of Kansas) or any applicable statute, rule or
regulation in order to effectuate, complete, perfect, continue or preserve the
respective rights, obligations, liens and interests of the parties thereto to
the fullest extent permitted by law; provided, that any such additional
instrument, certification, amendment, modification or other document shall not
materially change the respective rights, remedies or obligations of the parties
under this Agreement or any other agreement or document related thereto.
13.4.4 NOTICES. Unless otherwise specifically permitted by this
-------
Agreement, all notices under this Agreement shall be in writing and shall be
delivered by personal service, telecopy, federal express or comparable overnight
service or certified mail (if such service is not available, then by first class
mail), postage prepaid, to such address as may be designated
-40-
<PAGE>
from time to time by the relevant party, and which shall initially be as set
forth on Exhibit A. All other notices shall be deemed given when received. No
objection may be made to the manner of delivery of any notice actually received
in writing by an authorized agent of a party.
13.4.5 PARTIES.
-------
13.4.5.1 NO THIRD-PARTY BENEFITS. None of the provisions of
-----------------------
this Agreement shall be for the benefit of, or enforceable by, any third party.
13.4.5.2 SUCCESSORS AND ASSIGNS. Except as provided herein to
----------------------
the contrary, this Agreement shall be binding upon and inure to the benefit of
the parties, their respective successors and permitted assigns.
13.4.6 WAIVERS STRICTLY CONSTRUED. With regard to any power,
--------------------------
remedy or right provided herein or otherwise available to any party hereunder
(i) no waiver or extension of time shall be effective unless expressly contained
in a writing signed by the waiving party; and (ii) no alteration, modification
or impairment shall be implied by reason of any previous waiver, extension of
time, delay or omission in exercise, or by any other indulgence.
13.4.7 RULES OF CONSTRUCTION.
---------------------
13.4.7.1 HEADINGS. The Article and Section headings in this
--------
Agreement are inserted only as a matter of convenience, and in no way define,
limit, or interpret the scope of this Agreement or of any particular Article or
Section.
13.4.7.2 TENSE AND CASE. Throughout this Agreement, as the
--------------
context may require, references to any word used in one tense or case shall
include all other appropriate tenses or cases.
13.4.7.3 SEVERABILITY. The validity, legality or
------------
enforceability of the remainder of this Agreement will not be affected even if
one or more of the provisions of this Agreement will be held to be invalid,
illegal or unenforceable in any respect.
13.4.7.4 AGREEMENT NEGOTIATED. The parties hereto are
--------------------
sophisticated and have been represented by lawyers throughout this transaction
who have carefully negotiated the provisions hereof. As a consequence, the
parties do not believe that the presumptions of California Civil Code Section
1654 and similar laws or rules relating to the interpretation of contracts
against the drafter of any particular clause should be applied in this case and
therefore waive their effects. Only the final executed version of this Agreement
may be admitted into evidence or used for any purpose, and drafts of this
Agreement shall be disregarded for all purposes.
13.4.8 COUNTERPARTS. This Agreement may be executed simultaneously
------------
in two or more counterparts or by facsimile, each of which (including any
facsimiles) shall be deemed an original, but all of which together shall
constitute one and the same instrument.
13.5 AMENDMENTS. Except as set forth in the next sentence, all amendments
----------
to this Agreement shall be in writing and approved by all of the Partners. The
Board may amend Exhibit A hereto at any time and from time to time to reflect
the admission or withdrawal of any Partner, or the change in any Partner's
Capital Contributions, Profit Percentage Interests, or any changes in the
Partner's addresses, all as contemplated by this Agreement.
-41-
<PAGE>
13.6 RELIANCE ON AUTHORITY OF PERSON SIGNING AGREEMENT. If a Partner is
-------------------------------------------------
not a natural person, neither the Partnership nor any Partner will be required
to determine the authority of the individual signing this Agreement to make any
commitment or undertaking on behalf of such entity or to determine any fact or
circumstance bearing upon the existence of the authority of such individual.
13.7 INVESTMENT REPRESENTATION. Each Partner hereby represents and
-------------------------
warrants to, and agrees with, the other Partners and the Partnership that he or
it is acquiring the Partnership Interest for investment purposes for his or its
own account only and not with a view to or for sale in connection with any
distribution of all or any part of the Partnership Interest. No other person
will have any direct or indirect beneficial interest in or right to the
Partnership Interest.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-42-
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed as of the day and year set
forth above.
HOLLYWOOD PARK, INC.
By: /s/ Bruce Rimbo
------------------------
Bruce Rimbo
Its: Executive Vice President/Race Track
Development
NORTH AMERICAN SPORTS MANAGEMENT OF KANSAS,
INC., a Florida corporation (in its capacity as
a Limited Partner)
By: /s/ Alan H. Ginsburg
----------------------------
Alan H. Ginsburg
Its: President
HP KANSAS, INC.
By: /s/ Bruce Rimbo
---------------------------
Bruce Rimbo
Its: Vice President and Secretary
NORTH AMERICAN SPORTS MANAGEMENT OF KANSAS,
INC., a Florida corporation (in its capacity as
a General Partner
By: /s/ Alan H. Ginsburg
----------------------------
Alan H. Ginsburg
Its: President
-43-
<PAGE>
EXHIBIT A
---------
LIMITED PARTNERS
<TABLE>
<CAPTION> Initial Profit
--------------
Percentage Initial Capital
---------- --------------
Partner's Name Partner's Address Interests Contributions
- ------------- ---------------- --------- --------------
<S> <C> <C> <C>
HP 1050 South Prarie Avenue 43.167% $49.00
Inglewood, CA 90301
Attn: G. Michael Finnigan
NORAM 2200 Lucien Way, Suite 450 55.833% $49.00
Maitland, Florida 32751
</TABLE>
GENERAL PARTNERS
<TABLE>
<CAPTION>
Initial Profit
--------------
Percentage Initial Capital
---------- -------------
Partner's Name Partner's Address Interests Contributions
- -------------- ----------------- --------- -------------
<S> <C> <C> <C>
HP General 1050 South Prarie Avenue 0.50% $1.00
Partner Inglewood, CA 90301
Attn: G. Michael Finnigan
NORAM General 2200 Lucien Way, Suite 450 0.50% $1.00
Partner Maitland, Florida 32751
</TABLE>
-44-
<PAGE>
Hollywood Park, Inc. June 30, 1997 Form 10-Q
Exhibit 10.29
AMENDMENT NO. 1 TO
REDUCING REVOLVING LOAN AGREEMENT
This Amendment No. 1 to Reducing Revolving Loan Agreement (this
"Amendment") is entered into with reference to the Reducing Revolving Loan
Agreement dated as of March 27, 1997 among Hollywood Park, Inc. ("Borrower"),
the Banks party thereto, Bank of Scotland, Bankers Trust Company and Societe
Generale, as Co-Agents, and Bank of America National Trust and Savings
Association, as Managing Agent (the "Loan Agreement"). Capitalized terms used
but not defined herein are used with the meanings set forth for those terms in
the Loan Agreement.
Borrower and the Managing Agent, acting with the consent of all of the
Banks pursuant to Section 11.2 of the Loan Agreement, agree as follows:
----
. Section 1.1. Section 1.1 of the Loan Agreement is amended:
----------- ---
(a) by revising clause (a) in the definition of "Applicable
-
Pricing Level" to read in full as follows:
"(a) for the Pricing Period from the Closing Date
through August 31, 1997, such Pricing Level as is set
forth in a written memorandum agreement dated as of
the Closing Date between Borrower and the Managing
Agent and"
(b) by revising the definition of "Crystal Park Property" to
read in full as follows:
"'Crystal Park Property' means the real property and
----------------------
improvements thereon known as the "Crystal Park Hotel
& Casino" located in Compton, California, comprised
of approximately 1/2 acre in a fee simple estate, a
leasehold estate in a portion of the air rights over
that fee simple estate and approximately
-1-
<PAGE>
40 acres in a leasehold estate and related
easements and appurtenances .
(c) by revising the first sentence of the definition of
Primary Commitment to read in full as follows:
"'Primary Commitment' means, subject to Sections 2.5 and
------------------ ---
2.6, $225,000,000; provided that availability of credit
--- --------
thereunder in excess of $150,000,000 is subject to
satisfaction of the further conditions precedent set forth
in Section 8.1A;"
----
and
(d) by revising the definition of Subsidiary Guarantors to
read in full as follows:
"'Subsidiary Guarantors' means (a) with respect to the
---------------------
Primary Commitment credit facility so long as the
availability of credit thereunder does not exceed
$150,000,000, the Significant Subsidiaries other than
----- ----
Louisiana Gaming Enterprises, Inc., Louisiana-I Gaming,
L.P. and their Subsidiaries, (b) with respect to the
Primary Commitment credit facility if the initial
availability of credit thereunder exceeds $150,000,000,
the Significant Subsidiaries and (c) with respect to the
Alternative Commitment credit facility, the Significant
Subsidiaries other than Boomtown, Inc. and its
----- ----
Subsidiaries."
. Section 2.6A. The Loan Agreement is amended to add a new Section
------------
2.6A to read as follows:
----
"2.6A Automatic Reduction of Primary Commitment or Alternative
--------------------------------------------------------
Commitment. The Primary Commitment or Alternative Commitment
----------
(whichever is then applicable) shall automatically be reduced
on the day after Borrower receives payment of the purchase
price for the Crystal Park Property upon the exercise by
Compton Entertainment, Inc. (or its successor) of
-2-
<PAGE>
its option to acquire the Crystal Park Property pursuant to
that certain Amended and Restated Agreement Respecting Pyramid
Casino dated July 14, 1995 among Borrower, Compton
Entertainment, Inc. and Rouben Kandilian by an amount equal to
such payment (net of transaction costs incurred by Borrower in
connection therewith)."
. Section 5.9. Section 5.9 of the Loan Agreement is amended to add
----------- ---
the following proviso at the end thereof:
"provided, however, that until such time as Louisiana Gaming
--------
Enterprises, Inc., Louisiana-I Gaming, L.P. and their
Subsidiaries have executed and delivered the Subsidiary
Guaranty and such Collateral Documents as are applicable to
them, no part of any Loans may be used for any improvement to
the New Orleans Property or for the acquisition of any Property
for use in, or in connection with, the New Orleans Property."
Section 5.17. The Loan Agreement is amended to add a new Section
------------
5.17 to read as follows:
----
"5.17 Louisiana Gaming Board Approval. Promptly following the
-------------------------------
Closing Date, file all necessary applications with the
Louisiana Gaming Control Board seeking its approval for
Louisiana Gaming Enterprises, Inc., Louisiana-I Gaming, L.P.
and their Subsidiaries to execute and deliver the Subsidiary
Guaranty and such Collateral Documents as are applicable to
them, diligently prosecute such applications and, promptly
following approval of the Louisiana Gaming Control Board of
such applications, cause Louisiana Gaming Enterprises, Inc.,
Louisiana-I Gaming, L.P. and their Subsidiaries to execute and
deliver the Subsidiary Guaranty and such Collateral Documents."
. Section 8.1. Section 8.1 of the Loan Agreement is amended to
----------- -----------
make the following revisions:
(a) to revise clause (4) of Section 8.1(a) thereof, to read as
------
follows:
-3-
<PAGE>
"(4) the Subsidiary Guaranty (General) executed by each
Subsidiary Guarantor (other than Crystal Park Hotel &
----------
Development Co., LLC, Louisiana Gaming Enterprises, Inc.,
Louisiana-I Gaming, L.P. and their Subsidiaries);"
(b) in clauses (6), (7), (8) and (21) of Section 8.1(a)
-- -- -- -- ------
thereof, to insert the words "(other than Louisiana Gaming
----- ----
Enterprises, Inc., Louisiana-I Gaming, L.P. and their
Subsidiaries)" after the words "Subsidiary Guarantor" wherever
such words appear;
(c) to revise subclause (a) of clause (9) of Section 8.1(a)
- - ------
thereof to add at the end thereof the words "and Bayview Yacht
Club, Inc.";
(d) to revise subclause (d) of clause (9) of Section 8.1(a)
------
thereof to read as follows:
"(d) By Bayview Yacht Club, Inc. with respect to its
equity interest in Mississippi-I Gaming, L.P.;"
(e) to revise clause (14) of Section 8.1(a) thereof to read
-- ------
"[Intentionally Omitted];"
(f) to revise clause (17) of Section 8.1(a) thereof to read
-- ------
"[Intentionally Omitted];"
(g) to revise clause (18) of Section 8.1(a) thereof to read
-- ------
"[Intentionally Omitted];"
(h) to revise clause (20) of Section 8.1(a) thereof to read as
-- -----
follows:
"(20) written agreements executed by the holders of the
minority limited partnership interests in Mississippi-I
Gaming, L.P. to the effect that such holders consent to
the transactions contemplated by the Loan Documents, in
form and substance satisfactory to the Managing Agent;
-4-
<PAGE>
provided that this condition shall be waived if an Opinion
--------
of Counsel includes an opinion that such agreements are
not legally required and that the transactions
contemplated by the Loan Documents do not violate any
obligation or duty owed by Borrower or any of its
Subsidiaries to such holders;"
(i) to revise clause (22) of Section 8.1(a) thereof by
-- ------
inserting the words "described in clauses (a), (b), (c) and (d)
of the definition thereof" at the end of such clause;
(j) to revise clause (23) of Section 8.1(a) thereof by (i)
-- ------
inserting the words "(other than the New Orleans Property)"
----- ----
after the words "Real Property Collateral" and (ii) striking
the figures "$350,000,000" and inserting the figures and words
"$280,000,000 (disregarding for this purpose any appraised
value of the Crystal Park Property in excess of $25,000,000)"
at that place;
(k) to revise clause (24) of Section 8.1(a) thereof by
-- ------
inserting the words "(other than the New Orleans Deed of Trust)
----- ----
after the words "Deeds of Trust" in the third line thereof,
inserting the words "(other than the New Orleans Property)"
----- ----
after the words "Real Property Collateral" in the fourth line
thereof and striking the words "the Commitment" in the sixth
line thereof and inserting the figures "$150,000,000" at that
place;
(l) to revise clause (25) of Section 8.1(a) thereof by
-- ------
inserting "(other than the New Orleans Property)" after the
----- ----
words "Real Property Collateral";
(m) to revise clause (26) of Section 8.1(a) thereof by
-- ------
inserting the words "(other than the New Orleans Deed of
----- ----
Trust") after the words "Deeds of Trust" in the third line
thereof; and
(n) to revise clause (29) of Section 8.1(a) thereof to read
-- ------
"[Intentionally Omitted]."
-5-
<PAGE>
. Section 8.1A. The Loan Agreement is amended to add a new Section
-------------
8.1A to read as follows:
"8.1A. Advances under Primary Commitment in Excess of
----------------------------------------------
$150,000,000. The obligation of each Bank to make the initial
------------
Advance under the Primary Commitment (and the obligation of the
Issuing Bank to issue the initial Letter of Credit) which,
giving effect to such Advance or Letter of Credit would result
in the sum of (i) the aggregate principal amount outstanding
---
under the Notes, plus (ii) the Aggregate Effective Amount of
----
all outstanding Letters of Credit, plus (iii) the Aggregate
----
Effective Amount of all outstanding Outside Letters of Credit,
plus (iv) the Swing Line Outstandings to exceed $150,000,000 is
----
subject to the following conditions precedent, each of which
shall be satisfied prior to the making of such an Advance or
the issuance of such a Letter of Credit (unless all of the
Banks, in their sole and absolute discretion, shall agree
otherwise):
(a) The Managing Agent shall have received all of the
following, each of which shall be originals unless
otherwise specified, each properly executed by a
Responsible Official of each party thereto, each dated as
of a date acceptable to the Managing Agent and each in
form and substance satisfactory to the Managing Agent and
its legal counsel (unless otherwise specified or, in the
case of the date of any of the following, unless the
Managing Agent otherwise agrees or directs):
(1) the documents required to be delivered pursuant to
clauses (4), (6), (7), (8), (9), (14), (18), (21),
- - - - - -- -- --
(22), (24), (25), and (26) of Section 8.1(a) as in
-- -- -- -- ------
effect immediately prior to the amendment thereof
pursuant to Paragraph 5 of Amendment No. 1 to
Reducing Revolving Loan Agreement, to the extent such
documents have not previously been delivered to the
Managing Agent;
-6-
<PAGE>
(2) written agreements executed by the holders of the
minority limited partnership interests in Louisiana-I
Gaming, L.P. to the effect that such holders consent
to the transactions contemplated by the Loan
Documents, in form and substance satisfactory to the
Managing Agent, provided that this condition shall be
--------
waived if an Opinion of Counsel includes an opinion
that such agreements are not legally required and
that the transactions contemplated by the Loan
Documents do not violate any obligation or duty owed
by Borrower or any of its Subsidiaries to such
holders, to the extent such agreements or Opinion of
Counsel have not previously been delivered to the
Managing Agent; and
(3) a written appraisal by a qualified independent
appraiser acceptable to the Managing Agent and
complying in all respects with FIRREA of the New
Orleans Property that, when added to the fair market
value of the appraisals previously delivered pursuant
to Section 8.1(a)(23), reflects an aggregate fair
----------
market value thereof of not less than $350,000,000
(disregarding for this purpose any appraised value of
the Crystal Park Property in excess of $25,000,000),
to the extent such appraisal has not previously been
delivered to the Managing Agent.
(b) The Managing Agent shall be satisfied that, upon filing or
recordation of the Collateral Documents delivered pursuant
to this Section 8.1A with the appropriate Governmental
----
Agencies, the Lien of such Collateral Documents will be a
first priority perfected Lien on all of the assets of
Louisiana Gaming Enterprises, Inc. and Louisiana-I Gaming,
L.P., subject only to such exceptions as are acceptable to
the Managing Agent."
-7-
<PAGE>
. Subsidiary Guaranty (Crystal Park). Exhibit N to the Loan
----------------------------------
Agreement (the "Subsidiary Guaranty - Crystal Park") is amended by striking
the figures "$30,000,000" in Paragraph 2 thereof and inserting the figures
"$25,000,000" at that place.
. Security Agreement. Exhibit M to the Loan Agreement (the
------------------
"Security Agreement") is amended by revising the definition of "Secured
Obligations" to read as set forth in Exhibit A to this Amendment.
. Trademark Collateral Assignment. Exhibit P to the Loan Agreement
-------------------------------
(the "Trademark Collateral Agreement") is amended to read in its entirety as
is set forth in Exhibit B to this Amendment.
. Conditions Precedent. The effectiveness of this Amendment shall
--------------------
be conditioned upon the receipt by the Managing Agent of the following
documents, each properly executed by a Responsible Official of each party
thereto and dated as of the date hereof:
(a) Counterparts of this Amendment executed
by all parties hereto; and
(b) Written consent of all of the Banks as required under
Section 11.2 of the Loan Agreement in the form of
----
Exhibit C to this Amendment.
. Confirmation. In all respects, the terms of the Loan Agreement
------------
(as amended hereby) are hereby confirmed.
IN WITNESS WHEREOF, Borrower and the Managing Agent have executed this
Amendment as of June 30, 1997 by their duly authorized representatives.
HOLLYWOOD PARK, INC.
By: /s/ G. Michael Finnigan
-------------------------------------
G. Michael Finnigan
Executive Vice President and
Chief Financial Officer
-8-
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Managing Agent
By: /s/ Janice Hammond
------------------------------------
Jon Varnell
Vice President
Janice Hammond
Vice President, Agency Specialist
-9-
<PAGE>
Exhibit C to Amendment
CONSENT OF BANK
---------------
Reference is hereby made to that certain Reducing Revolving Loan
Agreement dated as of March 27, 1997 among Hollywood Park, Inc. ("Borrower"),
the Banks party thereto, Bank of Scotland, Bankers Trust Company and Societe
Generale, as Co-Agents, and Bank of America National Trust and Savings
Association, as Managing Agent (the "Loan Agreement").
The undersigned Bank hereby consents to the execution and delivery of
Amendment No. 1 to Reducing Revolving Loan Agreement by the Managing Agent on
its behalf, substantially in the form of a draft dated on or about June 6,
1997 presented to the undersigned Bank.
Dated: June 19, 1997
Societe Generale
---------------------------------------
[Name of Institution]
By: /s/ Donald L. Schubert
-------------------------------
Donald L. Schubert
Vice President
_________________________________
[Printed Name and Title]
-10-
<PAGE>
Exhibit C to Amendment
CONSENT OF BANK
---------------
Reference is hereby made to that certain Reducing Revolving Loan
Agreement dated as of March 27, 1997 among Hollywood Park, Inc. ("Borrower"),
the Banks party thereto, Bank of Scotland, Bankers Trust Company and Societe
Generale, as Co-Agents, and Bank of America National Trust and Savings
Association, as Managing Agent (the "Loan Agreement").
The undersigned Bank hereby consents to the execution and delivery of
Amendment No. 1 to Reducing Revolving Loan Agreement by the Managing Agent on
its behalf, substantially in the form of a draft dated on or about June 6,
1997 presented to the undersigned Bank.
Dated: June 19, 1997
Bank of America
------------------------------
[Name of Institution]
By: /s/ John Varnell
-------------------------
John Varnell
Managing Director
_________________________________
[Printed Name and Title]
Exhibit C to Amendment
-11-
<PAGE>
CONSENT OF BANK
---------------
Reference is hereby made to that certain Reducing Revolving Loan
Agreement dated as of March 27, 1997 among Hollywood Park, Inc. ("Borrower"),
the Banks party thereto, Bank of Scotland, Bankers Trust Company and Societe
Generale, as Co-Agents, and Bank of America National Trust and Savings
Association, as Managing Agent (the "Loan Agreement").
The undersigned Bank hereby consents to the execution and delivery of
Amendment No. 1 to Reducing Revolving Loan Agreement by the Managing Agent on
its behalf, substantially in the form of a draft dated on or about June 6,
1997 presented to the undersigned Bank.
Dated: June 19, 1997
Bank of Scotland
---------------------------
[Name of Institution]
By: /s/ Annie Chin Tat
---------------------------
Annie Chin Tat
Vice President
___________________________
[Printed Name and Title]
Exhibit C to Amendment
-12-
<PAGE>
CONSENT OF BANK
---------------
Reference is hereby made to that certain Reducing Revolving Loan
Agreement dated as of March 27, 1997 among Hollywood Park, Inc. ("Borrower"),
the Banks party thereto, Bank of Scotland, Bankers Trust Company and Societe
Generale, as Co-Agents, and Bank of America National Trust and Savings
Association, as Managing Agent (the "Loan Agreement").
The undersigned Bank hereby consents to the execution and delivery of
Amendment No. 1 to Reducing Revolving Loan Agreement by the Managing Agent on
its behalf, substantially in the form of a draft dated on or about June 6,
1997 presented to the undersigned Bank.
Dated: June 19, 1997
Bankers Trust Company
-----------------------------
[Name of Institution]
By: /s/ Timothy J. Morris
------------------------------
Timothy J. Morris
Vice President
_________________________________
[Printed Name and Title]
-13-
<PAGE>
HOLLYWOOD PARK, INC. JUNE 30, 1997 FORM 10-Q
Exhibit 10.30
AMENDMENT NO. 2 TO
REDUCING REVOLVING LOAN AGREEMENT
This Amendment No. 2 to Reducing Revolving Loan Agreement (this
"Amendment") is entered into with reference to the Reducing Revolving Loan
Agreement dated as of March 27, 1997 among Hollywood Park, Inc. ("Borrower"),
the Banks party thereto, Bank of Scotland, Bankers Trust Company and Societe
Generale, as Co-Agents, and Bank of America National Trust and Savings
Association, as Managing Agent (as heretofore amended, the "Loan Agreement").
Capitalized terms used but not defined herein are used with the meanings set
forth for those terms in the Loan Agreement.
Borrower and the Managing Agent, acting with the consent of all of the
Banks pursuant to Section 11.2 of the Loan Agreement, agree as follows:
----
1. Section 1.1. Section 1.1 of the Loan Agreement is amended by
----------- ---
inserting the words "and/or of Hollywood Park Operating Company, a Delaware
corporation," immediately following the word "Borrower" in the first line of the
definition of "New Senior Subordinated Debt."
1. Section 2.6. Section 2.6 of the Loan Agreement is amended by deleting
----------- ---
clause (a) in its entirety from such Section 2.6.
--- ---
1. New Senior Subordinated Debt. The Requisite Banks hereby approve,
----------------------------
pursuant to clauses (c), (d) and (e) of the definition of "New Senior
Subordinated Debt", the subordination provisions, covenants, events of default
and other provisions as are set forth in the July 18, 1997 draft of the Offering
Memorandum for the "___% Senior Subordinated Notes Due 2007", and any immaterial
modifications and/or additions to such provisions.
1. Conditions Precedent. The effectiveness of this Amendment shall be
--------------------
conditioned upon:
(a) receipt by the Managing Agent
of the following documents, each properly executed by a Responsible
Official of each party thereto and dated as of the date hereof:
<PAGE>
(i) Counterparts of this Amendment
executed by all parties hereto; and
(i) Written consent of all of the
Banks as required under Section 11.2 of the Loan Agreement in the form
----
of Exhibit A to this Amendment; and
(a) approval (to the extent
required) of the form of this Amendment by the Louisiana Gaming Control
Board.
1. Confirmation. In all respects, the terms of the Loan Agreement (as amended
------------
hereby) are hereby confirmed.
IN WITNESS WHEREOF, Borrower and the Managing Agent have executed this
Amendment as of July 30, 1997 by their duly authorized representatives.
HOLLYWOOD PARK, INC.
By: /s/ G. Michael Finnigan
G. Michael Finnigan
Executive Vice President and
Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Managing Agent
By: /s/ Janice Hammond
Janice Hammond
Vice President
-2-
<PAGE>
Exhibit A to Amendment
CONSENT OF BANK
---------------
Reference is hereby made to that certain Reducing Revolving Loan Agreement
dated as of March 27, 1997 among Hollywood Park, Inc. ("Borrower"), the Banks
party thereto, Bank of Scotland, Bankers Trust Company and Societe Generale, as
Co-Agents, and Bank of America National Trust and Savings Association, as
Managing Agent (as heretofore amended, the "Loan Agreement").
The undersigned Bank hereby consents to the execution and delivery of
Amendment No. 2 to Reducing Revolving Loan Agreement by the Managing Agent on
its behalf, substantially in the form of a draft dated on or about July 18, 1997
presented to the undersigned Bank.
Dated: July 29, 1997
BANK OF AMERICA
[Name of Institution]
By: /s/ Jon Varnell
Jon Varnell, Managing Director
[Printed Name and Title]
-4-
<PAGE>
Exhibit A to Amendment
CONSENT OF BANK
---------------
Reference is hereby made to that certain Reducing Revolving Loan Agreement
dated as of March 27, 1997 among Hollywood Park, Inc. ("Borrower"), the Banks
party thereto, Bank of Scotland, Bankers Trust Company and Societe Generale, as
Co-Agents, and Bank of America National Trust and Savings Association, as
Managing Agent (as heretofore amended, the "Loan Agreement").
The undersigned Bank hereby consents to the execution and delivery of
Amendment No. 2 to Reducing Revolving Loan Agreement by the Managing Agent on
its behalf, substantially in the form of a draft dated on or about July 18, 1997
presented to the undersigned Bank.
Dated: July 23, 1997
BANK OF SCOTLAND
[Name of Institution]
By: /s/ Joseph Fratus
Joseph Fratus, Asst. Vice President
[Printed Name and Title]
-5-
<PAGE>
Exhibit A to Amendment
CONSENT OF BANK
---------------
Reference is hereby made to that certain Reducing Revolving Loan Agreement
dated as of March 27, 1997 among Hollywood Park, Inc. ("Borrower"), the Banks
party thereto, Bank of Scotland, Bankers Trust Company and Societe Generale, as
Co-Agents, and Bank of America National Trust and Savings Association, as
Managing Agent (as heretofore amended, the "Loan Agreement").
The undersigned Bank hereby consents to the execution and delivery of
Amendment No. 2 to Reducing Revolving Loan Agreement by the Managing Agent on
its behalf, substantially in the form of a draft dated on or about July 18, 1997
presented to the undersigned Bank.
Dated: July 22, 1997
BANKERS TRUST COMPANY
[Name of Institution]
By: /s/ Timothy J. Morris
Timothy J. Morris, Vice President
[Printed Name and Title]
-6-
<PAGE>
Exhibit A to Amendment
CONSENT OF BANK
---------------
Reference is hereby made to that certain Reducing Revolving Loan Agreement
dated as of March 27, 1997 among Hollywood Park, Inc. ("Borrower"), the Banks
party thereto, Bank of Scotland, Bankers Trust Company and Societe Generale, as
Co-Agents, and Bank of America National Trust and Savings Association, as
Managing Agent (as heretofore amended, the "Loan Agreement").
The undersigned Bank hereby consents to the execution and delivery of
Amendment No. 2 to Reducing Revolving Loan Agreement by the Managing Agent on
its behalf, substantially in the form of a draft dated on or about July 18, 1997
presented to the undersigned Bank.
Dated: July 30, 1997
SOCIETE GENERALE
[Name of Institution]
By: /s/ Donald L. Schubert
Donald L. Schubert, Vice President
[Printed Name and Title]
-7-
<PAGE>
Exhibit 10.31
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
MISSISSIPPI-I GAMING, L.P.,
A MISSISSIPPI LIMITED PARTNERSHIP
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE REGULATORY
AUTHORITY HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS AGREEMENT OF LIMITED
PARTNERSHIP OR THE LIMITED PARTNERSHIP INTERESTS PROVIDED FOR HEREIN. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THE LIMITED PARTNERSHIP INTERESTS HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), IN RELIANCE UPON THE
EXEMPTIONS SET FORTH IN SECTION 4(2) THEREOF AND IN RULE 506 OF REGULATION D
PROMULGATED THEREUNDER; THE ISSUER IS UNDER NO OBLIGATION TO REGISTER THE
LIMITED PARTNERSHIP INTERESTS UNDER THE 1933 ACT.
A LIMITED PARTNERSHIP INTEREST MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE 1933
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE GENERAL PARTNER THAT SUCH
REGISTRATION IS NOT REQUIRED. ADDITIONAL RESTRICTIONS ON THE TRANSFER OF
LIMITED PARTNERSHIP INTERESTS ARE CONTAINED IN SECTION 6 OF THIS AGREEMENT.
BASED UPON THE FOREGOING, A PURCHASER OF A LIMITED PARTNERSHIP INTEREST MUST BE
PREPARED TO BEAR THE ECONOMIC RISK OF INVESTMENT THEREIN FOR AN INDEFINITE
PERIOD OF TIME.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1 - DEFINITIONS............................................... 1
SECTION 2 - CONTINUATION OF LIMITED PARTNERSHIP....................... 4
2.1 Continuation, Name and Principal Office................ 4
2.2 Agent for Service of Process........................... 4
2.3 Purpose and Scope of the Partnership................... 4
2.4 Names and Addresses of the Partners.................... 5
2.5 Term of the Partnership................................ 5
2.6 Required Documents..................................... 5
2.7 Title to Property...................................... 5
2.8 Required Licenses...................................... 5
SECTION 3 - CAPITALIZATION OF THE PARTNERSHIP......................... 6
3.1 Iinitil Capital Contribution........................... 6
3.2 Additional Capital Contributions....................... 6
3.3 Adminssion of Additional Limited Partners.............. 7
3.4 Withdrawal and Return of Capital....................... 7
3.5 Loans to the Partnership............................... 7
3.6 Limitation of Liability................................ 7
3.7 Percentage Interest.................................... 7
3.8 Interest on Capital.................................... 8
SECTION 4 - DISTRIBUTIONS, PROFITS AND LOSSES......................... 8
4.1 Distributions.......................................... 8
4.2 Allocations of Partnership Profits and Losses.......... 9
4.3 Modifications to Preserve Underlying Economic
Objectives............................................. 12
4.4 Withholding Taxes and Fees............................. 12
4.5 Nonallocation of Distributions to Increases in
Minimum Gain........................................... 13
4.6 Allocation of Liabilities.............................. 13
SECTION 5 - ADMINISTRATIVE PROVISIONS................................. 13
5.1 Power of Limited Partners.............................. 13
5.2 Management by the General Partner...................... 13
5.3 Restrictions on Powers of the General Partner.......... 14
5.4 Competing Ventures..................................... 14
5.5 Disclosures............................................ 15
5.6 Reimbursement to the General Partner................... 15
5.7 Compensation........................................... 15
5.8 Tax Matters Partner.................................... 15
5.9 Books, Records and Annual Financial Statements......... 16
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 6 - TRANSFER OF A PARTNERSHIP INTEREST; WITHDRAWALS.......... 16
6.1 Transfers............................................. 16
6.2 Withdrawal of a Limited Partner....................... 17
SECTION 7 - DISSOLUTION AND LIQUIDATION OF THE PARTNERSHIP........... 19
7.1 Dissolving Events..................................... 19
7.2 Special Meeting to Dissolve or Continue the
Partnership........................................... 19
7.3 Winding Up of the Partnership......................... 20
SECTION 8 - LIABILITY AND INDEMNIFICATION OF THE GENERAL
PARTNER.............................................................. 21
8.1 Liability............................................. 21
8.2 Indemnification....................................... 21
SECTION 9 - GENERAL PROVISIONS....................................... 21
9.1 Special Meetings...................................... 21
9.2 Entire Agreement...................................... 21
9.3 Amendments............................................ 22
9.4 Governing Law......................................... 22
9.5 Severability.......................................... 22
9.6 Counterparts.......................................... 22
9.7 Survival of Rights.................................... 22
9.8 Arbitration and Attorneys' Fees....................... 22
9.9 Notices............................................... 22
9.10 Consents.............................................. 23
9.12 Representation by Limited Partners.................... 23
9.13 Valuation............................................. 23
9.14 Mutual Selection...................................... 23
</TABLE>
-ii
<PAGE>
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
MISSISSIPPI-I GAMING, L.P.,
A MISSISSIPPI LIMITED PARTNERSHIP
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (this
"Agreement") of Mississippi-I Gaming, L.P., a Mississippi Limited Partnership
(the "Partnership"), is entered into as of July 18, 1994 by and among Bayview
Yacht Club, Inc., a Mississippi corporation as the "General Partner," Boomtown,
Inc., a Delaware corporation ("Boomtown"), as a limited partner, and Eric F.
Skrmetta ("Skrmetta"), as a limited partner (collectively with Boomtown, the
"Limited Partners"). The General Partner and the Limited Partners are referred
to collectively as the "Partners" and each individually as a "Partner."
WITNESSETH:
-----------
WHEREAS, the original Limited Partnership Agreement of Mississippi-I
Gaming, L.P., a Mississippi Limited Partnership (the "Original Agreement"), was
entered into as of April 27, 1993; and
WHEREAS, the parties hereto desire to amend and restate the Original
Agreement in its entirety to set forth their understandings with respect to the
business affairs of the Partnership.
NOW, THEREFORE, in consideration of the mutual promises made herein, the
parties intending to be legally bound, hereby agree that the Original Agreement
is hereby amended and restated in its entirety to read as follows:
SECTION 1
---------
DEFINITIONS
-----------
As used in this Agreement:
Act shall mean the Mississippi Limited Partnership Act, Mississippi Code
---
Ann. (S) 79-14-101 et seq.
-- ---
Additional Capital Contribution shall mean any contribution to the capital
-------------------------------
of the Partnership (including the initial capital contribution of a person
admitted as an additional
<PAGE>
Limited Partner pursuant to Section 3.3) made on a date subsequent to the date
of this Agreement. Each Additional Capital Contribution shall be deemed to be
made as of the close of business on the date thereof.
Authorized Transferee shall have the meaning set forth in Section
---------------------
6.1(a)(iv).
Bankruptcy shall mean, with respect to a Partner, the commencement of any
----------
bankruptcy or insolvency case or proceeding against such Partner which shall
continue and remain unstayed and in effect for a period of 60 consecutive days,
or the filing by such Partner of a petition, answer or consent seeking relief
under any applicable Federal or state bankruptcy, insolvency or similar law.
Capital Account shall mean, for each Partner, a separate account that is:
---------------
(a) increased by (i) the amount of such Partner's Capital Contribution
and (ii) allocations of Profits to such Partner pursuant to Section 4.2;
(b) decreased by (i) the amount of cash distributed to such Partner by
the Partnership, (ii) the fair market value of any other property distributed to
such Partner by the Partnership (determined as of the date of distribution,
without regard to Section 7701(g) of the Code, and net of liabilities secured by
such property that the Partner assumes or to which the Partner's ownership of
the property is subject), and (iii) allocations of Losses to such Partner
pursuant to Section 4.2; and
(c) otherwise adjusted so as to conform to the requirements of
Sections 704(b) and (c) of the Code and the regulations issued thereunder.
Capital Contribution shall mean, for any Partner, the net amount of cash
--------------------
and the fair market value, without regard to Section 7701(g) of the Code, of any
other property (determined as of the date of contribution and net of liabilities
secured by such property that the Partnership assumes or to which the
Partnership's ownership of the property is subject) contributed by such Partner
to the capital of the Partnership. A Partner's Capital Contribution shall
include such Partner's Additional Capital Contributions.
Code shall mean the Internal Revenue Code of 1986, as amended.
----
Dissolution of a Partner which is not a natural person shall mean that such
-----------
Partner has terminated its existence (whether as a partnership, corporation or
other legal entity) and dissolved; provided, however, that a change in the
-------- -------
membership of a Partner that is a partnership shall not constitute a
"Dissolution" of such Partner, so long as the business of the Partner is
continued in partnership form, regardless of whether such Partner is deemed
technically dissolved for partnership or tax law purposes.
Distributable Income shall have the meaning set forth in Section 4.1(a).
--------------------
-2-
<PAGE>
Fiscal Year shall mean the period from January 1 through December 31 of
-----------
each year (unless otherwise required by law).
Foregone Rent shall mean the items of rent not payable by the Partnership
-------------
as described in Section 3.2(d).
Indemnified Person shall have the meaning set forth in Section 8.2.
------------------
Lease shall mean that certain Ground Lease between Raphael Skrmetta as
-----
Landlord, and the Partnership, as Tenant.
Liquidating Partner shall mean the General Partner unless another person is
-------------------
selected pursuant to Section 7.2.
Majority-In-Interest of the Limited Partners shall mean a group of Limited
--------------------------------------------
Partners whose aggregate Percentage Interests are in excess of 50 percent of the
total Percentage Interests of all of the Limited Partners.
Minimum Gain of the Partnership shall, as provided in Treasury Regulation
------------
Section 1.704-2, mean the total amount of gain the Partnership would realize for
Federal income tax purposes if it disposed of all assets subject to nonrecourse
liability for no consideration other than full satisfaction thereof.
Nonrecourse Deduction shall mean an item of loss, expense or deduction
---------------------
(other than a Partner Nonrecourse Deduction) attributable to a nonrecourse
liability of the Partnership within the meaning of Treasury Regulation Section
1.704-2(b).
Partner Nonrecourse Deduction shall mean an item of loss, expense or
-----------------------------
deduction attributable to a nonrecourse liability of the Partnership for which a
Partner bears the economic risk of loss within the meaning of Treasury
Regulation Section 1.704-2(i).
Percentage Interest shall have the meaning set forth in Section 3.7.
-------------------
Profits and Losses of the Partnership shall mean items of income and gain
------------------
(including items not subject to Federal income tax) and items of loss, expense
and deduction (including items not deductible, depreciable, amortizable or
otherwise excludable from income for Federal income tax purposes), respectively,
as determined under Federal income tax principles.
Project shall mean the proposed gaming facility which is described with
-------
particularity on Schedule B attached hereto.
Property shall mean that certain real property commonly known as 676
--------
Bayview Avenue, Biloxi, Mississippi, together with tracts south of Bayview
Avenue in Biloxi Mississippi, said parcels constituting approximately 8.9 acres
(all such real property described with particularity on Schedule C attached
hereto).
-2-
<PAGE>
Required License shall have the meaning set forth in Section 2.7.
----------------
Skrmetta shall mean Eric F. Skrmetta as well as any transferee or assignee
--------
thereof (provided that such transfer or assignment is authorized under this
Agreement).
Substitute Partner shall have the meaning set forth in Section 6.1(a).
------------------
Transfer shall have the meaning set forth in Section 6.1.
--------
Transferring Partner shall have the meaning set forth in Section 6.1(a)(i).
--------------------
Unreturned Capital Contribution shall mean, with respect to each Partner,
-------------------------------
the amount of such Partner's Capital Contribution reduced by the amount
distributed to such Partner pursuant to Section 4.1(a)(i). For purposes of the
preceding sentence, the "amount distributed" with regard to any distribution of
property in kind shall be equal to the fair market value of such property,
without regard to Section 7701(g) of the Code, determined as of the date of
distribution and net of liabilities secured by the property that the distributee
Partner assumes or to which the distributee Partner's ownership of the property
is subject.
SECTION 2
---------
CONTINUATION OF LIMITED PARTNERSHIP
-----------------------------------
2.1 Continuation, Name and Principal Office. The Partners hereby continue
---------------------------------------
the Partnership for the limited purpose and scope set forth in this Agreement.
Except as otherwise provided herein, the Partnership shall be a limited
partnership governed by the Act. The name of the Partnership shall be
"Mississippi-I Gaming, L.P., a Mississippi Limited Partnership." The principal
office of the Partnership shall be at 700 Camp Street, New Orleans, Louisiana
70130 or, upon written notice to the Limited Partners, at such other place as
may be designated by the General Partner.
2.2 Agent for Service of Process. The Partnership shall maintain a
----------------------------
Mississippi agent for service of process in accordance with the provisions of
(S)79-14-104(a)(2) of the Act. Except as otherwise required thereby, the agent
for service of process shall be the General Partner.
2.3 Purpose and Scope of the Partnership. The purpose of the Partnership
------------------------------------
shall be to:
(i) lease or otherwise acquire the Property;
(ii) develop and operate one or more of the following on the
Property, to the extent allowed by and in conformance with applicable law: (a) a
riverboat gaming vessel; (b) a dockside gaming vessel; or (c) a land-based
casino;
-4-
<PAGE>
(iii) develop and operate any facilities that are related to,
necessary for the operation of, or compatible with and enhance the gaming
operation to be conducted on the Property, including parking areas,
entertainment and lodging facilities, food and beverage service, passenger
ticketing facilities, docking facilities, storage and maintenance facilities
(including fueling facilities for any riverboat vessel);
(iv) engage in any other lawful activities determined by the
General Partner to be necessary or advisable in furtherance of the foregoing.
2.4 Names and Addresses of the Partners. The name and address of each
-----------------------------------
Partner shall be set forth on Schedule A.
2.5 Term of the Partnership. The Partnership commenced on April 27, 1993
-----------------------
and shall continue for a period of 99 years thereafter, unless earlier dissolved
and terminated pursuant to Section 7.
2.6 Required Documents.
------------------
(a) Partnership Documents. The General Partner shall cause to be
---------------------
filed, recorded or amended, as necessary, a certificate of limited partnership
and any other documents required to be filed, recorded or amended in connection
with the formation or operation of the Partnership pursuant to the laws of the
State of Mississippi or any other jurisdiction in which the Partnership's
business is conducted.
(b) Other Documents. The Limited Partners shall execute and
---------------
acknowledge as requested by the General Partner such documents as may be
necessary or desirable to (i) comply with legal requirements applicable to the
formation of the Partnership or the operation of the Partnership's business, or
(ii) otherwise give effect to the terms of this Agreement.
(c) Special Power of Attorney. Each Limited Partner hereby grants to
-------------------------
the General Partner a special power of attorney irrevocably appointing the
General Partner as the Limited Partner's attorney-in-fact with power and
authority to execute and acknowledge, in the Limited Partner's name and on its
behalf, any document described in Section 2.6(b). Such special power of
attorney is coupled with an interest.
2.7 Title to Property. Title to all Partnership property shall be held in
-----------------
the name of the Partnership.
2.8 Required Licenses. Each Partner shall use its reasonable efforts to
-----------------
obtain and continue to hold all governmental licenses, permits and similar
authorizations that are necessary or advisable in connection with the business
of the Partnership, as determined by the General Partner in its reasonable
discretion ("Required Licenses").
-5-
<PAGE>
SECTION 3
---------
CAPITALIZATION OF THE PARTNERSHIP
---------------------------------
3.1 Initial Capital Contribution. Each Partner, not later than the
----------------------------
Commencement Date, as defined in the Lease, shall make a contribution to the
capital of the Partnership. The initial capital contribution of the General
Partner shall be $250,000.00. The initial capital contribution of Boomtown
shall be $4,750,000.00. Except as provided in Section 3.2(d), each Limited
Partner's initial capital contribution shall be in such amount as shall be
agreed to by the General Partner and shall be set forth on Schedule A.
3.2 Additional Capital Contributions.
--------------------------------
(a) General. Except as otherwise specifically provided in this
-------
Section 3.2, no Partner shall be permitted or required to make an Additional
Capital Contribution.
(b) Mandatory Additional Contributions by the General Partner. The
---------------------------------------------------------
General Partner shall make any capital contribution required in connection with
the dissolution of the Partnership pursuant to Section 7.3(e). In addition, the
General Partner shall make any capital contributions necessary for it to
maintain, at all times during the term of the Partnership, a positive Capital
Account balance at least equal to the lesser of (i) one percent of the aggregate
positive Capital Account balances of the Partners or (ii) $500,000.
(c) Other Additional Contributions. Prior to completion of the
------------------------------
Project, any Partner may contribute additional capital to the Partnership upon
the consent of the General Partner. Once the Project has been completed, if the
General Partner determines in its sole discretion that the Partnership needs
additional capital for any purpose, the General Partner may offer to the
Partners the opportunity to make Additional Capital Contributions; provided,
--------
Skrmetta shall be entitled to make his pro rata share of any Additional Capital
Contributions (i.e., that portion which would preclude a change to Skrmetta's
Percentage Interest under Section 3.7), using the proceeds of a loan from the
Partnership to Skrmetta, which loan shall be repaid solely out of amounts
otherwise distributable by the Partnership to Skrmetta, under this Agreement.
(d) Admission of and Special Contribution by Skrmetta. Pursuant to
-------------------------------------------------
Section 3.10 of the Lease, the Partnership hereby admits Skrmetta as a Limited
Partner (with the rights and subject to the obligations set forth in this
Agreement) in exchange for Raphael Skrmetta's forbearance of charging any Annual
Base Rent (under paragraph 3.1 of the Lease) or any Percentage Rent (under
subparagraph 3.4A of the Lease) to the Partnership for the first twenty-four
(24) months of the Ground Lease Term. For purposes of this Agreement, "Annual
Base Rent," "Percentage Rent," and "Ground Lease Term" have the same meanings as
in the Lease. The Partners hereby agree that, by virtue of such transaction,
Skrmetta has contributed the use of the Property for the first twenty-four (24)
months of the Ground Lease Term to the Partnership as a Capital Contribution.
-6-
<PAGE>
3.3 Admission of Additional Limited Partners. Subject to its authority to
----------------------------------------
approve Transfers of limited partnership interests under Section 6, the General
Partner may admit additional persons as Limited Partners only with the consent
of all the Limited Partners and only in compliance with applicable gaming laws.
3.4 Withdrawal and Return of Capital. Except as provided in Sections 4.1,
--------------------------------
6.2 and 7.3, (i) no Partner may withdraw any portion of its Capital Contribution
without the prior consent of the General Partner and a Majority-In-Interest of
the Limited Partners and (ii) no Partner shall be entitled to a return of such
Partner's Capital Contribution.
3.5 Loans to the Partnership. If the General Partner determines that the
------------------------
Partnership needs additional capital for any purpose, the General Partner may
offer to the Partners, pro rata in proportion to their respective Percentage
Interests, the opportunity to lend a specified amount of cash to the Partnership
at a rate of interest equal to the prime rate of interest quoted from time to
time by the Bank of America N.T.S.A. San Francisco main branch plus two percent
(but not to exceed the maximum rate permitted under applicable law). If any
Partner declines to lend its pro rata share of such amount to the Partnership,
the other Partners may elect to lend to the Partnership all or a portion of the
amount necessary to cover the resulting shortfall (in such proportions as the
General Partner may determine in its sole discretion). Notwithstanding the
foregoing, the General Partner shall not raise capital through Partner loans to
the Partnership without first offering the Partners an opportunity to contribute
the needed capital through Additional Capital Contributions pursuant to Section
3.2(c).
3.6 Limitation of Liability. Except as otherwise required by the Act or
-----------------------
in connection with a claim against a Limited Partner for recovery of
distributions received by such Limited Partner in violation of this Agreement,
the liability of each Limited Partner for Partnership Losses shall not exceed
the value of such Limited Partner's interest in the Partnership. Any cash or
property that a Limited Partner is obligated to return to the Partnership shall
be returned immediately upon demand therefor by the General Partner. A Limited
Partner obligated to return property may, at its option, return cash equal to
the fair market value of the property (determined by the General Partner in its
reasonable discretion as of the date of such return). If, as a result of a
Limited Partner receiving a distribution of cash or property that it is required
to return, Losses which otherwise would have been allocated to the Limited
Partner were allocated to the General Partner (and such allocation has not been
reversed pursuant to Section 4.2(b)(iv)), the Capital Accounts of the Partners
shall be adjusted to reflect the allocation of such Losses to the Limited
Partner.
3.7 Percentage Interest.
-------------------
(a) Upon commencement of the term of the Partnership, the percentage
interests ("Percentage Interests") of the Partners were as follows:
General Partner 5%
Boomtown 95%
-7-
<PAGE>
Except as specifically provided in (b) and (c) below, the Percentage
Interests of the Partners shall not be adjusted.
(b) In connection with the admission of Skrmetta to the Partnership as
described in Section 3.2(d), the Percentage Interests of the Partners are hereby
adjusted to be as follows:
General Partner 5%
Boomtown 80%
Skrmetta 15%
(c) If, after completion of the Project, there is an Additional
Capital Contribution (other than pursuant to the admission of Skrmetta to the
Partnership as described in Section 3.2(d)), the Percentage Interests of the
Partners shall immediately thereafter be adjusted so that the Percentage
Interest of each Partner is equal to the ratio that (A) the sum of such
Partner's share of the Additional Capital Contributions made on such date and
the fair market value of such Partner's interest in the Partnership (determined
as of the time immediately prior to such Additional Capital Contributions) bears
to (B) the sum of all Additional Capital Contributions made on such date and the
aggregate fair market value of the Partners' interests in Partnership
(determined as of the time immediately prior to such Additional Capital
Contributions).
3.8 Interest on Capital. No Partner shall be entitled to interest on such
-------------------
Partner's Capital Contribution.
SECTION 4
---------
DISTRIBUTIONS, PROFITS AND LOSSES
---------------------------------
4.1 Distributions.
-------------
(a) Except as otherwise required pursuant to Section 4.1(b) or (c) or
applicable law, and subject to the Partnership's obligation to distributions
delay or defer certain distributions under the terms of the Lease, the
Partnership shall make of cash or property from time to time at the discretion
of the General Partner; provided, however, that, subject to the foregoing
-------- -------
limitations, the Partnership shall make quarterly distributions of Distributable
Income as follows:
(i) Within 45 days after the end of each of the first three quarters
of each Fiscal Year, 75 percent of the Partnership's Distributable Income for
such quarter shall be distributed to the Partners in proportion to their
respective Percentage Interests; and
(ii) Within 60 days after the end of the final quarter of each Fiscal
Year, 100 percent of any previously undistributed Distributable Income for such
Fiscal Year shall be distributed to the Partners in proportion to their
respective Percentage Interests.
-8-
<PAGE>
For purposes of this Section 4.1(a), "Distributable Income" for any period
shall mean:
(i) the sum of the Partnership's (A) net income, (B) depreciation and
amortization charges, and (C) provision for income taxes or similar governmental
fees; reduced by
(ii) the sum of the Partnership's (A) capital expenditures in the
normal course of operation, (B) scheduled principal repayments on indebtedness,
and (C) income taxes or similar governmental fees actually paid (all of the
foregoing items in this sentence to be determined with regard to amounts accrued
or incurred in accordance with generally accepted accounting principles
consistently applied); and further reduced by
(iii) 50 percent of the aggregate deficit in Distributable Income,
if any, for all prior periods (provided, however, that the reduction required
-------- -------
under this clause (iii) shall not be applied for purposes of determining the
historic Distributable Income for any prior period).
(b) Notwithstanding Section 4.1(a), cash or property of the
Partnership available for distribution upon the dissolution of the Partnership
(including cash or property received upon the sale or other disposition of
assets in anticipation of or in connection with such dissolution) shall be
distributed in accordance with the provisions of Section 7.3.
(c) No distribution shall be made to a Limited Partner pursuant to
Section 4.1(a) if and to the extent that, upon a hypothetical liquidation of the
Partnership in accordance with the provisions of Section 7.3 immediately
subsequent to such distribution, the Limited Partner would have a deficit
Capital Account balance.
4.2 Allocations of Partnership Profits and Losses.
---------------------------------------------
(a) Except as otherwise provided in this Section 4.2, Profits and
Losses of the Partnership shall be allocated among the Partners as follows:
(i) Profits of the Partnership shall be allocated:
(A) First, to the Partners in proportion to their
respective negative Capital Account balances until no Partner has a negative
Capital Account balance;
(B) Next, to the Partners in proportion to their
respective Unreturned Capital Contributions until the Capital Account balance of
each Partner is not less than such Partner's Unreturned Capital Contribution;
and
(C) Finally, to the Partners in proportion to their
respective Percentage Interests.
(ii) Next, Losses of the Partnership shall be allocated:
-9-
<PAGE>
(A) First, to the Partners in proportion to the amounts by
which the Capital Account balance of each Partner exceeds such Partner's
Unreturned Capital Contribution until the Capital Account balance of each
Partner does not exceed such Partner's Unreturned Capital Contribution;
(B) Next, to the Partners in proportion to their
respective Unreturned Capital Contributions until the Capital Account balance of
each Partner does not exceed zero; and
(C) Finally, to the Partners in proportion to their
respective Percentage Interests.
(iii) Notwithstanding the foregoing provisions of this
Section 4.2(a):
(A) Nonrecourse Deductions shall be allocated among the
Partners in proportion to their respective Percentage Interests;
(B) In accordance with the provisions of Treasury
Regulation Section 1.704-2(i), each item of Partner Nonrecourse Deduction shall
be allocated among the Partners in proportion to the economic risk of loss that
the Partners bear with respect to the nonrecourse liability of the Partnership
to which such item of Partner Nonrecourse Deduction is attributable; and
(C) Solely for purposes of determining the amounts to be
allocated among the Partners under Section 4.2(a)(i) and (ii), the Capital
Account balances of the Partners shall not reflect any reduction thereof caused
by (l) the allocation to the Partners' Capital Accounts of Nonrecourse
Deductions or Partner Nonrecourse Deductions under this Section 4.2(a)(iii), or
(2) any distributions that, notwithstanding the provisions of Section 4.5, are
allocable to increases in the Partnership's Minimum Gain under Treasury
Regulation Section 1.704-2(h) (except to the extent that such Nonrecourse
Deductions, Partner Nonrecourse Deductions or distributions have been offset by
operation of the minimum gain chargeback provisions of Section 4.2(b)(iii)).
(b) Allocation Adjustments Required to Comply With Section 704(b)
-------------------------------------------------------------
of the Code.
-----------
(i) Limitations on Allocation of Losses. Notwithstanding the
-----------------------------------
provisions of Section 4.2(a)(ii), there shall be no allocation of Losses to any
Limited Partner which would create or increase a deficit balance in such Limited
Partner's Capital Account unless such allocation would be treated as valid under
Section 704(b) of the Code. Any Losses that cannot be allocated to a Limited
Partner pursuant to the preceding sentence shall be reallocated to the General
Partner.
(ii) Qualified Income Offset. Notwithstanding the provisions of
-----------------------
Section 4.2(a)(i), if in any Fiscal Year a Limited Partner receives (or is
reasonably expected to receive) a distribution, or an allocation or adjustment
to such Limited Partner's Capital
-10-
<PAGE>
Account, that creates or increases (or is reasonably expected to create or
increase) a deficit balance in such Limited Partner's Capital Account, there
shall there shall be allocated to the Limited Partner such items of Partnership
income or gain as are necessary to satisfy the requirements of a "qualified
income offset" within the meaning of Treasury Regulation Section 1.704-1(b).
(iii) Minimum Gain Chargeback. Notwithstanding the provisions of
-----------------------
Section 4.2(a), this Section 4.2(b)(iii) hereby incorporates by reference the
"minimum gain chargeback" provisions of Treasury Regulation Section 1.704-2. In
general, upon a reduction of the Partnership's Minimum Gain, the preceding
sentence shall require that items of income and gain be allocated among the
Partners in a manner that reverses prior allocations of Nonrecourse and Partner
Nonrecourse Deductions as well as reductions in the Partners' Capital Account
balances resulting from distributions that, notwithstanding Section 4.5, are
allocable to increases in the Partnership's Minimum Gain. Subject to the
provisions of Section 704 of the Code and the regulations thereunder, if the
General Partner determines at any time that operation of such "minimum gain
chargeback" provisions likely will not achieve such a reversal by the conclusion
of the liquidation of the Partnership, the General Partner shall adjust the
allocation provisions of this Section 4.2 as necessary to accomplish that
result.
(iv) Allocations Subsequent to Certain Allocation Adjustments.
--------------------------------------------------------
Any allocations of items of Profits or Losses pursuant to Section 4.2(b)(i) or
(ii) shall be taken into account in computing subsequent allocations pursuant to
Section 4.2(a) so that the net amount of any items so allocated and all other
items allocated to each Partner pursuant to Section 4.2(a) shall, to the extent
possible, be equal to the net amount that would have been allocated to each
Partner pursuant to the provisions of Section 4.2(a) without application of
Section 4.2(b)(i) or (ii).
(c) Book - Tax Accounting Disparities. If Partnership property is
---------------------------------
reflected in the Capital Accounts of the Partners at a book value that differs
from the adjusted tax basis of such property (whether because such property was
contributed to the Partnership by a Partner or because of a revaluation of the
Partners' Capital Accounts under Treasury Regulation Section 1.704-1(b)),
allocations of depreciation, amortization, income, gain or loss with respect to
such property shall be made among the Partners in a manner which takes such
difference into account in accordance with Code Section 704(c) and Treasury
Regulation Section 1.704-1(b).
(d) Minimum Allocations to General Partner. Notwithstanding anything
--------------------------------------
in this Agreement to the contrary, but subject to the provisions of Section
4.2(b)(ii) and (iii), the General Partner shall be allocated pro rata at least
one percent of each item of Partnership income, gain, loss, expense or
deduction.
(e) Special Allocations in Connection with Certain Transactions.
-----------------------------------------------------------
Subject to the provisions of Section 4.2(b), if the Partnership is entitled to a
tax deduction in connection with the acquisition or receipt by a Partner of an
interest in the Partnership, then the deduction shall be allocated entirely to
such Partner. Any amount that such Partner is
-11-
<PAGE>
required to include in income for Federal income tax purposes in connection with
the acquisition or receipt of such interest shall be treated as a contribution
to the capital of the Partnership by such Partner.
(f) Allocation in Event of Transfer. If an interest in the
-------------------------------
Partnership is Transferred in accordance with Section 6, there shall be
allocated to the Transferring Partner during the Fiscal Year of Transfer the
product of (i) the Partnership's Profits or Losses allocable to such Transferred
interest for such Fiscal Year and (ii) a fraction, the numerator of which is the
number of days such Partner held the Transferred interest during such Fiscal
Year and the denominator of which is the total number of days in such Fiscal
Year. All remaining Partnership Profits and Losses allocable to such
Transferred interest for such Fiscal Year shall be allocated to the Substitute
Partner acquiring such interest. Such allocations shall be made without regard
to the date, amount or recipient of any distributions which may have been made
with respect to such Transferred interest. As of the date of such Transfer, the
Substitute Partner shall succeed to the Capital Account and Capital Contribution
of the Transferring Partner to the extent attributable to the Transferred
interest.
(g) Adjustment to Capital Accounts for Distributions of Property. If
------------------------------------------------------------
property distributed in kind is reflected in the Capital Accounts of the
Partners at a book value that differs from the fair market value of such
property on the date of distribution, the difference shall be treated as Profit
or Loss on the sale of the property and shall be allocated among the Partners in
accordance with the provisions of this Section 4.2.
(h) Tax Credits and Similar Items. Any tax credits or similar items
-----------------------------
not allocable pursuant to Section 4.2(a) through (g) shall be allocated to the
Partners in proportion to their respective Percentage Interests; provided,
--------
however, that at least one percent of each such item shall be allocated to the
- -------
General Partner.
4.3 Modifications to Preserve Underlying Economic Objectives. If, in the
--------------------------------------------------------
opinion of counsel to the Partnership, there is a change in the Federal income
tax law (including the Code as well as the regulations, rulings, and
administrative practices thereunder) which makes it necessary or prudent to
modify the allocation provisions of this Section 4 in order to preserve the
underlying economic objectives of the Partners as reflected in this Agreement,
the General Partner shall make the minimum modification necessary to achieve
such purpose.
4.4 Withholding Taxes and Fees. The Partnership shall withhold taxes and
--------------------------
similar governmental fees from distributions to, and allocations among, the
Partners to the extent required by law (as determined by the General Partner in
its sole discretion). Any amount so withheld by the Partnership with regard to
a Partner shall be treated for purposes of this Agreement as an amount actually
distributed to such Partner. An amount shall be considered withheld by the
Partnership if remitted to a governmental agency without regard to whether such
remittance occurs at the same time as the distribution or allocation to which it
relates. To the extent operation of the foregoing provisions of this Section
4.4 would create or increase a deficit balance in a Limited Partner's Capital
Account (excluding for
-12-
<PAGE>
this purpose any portion of such deficit attributable to the Partner's share of
the Partnership's Minimum Gain as determined under Treasury Regulation Section
1.704-2), the amount of the deemed distribution shall instead be treated as a
distribution received in violation of this Agreement and subject to the
provisions of Section 3.6.
4.5 Nonallocation of Distributions to Increases in Minimum Gain. To the
-----------------------------------------------------------
extent permitted under Treasury Regulation Section 1.704-2(h), distributions to
Partners shall not be allocable to increases in the Partnership's Minimum Gain.
In general, and except as provided in such regulation, the preceding sentence is
intended to insure that reductions in a Partner's Capital Account balance
resulting from distributions of money or other property to that Partner are not
reversed by the minimum gain chargeback provisions of Section 4.2(b)(iii).
4.6 Allocation of Liabilities. Solely for purposes of determining the
-------------------------
Partners' respective shares of the nonrecourse liabilities of the Partnership
within the meaning of Treasury Regulation Section 1.752-3(a)(3), each Partner's
interest in Partnership Profits shall be equal to such Partner's Percentage
Interest.
SECTION 5
---------
ADMINISTRATIVE PROVISIONS
-------------------------
5.1 Power of Limited Partners.
-------------------------
(a) No Management by Limited Partners. Except as specifically
---------------------------------
required under the Act or permitted under this Agreement, the Limited Partners
shall not take part in the management or control of, and shall not bind or act
for, the Partnership.
(b) Majority-In-Interest Approval for Certain Actions. The approval
-------------------------------------------------
of a Majority-In-Interest of the Limited Partners shall be required in order for
the General Partner to:
(i) liquidate substantially all of the Partnership's assets;
or
(ii) otherwise discontinue the Partnership's business.
5.2 Management by the General Partner. The General Partner shall devote
---------------------------------
such time and attention, and shall diligently perform those duties, as are
reasonably necessary to manage effectively the Partnership's affairs.
Subject to the provisions of the Act and this Agreement, the General
Partner shall have the power to perform acts necessary or appropriate for the
efficient management of the Partnership including, without limitation, the right
to:
-13-
<PAGE>
(a) Acquire, manage, develop, hold, lease, improve, control, operate,
and sell or otherwise dispose of property on behalf of the Partnership;
(b) Borrow money on behalf of the Partnership or encumber Partnership
property solely for the purpose of obtaining financing for the Partnership's
business, and to extend or modify any obligations of the Partnership;
(c) Employ or retain any qualified person to perform services or
provide advice for the benefit of the Partnership and pay reasonable
compensation therefor;
(d) Compromise, arbitrate or otherwise adjust claims in favor of or
against the Partnership, and commence or defend litigation with respect to the
Partnership or any assets of the Partnership, at the Partnership expense;
(e) Cause the Partnership to maintain, at the Partnership's expense,
insurance coverage reasonably satisfactory to the General Partner with regard to
any circumstance or condition which may affect the Partnership or the liability
of the General Partner in its capacity as such;
(f) Open, conduct business regarding, draw checks or other payment
orders upon, and close cash, checking, custodial or similar accounts with banks
or brokers on behalf of the Partnership and pay the customary fees and charges
applicable to transactions in respect of all such accounts;
(g) Cause the Partnership to enter into, make and perform such
contracts, agreements and other undertakings, and to do such other acts, as it
may deem necessary or advisable for, or as may be incidental to, the conduct of
the business of the Partnership, including, without limitation, contracts,
agreements, undertakings and transactions with any Partner or with any other
person or entity related to any Partner, provided, however, that transactions
-------- -------
with such persons and entities for the account of the Partnership shall be on
terms no less favorable to the Partnership than are generally afforded to
unrelated third parties in comparable transactions; and
(h) Assume and exercise all powers and responsibilities granted a
general partner by the laws of the State of Mississippi.
5.3 Restrictions on Powers of the General Partner. The General Partner
---------------------------------------------
shall not do any act in contravention of this Agreement or, subject to the
provisions of Section 5.4, any act which is detrimental to the business of the
Partnership. The General Partner shall have fiduciary responsibility for the
safekeeping and use of all funds and assets of the Partnership. The General
Partner shall not use, or permit another to use, such funds or assets in any
manner except for the exclusive benefit of the Partnership.
5.4 Competing Ventures. The Limited Partners understand that the General
------------------
Partner may have other business activities which may take the major part of the
General Partner's total time devoted to business matters. Accordingly, the
General Partner shall not
-14-
<PAGE>
be bound to devote all of the General Partner's business time to the affairs of
the Partnership, but shall devote such time and attention to the Partnership's
business as may be required in order to assure that the Partnership's business
is conducted in a diligent and proper manner. During the continuance of this
Agreement, any Partner and/or such Partner's respective affiliated entities may
(i) engage in any activity whether or not in direct competition with the
Partnership for such Partner's own profit and advantage without the consent of
any other Partner or the Partnership, or (ii) possess an interest in any other
business venture of any nature or description independently or with others.
Neither the Partnership nor any Partner shall have any right by virtue of this
Agreement in and to any Partner's separate business venture or to the income or
profits derived therefrom.
5.5 Disclosures. Each Partner shall furnish any data with respect to
-----------
itself reasonably required in connection with financing or operation of the
Partnership's business.
5.6 Reimbursement to the General Partner. The General Partner shall be
------------------------------------
reimbursed for amounts paid to third parties for, or on behalf of, the
Partnership (including, without limitation, amounts paid in connection with the
formation of the Partnership).
5.7 Compensation. Partners and affiliates of Partners shall be entitled
------------
to receive fair market value compensation (as determined by the General Partner
in its reasonable discretion and in accordance with the provisions of Section
5.2(g)) for services provided to, or for the benefit of, the Partnership.
5.8 Tax Matters Partner.
-------------------
(a) General. The General Partner is hereby designated the "tax
-------
matters partner" of the Partnership within the meaning of Section 6231(a)(7) of
the Code. Except as specifically provided in the Code and the regulations
issued thereunder, the General Partner in its sole discretion shall have
exclusive authority to act for or on behalf of the Partnership with regard to
tax matters, including, without limitation, the authority to make (or decline to
make) any available tax elections.
(b) Notice of Inconsistent Treatment of Partnership Item. No Partner
----------------------------------------------------
shall file a notice with the Internal Revenue Service under Section 6222(b) of
the Code in connection with such Partner's intention to treat an item on such
Partner's Federal income tax return in a manner which is inconsistent with the
treatment of such item on the Partnership's Federal income tax return unless
such Partner has, not less than 30 days prior to the filing of such notice,
provided the General Partner with a copy of the notice and thereafter in a
timely manner provides such other information related thereto as the General
Partner shall reasonably request.
(c) Notice of Settlement Agreement. Any Limited Partner entering into
------------------------------
a settlement agreement with the Secretary of the Treasury which concerns a
Partnership item shall notify the General Partner of such settlement agreement
and its terms within 60 days from the date thereof.
-15-
<PAGE>
5.9 Books, Records and Annual Financial Statements.
----------------------------------------------
(a) The Partnership shall maintain or cause to be maintained true and
proper books, records, reports, and accounts in which shall be entered, on the
accrual basis, all transactions of the Partnership. Such books, records,
reports and accounts shall be located at the principal place of business of the
Partnership and shall be available to any Partner for inspection and copying
during reasonable business hours.
(b) The Partnership shall cause to be delivered to each Partner within
90 days after the expiration of each Fiscal Year an annual report containing all
Partnership information necessary for preparation of the Federal, state and
local income tax returns of such Partner.
SECTION 6
---------
TRANSFER OF A PARTNERSHIP INTEREST; WITHDRAWALS
-----------------------------------------------
6.1 Transfers. No sale, transfer, assignment or other disposition (a
---------
"Transfer") of a Partner's interest in violation of this Agreement shall be
valid or effective.
(a) Limited Partners -- Voluntary Transfers. The Transfer of a
---------------------------------------
Limited Partner's interest in the Partnership to another person (a "Substitute
Partner") shall be valid and effective if the following conditions are
satisfied:
(i) Execution of Documents. The Limited Partner whose interest is
----------------------
Transferred (the "Transferring Partner") and the Substitute Partner shall
properly execute documents or instruments which the General Partner reasonably
determines to be necessary or desirable to effect such Transfer, including
written acceptance, ratification and approval of all of the terms and conditions
of this Agreement and any amendments hereto.
(ii) Compliance With Applicable Laws and Rules. The Transfer of
-----------------------------------------
the interest shall not at the time of the Transfer and will not thereafter, to
the reasonable satisfaction of the General Partner, violate any applicable law
or governmental rule, including, without limitation, any Federal or state
securities or gaming law or rule (based upon the presumption, for this purpose,
that the business operations of the Partnership shall not be changed to
accommodate the Transfer of a Limited Partner's interest in the Partnership).
(iii) Tax Effects. The Transfer of the interest shall not, to the
-----------
reasonable satisfaction of the General Partner, cause the Partnership to (A)
terminate within the meaning of Section 708 of the Code; (B) qualify as a
"publicly traded partnership" within the meaning of Section 469(k) or 7704 of
the Code; or (C) be classified for Federal income tax purposes as an association
taxable as a corporation.
-16-
<PAGE>
(iv) Consent of the General Partner. The prior written consent of
------------------------------
the General Partner to such Transfer shall be obtained by the Transferring
Partner, the granting or denial of which shall be in the General Partner's sole
discretion. Notwithstanding the preceding sentence, the General Partner shall be
deemed to have consented to the Transfer of all or a portion of Skrmetta's
limited partnership interest to one or more Authorized Transferees; provided,
--------
however, that the General Partner shall not be deemed to have consented to any
- -------
Transfer that would result in Skrmetta's limited partnership interest being held
by more than four separate persons.
As used herein, "Authorized Transferee" means (i) any shareholder of
one or more of the corporate entities, if any, of which Skrmetta is comprised,
(ii) any immediate family member of such a shareholder, (iii) any of Raphael,
Eric, Dennis or Barbara Skrmetta or an immediate family member thereof, or (iv)
any corporation, trust or other entity wholly owned by any or all of Raphael,
Eric, Dennis or Barbara Skrmetta. For purposes of the preceding sentence, the
"immediate family" of an individual shall include and be limited to such
individual's parents, siblings, spouse, children, grandchildren and great
grandchildren.
Notwithstanding the foregoing provisions of this Section 6.1(a)(iv),
no person (including, without limitation, an Authorized Transferee) shall be
admitted to the Partnership without the prior written consent of the General
Partner, the granting or denial of which shall be in the General Partner's sole
discretion.
(b) Limited Partners -- Involuntary Transfers. A person may become
-----------------------------------------
the assignee of all or a portion of a Limited Partner's interest in the Profits
and Losses of the Partnership upon (i) the death, Bankruptcy, incapacity, or
Dissolution of such Limited Partner; (ii) foreclosure against that portion of
such Limited Partner's interest in the Partnership which was pledged as security
for an obligation; or (iii) a transfer to such Limited Partner's spouse pursuant
to a divorce decree or settlement. In the event a person becomes the assignee
of an interest in the Profits and Losses of the Partnership under the preceding
sentence, the General Partner shall, in its sole discretion, (i) admit such
assignee to the Partnership as a Substitute Partner (provided, however, that the
-------- -------
requirements of Section 6.1(a)(ii) and (iii) shall in all events be satisfied)
or (ii) redeem such assignee's interest by treating such assignee as a
withdrawing Limited Partner under the rules set forth in Section 6.2.
(c) Transfers by the General Partner. The General Partner shall not
--------------------------------
Transfer its interest in the Partnership in violation of applicable law or
without the prior written consent of all the Limited Partners; provided,
--------
however, that the General Partner shall not be required to obtain such consent
- -------
for a Transfer which consists solely of an assignment of all or a portion of the
General Partner's interest in the allocations and distributions of the
Partnership.
6.2 Withdrawal of a Limited Partner. A Limited Partner shall not withdraw
-------------------------------
from the Partnership without the written consent of the General Partner, the
granting or denial of which shall be in the General Partner's sole discretion.
A Limited Partner permitted to
-17-
<PAGE>
withdraw from the Partnership pursuant to this Section 6.2 shall receive the
amount of cash and/or property (as determined in the reasonable discretion of
the General Partner) that such Limited Partner would have received if, on the
effective date of such withdrawal, the Partnership had been dissolved and
liquidated pursuant to Section 7.3. Upon the withdrawal of a Limited Partner
from the Partnership, such Limited Partner's Percentage Interest shall be
allocated among the remaining Partners in proportion to the remaining Partners'
respective Percentage Interests as in effect immediately prior to the
withdrawal.
6.3 Mandatory Transfer of a Partner's Interest.
------------------------------------------
(a) Failure by Skrmetta to Obtain or Hold a Required License. Subject
--------------------------------------------------------
to any other agreements among the Partners, if Skrmetta (i) fails to obtain a
Required License, or (ii) loses or has revoked a Required License and fails to
reacquire such license within the shorter of a reasonable period of time or such
period as is required by applicable law, then Skrmetta shall use its reasonable
efforts to, within such aforementioned time period, sell or otherwise Transfer
(in a transaction that satisfies the requirements of Section 6.1(a)) its
interest in the Partnership to a person that holds all Required Licenses.
If Skrmetta fails to obtain or reacquire a Required License or to sell
or otherwise Transfer its Partnership interest in accordance with the terms of
the preceding paragraph (including, without limitation, the time period
described therein) or Skrmetta's failure to hold all Required Licenses
--
materially impairs the ability of the Partnership to conduct its business (as
determined by the General Partner in its reasonable discretion), then the
Partnership shall have an immediate and continuing right to redeem Skrmetta's
Partnership interest for fair market value on the date of redemption (as
determined by agreement among the Partners or, if any Partner declares that no
agreement can be reached, by arbitration in accordance with the provisions of
Section 9.8).
(b) Failure by the General Partner or Boomtown to Obtain or Hold a
--------------------------------------------------------------
Required License. If the General Partner or Boomtown fails to obtain or
- ----------------
reacquire a Required License within the shorter of a reasonable period of time
or such period as is required by applicable law and the failure materially
impairs the ability of the Partnership to conduct its business, then such
Partner shall use its reasonable efforts to sell or otherwise Transfer its
interest in the Partnership, for a price and on such other terms as are
reasonably acceptable to such Partner, to a person that holds all Required
Licenses. If such Partner is the General Partner, the consent of all the
Limited Partners shall be required for the sale or other Transfer of its
interest to occur.
If a Partner required to sell or otherwise Transfer its Partnership
interest under the terms of the preceding paragraph fails to effect such sale or
other Transfer within the applicable time period, the Partnership shall
immediately attempt to sell its business assets for a price and on such other
terms as are acceptable in the reasonable discretion of the General Partner. If
no such sale is effected within a reasonable period of time, the Partnership
shall be dissolved and liquidated in accordance with the provisions of Section
7.
-18-
<PAGE>
Any sale or other Transfer (i) by the General Partner or Boomtown
(other than to a person affiliated with or related to the General Partner or
Boomtown) or (ii) by the Partnership shall be subject to a right of first
refusal on the part of Skrmetta under terms substantially identical to those
contained in Section 14.2 of the Lease.
SECTION 7
---------
DISSOLUTION AND LIQUIDATION OF THE PARTNERSHIP
----------------------------------------------
7.1 Dissolving Events. The Partnership shall be dissolved upon the
-----------------
occurrence of any of the following events:
(a) Expiration of the Partnership term;
(b) Issuance of an order by a court of competent jurisdiction
requiring the dissolution of the Partnership;
(c) Permanent cessation of the Partnership's business;
(d) Consent of the General Partner and a Majority-in-Interest of the
Limited Partners to dissolve;
(e) The withdrawal, retirement, Bankruptcy, Dissolution, death or
incapacity of the General Partner, unless the remaining Partners elect to
continue the Partnership pursuant to Section 7.2;
(f) Failure by the Partnership to sell its business assets in
accordance with the provisions of Section 6.3(b); and
(g) Any other event which results in dissolution of the Partnership
under the Act.
7.2 Special Meeting to Dissolve or Continue the Partnership. Upon the
-------------------------------------------------------
withdrawal, retirement, Bankruptcy, Dissolution, death or incapacity of the
General Partner, the two Limited Partners having the largest Capital Account
balances shall, in accordance with the provisions of the Act, notify the
remaining Limited Partners of a special meeting of the Limited Partners to be
held not less than 10 nor more than 60 days after the date of such event. At
that meeting the Limited Partners may by unanimous vote elect to continue the
business of the Partnership and agree to the appointment of a new General
Partner. If the Limited Partners do not elect to continue the business of the
Partnership and to appoint a new General Partner, a Liquidating Partner shall be
elected by a Majority-In-Interest of the Limited Partners; the Liquidating
Partner shall then cause the Partnership to be liquidated in accordance with the
provisions of Section 7.3.
-19-
<PAGE>
Written consent of a Partner to continuation of the Partnership and the
election of a new General Partner or to dissolution of the Partnership and the
election of a Liquidating Partner shall be counted as a vote at such special
meeting.
7.3 Winding Up of the Partnership.
-----------------------------
(a) Upon dissolution of the Partnership, the Liquidating Partner shall
promptly wind up the affairs of the Partnership in accordance with the
provisions of this Section 7.3. The Partnership shall engage in no further
business except as may be necessary, in the reasonable discretion of the
Liquidating Partner, to preserve the value of the Partnership's assets during
the period of dissolution and liquidation.
(b) Distributions to the Partners in liquidation may be made in cash
or in kind, or partly in cash and partly in kind, as determined by the
Liquidating Partner. Distributions in kind shall be valued at fair market value
as reasonably determined by the Liquidating Partner and shall be subject to such
conditions and restrictions as may be necessary or advisable in the reasonable
discretion of the Liquidating Partner to preserve the value of the property so
distributed.
(c) The Profits and Losses of the Partnership during the period of
dissolution and liquidation shall be allocated among the Partners in accordance
with the provisions of Section 4.2. If any property is distributed in kind, the
Capital Accounts of the Partners shall be adjusted in accordance with the
provisions of Section 4.2(g).
(d) The assets of the Partnership (including, without limitation,
proceeds from the sale or other disposition of any assets during the period of
dissolution and liquidation) shall be applied as follows:
(i) First, to repay any indebtedness of the Partnership, whether
to third parties or the Partners, in the order of priority required by law;
(ii) Next, to any reserves which the Liquidating Partner
reasonably deems necessary for contingent or unforeseen liabilities or
obligations of the Partnership (which reserves when they become unnecessary
shall be distributed in the remaining priorities set forth in this Section
7.3(d)); and
(iii) Next, to the Partners in proportion to their respective
positive Capital Account balances (after taking into account all adjustments to
the Partners' Capital Accounts required under Section 7.3(c)).
(e) If, after allocation of all Profits and Losses of the Partnership
pursuant to Section 7.3(c), the Capital Account balance of the General Partner
is less than zero, the General Partner shall, prior to application and
distribution of the Partnership's assets pursuant to Section 7.3(d), contribute
to the capital of the Partnership sufficient cash and/or property to increase
the General Partner's Capital Account balance to zero.
-20-
<PAGE>
SECTION 8
---------
LIABILITY AND INDEMNIFICATION OF THE GENERAL PARTNER
----------------------------------------------------
8.1 Liability. Except as specifically provided in this Agreement, the
---------
General Partner (and its affiliates) shall not be personally liable for the
return of any contributions made to the capital of the Partnership by the
Limited Partners. In the absence of fraud, gross negligence, material breach of
fiduciary duty, or willful misconduct by the General Partner, the General
Partner (and its affiliates) shall not be liable to the Partnership or the
Limited Partners for any act or omission concerning the Partnership's business.
8.2 Indemnification. In the absence of fraud, gross negligence, material
---------------
breach of fiduciary duty, or willful misconduct on the part an Indemnified
Person, the Partnership shall indemnify and hold each Indemnified Person
harmless from and against any loss, expense, damage or injury suffered or
sustained by any of them by reason of any acts, omissions, or alleged acts or
omissions arising out of any activity performed on behalf of the Partnership.
This indemnification shall include, but not be limited to: (i) payment of
reasonable attorneys' fees and other expenses incurred in settling any claim or
threatened action, or incurred in any finally-adjudicated legal proceeding, and
(ii) the removal of any liens affecting the property of an Indemnified Person
(which liens shall be deemed a debt of the Partnership to such Indemnified
Person to be repaid in full before any distributions are made to the Partners
pursuant to this Agreement). As used herein, "Indemnified Person" means the
General Partner, any business entity of which the General Partner is an officer,
director, partner or shareholder, or any employee or agent thereof. The total
obligation of the Partnership to all Indemnified Person under this Section 8.2
shall be limited to the assets of the Partnership (excluding, solely for
purposes of this sentence, any obligation of the General Partner to restore a
deficit balance in its Capital Account pursuant to Section 7.3(e)).
SECTION 9
---------
GENERAL PROVISIONS
------------------
9.1 Special Meetings. Subject to the provisions of the Act, the General
----------------
Partner may call a special meeting of all Partners at any reasonable time on not
less than 10 nor more than 60 days written notice.
9.2 Entire Agreement. Except for that certain Partnership Admission
----------------
Agreement entered into as of July 18, 1994 by and among the Partnership, the
General Partner, Boomtown, Skrmetta, and Raphael Skrmetta, this Agreement
contains the entire understanding among the Partners and supersedes any prior
written or oral agreement between them respecting the Partnership. Except as
set forth in the preceding sentence, there are no representations, agreements,
arrangements, or understandings, oral or written, among the Partners relating to
the Partnership which are not fully expressed in this Agreement.
-21-
<PAGE>
9.3 Amendments.
----------
(a) General. This Agreement is subject to amendment only with the
-------
written consent of the General Partner and a Majority-In-Interest of the Limited
Partners; provided, however, that there shall be no amendment to this Agreement
-------- -------
which reduces a Limited Partner's interest in the Profits, distributions or
capital of the Partnership without the consent of such Limited Partner.
(b) Amendments to Comply with Gaming or Similar Laws. Notwithstanding
------------------------------------------------
the provisions of Section 9.3(a), the Partners hereby agree in advance that this
Agreement shall be amended as necessary to comply with the requirements of any
gaming or similar law or governmental rule that regulates or otherwise pertains
to the business of the Partnership.
9.4 Governing Law. All questions with respect to the interpretation of
-------------
this Agreement and the rights and liabilities of the Partners shall be governed
by the laws of the State of Mississippi as they are applied to contracts entered
into between residents of Mississippi.
9.5 Severability. In the event any one or more of the provisions of this
------------
Agreement are determined to be invalid or unenforceable, such provision or
provisions shall be deemed severable from the remainder of this Agreement and
shall not cause the invalidity or unenforceability of the remainder of this
Agreement.
9.6 Counterparts. This Agreement may be executed in any number of
------------
counterparts and when so executed, all of such counterparts shall constitute a
single instrument binding upon all parties notwithstanding the fact that all
parties are not signatory to the original or to the same counterpart.
9.7 Survival of Rights. Subject to the restrictions against unauthorized
------------------
assignment or transfer set forth in this Agreement, the provisions of this
Agreement shall inure to the benefit of and be binding upon each Partner and
such Partner's heirs, devises, legatees, personal representatives, successors,
and assigns.
9.8 Arbitration and Attorneys' Fees. Any controversy or claim arising out
-------------------------------
of or relating to this Agreement, the Partnership, or the Partners' respective
rights and duties shall be settled by arbitration in the State of Nevada. Such
arbitration shall be in accordance with the rules of the American Arbitration
Association, and judgment upon the award may be entered in any court of
competent jurisdiction. The prevailing Partner or Partners in such arbitration
and any ensuing legal action shall be reimbursed by the Partner or Partners who
do not prevail for their reasonable attorney's, accountant's and expert's fees
and the costs of such actions.
9.9 Notices. Any notice shall be in writing and shall be deemed duly
-------
given when personally delivered to the Partner to whom it is directed, or in
lieu of such personal service, when deposited in the United States mail,
registered or certified mail, postage
-22-
<PAGE>
prepaid, to the address set forth on Schedule A for such Partner, or to any
other address of which the General Partner is notified by such Partner in
writing. Notice also shall be deemed duly given when actually received by the
Partner to whom it is directed via telecopy, electronic transfer, telex or
telegram.
9.10 Consents. All consents, agreements and approvals provided for or
--------
permitted by this Agreement shall be in writing and signed copies thereof shall
be retained with the books of the Partnership.
9.11 No Partition. Except as otherwise permitted by this Agreement, no
------------
Partner shall have the right, and each Partner does hereby agree that it shall
not seek, to cause a partition of the Partnership's property whether by court
action or otherwise.
9.12 Representation by Limited Partners. Each Limited Partner hereby
----------------------------------
represents that, with respect to its limited partnership interest in the
Partnership: (i) it is acquiring or has acquired such interest for purposes of
investment only, for its own account (or a trust account if such Limited Partner
is a trustee), and not with a view to resell or distribute the same or any part
thereof; and (ii) no other person has any interest in such limited partnership
interest or in the rights of such Limited Partner under this Agreement other
than a spouse having a community property or similar interest under applicable
state law. Each Limited Partner also warrants to the Partnership and the other
Partners that it has the business and financial knowledge and experience
necessary to purchase a limited partnership interest in the Partnership in the
amount of its capital contributions to the Partnership on the terms contemplated
herein and that it has the ability to bear the risks of such investment
(including the risk of sustaining a complete loss of all such capital
contributions) without the need for the investor protections provided by the
registration requirements of the Securities Act of 1933, as amended.
9.13 Valuation. If (i) the fair market value of any asset or other item of
---------
property (including, without limitation, a limited partnership interest in the
Partnership) is required to be determined under the terms of this Agreement or
any other agreement or arrangement to which the Partnership is subject, and (ii)
no standard for determining such fair market value is provided for under the
applicable provision of this Agreement or such other agreement or arrangement,
then the fair market value of the asset or other item of property shall be
determined by the General Partner in its reasonable discretion.
9.14 Mutual Selection. Each Partner hereby specifically consents to and
----------------
endorses the selection of all other Partners admitted to the Partnership
pursuant to the terms of this Agreement.
9.15 Special Provision to Comply with Mississippi Gaming Law.
-------------------------------------------------------
Notwithstanding anything to the contrary, expressed or implied in this
Agreement, the sale, assignment, transfer, pledge, or other disposition of any
interest in the Partnership shall be void unless approved in advance by the
Commission designated in the Mississippi Gaming Control Act, Mississippi Code
Ann., Chapter 14, (S) 75-76-223. If at any time the Commission finds that an
individual owner of any such interest is unsuitable to hold that interest, and
the
-23-
<PAGE>
Commission shall notifies the Partnership of that fact, the Partnership shall,
within 10 days from the date that it receives the notice from the Commission,
return to the unsuitable owner the amount of his or her Capital Account balance.
Beginning on the date when the Commission serves notice of a determination of
unsuitability upon the Partnership, the unsuitable owner shall not
(a) receive from the Partnership any share of the Partnership's
Profits or distributions of any cash or other property other than a return of
capital as required above;
(b) exercise, directly or through any trustee or nominee, any voting
right conferred by the owner's Partnership interest; or
(c) receive any remuneration in any form from the Partnership, for
services rendered or otherwise.
Any Limited Partner granted "delayed licensing" that is later found
unsuitable by the Commission shall return all evidence of any ownership in the
Partnership to the Partnership, at which time the Partnership shall return to
the unsuitable Limited Partner the amount of such Limited Partner's Capital
Account balance, and the unsuitable Limited Partner shall no longer have any
direct or indirect interest in the Partnership.
As used in this Section 9.15, "delayed licensing" means an approval
granted by the Commission to a limited partner of a limited partnership
licensee, enabling the limited partner to receive a share or percentage of
revenues derived in the conduct of gaming prior to the limited partner being
licensed.
-24-
<PAGE>
This Section 9.15 is intended to satisfy the requirements of the
Mississippi Gaming Control Act, Mississippi Code Ann., Chapter 14, (S) 75-76-
223, which is hereby incorporated by reference, and shall be interpreted
accordingly.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
GENERAL PARTNER: LIMITED PARTNERS:
BAYVIEW YACHT CLUB, INC. BOOMTOWN, INC.
___________________________ -----------------------------------
By: Robert F. List By: Robert F. List
Title: Title: Senior Vice President
-----------------------------------
Eric F. Skrmetta
-25-
<PAGE>
SCHEDULE A
----------
<TABLE>
<CAPTION>
Initial Capital Percentage
Name and Address Contribution Interest
- --------------------------- --------------- -----------
<S> <C> <C>
Bayview Yacht Club, Inc. $ 250,000 5%
c/o Boomtown, Inc.
P.O. Box 399
Verdi, NV 89439
Boomtown, Inc. $4,750,000 80%
P.O. Box 399
Verdi, NV 89439
Eric F. Skrmetta Amount of 15%
4314 Bancroft Drive Forgone Rent
New Orleans, LA 70122
</TABLE>
<PAGE>
EXHIBIT 10.32
AMENDED EQUITY CONVERSION AGREEMENT
This Agreement is made as of July 18, 1994, by and between Boomtown, Inc.,
a Delaware corporation ("Boomtown"), and Eric F. Skrmetta ("Skrmetta").
R E C I T A L S
A. Pursuant to an Agreement to Lease dated as of April 12, 1993 (the
"Agreement to Lease") as amended on September 16, 1993, Boomtown and Raphael
Skrmetta entered into an agreement providing for the lease of certain property
located in Biloxi, Mississippi pursuant to a lease (the "Lease") in the form
attached to the Agreement to Lease as Exhibit II, and the development and
operation of gaming facilities on a gaming vessel, dockside or otherwise.
B. Pursuant to an Agreement of Limited Partnership of Mississippi-I
Gaming, L.P., a Mississippi Limited Partnership in the form attached as Exhibit
3.2 to the Agreement to Lease, Boomtown established a partnership (the
"Partnership") to develop and operate the gaming facilities referred to above.
C. Pursuant to a Partnership Admission Agreement dated as of July 18,
1994, Skrmetta is being admitted as a limited partner of the Partnership.
Concurrently with the execution and delivery of this Agreement, Boomtown,
Skrmetta and Bayview Yacht Club, Inc. are executing and delivering an Amended
and Restated Agreement of Limited Partnership regarding the Partnership (as
amended, the "Partnership Agreement").
D. The parties hereto desire pursuant to this Agreement to set forth the
terms and conditions pursuant to which the entire interest in the Partnership of
Skrmetta shall be sold to Boomtown.
SECTION 1
Sale of Partnership Interest
----------------------------
1.1 Sale. Subject to the terms and conditions hereof, at the Closing (as
----
defined in Section 2.1 hereof), Skrmetta and any of Skrmetta's Authorized
Transferees (as defined in Section 6 of the Partnership Agreement) who own an
interest in the Partnership (Skrmetta and any Authorized Transferee who owns an
interest in the Partnership are collectively referred to herein as the "Skrmetta
Parties") shall sell to Boomtown and Boomtown shall purchase from the Skrmetta
Parties the entire interest in the Partnership owned by the Skrmetta Parties
(such entire interest is hereinafter referred to as the "Partnership Interest"),
for the consideration described in Section 2.2 hereof.
<PAGE>
SECTION 2
Closing; Delivery
-----------------
2.1 Closing. The closing of the purchase and sale of the Partnership
-------
Interest hereunder (the "Closing") shall be held at the offices of Wilson,
Sonsini, Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California, or at
such other place as the parties may agree, on a date (the "Closing Date") not
later than thirty (30) days following the date of the Valuation Certificate
described in Section 7.3(c) hereof and at a time as may be agreed among Boomtown
and the Skrmetta Parties.
2.2 Delivery. At the Closing, Boomtown shall deliver to the Skrmetta
--------
Parties (i) stock certificates in the names of the Skrmetta Parties representing
shares of Common Stock of Boomtown ("Boomtown Common Stock") having an aggregate
value equal to the Aggregate Value of the Partnership Interest (as determined
pursuant to Section 7.3 hereof), or (ii) cash in an aggregate amount equal to
the Aggregate Value of the Partnership Interest, or (iii) a combination of cash
and Boomtown Common Stock having an aggregate value equal to the Aggregate Value
of the Partnership Interest, as elected by the Skrmetta Parties pursuant to
Section 7.2 hereof, subject to the provisions of Section 7.7 hereof.
2.3 Legends on Certificates. The Skrmetta Parties agree that any stock
-----------------------
certificates representing shares of Boomtown Common Stock delivered pursuant to
Section 2.2 hereof and any securities delivered in respect of such Boomtown
Common Stock upon any stock split, stock dividend, recapitalization or similar
event, shall be stamped or imprinted with legends in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER, INCLUDING SALE, PLEDGE OR OTHER HYPOTHECATION AND RIGHTS OF FIRST
REFUSAL AS SET FORTH IN AN AGREEMENT DATED AS OF JULY 18, 1994. A COPY OF
SUCH PROVISIONS ARE AVAILABLE FROM THE SECRETARY OF THE COMPANY AT THE
COMPANY'S PRINCIPAL OFFICES.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL FOR THE HOLDER SATISFACTORY TO THE
COMPANY THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
-2-
<PAGE>
SECTION 3
Representations and Warranties of Boomtown
------------------------------------------
Boomtown hereby represents and warrants to Skrmetta as follows:
3.1 Corporate Power. Boomtown has all requisite corporate power to
---------------
execute and deliver this Agreement, to sell and issue the Boomtown Common Stock
hereunder and to carry out and perform its obligations under the terms of this
Agreement, subject to any required approval of the transactions contemplated
hereby by Boomtown's stockholders which, if required, will be obtained prior to
the Closing Date.
3.2 Authorization. All corporate action on the part of Boomtown and its
-------------
directors necessary for the authorization, execution, delivery and performance
of this Agreement by Boomtown and the performance of Boomtown's obligations
hereunder has been taken, provided that the approval of the transactions
contemplated hereby by Boomtown's stockholders, if required, will be obtained
prior to the Closing Date. This Agreement, when executed and delivered by
Boomtown shall constitute a valid and binding obligation of Boomtown,
enforceable in accordance with its terms, subject to any required approval of
Boomtown's stockholders. The Boomtown Common Stock which may be delivered
pursuant to Section 2.2 hereof, when issued in compliance with the provisions of
this Agreement at the Closing Date, will be validly issued, fully paid and
nonassessable and will be free of any liens or encumbrances. At the Closing
Date the Boomtown Common Stock which may be delivered pursuant to Section 2.2
hereof will not be subject to any preemptive rights or rights of first refusal.
3.3 No Conflict. The execution and delivery of this Agreement do not, and
-----------
the consummation of the transactions contemplated hereby will not, conflict with
or violate or result in a default under the provisions of any contract or other
agreement to which Boomtown is a party or result in any violation of any
provision of the Certificate of Incorporation or Bylaws of Boomtown or any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Boomtown.
3.4 Governmental Consents, Etc. No consent, approval or authorization of
---------------------------
or designation, declaration or filing with any governmental authority on the
part of Boomtown is required in connection with the valid execution and delivery
of this Agreement by Boomtown or the consummation by Boomtown of the
transactions contemplated hereby, other than (i) such licenses and approvals as
may be referenced in the Agreement to Lease and the agreements delivered in
connection therewith, (ii) in the event Boomtown Common Stock is delivered
pursuant to Section 2.2 hereof, any necessary filings and qualifications
-3-
<PAGE>
under applicable state and federal securities laws, and (iii) any licenses,
approvals, filings and qualifications required under applicable state gaming
laws.
SECTION 4
Representations and Warranties of Skrmetta
------------------------------------------
Skrmetta hereby represents and warrants to Boomtown as follows:
4.1 Power; Authorization. Skrmetta has full right, power and authority to
--------------------
execute and deliver this Agreement and to carry out and perform his obligations
under the terms of this Agreement. This Agreement, when executed and delivered
by Skrmetta, shall constitute a valid and binding obligation of Skrmetta,
enforceable in accordance with its terms.
4.2 No Conflict. The execution and delivery of this Agreement do not, and
-----------
the consummation of the transactions contemplated hereby will not, conflict with
or violate or result in a default under the provisions of any contract or other
agreement to which Skrmetta is a party or result in any violation of any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Skrmetta.
4.3 Governmental Consent, Etc. No consent, approval or authorization of
--------------------------
or designation, declaration or filing with any governmental authority on the
part of Skrmetta is required in connection with the valid execution and delivery
of this Agreement by Skrmetta or the consummation by Skrmetta of the
transactions contemplated hereby, other than (i) such licenses and approvals as
may be referenced in the Agreement to Lease and the agreements delivered in
connection therewith and (ii) any licenses, approvals, filings and
qualifications required under applicable state gaming laws.
SECTION 5
Conditions to Closing of the Skrmetta Parties
---------------------------------------------
The Skrmetta Parties' obligation to sell the Partnership Interest at the
Closing is subject to the fulfillment (or waiver by Skrmetta Parties holding a
majority in interest of the Partnership Interest) on or prior to the Closing
Date of the following conditions:
5.1 Representations and Warranties Correct. The representations and
--------------------------------------
warranties made by Boomtown in Section 3 hereof shall be true and correct in all
material respects when made, and shall be true and correct in all material
respects
-4-
<PAGE>
on the Closing Date with the same force and effect as if they had been made on
and as of that date.
5.2 Covenants. All covenants, agreements and conditions contained in this
---------
Agreement to be performed by Boomtown on or prior to the Closing Date shall have
been performed or complied with in all material respects.
5.3 Securities Law Compliance. In the event the Skrmetta Parties have
-------------------------
elected to receive Boomtown Common Stock as all or part of the consideration to
be delivered in exchange for the Partnership Interest, Boomtown shall have
obtained all necessary permits and qualifications, or secured an exemption
therefrom, required by applicable state and federal securities laws for the
offer and sale of the Boomtown Common Stock hereunder.
5.4 Stockholder Consent. This Agreement and the transactions contemplated
-------------------
hereby shall have been approved by the stockholders of Boomtown, or the Chief
Executive Officer of Boomtown shall have delivered a letter to Skrmetta
certifying that such approval is not required.
5.5 Compliance with Applicable Gaming Laws. Each of Boomtown and the
--------------------------------------
Skrmetta Parties shall have obtained all licenses, approvals, permits and
qualifications, or secured an exemption therefrom, required under applicable
state gaming laws in connection with the purchase and sale of the Partnership
Interest hereunder.
SECTION 6
Conditions to Closing of Boomtown
---------------------------------
Boomtown's obligation to purchase the Partnership Interest at the Closing
is subject to the fulfillment (or waiver by Boomtown) on or prior to the Closing
Date of the following conditions:
6.1 Representations and Warranties Correct. The representations and
--------------------------------------
warranties made by Skrmetta (and any other Skrmetta Parties) in Section 4 hereof
shall be true and correct in all material respects when made, and shall be true
and correct in all material respects on the Closing Date with the same force and
effect as if they had been made on and as of such date.
6.2 Covenants. All covenants, agreements and conditions contained in this
---------
Agreement to be performed by Skrmetta Parties on or prior to the Closing Date
shall have been performed or complied with in all material respects.
-5-
<PAGE>
6.3 Securities Law Compliance. In the event the Skrmetta Parties have
-------------------------
elected to receive Boomtown Common Stock as all or part of the consideration to
be delivered in exchange for the Partnership Interest, Boomtown shall have
obtained all necessary permits and qualifications, or secured an exemption
therefrom, required by applicable state and federal securities laws for the
offer and sale of the Boomtown Common Stock hereunder.
6.4 Investment Representation Letter. In the event the Skrmetta Parties
--------------------------------
have elected to receive Boomtown Common Stock as all or part of the
consideration to be delivered in exchange for the Partnership Interest, each
Skrmetta Party shall have delivered to Boomtown an investment representation
letter in form and substance satisfactory to Boomtown stating, among other
things, (i) that such Skrmetta Party is purchasing the Boomtown Common Stock for
investment purposes for its own account and not with a view to distributing the
Boomtown Common Stock; (ii) such Skrmetta Party's understanding that the
Boomtown Common Stock constitutes "restricted securities" under federal
securities laws and can only be resold under limited circumstances without
registration under the Securities Act of 1933, and (iii) that such Skrmetta
Party agrees that if it should later desire to transfer any shares of Boomtown
Common Stock, it shall not do so without first obtaining an opinion of counsel
satisfactory to Boomtown that such proposed disposition or transfer may lawfully
be made.
6.5 Stockholder Consent. This Agreement and the transactions contemplated
-------------------
hereby shall have been approved by the stockholders of Boomtown, if required.
6.6 Compliance with Applicable Gaming Laws. Each of Boomtown and the
--------------------------------------
Skrmetta Parties shall have obtained all licenses, approvals, permits and
qualifications, or secured an exemption therefrom, required under applicable
state gaming laws in connection with the purchase and sale of the Partnership
Interest hereunder.
SECTION 7
Exchange Option
---------------
7.1 Exchange Option. At any time at least three (3) years after the
---------------
Commencement Date (as defined in the Lease) and prior to the Exchange
Termination Date (as defined in Section 7.8 hereof), Boomtown may elect to
require the Skrmetta Parties to sell to Boomtown, or Skrmetta Parties holding at
least a majority in interest of the Partnership Interest may elect to require
Boomtown to purchase from all Skrmetta Parties, the Partnership Interest on the
terms and conditions set forth herein (the "Exchange Option").
-6-
<PAGE>
7.2 Exchange Consideration. The consideration to be delivered by Boomtown
----------------------
in exchange for the Partnership Interest shall be either (i) cash having a value
equal to the Aggregate Value of the Partnership Interest (as determined pursuant
to Section 7.3 hereof), (ii) that number of shares of Boomtown Common Stock
equal to the Aggregate Value of the Partnership Interest divided by the value of
a share of Boomtown Common Stock as determined pursuant to Section 7.3(b), or
(iii) a combination of cash and Boomtown Common Stock which have an aggregate
value equal to the Aggregate Value of the Partnership Interest, as elected by
Skrmetta Parties holding at least a majority in interest of the Partnership
Interest.
7.3 Valuation.
---------
(a) Partnership. The Aggregate Value of the Partnership shall equal
-----------
the following:
(i) That amount equal to the difference between (A) six (6) times
the sum of the Partnership's (w) consolidated net income for the last completed
fiscal year immediately preceding the date of the Exchange Notice (as defined in
Section 7.4 hereof), plus (x) depreciation and amortization charges for such
fiscal year, plus (y) the provision for any income taxes for accounting purposes
for such fiscal year, and plus (z) interest expense on long-term debt for such
fiscal year, less (B) the sum of all the Partnership's Indebtedness, all as
determined on a consolidated basis in accordance with generally accepted
accounting principles consistently applied. As used in this Section 7.3,
Indebtedness means long-term debt of the Partnership which was incurred directly
for the benefit of the business operated by the Partnership (and which business
is within the purpose and scope of the Partnership as set forth in Section 2.3
of the Partnership Agreement), provided that debt in excess of Two Million Five
Hundred Thousand Dollars ($2,500,000) which is incurred in connection with the
construction or acquisition of property, plant or equipment shall not be
included until one (1) year after the in-service date for the asset with which
the debt is associated.
The Aggregate Value of the Partnership Interest shall be determined by
multiplying the fraction of the Partnership represented by the Partnership
Interest by the Aggregate Value of the Partnership.
(b) Boomtown Common Stock. The value of Boomtown Common Stock for
---------------------
purposes of the Exchange Option shall be the average closing price thereof as
reported on the National Association of Securities Dealers, Inc. National
Market System (or, if at the time of delivery of the Exchange Notice the
Boomtown Common Stock is traded on an exchange, as reported on such exchange),
for the thirty (30) trading days immediately preceding the date of the Exchange
Notice.
-7-
<PAGE>
(c) Valuation Certificate. The Aggregate Value of the Partnership
---------------------
shall be calculated by the principal financial officer of the Partnership, and
shall be concurred in by the independent public accounting firm employed by the
Partnership. Within thirty (30) days after the date of the Exchange Notice, the
principal financial officer of the Partnership shall deliver to each of Boomtown
and the Skrmetta Parties a certificate (the "Valuation Certificate"), signed by
such officer and an officer of the Partnership's independent public accounting
firm. The Aggregate Value of the Partnership set forth in the Valuation
Certificate shall represent the final determination of the Aggregate Value of
the Partnership for purposes of this Agreement.
7.4 Notice of Election to Exchange. The Exchange Option shall be
------------------------------
exercisable at any time on or after the date which is three (3) years after the
Commencement Date and prior to the Exchange Termination Date, by delivery of a
notice of election to exchange (the "Exchange Notice") (i) by Boomtown to each
of the Skrmetta Parties, with a copy to the principal financial officer of the
Partnership, or (ii) by Skrmetta Parties holding at least a majority in interest
of the Partnership Interest to Boomtown and to all other Skrmetta Parties, with
a copy to the principal financial officer of the Partnership, stating that the
party or parties delivering the Exchange Notice have elected to implement the
Exchange Option and, in the case of an Exchange Notice sent by the Skrmetta
Parties, stating the form of consideration the Skrmetta Parties have elected to
receive.
7.5 Consideration. In the event Boomtown has delivered the Exchange
-------------
Notice, within fifteen (15) days after the date of the Exchange Notice, Skrmetta
Parties holding at least a majority in interest of the Partnership Interest
shall deliver to Boomtown a Notice of Election of Consideration, which shall
specify the form of consideration the Skrmetta Parties have elected to receive
in exchange for the Partnership Interest, as determined in accordance with the
provisions of Section 7.2 hereof. In the event the Skrmetta Parties fail to
deliver to Boomtown a Notice of Election of Consideration within such fifteen
(15) day period, Boomtown shall have the right to determine, in accordance with
the provisions of Section 7.2 hereof, the form of consideration to be given to
the Skrmetta Parties.
7.6 Closing. The closing of the purchase and sale of the Partnership
-------
Interest to Boomtown shall be held as specified in Section 2.1 hereof, on a date
not later than thirty (30) days following the date of the Valuation Certificate.
-8-
<PAGE>
7.7 Acquisition of Boomtown.
-----------------------
(a) Consideration. In the event of a merger or consolidation of
-------------
Boomtown with or into any other entity, following which (i) an entity other than
Boomtown is the surviving corporation or (ii) such other entity becomes the
parent corporation of Boomtown, or a sale of all or substantially all of
Boomtown's assets, which event occurs prior to (A) the Closing of the purchase
and sale of the Partnership Interest hereunder and (B) the Exchange Termination
Date, then if the consideration delivered to the stockholders of Boomtown in
such transaction is securities of the acquiring entity, thereafter upon exercise
of the Exchange Option the Skrmetta Parties shall have the right to receive
securities of the acquiring entity; provided that (i) if in the reasonable
opinion of Boomtown the foregoing provisions of this Section 7.7 would impair
Boomtown's ability to consummate such transaction on terms which are in the best
interests of Boomtown and its stockholders, or (ii) if the consideration
delivered to the stockholders of Boomtown in such transaction is cash and/or
property other than securities, then the Skrmetta Parties shall be required to
elect cash in exchange for the Partnership Interest, and the provisions of this
Agreement providing for the transfer of shares of Boomtown Common Stock shall
have no further force or effect.
(b) Valuation of Acquiror Securities. For purposes of Section 7.7(a)
--------------------------------
hereof, the securities of the acquiring corporation shall be valued in
accordance with the formula set forth with respect to Boomtown Common Stock in
Section 7.3(b) hereof; provided that if such securities are not publicly traded,
then the value of the securities shall be determined by an independent appraiser
mutually selected by Boomtown and Skrmetta Parties representing a majority in
interest of the Partnership Interest, and the costs and expenses of such
appraiser shall be shared equally by Boomtown and the Skrmetta Parties. In the
event Boomtown and the Skrmetta Parties are unable to agree on the selection of
an independent appraiser, each shall select an appraiser and the two selected
appraisers shall select a third, whose determination as to the value of the
securities shall be final. The costs and expenses of such latter appraiser
shall be shared equally by Boomtown and the Skrmetta Parties. In the event an
independent appraisal of the securities is required, notwithstanding anything to
the contrary contained in Sections 2.1 and 7.6 hereof, the closing of the
purchase and sale of the Partnership Interest shall occur on a date not later
than sixty (60) days following the date of the Valuation Certificate.
7.8 Exchange Termination Date. The Exchange Option shall terminate and
-------------------------
have no further force or effect on the date which is seven (7) years from the
date of this Agreement (the "Exchange Termination Date"), provided that the
obligations of Boomtown and the Skrmetta Parties under the
-9-
<PAGE>
Exchange Option shall apply to any Exchange Notice delivered prior to the
Exchange Termination Date.
SECTION 8
Boomtown Right of First Refusal on Transfer
-------------------------------------------
8.1 Right of First Refusal. In the event that the Skrmetta Parties elect
----------------------
to receive Boomtown Common Stock as all or a portion of the consideration to be
delivered in exchange for the Partnership Interest, then Boomtown shall have the
right of first refusal (the "First Refusal Right") described in this Section 8.
8.2 Election to Transfer. Prior to making any sale or transfer of
--------------------
Boomtown Common Stock, any Skrmetta Party electing to transfer Boomtown Common
Stock (the "Transferor") shall give Boomtown the opportunity to purchase the
Boomtown Common Stock it has elected to transfer in the following manner:
(a) Transfer Notice. The Transferor shall deliver a notice (the
---------------
"Transfer Notice") to Boomtown in writing stating its intention to transfer
Boomtown Stock, and specifying the name of the proposed purchaser or transferee,
the amount of Boomtown Common Stock proposed to be sold or transferred, the
proposed price per share therefor (the "Transfer Price"), the proposed form of
consideration therefor, and any other material terms upon which such disposition
is proposed to be made.
(b) Exercise Notice. Boomtown shall have the right, exercisable by
---------------
written notice given by Boomtown to the Transferor within thirty (30) days after
receipt of such Transfer Notice, to purchase all of the Boomtown Common Stock
specified in such Transfer Notice at the Transfer Price by payment of the
consideration described in the Transfer Notice; provided that if the
consideration to be delivered is property other than cash, then Boomtown shall
pay the fair market value of such shares, as determined in accordance with the
formula set forth in Section 7.3(b) hereof.
(c) Closing. If Boomtown exercises its First Refusal Right hereunder,
-------
the closing of the purchase of the Boomtown Common Stock with respect to which
such right has been exercised shall take place within ninety (90) calendar days
after the date on which Boomtown has given notice of such exercise, which period
of time shall be extended in order to comply with applicable laws and
regulations. Upon the exercise by Boomtown of its First Refusal Right, Boomtown
and the Transferor shall be legally obligated to consummate the purchase
contemplated thereby and shall use their best efforts to secure any approvals
required in connection therewith.
-10-
<PAGE>
(d) Transfer to Third Party. If Boomtown does not exercise its First
-----------------------
Refusal Right with respect to a Transfer Notice within the time specified for
such exercise, the Transferor shall have the right, during the period of sixty
(60) calendar days following the expiration of such time for exercise, to sell
the Boomtown Common Stock specified in such Transfer Notice at the Transfer
Price and on other terms substantially similar to the terms specified in the
Transfer Notice.
8.3 Assignment of Rights. In the event that Boomtown elects to exercise
--------------------
the First Refusal Right, Boomtown may specify in its notice of intention to
exercise such right a person as its designee to purchase the Boomtown Common
Stock to which the Transfer Notice relates.
8.4 Exclusion. The First Refusal Right shall not apply to (i) any sale or
---------
transfer to a partner, stockholder, ancestor, descendant, sibling or spouse of a
Skrmetta Party, or to a custodian, trustee, executor or other fiduciary for the
account of a Skrmetta Party or any ancestor, descendant, sibling or spouse of a
Skrmetta Party, provided that the transferee executes a writing reasonably
satisfactory to Boomtown agreeing to be bound by the provisions of this Section
8, or (ii) open market transfers pursuant to Rule 144 under the Securities Act
of 1933, provided that the Transferor has no reason to believe that the
purchaser of such stock will own following such sale or series of sales Boomtown
Common Stock aggregating five percent (5%) or more of the outstanding Boomtown
Common Stock.
SECTION 9
Miscellaneous
-------------
9.1 Assumption. In the event that Skrmetta elects to designate any
----------
Authorized Transferee to acquire an interest in the Partnership, in accordance
with the terms of the Partnership Agreement, then as a condition precedent to
such acquisition, each such Authorized Transferee shall execute and deliver to
Boomtown a writing reasonably acceptable to Boomtown pursuant to which such
Authorized Transferee (i) agrees to be bound by all the terms and conditions of
this Agreement and (ii) makes the representations and warranties set forth in
Section 4 hereof, with such changes to the form of such representations and
warranties as may be necessary in the case of Authorized Transferees who are
partnerships or corporate entities rather than individuals.
9.2 Further Assurances. Each of Boomtown and the Skrmetta Parties shall
------------------
take all such actions, and shall execute and deliver all such documents and
instruments, as may be reasonably requested by the other to carry out the
purposes
-11-
<PAGE>
and intent of the provisions of this Agreement and to fulfill the Conditions to
Closing of such party as set forth herein.
9.3 Governing Law; Arbitration. This Agreement shall be governed in all
--------------------------
respects by the laws of the State of Delaware. Any controversy or claim arising
out of or relating to this Agreement shall be settled by arbitration in the
State of Nevada. Such arbitration shall be in accordance with the rules of the
American Arbitration Association, and judgment upon the award may be entered in
any court of competent jurisdiction. The prevailing party or parties in such
arbitration and any ensuing legal action shall be reimbursed by the party or
parties who do not prevail for their reasonable attorneys', accountants' and
experts' fees and the costs of such actions.
9.4 Successors and Assigns. Except as otherwise provided herein, the
----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
9.5 Entire Agreement; Amendment. This Agreement constitutes the full and
---------------------------
entire understanding and agreement between the parties with regard to the
subject matter hereof. Neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument
signed by (i) Boomtown and (ii) Skrmetta Parties holding a majority in interest
of the Partnership Interest.
9.6 Notices, etc. All notices and other communications required or
-------------
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
addressed (a) if to Boomtown, to Interstate 80/Garson Road, Verdi, Nevada 89439,
Attention: Chief Financial Officer; or at such other address as Boomtown shall
have furnished to the Skrmetta Parties in writing, or (b) if to any Skrmetta
Party to 3536 Lowerline Street, New Orleans, Louisiana 70125; or at such other
address as a Skrmetta Party shall have furnished to Boomtown in writing.
9.7 Delays or Omissions. No delay or omission to exercise any right,
-------------------
power or remedy accruing to any party upon any breach or default of any other
party under this Agreement, shall impair any such right, power or remedy of such
party nor shall it be construed to be a waiver of any such breach or default, or
an acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
party or any breach or default under this Agreement, or any waiver on the part
of any holder of any provisions or conditions of this Agreement, must be in
-12-
<PAGE>
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement, or by law or otherwise
afforded to any holder, shall be cumulative and not alternative.
9.8 Counterparts. This Agreement may be executed in two counterparts,
------------
each of which shall be enforceable against the party actually executing such
counterparts, and both of which together shall constitute one instrument.
9.9 Severability. In the event that any provision of this Agreement
------------
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
9.10 Termination. In the event that within two (2) years after the
-----------
Commencement Date the Skrmetta Parties have not received the licenses required
by Section 3.10 of the Lease, this Agreement shall be null and void and shall
have no further force or effect.
IN WITNESS WHEREOF, the parties hereto have set their names as of the date
first above written.
BOOMTOWN, INC.
By:____________________________
Title:_________________________
ERIC F. SKRMETTA
_______________________________
-13-
<PAGE>
EXHIBIT 10.33
GROUND LEASE
BETWEEN
RAPHAEL SKRMETTA,
AS LANDLORD
AND
MISSISSIPPI-I GAMING, L.P.,
AS TENANT
<PAGE>
GROUND LEASE BETWEEN RAPHAEL SKRMETTA,
AS LANDLORD,
AND MISSISSIPPI-I GAMING, L.P., AS TENANT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1 DEFINITIONS................................................ 1
1.1 Adjusted Gaming Win........................................ 1
1.2 Affiliate of Tenant........................................ 1
1.3 Annual Fixed Fee........................................... 1
1.4 Commencement Date.......................................... 1
1.5 Effective Date............................................. 1
1.6 Gross Gaming Win........................................... 1
1.7 Improvements............................................... 2
1.8 Landlord's Estate.......................................... 2
1.9 Lease Term................................................. 2
1.10 Lease Year................................................. 2
1.11 Premises................................................... 3
1.12 Property................................................... 3
1.13 Tenant's Estate............................................ 3
1.14 Trade Fixtures............................................. 3
ARTICLE 2 DEMISE, POSSESSION, TERM, OPTIONS TO
EXTEND..................................................... 3
2.1 Demise of Premises......................................... 3
2.2 Term....................................................... 4
2.3 Possession................................................. 4
2.4 [Intentionally Omitted].................................... 4
2.5 Termination Right on One Year's Notice..................... 4
2.6 Gaming Law Invalid......................................... 5
2.7 Tidelands Lease............................................ 5
ARTICLE 3 RENT....................................................... 6
3.1 Annual Base Rent........................................... 6
3.2 Adjustment of Annual Base Rent............................. 7
3.3 Sample Calculation......................................... 8
3.4 Percentage Rent............................................ 8
3.5 Payment of Rent............................................ 9
3.6 Audits..................................................... 9
3.7 Last Year's Rent........................................... 10
3.8 Annual Fixed Fee........................................... 10
3.9 [Intentionally Omitted].................................... 10
3.10 Conversion of Annual Base Rent
and Percentage Rent to Equity.............................. 10
3.11 Licensing Due to Landlord's Rent........................... 11
</TABLE>
-i-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 4 PAYMENT OF IMPOSITIONS AND UTILITY CHARGES................. 12
4.1 Impositions................................................ 12
4.2 Apportionment.............................................. 13
4.3 Right to Contest........................................... 13
4.4 Utility Charges............................................ 13
ARTICLE 5 USE........................................................ 14
5.1 Permitted Use.............................................. 14
5.2 Compliance with Law........................................ 14
5.3 Waste...................................................... 14
ARTICLE 6 IMPROVEMENTS............................................... 14
6.1 Construction of Initial Improvements....................... 14
6.2 Construction of Improvements and
Demolition of Improvements................................. 15
6.3 Permits and Basements...................................... 15
6.4 Ownership of Improvements.................................. 16
6.5 Removal of Trade Fixtures.................................. 16
ARTICLE 7 MECHANICS' LIENS........................................... 16
7.1 Mechanics' Liens........................................... 16
7.2 Contests................................................... 16
ARTICLE 8 INSURANCE AND INDEMNITY.................................... 17
8.1 Required Insurance......................................... 17
8.2 Required Terms............................................. 18
8.3 Partial Release of Liability and
Waiver of Subrogation...................................... 18
8.4 Indemnity.................................................. 18
ARTICLE 9 MAINTENANCE, REPAIR AND RESTORATION
OF DAMAGE.................................................. 18
9.1 Tenant's Duty to Maintain and Repair....................... 18
9.2 Tenant's Duty to Restore insured
Damage to Improvements..................................... 19
9.3 Tenant's Option Following Damage
to the Improvements Near the End
of the Lease Term and Following
Uninsured Damage to the Improvements....................... 19
</TABLE>
-ii-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
9.4 Insurance Proceeds.......................................... 20
ARTICLE 10 CONDEMNATION................................................ 20
10.1 Definitions................................................. 20
10.2 Total Taking................................................ 21
10.3 Partial Taking.............................................. 21
10.4 Temporary Taking............................................ 22
10.5 Apportionment of Award...................................... 22
10.6 General..................................................... 22
ARTICLE 11 DEFAULT AND REMEDIES........................................ 23
11.1 Events of Tenant's Default.................................. 23
11.2 Landlord's Remedies......................................... 24
11.3 Landlord's Default and Tenant's
Remedies.................................................... 24
ARTICLE 12 TERMINATION................................................. 25
12.1 Surrender on Termination.................................... 25
12.2 Recognition of Tenant's Subtenants.......................... 25
12.3 Removal of Trade Fixtures................................... 25
12.4 Tenant's Quitclaim.......................................... 25
ARTICLE 13 ASSIGNMENT AND SUBLETTING................................... 26
13.1 Assignment by Tenant........................................ 26
13.2 Permitted Assignee Defined.................................. 26
13.3 Subletting.................................................. 26
ARTICLE 14 TRANSFER OF PREMISES BY LANDLORD............................ 27
14.1 Transfer by Landlord........................................ 27
14.2 Tenant's Right of First Refusal............................. 28
ARTICLE 15 LEASEHOLD MORTGAGES......................................... 29
15.1 Right to Encumber Tenant's Estate........................... 29
15.2 Notice...................................................... 29
15.3 Leasehold Mortgagee's Rights and
Obligations Prior to Foreclosure............................ 29
15.4 Obligations of Landlord with
Respect to any Leasehold Mortgagee.......................... 30
</TABLE>
-iii-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
15.5 Leasehold Mortgagee's Rights and
Obligations Following a Foreclosure....................... 31
15.6 Non-Liability of Leasehold
Mortgagee.................................................. 31
15.7 No Restriction on Assignment............................... 31
15.8 New Lease.................................................. 31
15.9 Covenant of Cooperation.................................... 32
15.10 No Amendment............................................... 32
15.11 No Merger.................................................. 32
ARTICLE 16 ENVIRONMENTAL.............................................. 32
16.1 Landlord's Representations.................................. 32
16.2 Covenant to Comply with
Environmental Laws.......................................... 33
16.3 Tenant Indemnity............................................ 33
16.4 Landlord Obligations........................................ 33
16.5 Definition of Environmental Laws............................ 35
16.6 Definition of Hazardous Material............................ 35
16.7 Exclusive Provisions........................................ 36
ARTICLE 17 GENERAL PROVISIONS.......................................... 36
17.1 Estoppel Certificates....................................... 36
17.2 Holding Over................................................ 36
17.3 Notices..................................................... 37
17.4 Attorney's Fees............................................. 37
17.5 No Merger................................................... 38
17.6 Arbitration................................................. 38
17.7 Quiet Enjoyment............................................. 39
17.8 No Partnership.............................................. 39
17.9 Captions.................................................... 39
17.10 Duplicate Originals; Counterparts........................... 39
17.11 Time of the Essence......................................... 39
17.12 Severability................................................ 39
17.13 Interpretation.............................................. 39
17.14 Successors Bound............................................ 40
17.15 No Waiver................................................... 40
17.16 Covenant of Fair Dealing.................................... 40
17.17 Delays...................................................... 40
17.18 Integration................................................. 40
17.19 Memorandum of Lease......................................... 40
17.20 Limit on Tenant's Liability................................. 41
</TABLE>
-iv-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
Page
----
Exhibit "A" - Legal Description
Exhibit "B" - Permitted Exceptions
Exhibit "C" - Sample Rent Calculation
Exhibit "D" - Memorandum of Lease
-v-
<PAGE>
GROUND LEASE
------------
THIS GROUND LEASE is made as of the _______ day of October, 1993, by and
among RAPHAEL SKRMETTA, an individual resident of Louisiana ("Landlord"), and
MISSISSIPPI-I GAMING, L.P., a Mississippi limited partnership ("Tenant").
ARTICLE 1
---------
DEFINITIONS
1.1 Adjusted Gaming Win: As used herein, the term "Adjusted Gaming
-------------------
Win" shall mean, for the period in question, the positive difference, if any,
derived by subtracting (i) all federal, state and local gaming taxes and fees
related to Tenant's gaming operations at the Premises from (ii) the Gross Gaming
Win.
1.2 Affiliate of Tenant: As used herein, the term "Affiliate of
-------------------
Tenant" shall mean (i) any person or entity who directly or indirectly owns five
percent (5%) or more of the stock, partnership or other beneficial interest in
Tenant, if Tenant is a corporation, partnership or other entity, (ii) any
corporation, partnership or other entity of which five percent (5%) or more of
the stock, partnership or other beneficial interest of which is owned directly
or indirectly by Tenant, and (iii) any corporation, partnership or entity of
which five percent (5%) or more of the stock, partnership or other beneficial
interest is owned directly or indirectly by any person or entity that owns five
percent (5%) or more of the stock, partnership or other beneficial interest of
Tenant, if Tenant is a corporation, partnership or other entity.
1.3 Annual Fixed Fee: As used herein, the term "Annual Fixed Fee"
----------------
shall mean the fee described in paragraph 3.8.
1.4 Commencement Date: As used herein, the term "Commencement Date"
-----------------
shall mean the date on which gaming operations commence at or from the Premises,
including, without limitation, the commencement of gaming operations on the
riverboat or other vessel described in paragraph 5.1.
1.5 Effective Date: As used herein, the term "Effective Date" shall
--------------
mean the date of the last signatory to this Lease necessary to make it binding
upon Landlord and Tenant.
1.6 Gross Gaming Win: As used herein, the term "Gross Gaming Win"
----------------
shall mean, for the period in question, the sum of (a) cash received by Tenant
as winnings from gaming transactions at the Premises (including gaming
transactions
<PAGE>
occurring on any gaming vessel permanently moored at the Premises or which takes
on passengers at the Premises), (b) cash received by Tenant in payment for
credit extended by Tenant to a patron for purposes of gaming at the Premises and
(c) compensation received by Tenant for conducting any game at the Premises in
which Tenant is not a party to a wager, less the total of all cash paid out by
----
Tenant as losses to patrons at the Premises and those amounts paid to purchase
annuities to fund losses paid to patrons at the Premises over several years by
independent financial institutions. For purposes of this definition, cash or
the value of non-cash prizes awarded to patrons in a contest or tournament shall
not be losses. Gross Gaming Win shall not include (i) any revenues from the
sale of lodging, parking, travel arrangements, admissions to entertainment
events, food, beverages or merchandise, (ii) any revenues from subtenants or
concessionaires, (iii) any revenues related to any other business operations of
Tenant at the Premises, (iv) counterfeit money or tokens, (v) coins of other
countries which are received in gaming devices, (vi) cash taken in fraudulent
acts perpetrated against Tenant for which Tenant is not reimbursed, or (vii)
cash received as entry fees for contests or tournaments in which patrons compete
for prizes.
1.7 Improvements: As used herein, the term "Improvements" shall mean
------------
all improvements (including, without limitation, the initial improvements
described in paragraph 6.1), structures, buildings, interior improvements,
landscaping, paving, pipes, conduits, roads, walkways, fixtures, fencing, on-
site utility lines, and all apparatus, machinery, devices, fixtures,
appurtenances, and equipment (excluding Trade Fixtures, as defined in paragraph
1.11), and all alterations and additions thereto and replacements thereof which
may be erected or installed on the Premises by Tenant after the date of this
Lease, regardless of how such Improvements are affixed to the Premises. The
term "Improvements" shall not include any gaming vessel or any gaming equipment
---
or other personal property of Tenant, which shall be and remain at all times the
sole personal property of Tenant.
1.8 Landlord's Estate: As used herein, the term "Landlord's Estate"
-----------------
shall mean all of Landlord's right, title and interest in, under and to this
Lease and the Property.
1.9 Lease Term: As used herein, the term "Lease Term" shall mean the
----------
term of this Lease as described in paragraph 2.2.
1.10 Lease Year: As used herein, the term "Lease Year" shall mean (i)
----------
the period from the Commencement Date through and including September 30 next
following, (ii) each complete, successive twelve (12) month period thereafter
during the Lease Term, and (iii) the period commencing
-2-
<PAGE>
October 1 immediately following expiration of the final complete twelve (12)
month Lease Year during the Lease Term and continuing through and including the
final day of the Lease Term.
1.11 Premises: As used herein, the term "Premises" shall mean that
--------
certain real property consisting of three (3) parcels constituting approximately
eight and nine-tenths (8.9) acres in the aggregate, the southerly parcel of
which is commonly known as 676 Bayview Avenue, Biloxi, Harrison County,
Mississippi, which parcels are more particularly described on Exhibit "A"
-----------
attached hereto and made a part hereof, together with (i) all buildings,
structures and improvements existing on such real property as of the date of
this Lease, and (ii) all easements, licenses, rights and privileges appurtenant
thereto (including, without limitation, all right, title and interest of
Landlord in, under and to the land lying in the streets and roads abutting such
real property to the central lines thereof). The term "Premises" shall not
---
include the Improvements or any rights to minerals lying beneath the surface of
such real property (but Landlord shall have no right to extract any minerals
from the surface of the Premises without Tenant's prior written consent in
Tenant's sole and absolute discretion).
1.12 Property: As used herein, the term "Property" shall mean the
--------
Premises and the Improvements.
1.13 Tenant's Estate: As used herein, the term "Tenant's Estate" shall
---------------
mean all of Tenant's right, title and interest in, under and to this Lease and
the Property.
1.14 Trade Fixtures: As used herein, the term "Trade Fixtures" shall
--------------
mean anything affixed to the Property by Tenant or any subtenant, licensee or
invitee thereof for purposes of trade, manufacture, ornament or commercial use,
if the removal thereof can be effected without irreparable injury to the
Property.
ARTICLE 2
---------
DEMISE, POSSESSION, TERM, OPTIONS TO EXTEND
2.1 Demise of Premises: Landlord hereby leases to Tenant, and Tenant
------------------
hereby leases from Landlord, the Premises for the Lease Term upon the terms and
conditions contained in this Lease. Tenant's lease of the Premises shall be
subject only to those exceptions to Landlord's fee title described on Exhibit
-------
"B" attached hereto and made a part hereof (the "Permitted Exceptions").
- ---
Landlord warrants and represents to Tenant that Landlord is the owner in fee
simple absolute of the Premises free and clear of any liens, encumbrances,
leases, rights of use or occupancy or any other rights or privileges, other than
the Permitted Exceptions.
-3-
<PAGE>
2.2 Term: The term of this Lease shall be for ninety-nine (99) years
----
commencing on the Commencement Date and ending at midnight on the ninety-ninth
(99th) anniversary of the Commencement Date or upon the sooner termination of
this Lease according to its terms, whichever first occurs.
2.3 Possession: Possession of the Premises shall be delivered by
----------
Landlord to Tenant on the Effective Date free and clear of all tenants and
occupants and the rights of either and all liens, encumbrances, rights or
privileges other than the Permitted Exceptions. Tenant shall accept possession
of the Premises in their condition as of the Effective Date with all existing
structures, paving and other improvements. Tenant shall be entitled, from the
Effective Date to the Commencement Date, to exercise all of the rights and
privileges of the tenant under this Lease (including, without limitation, the
preparation of the Premises for the conduct of Tenant's anticipated business
operations, including the demolition, alteration and construction of
improvements in accordance with Article 6). During such period from the
Effective Date to the Commencement Date, however, Tenant shall have no
obligation with respect to payment of Annual Base Rent, Percentage Rent,
Impositions or any other monetary obligations of Tenant under this Lease, all
such payment obligations to commence only from and after the Commencement Date.
Notwithstanding the foregoing, Landlord shall be entitled for a period not to
exceed fifteen (15) days after the Effective Date, to continue to use and occupy
the structures, paving and other improvements currently present at the Premises
(together with Landlord's personal property, fixtures and equipment located
therein) to operate Landlord's business at the Premises in the same manner as
heretofore operated. Landlord shall, however, use its reasonable efforts and
all due diligence to vacate the Premises at the earliest date reasonably
possible (but not later than fifteen (15) days after the Effective Date).
Landlord shall cooperate reasonably with Tenant to facilitate Tenant's
activities on the Premises (including, without limitation, construction of the
initial Improvements described in paragraph 6.1). Landlord shall indemnify and
hold Tenant harmless from and against all losses, costs, claims and damages
(including attorneys' fees) arising from or relating in any manner to Landlord's
possession, occupancy and use of the Premises from and after the Effective Date.
2.4 [Intentionally Omitted]:
-----------------------
2.5 Termination Right on One Year's Notice: Notwithstanding any other
--------------------------------------
term or condition of this Lease to the contrary, Tenant shall have the right at
any time during the Lease Term (whether during the initial term or any extended
term) to terminate this Lease effective on any anniversary of the Commencement
Date by giving Landlord written notice of such termination at least three
hundred
-4-
<PAGE>
sixty-five (365) days prior to the effective date of such termination. In
consideration of Tenant's termination right provided under this paragraph,
Landlord shall be entitled to retain, as liquidated damages and not as a
penalty, from and after any such termination, the entire Two Million Dollar
($2,000,000) sum paid by Tenant to Landlord under paragraph 3.7. Landlord and
Tenant acknowledge that any damage that Landlord might suffer by virtue of
Tenant's exercise of this termination right would not be readily susceptible to
calculation and that such sum constitutes as reasonable estimate of such damage
as may be suffered by Landlord. Landlord's retention of such sums shall
therefore be Landlord's sole remedy, and Tenant's only liability, following any
early termination of this Lease by Tenant's exercise of the termination right
provided in this paragraph. Upon any such termination, (i) all rent and other
sums due under this Lease shall be paid by Tenant through such termination date,
(ii) this Lease shall expire and terminate, and neither Landlord nor Tenant
shall have any further obligations hereunder, except for those which have
accrued prior to the date of such termination and those which expressly survive
any termination under the terms of this Lease.
2.6 Gaming Law Invalid: Notwithstanding any other term or condition of
------------------
this Lease to the contrary, and in addition to and separate from the termination
right described in paragraph 2.5, in the event that Tenant is unable to conduct
gaming operations on the Premises because it is unable to obtain all necessary
governmental licenses, because any necessary governmental license expires and
cannot be renewed or is revoked, because the Premises become ineligible for
gaming operations, because the applicable enabling legislation permitting gaming
is amended, suspended, or revoked by the applicable legislative body, or because
any such enabling legislation is held invalid by a court of competent
jurisdiction, then Tenant may elect, at Tenant's sole and absolute discretion,
to terminate this Lease, effective immediately, by giving written notice of such
termination to Landlord. Upon any such termination, (i) all rent and other sums
due under this Lease shall be prorated as of such termination date and paid by
Tenant, (ii) this Lease shall expire and terminate, and (iii) neither Landlord
nor Tenant shall have any further obligations hereunder, except for those which
have accrued prior to the date of such termination and those which expressly
survive any termination under the terms of this Lease.
2.7 Tidelands Lease:
---------------
A. Landlord and Tenant acknowledge that Tenant may be required
to execute a tidelands lease or leases on terms and conditions acceptable to
Tenant (a "Tidelands Lease") pursuant to which Tenant shall lease from the State
of Mississippi some or all of that portion of the Premises as
-5-
<PAGE>
legally constitutes tidelands or other lands lying beneath the waters contiguous
to the Premises subject to the ownership, jurisdiction and public trust of the
State of Mississippi. Throughout the Lease Term, Tenant shall have the sole and
exclusive right to obtain and maintain Tidelands Leases, and Tenant shall be
responsible for payment of all rent thereunder. Landlord shall cooperate
reasonably with Tenant to facilitate Tenant's obtaining and maintaining of
Tidelands Leases in force at all times during the Lease Term, to which end
Landlord shall, among other things, execute (whether individually or jointly
with Tenant), deliver and acknowledge such documents as Tenant may reasonably
request in connection with Tidelands Leases.
B. Notwithstanding any other term or condition of this Lease to
the contrary, and in addition to and separate from the termination rights
described in paragraphs 2.5 and 2.6, in the event that a Tidelands Lease has not
been fully executed and delivered by all parties thereto prior to the Effective
Date or in the event that a Tidelands Lease does not thereafter remain at all
times in full force and effect during the Lease Term, Tenant may elect, in
Tenant's sole and absolute discretion, to terminate this Lease, effective
immediately, by giving written notice of such termination to Landlord. Without
limiting the generality of the foregoing sentence, Tenant may terminate this
Lease pursuant to this paragraph 2.7 if at any time Tenant is unable to
negotiate and execute a renewal, extension or substitute Tidelands Lease on
terms and conditions (including rent) acceptable to Tenant in its sole
discretion. Upon any termination under this paragraph 2.7, (i) all rent and
other sums due under this Lease shall be prorated as of such termination date
and paid by Tenant; (ii) this Lease shall expire and terminate; (iii) Landlord
shall retain the Two Million Dollar ($2,000,000) sum paid by Tenant under
paragraph 3.7; and (iv) neither Landlord nor Tenant shall have any further
obligations hereunder, except for those which have accrued prior to the date of
such termination and those which expressly survive any termination under the
terms of this Lease.
ARTICLE 3
---------
RENT
3.1 Annual Base Rent: Commencing on the Commencement Date and
----------------
continuing throughout the remainder of the Lease Term, Tenant shall pay to
Landlord a fixed annual base rent (the "Annual Base Rent") for each Lease Year
equal to either (i) Five Hundred Thousand Dollars ($500,000), if the Adjusted
Gaming Win for the immediately preceding Lease Year is less than or equal to Ten
Million Dollars ($10,000,000), (ii) One Million Dollars ($1,000,000), if the
Adjusted Gaming Win for
-6-
<PAGE>
the immediately preceding Lease Year is greater than Ten Million Dollars
($10,000,000) but less than Fifteen Million Dollars ($15,000,000), or (iii) Two
Million Dollars ($2,000,000), if the Adjusted Gaming Win for the immediately
preceding Lease Year is greater than or equal to Fifteen Million Dollars
($15,000,000). Tenant shall determine within thirty (30) days after
commencement of each Lease Year the Adjusted Gaming Win actually received by
Tenant for the immediately preceding Lease Year. Notwithstanding the first
sentence of this paragraph 3.1, Annual Base Rent for the first Lease Year shall
equal either (a) Five Hundred Thousand Dollars ($500,000), if the Adjusted
Gaming Win for the first Lease Year (determined as hereinafter provided) is less
than or equal to Ten Million Dollars ($10,000,000), (b) One Million Dollars
($1,000,000), if the Adjusted Gaming Win for the first Lease Year is greater
than Ten Million Dollars ($10,000,000) but less than Fifteen Million Dollars
($15,000,000) or (c) Two Million Dollars ($2,000,000) if the Adjusted Gaming Win
for the first Lease Year is greater than or equal to Fifteen Million Dollars
($15,000,000); provided, however, that Annual Base Rent for the first Lease Year
shall in any event be prorated as provided in paragraph 3.5. For purposes of
determining Annual Base Rent for the first Lease Year, Adjusted Gaming Win for
the first Lease Year shall be calculated as follows: (A) if the first Lease
Year consists of one hundred eighty (180) days or more, the Adjusted Gaming Win
for the first Lease Year shall be deemed to equal the actual Adjusted Gaming Win
for the first Lease Year annualized as if the first Lease Year had consisted of
an entire twelve-month period, and (B) if the first Lease Year consists of less
than one hundred eighty (180) days, the Adjusted Gaming Win for the first Lease
Year shall be deemed to equal the Adjusted Gaming Win for the second Lease Year.
3.2 Adjustment of Annual Base Rent: On the fifth (5th) anniversary of
------------------------------
the Commencement Date and on every fifth (5th) anniversary of the Commencement
Date thereafter, the Annual Base Rent amounts of Five Hundred Thousand Dollars
($500,000), one Million Dollars ($1,000,000) and Two Million Dollars
($2,000,000) described in paragraph 3.1 shall each be adjusted to an amount
equal to the product obtained by multiplying such Annual Base Rent amount (as it
may previously have been adjusted pursuant to this paragraph) by the lesser of
(i) 1.06, or (ii) a fraction, the numerator of which is the Consumer Price Index
published immediately preceding such fifth (5th) anniversary and the denominator
of which is the Consumer Price Index published immediately preceding the
Commencement Date. For the next five (5) Lease Years following any such
adjustment, the Annual Base Rent to be paid shall be whichever of the two
adjusted Annual Base Rent amounts is applicable (which shall depend upon the
amount of the Adjusted Gaming Win for the immediately preceding Lease Year as
provided in paragraph 3.1). As used herein, the term "Consumer Price Index"
shall mean the Consumer Price Index,
-7-
<PAGE>
All Urban Consumers, subgroup "All Items", for the South Urban Region (Base Year
1982-84 = 100), which is presently being published monthly by the United States
Department of Labor, Bureau of Labor Statistics. If, however, the Consumer
Price Index is changed, revised or discontinued for any reason, there shall be
substituted in lieu thereof, and the term "Consumer Price Index" shall
thereafter refer to, the most nearly comparable official price index of the
United States government so as to obtain substantially the same result as would
have been obtained had the original consumer Price Index not been changed,
revised or discontinued, which alternative index shall be selected by Landlord
and shall be subject to Tenant's written approval.
3.3 Sample Calculation: Attached hereto as Exhibit "C" and made a part
------------------ -----------
hereof is a schedule demonstrating a sample calculation of both Annual Base Rent
and Percentage Rent under this Lease for the first five (5) Lease Years, except
that Exhibit "C" does not take into account the effect of any Consumer Price
-----------
Index adjustment under paragraph 3.2. The sample calculations on Exhibit "C"
-----------
are intended by way of example only to illustrate the calculation of Annual Base
Rent and Percentage Rent hereunder and shall not be deemed to supersede any of
the express provisions of this Lease.
3.4 Percentage Rent: In addition to the Annual Base Rent provided for
---------------
in paragraph 3.1 (as adjusted from time to time under paragraph 3.2), to the
extent permitted under applicable law, Tenant shall pay to Landlord additional
rent (the "Percentage Rent") for each Lease Year based upon the Adjusted Gaming
Win actually received by Tenant during such Lease Year, determined as follows:
A. Except as otherwise provided in subparagraph 3.10B, if the
Adjusted Gaming Win during such Lease Year exceeds Ten Million Dollars
($10,000,000) but is less than Fifteen Million Dollars ($15,000,000), the
Percentage Rent shall equal ten percent (10%) of the amount by which such
Adjusted Gaming Win exceeds Ten Million Dollars ($10,000,000);
B. If the Adjusted Gaming Win for such Lease Year exceeds
Twenty-Five Million Dollars ($25,000,000), the Percentage Rent shall equal five
percent (5%) of the amount by which such Adjusted Gaming Win exceeds Twenty-Five
Million Dollars ($25,000,000); and
C. If the Adjusted Gaming Win for such Lease Year exceeds Fifty
Million Dollars ($50,000,000), the Percentage Rent shall equal the sum of (i)
the amount described in subparagraph 3.4B and (ii) six percent (6%) of the
amount by which such Adjusted Gaming Win exceeds Fifty Million Dollars
($50,000,000).
-8-
<PAGE>
3.5 Payment of Rent: Annual Base Rent shall be paid quarterly in
---------------
advance on the first day of each January, April and July for the second, third
and fourth quarters of each Lease Year and on the thirtieth (30th) day of
October for the first quarter of each Lease Year. On or before the thirtieth
(30th) day after the expiration of each of the first three quarters of a Lease
Year, Tenant shall deliver to Landlord (i) Tenant's calculation of the Adjusted
Gaming Win actually received by Tenant during such quarter (on an amortized
basis) and the Percentage Rent due for such quarter, all certified as true and
correct in all material respects by Tenant, and (ii) payment of eighty percent
(80%) of the amount of Percentage Rent due for the most recently concluded
quarterly period, along with a payment as adjusted by such amount as is
necessary to bring the total amount paid by Tenant on account of Percentage Rent
for the Lease Year in question up to an amount equal to eighty percent (80%) of
the Percentage Rent that is due based on the Adjusted Gaming Win actually
received by Tenant for all quarters in Lease Year that have been completed. On
or before the thirtieth (30th) day after the expiration of the fourth quarter of
each Lease Year during the Lease Term, Tenant shall deliver to Landlord (i)
Tenant's calculation of the Adjusted Gaming Win actually received by Tenant for
the Lease Year just completed, certified as true and correct in all material
respects by Tenant, and (ii) payment of such amount as is necessary to bring the
total amount paid to Landlord for Percentage Rent up to an amount equal to one
hundred percent (100%) of the Percentage Rent due for the Lease Year most
recently completed based on the actual Adjusted Gaming Win for such Lease Year.
All rent shall be paid in lawful money of the United States to Landlord at its
address set forth for notices in paragraph 17.3, or to such other place as
Landlord may designate from time to time in writing, without abatement,
deduction, offset or prior demand therefor, except as otherwise expressly
provided in this Lease. Annual Base Rent and Percentage Rent shall be prorated
as of the commencement or expiration or earlier termination of the Lease Term.
3.6 Audits: Tenant shall provide Landlord with copies of all gaming
------
revenue reports filed by Tenant with the State of Mississippi during the Lease
Term. Landlord reserves the right to conduct an independent audit of Tenant's
records regarding Tenant's gaming operations at the Property to ascertain the
accuracy of any quarterly or annual financial statements submitted by Tenant.
The independent audit, with respect to any one quarterly or annual financial
statement, may be conducted at any time within ninety (90) days of Landlord's
receipt of such Statement and may be conducted by a certified public accounting
firm of Landlord's choice. If any such independent audit correctly shows that
the audited quarterly or annual financial statement resulted in an underpayment
of Percentage Rent of more than five percent (5%) of the Percentage Rent
actually due, then Tenant shall pay the
-9-
<PAGE>
cost of such audit. Otherwise, the cost of such audit shall be paid by
Landlord.
3.7 Last Year's Rent: Landlord acknowledges that Tenant has previously
----------------
paid Landlord the sum of One Hundred Thousand Dollars ($100,000) and that Tenant
has paid Landlord as of the Effective Date the additional sum of Nine Hundred
Thousand Dollars ($900,000). Tenant shall further pay Landlord on the
Commencement Date the additional sum of One Million Dollars ($1,000,000), so
that, as of the Commencement Date, Tenant will have paid Landlord the aggregate
amount of Two Million Dollars ($2,000,000). Such aggregate amount shall
constitute payment in full of all Annual Base Rent due for the last twelve (12)
month period of the Lease Term, notwithstanding any adjustments that may
previously have been made to Annual Base Rent under paragraph 3.2.
3.8 Annual Fixed Fee: Tenant shall make ten (10) payments to Landlord
----------------
of the Annual Fixed Fee (as hereinafter defined). Commencing on August 10,
1993, and continuing on August 10 of each year thereafter during the Lease Term
through and including August 10, 2002, Tenant shall pay to Landlord an annual
fixed fee (the "Annual Fixed Fee") for each Lease Year in the amount of Two
Hundred Thousand ($200,000) Dollars in addition to the Annual Base Rent and
Percentage Rent set forth herein. Receipt of the first payment of Two Hundred
Thousand Dollars is hereby acknowledged. Said Annual Fixed Fee shall not be
subject to the adjustment set forth in paragraph 3.2. Further, the Annual Fixed
Fee is not subject to the conversion to equity provided in paragraph 3.10. The
Annual Fixed Fee shall be paid annually in advance on August 10 of each Lease
Year in which the Annual Fixed Fee is required to be paid.
3.9 [Intentionally Omitted]
-----------------------
3.10 Conversion of Annual Base Rent and Percentage Rent to Equity:
------------------------------------------------------------
A. Notwithstanding the foregoing provisions of this Article
III, Tenant shall cause to be transferred to Landlord (or Landlord's designee) a
limited partnership interest (the "Equity Interest") constituting fifteen
percent (15%) of all partnership interests in Tenant, which transfer shall be in
lieu of all Annual Base Rent under paragraph 3.1 and all Percentage Rent (if
any) under subparagraph 3.4A for the first twenty-four (24) month period of the
Lease Term. Landlord acknowledges, however, that the State of Mississippi may
require that Landlord (or its designee) prosecute applications for certain
licenses (including, without limitation, gaming licenses and liquor licenses) on
behalf of the owners of the Equity Interest. In the event therefore that Tenant
determines, in Tenant's sole discretion, that the prosecution of such
applications ("Landlord's Licensing") will
-10-
<PAGE>
delay to any material extent the commencement of gaming activity at the
Property, Tenant may, notwithstanding the foregoing provisions of this paragraph
3.10, commence such gazing operations without causing the transfer of the Equity
Interest to Landlord (or its designee). In the event that the Landlord's
Licensing is completed by the second (2nd) anniversary of the Commencement Date,
Tenant shall, promptly after completion of Landlord's Licensing, cause the
Equity Interest to be transferred to Landlord (or its designee), together with
all distributions that would otherwise have been made to the holder of such
Equity Interest from the Commencement Date through the date of such transfer to
the extent permitted under applicable law. If, however, Landlord has not
properly been issued all full and final licenses required with respect to
Tenant's gaming activities at the Property within such two-year period, Tenant
shall have no obligation to cause the Equity Interest to be transferred to
Landlord, but Tenant shall promptly pay Landlord Annual Base Rent for the first
twenty-four (24) month period of the Lease Term in accordance with paragraph 3.1
and Percentage Rent (if any) for such 24-month period in accordance with
subparagraph 3.4A.
B. Notwithstanding subparagraph 3.4A, in the event that (i) the
Equity Interest is transferred to Landlord pursuant to subparagraph 3.10A and
(ii) Adjusted Gaming Win during the third (3rd) Lease Year does not exceed
Twenty-Five Million Dollars ($25,000,000), Percentage Rent under subparagraph
3.4A during the third (3rd) Lease Year shall be determined as follows: First,
the number of days (the "Remaining Days") of the third (3rd) Lease Year that
falls after the expiration of the first twenty-four (24) month period of the
Lease Term shall be calculated. Second, a fraction (the "Adjustment Factor")
shall be established, the numerator of which equals the number of the Remaining
Days and the denominator of which equals three hundred sixty-five (365). Third,
if the Adjusted Gaming Win during the Remaining Days exceeds the product of Ten
Million Dollars ($10,000,000) multiplied by the Adjustment Factor but is less
than the product of Fifteen Million Dollars ($15,000,000) multiplied by the
Adjustment Factor, then Percentage Rent for such third (3rd) Lease Year shall
equal ten percent (10%) of the amount by which such Adjusted Gaming Win exceeds
the product of Ten Million Dollars ($10,000,000) multiplied by the Adjustment
Factor.
3.11 Licensing Due to Landlord's Rent: Landlord and Tenant further
--------------------------------
acknowledge that the State of Mississippi may require the issuance of certain
licenses (the "Required Landlord Licenses") (including, without limitation,
gaming licenses and liquor licenses) in favor of Landlord by virtue of this
Lease. Landlord shall use reasonable efforts and all due diligence to obtain
all Required Landlord Licenses at the earliest date possible. If, however,
forty-five (45) days
-11-
<PAGE>
prior to the date reasonably anticipated by Tenant to be the Commencement Date,
Landlord has not obtained all Required Landlord Licenses, Landlord shall
transfer the Landlord's Estate (subject to this Lease) to one or more immediate
family members of Raphael Skrmetta (i.e., parents, siblings, children,
grandchildren or great-grandchildren) (any such family member(s) to which the
Landlord's Estate has been transferred being referred to as an "Approved
Transferee"), provided that all such Approved Transferees shall obtain all
Required Landlord Licenses at least thirty (30) days prior to the anticipated
Commencement Date. If neither Landlord nor the Approved Transferees (if
Landlord has transferred the Landlord's Estate to such Approved Transferees) has
obtained all Required Landlord Licenses at least thirty (30) days before the
anticipated Commencement Date, then Tenant or its designee shall have, and
Landlord hereby grants to Tenant or Tenant's designee, an option to purchase the
Landlord's Estate for a purchase price equal to the fair market value of the
Landlord's Estate given Tenant's then intended use of the Property. If the
parties are unable to agree upon such fair market value, they shall submit the
issue to arbitration pursuant to paragraph 17.6 and shall exercise their good
faith efforts to complete such arbitration within thirty (30) days. Tenant may
exercise such purchase option at any time within ninety (90) days after the
determination of such fair market value by giving Landlord written notice
thereof. The closing of any purchase and sale of the Landlord's Estate pursuant
to such option shall occur no later than ten (10) days after the date Tenant
gives notice of such exercise. At such closing, Landlord shall execute and
deliver, in recordable form, such documents and instruments as Tenant may
reasonably request to effect the legal and valid transfer of the entire
Landlord's Estate to Tenant or its designee. Notwithstanding the foregoing, if
all Required Landlord Licenses have been fully, finally and properly issued in
favor of Landlord prior to Tenant's exercise of such purchase option, then this
Lease shall remain in full force and effect and Tenant shall not thereafter be
entitled to exercise such option. To enable Landlord and Tenant to implement
the provisions of this paragraph 3.11, Tenant shall give Landlord notice of the
date reasonably anticipated to be the Commencement Date no later than sixty (60)
days prior to such date.
ARTICLE 4
---------
PAYMENT OF IMPOSITIONS AND UTILITY CHARGES
4.1 Impositions: Tenant shall pay and discharge or cause to be paid
-----------
and discharged promptly as the same become due and before delinquency all
"Impositions" coming due during the Lease Term. The term "Impositions" as used
herein shall mean all real property taxes, assessments, levies, fees and other
charges (including the annual installments of principal and interest required to
pay any general or special
-12-
<PAGE>
assessments for public improvements), which are levied or assessed against, or
with respect to the use of, all or any portion of the Property, but shall not
include any (i) estate, succession, inheritance, transfer, gift, franchise or
similar taxes of Landlord or (ii) taxes on Landlord's income from the Property
or other sources, including any business, income or profits taxes assessed
against Landlord. Any Impositions required to be paid by Tenant which relate to
a tax year during which the Commencement Date or the Lease expiration date or
sooner termination of this Lease occurs shall be prorated between Landlord and
Tenant as of the commencement or termination of this Lease, as the case may be.
If the law permits payment of any Imposition in installments, Tenant may utilize
the permitted installment method over the maximum period of time allowed by law,
and Tenant shall be required to pay before delinquency only the installments
coming due during the Lease Term, together with any interest thereon.
4.2 Apportionment: In the event that the Property is not separately
-------------
taxed or assessed with respect to any Imposition, then such Imposition levied
shall be apportioned between the Property and such other property with which it
is assessed in such manner that Tenant shall pay only that portion of any such
Imposition fairly allocable to the Property.
4.3 Right to Contest: Tenant shall have the right (but not the
----------------
obligation) to pay under protest or to contest or otherwise review by
appropriate legal or administrative proceedings, or in such other manner as
Tenant may desire, any Imposition which Tenant is required to pay pursuant to
the provisions of this Article. Any such contest or other proceeding shall be
conducted solely at Tenant's expense and free of expense to Landlord. Tenant
shall indemnify Landlord against any and all loss, cost, expense or damage
resulting from any such contest or other proceeding. At the request of Tenant,
Landlord shall join in any contest or other proceedings which Tenant may desire
to bring pursuant to this paragraph; provided, however, that Tenant shall pay
all of Landlord's costs and expenses arising from such joinder. Within ten (10)
days after the final determination of the amount due from Tenant for such
Imposition, Tenant shall pay the amount so determined to be due, together with
all costs, expenses and interest.
4.4 Utility Charges: All water, gas, electricity and other public
---------------
utilities used upon or furnished to the Property during the Lease Term shall be
promptly paid by Tenant prior to delinquency.
-13-
<PAGE>
ARTICLE 5
---------
USE
5.1 Permitted Use: Tenant may use the Premises, or permit the Premises
-------------
to be used, for the following purposes:
A. Development of one or more of the following on the Property
as is elected by Tenant, of a design and capacity elected by Tenant, all to the
extent allowed by and in conformance with applicable law (a "Gaming Operation"):
(i) a riverboat gaming vessel; (ii) a dockside gaming vessel; or (iii) a land-
based casino;
B. Development and operation of any facilities that are related
to, necessary for the operation of, or compatible with and enhance any Gaming
Operation conducted on the Property, including parking areas, entertainment and
lodging facilities, food and beverage service and facilities, passenger
ticketing facilities, docking facilities, storage and maintenance facilities
(including fueling facilities for any riverboat vessel); and
C. Any other lawful activity or use.
5.2 Compliance with Law: Tenant shall comply with all laws and
-------------------
regulations of governmental authorities with respect to its use of the Property.
Tenant shall have the right, at its own cost and expense, to contest or review
by legal and/or administrative proceeding the validity or legality of any such
law or regulation. During such contest or review, Tenant may refrain from
complying therewith provided that compliance therewith may legally be so held in
abeyance without subjecting Landlord to any liability, civil or criminal, for
Tenant's failure so to comply.
5.3 Waste: Tenant shall not commit or permit waste on the Property nor
-----
shall Tenant remove any earth, rocks, gravel, minerals or the like from the
Premises except to the extent reasonably necessary for the construction of
Improvements.
ARTICLE 6
---------
IMPROVEMENTS
6.1 Construction of Initial Improvements: Tenant may (i) demolish and
------------------------------------
remove all improvements existing on the Premises as of the date of this Lease,
with all salvage belonging to Tenant and without any obligation to reimburse
Landlord for the cost or value of the improvements so demolished, and (ii)
design, engineer, construct, maintain and operate improvements upon the Premises
to enable Tenant to conduct the uses described in paragraphs 5.1A and B.
-14-
<PAGE>
6.2 Demolition of Improvements and Construction of New Improvements:
---------------------------------------------------------------
Landlord and Tenant acknowledge that (i) the initially constructed Improvements
may outlive their economic lives or usefulness prior to the expiration of the
Lease Term, and (ii) the effective use of the Premises as contemplated by this
Lease may require the demolition of Improvements, the reconstruction or
refurbishing of Improvements, or the construction of additional or different
Improvements (including buildings and related on-site and off-site improvements)
upon the Premises in addition to those described in paragraph 6.1. Therefore,
at any time and from time to time during the Lease Term, Tenant shall have the
right (but not the obligation) to do any or all of the following, and all
salvage resulting therefrom shall belong to Tenant:
A. Demolish and remove any Improvements;
B. Replace, alter, relocate, reconstruct or add to any
Improvements in whole or in part;
C. Construct or otherwise make any new Improvements as Tenant
may choose on any part of the Property; or
D. Modify or change the contour or grade, or both, of the
Premises.
6.3 Permits and Basements: Tenant may apply for and secure from any
---------------------
governmental authority having jurisdiction of the Property any approvals,
permits or licenses required for the development and use of the Property for the
purposes permitted by this Lease. Tenant shall have the right to grant or
convey in form required by such governmental authority dedications of portions
of the Premises for public use and/or rights of way or easements for poles or
conduits for gas, electricity, water, telephone, storm and sanitary sewer lines
and for other utility, municipal or special district services which may be
required by governmental authorities as a condition to granting any such
approval, permit or license or which otherwise may be necessary in connection
with constructing improvements on the Premises. Tenant may enter into
agreements restricting use or granting easements over the Premises or obtain
zoning changes, variances or use permits where necessary in connection with
constructing improvements on the Premises. Landlord shall upon request by
Tenant execute or join in the execution of any application for such agreements,
approvals, permits or licenses and agrees jointly with Tenant to make such
necessary dedications as may be required by appropriate governmental agencies or
by requisite utility districts and/or companies as a condition to the
construction of such improvements. In the event Tenant wishes to sublease a
portion of the Premises in a manner requiring the subdivision of the Premises
and the recordation of a
-15-
<PAGE>
subdivision or parcel map or the taking of any similar measures legally to
effect such subdivision, Landlord shall join with Tenant in executing all
documents necessary to effect such subdivision so long as Tenant pays all costs
and expenses arising by reason of such subdivision. All fees in connection with
such agreements, approvals, permits or licenses shall be paid by Tenant.
Nothing contained herein shall be deemed to impose upon Landlord any liability
to any governmental authority arising from any breach of any agreement or
application executed by or on behalf of Landlord pursuant to this paragraph and,
in connection therewith, Tenant shall indemnify and hold Landlord harmless from
any loss, cost, expense or claim against Landlord by any such governmental
agency arising from any such breach.
6.4 Ownership of Improvements: All Improvements constructed or in
-------------------------
installed upon the Premises by Tenant at any time during the Lease Term or any
extension thereof, which are and remain real property, are and shall be the
property of Tenant; provided, however, that upon the expiration or earlier
termination of this Lease, title to such Improvements then existing on the
Premises shall vest in Landlord and the same shall become the property of
Landlord without notice or execution of further instruments and without cost,
expense or obligation of any kind or nature to Landlord.
6.5 Removal of Trade Fixtures: Tenant and any subtenant,
-------------------------
concessionaire, licensee or invitee shall have the right to remove any or all
Trade Fixtures installed by it on the Property provided it repairs any damage
caused by such removal. Upon written request from Tenant, Landlord shall from
time to time execute and deliver any instrument that may be required by any
equipment supplier, vendor, lessor and/or lender whereby Landlord waives and/or
releases any rights it may have or acquire with respect to any Trade Fixtures
Tenant or any subtenant, concessionaire, licensee or invitee may affix to the
Property and agreeing that the same do not constitute realty.
ARTICLE 7
---------
MECHANICS' LIENS
7.1 Mechanics' Liens: Tenant covenants and agrees to keep the Property
----------------
free and clear of and from any and all mechanics', materialmen's and other liens
of record for work or labor done, services performed, or materials, appliances
or power contributed, used or furnished in the construction of any Improvements
upon the Premises or any alterations, repairs or additions thereto which Tenant
may make.
7.2 Contests: Tenant may, at its sole cost and expense, contest any
--------
lien of the nature set forth in this Article. In the event of any such contest,
Tenant shall
-16-
<PAGE>
indemnify Landlord against all loss, cost, expense and damage resulting
therefrom. In the event Tenant contests any such lien and sustains an adverse
determination, Tenant shall nevertheless not be in default if it satisfies the
indebtedness in question within ten (10) days after actual final determination
by the court or administrative agency involved.
ARTICLE 8
---------
INSURANCE AND INDEMNITY
8.1 Required Insurance: Tenant shall, at its sole cost and expense,
------------------
procure and maintain the following insurance at all times during the Lease Term:
A. A policy or policies of comprehensive general liability
insurance, naming Landlord as additional insured, against loss or other
liability for bodily injury, death or property damage occurring on or about, or
resulting from an occurrence on or about, the Property with combined single
limit coverage of not less than Three Million Dollars ($3,000,000.00). The
minimum limits of such policies of liability insurance shall be reasonably
increased from time to time to meet changed circumstances, including, but not
limited to, changes in the purchasing power of the dollar and changes indicated
by the course of plaintiffs' verdicts in personal injury actions in Harrison
County, Mississippi, but shall not exceed the amount of coverage then commonly
carried for similar property and improvements located in Harrison County. If
the parties are unable to agree on the amount by which the minimum coverage
required of Tenant is to be increased, the controversy shall be resolved by
arbitration according to the procedure set forth in paragraph 17.6. Landlord
may not request a change in the limits of Tenant's liability insurance more
often than once in any five (5) year period.
B. A policy or policies of standard fire and extended coverage
property damage insurance (including coverage for wind, hail and flood damage,
provided that such coverage is available at commercially reasonable rates),
naming Landlord as additional insured (as its interest may appear), in an amount
equal to not less than ninety percent (90%) of the full replacement value of the
Improvements with loss payable in accordance with the provisions of paragraph
9.4. Whenever any alterations or improvements are in the course of construction,
the insurance required by this subparagraph, to the extent appropriate, shall be
carried by Tenant in builder's risk form written on a completed value basis,
insuring against loss to the extent of at least ninety percent (90%) of the
replacement value of that which is being covered.
-17-
<PAGE>
8.2 Required Terms: All policies provided for herein shall be with
--------------
financially responsible insurance companies authorized to do business in the
State of Mississippi. Each such policy shall provide that the policy cannot be
canceled or altered without thirty (30) days prior written notice to Landlord.
Certificates of insurance evidencing these policies shall be delivered to
Landlord. Tenant shall, at least ten (10) days prior to the expiration of such
policies, furnish Landlord with renewals or binders showing no lapse in
coverage.
8.3 Partial Release of Liability and Waiver of Subrogation: Landlord
------------------------------------------------------
and Tenant release each other and their respective agents, contractors and
employees, and Landlord releases Tenant's subtenants, from any claims for damage
to any persons or property that are caused by or result from risks insured
against under any insurance policy or policies required by this Article which
are in force at the time of such damage, but only to the extent such claims are
covered by such insurance. This release shall be in effect with respect to any
loss only so long as the applicable insurance policy(s) contain a clause to the
effect that this release shall not affect the right of the named insured to
recover under such policies. Tenant shall cause each insurance policy obtained
by it to provide that the insurance company waives all rights of recovery by way
of subrogation against either or both Landlord and Tenant in connection with any
damage covered by such policy so long as such a waiver of subrogation is
available and can be obtained without unreasonable additional cost.
8.4 Indemnity: Tenant shall defend with competent counsel, indemnify
----------
and hold Landlord harmless from all liability, costs and expenses arising by
reason of any injury or death to any person or persons, or damage to property of
any person or persons, including without limitation, Tenant and Tenant's
servants, agents, employees, contractors and subtenants from any cause or causes
whatsoever (other than causes of liability, costs and expenses within Landlord's
control or resulting from the fault of Landlord or its agents, contractors or
employees or which are Claims subject to paragraph 16.4) occurring in or upon
the Property during the Lease Term.
ARTICLE 9
---------
MAINTENANCE, REPAIR AND
RESTORATION OF DAMAGE
9.1 Tenant's Duty to Maintain and Repair: During the Lease Term,
------------------------------------
Tenant shall, at its sole cost and expense, (i) keep and maintain the Property
in good order and repair (ordinary wear and tear excepted), and (ii) make any
and all repairs, alterations or improvements to the Property which may
-18-
<PAGE>
be required by any law or other governmental regulation. Landlord shall have no
obligation to make any repairs, alterations or improvements to the Property
during the Lease Term. Nothing contained in this paragraph shall be construed
as limiting any right given elsewhere in this Lease to Tenant to alter, modify,
demolish, remove or replace any Improvements, or as limiting provisions relating
to Condemnation or to damage to the Improvements.
9.2 Tenant's Duty to Restore Insured Damage to Improvements: If any
-------------------------------------------------------
Improvements are damaged by fire or other peril covered by the insurance
required to be carried by Tenant pursuant to paragraph 8.1B, then Tenant shall
either (i) restore the Improvements so damaged to the condition that existed
prior to such damage, but only to the extent reasonably practicable and
permitted by law, or (ii) demolish all or any of the Improvements and construct
additional or replacement Improvements, but only so long as the Improvements
following such work of demolition and replacement are at least equal in value to
the Improvements existing prior to the damage. Such work of restoration or
replacement shall be commenced and completed within a reasonable period of time,
subject to reasonable delays associated with adjustment or settlement of
insurance claims and procurement of new subtenants, if necessary.
9.3 Tenant's Option Following Damage to the Improvements Near the End
-----------------------------------------------------------------
of the Lease Term and Following Uninsured Damage to the Improvements: If (i)
- --------------------------------------------------------------------
any Improvements are damaged by any peril that is not covered by the insurance
---
required to be carried by Tenant pursuant to paragraph 8.1B, or (ii) any
Improvements are damaged by any peril to the extent of twenty-five percent (25%)
or more of the then replacement value of all Improvements then existing on the
Property within ten (10) years of the end of the Lease Term, then Tenant shall
have the option to do any of the following:
A. Tenant may elect to terminate this Lease. To exercise any
such option to terminate, Tenant must give Landlord written notice of its
election to terminate within sixty (60) days from the date of such damage. Upon
the termination date set forth in said notice: (i) all rent and other sums due
pursuant to this Lease shall be prorated as of such termination date and paid by
Tenant; (ii) this Lease shall expire and terminate; (iii) Landlord shall refund
to Tenant the positive difference, if any, between (a) so much of the Two
Million Dollar ($2,000,000) sum paid by Tenant under paragraph 3.7 as has not
actually been applied against Annual Base Rent for the last twelve (12) month
period of the Lease Term, and (b) an amount equal to fifty percent (50%) of the
then applicable Annual Base Rent; and (iv) neither Landlord nor Tenant shall
have any further obligations hereunder, except for those which have accrued
prior to the date of such termination and those which expressly survive any
termination
-19-
<PAGE>
under the terms of this Lease. In the event Tenant terminates the Lease
pursuant to this paragraph, Tenant shall at its sole expense prior to the date
of such termination either (i) demolish and remove all damaged Improvements, or
(ii) restore the damaged Improvements only to the extent necessary to avoid any
violation of any law, and Tenant shall indemnify and hold Landlord harmless from
any mechanics' liens or other liabilities resulting from such work.
Notwithstanding anything contained in this paragraph, Tenant shall not have the
right to terminate this Lease as a result of any damage unless any and all
Leasehold Mortgages shall have been fully satisfied and discharged.
B. Tenant shall have the right to continue this Lease in effect
and to demolish the damaged Improvements without the obligation to restore or
replace such damaged Improvements with any replacement Improvements.
9.4 Insurance Proceeds: All insurance proceeds payable on account of
------------------
any damage to the Property shall be paid as follows:
A. If a Leasehold Mortgage is in existence, then all insurance
proceeds shall be paid to the Leasehold Mortgagee for application according to
the terms of the Leasehold Mortgage, and any remaining proceeds shall be paid to
Tenant to be applied toward the cost of restoring the Property to the extent
required by this Article.
B. If there is no Leasehold Mortgage in existence, then all
insurance proceeds shall be paid to Tenant and shall be applied by Tenant toward
the restoration of the Property and any insurance proceeds not needed for such
purpose may be retained by Tenant.
C. Notwithstanding the foregoing, if this Lease is terminated
by Tenant pursuant to paragraph 9.3A, all insurance proceeds payable as a result
of such damage shall be applied in the following order of priority: (i) first,
to the payment of all expenses incurred by Tenant in completing the demolition
and/or restoration required of it pursuant to paragraph 9.3A; (ii) second, to
the satisfaction and payment of any Leasehold Mortgage; and (iii) the remainder
of insurance proceeds, if any, shall be paid to Landlord.
ARTICLE 10
----------
CONDEMNATION
10.1 Definitions: As used in this Lease, the following terms shall have
-----------
the following meanings:
A. The term "Condemnation" shall mean (i) any permanent taking
by the exercise of the power of eminent
-20-
<PAGE>
domain, whether by legal proceedings or otherwise, by any person or entity
having the legal power to do so, (ii) a voluntary sale or transfer by Landlord
to any condemnor, either under threat of condemnation or while legal proceedings
for condemnation are pending, or (iii) any permanent taking by inverse
condemnation.
B. The term "Total Taking" shall mean a Condemnation of (i) all
or substantially all of the Property or (ii) any portion of the Property which
leaves remaining a balance which, in Tenant's reasonable judgment, may not be
economically operated for the purpose the Property was operated prior to the
Date of Taking.
C. The term "Partial Taking" shall mean a Condemnation of a
portion of the Property which does not constitute a "Total Taking".
D. The term "Date of Taking" shall mean the date that the
condemner takes possession of the property being condemned; and
E. The term "Award" shall mean all compensation, sums or
anything of value awarded, paid or received on or because of a Total Taking, a
Partial Taking or a temporary taking of the Property.
10.2 Total Taking: If during the Lease Term there occurs a Total
------------
Taking, (i) this Lease shall terminate on the Date of Taking, (ii) all
obligations hereunder shall be prorated to that date, (iii) neither Landlord nor
Tenant shall have any further obligations hereunder, except for those which have
accrued prior to the date of such termination and those which expressly survive
any termination under the terms of this Lease, and (iv) any fixtures, machinery,
equipment and personal property (excluding Trade Fixtures) used in the operation
and maintenance of the Improvements ("Building Service Equipment") and not so
taken shall be sold as promptly as possible thereafter, with the proceeds of
such sale being included in the Award for the purposes of this Lease.
10.3 Partial Taking: If during the Lease Term there occurs a Partial
--------------
Taking, the following shall apply:
A. This Lease shall terminate as to the portion so taken and
shall remain in full force and effect as to the portion remaining.
B. Effective as of the Date of Taking, Annual Base Rent shall
be redetermined as provided in paragraph 3.1 based upon the area of the Premises
remaining after the Condemnation.
-21-
<PAGE>
C. Tenant shall, at its sole cost and with reasonable
diligence, commence and complete the restoration of the portion of the Property
not taken (to the extent then permitted by law) to a condition which is
economically viable, architecturally complete and suitable for the uses
permitted by this Lease.
10.4 Temporary Taking: If there occurs a temporary taking of all or any
-----------------
part of the Property during the Lease Term, (i) this Lease shall not be affected
in any way, (ii) Tenant shall continue to pay and perform all of the obligations
payable or performable by Tenant hereunder, and (iii) any Award made as a result
of said temporary taking shall be paid solely to Tenant.
10.5 Apportionment of Award: Any Award made as a result of a Total
----------------------
Taking or Partial Taking shrill be paid as follows:
A. Landlord shall receive that portion of any Award made for
that part of the Premises taken (valued as unimproved and encumbered by this
Lease);
B. Tenant shall receive that portion of any Award made for a
taking of any Improvements and that portion of any Award made for a taking of
Tenant's Estate (including any so-called "leasehold bonus value");
C. The remainder of the Award, if any, shall be allocated as
follows: (i) Tenant shall receive the portion of the Award (if any) payable for
restoration of the Improvements and Building Service Equipment, a taking of
Tenant's personal property or Trade Fixtures, for interruption of Tenant's
business, for Tenant's relocation costs, and/or for loss of Tenant's goodwill;
(ii) each subtenant of Tenant shall receive the portion of the Award (if any)
payable for a taking of said subtenant's personal property or Trade Fixtures
(and for said subtenant's relocation costs, loss of goodwill, or loss due to
interruption of business if, but only if, its sublease so provides); (iii) the
portion of the Award payable as severance damages upon a Partial Taking (if any)
shall be equitably apportioned between Landlord and Tenant so that Tenant
receives the portion of such severance damages which is fairly attributable to
any impairment of Tenant's use of the portion of the Property not taken during
the then remainder of the Lease Term; and (iv) any Award of attorneys' fees and
expenses and/or court costs made in any Condemnation proceeding shall be
received by the party(ies) who paid or incurred the expense in question.
10.6 General: Each party hereto shall be responsible for representing
-------
its own interest (at its own cost) in any proceeding or negotiation regarding
any Condemnation or any Award. To the extent possible, Landlord and Tenant
shall
-22-
<PAGE>
together make one combined claim for an Award (including severance damages if
applicable) and shall cooperate to maximize the total amount of the Award.
Issues between Landlord and Tenant which must be resolved to implement the
provisions of this Article shall be joined in any pending Condemnation
proceeding, to the extent permissible under then applicable law, to the end that
multiplicity of actions shall be avoided. Any dispute between Landlord and
Tenant arising under this Article which is not so joined in a Condemnation
proceeding shall be determined by arbitration pursuant to the arbitration
provisions contained in paragraph 17.6.
ARTICLE 11
----------
DEFAULT AND REMEDIES
11.1 Events of Tenant's Default: Tenant shall be in default under this
--------------------------
Lease if any of the following occurs:
A. Tenant shall have failed to pay Annual Base Rent, Percentage
Rent or any other charge or obligation of Tenant requiring the payment of money
under the terms of this Lease within fifteen (15) days after receipt of written
notice from Landlord that such obligation is due and unpaid; or
B. Tenant shall have failed to perform any term, covenant or
condition of this Lease to be performed by Tenant, except those requiring the
payment of money, and Tenant shall have failed to cure same within sixty (60)
days after written notice from Landlord, delivered in accordance with the
provisions of this Lease, where such failure could reasonably be cured within
said sixty (60) day period; provided, however, that where such failure could not
reasonably be cured within said sixty (60) day period, that Tenant shall not be
in default unless it has failed to promptly commence and thereafter continue to
make diligent and reasonable efforts to cure such failure as soon as
practicable; or
C. Tenant shall have made a general assignment of its assets
for the benefit of its creditors; or
D. A court shall have made or entered any decree or order
with respect to Tenant or Tenant shall have submitted to or sought a decree or
order (or a petition or pleading shall have been filed in connection therewith)
which: (i) grants or constitutes (or seeks) an order for relief, appointment of
a trustee, or confirmation of a reorganization plan under the bankruptcy laws of
the United States; (ii) approves as properly filed (or seeks such approval of) a
petition seeking liquidation or reorganization under said bankruptcy laws or any
other debtor's relief law or statute of the United States or any state thereof;
or (iii) otherwise
-23-
<PAGE>
directs (or seeks) the winding up or liquidation of Tenant; and such petition,
decree or order shall have continued in effect for a period of ninety (90) or
more consecutive days; or
E. The sequestration or attachment of, or execution or other
levy on, Tenant's interest in this Lease or the Premises or any Improvements
located thereon shall have occurred and Tenant shall have failed to obtain a
return or release of such property within thirty (30) days thereafter, or prior
to sale pursuant to such levy, whichever first occurs.
11.2 Landlord's Remedies: In the event of Tenant's default pursuant to
-------------------
paragraph 11.1, Landlord shall have the following remedies:
A. Landlord may, at Landlord's election, keep this Lease in
effect and enforce all of its rights and remedies under the Lease, including the
right to recover the rent and other sums as they become due by appropriate legal
action.
B. Landlord may, at Landlord's election, terminate this Lease
by giving Tenant written notice of termination. On the giving of the notice, in
accordance with the terms of this Lease, all of Tenant's right in the Property
shall terminate. Promptly after notice of termination, Tenant shall surrender
and vacate the Property in broom-clean condition, and Landlord may re-enter and
take possession of the Property; provided, however, that (i) Landlord shall not
eject any subtenant of Tenant then occupying space within the Property pursuant
to a valid sublease executed by Tenant who is not then in default, and (ii)
Landlord shall recognize the rights of such subtenants as provided in paragraph
13.3. This Lease may also be terminated by a judgment specifically providing
for termination.
Landlord shall use its best efforts with all due diligence to mitigate any
damages resulting from any such default by Tenant (including, without
limitation, the prompt reletting of the Premises in whole or in part for the
remainder of the Lease Term on reasonable terms and conditions), and Tenant
shall not in any event be liable for any damages reasonably mitigable by
Landlord. Landlord waives any right of distraint, distress for rent or
landlord's lien that may arise at law.
11.3 Landlord's Default and Tenant's Remedies: In the event Landlord
----------------------------------------
fails to perform any of its obligations under this Lease and fails to cure such
default within sixty (60) days after written notice from Tenant specifying the
nature of such default where such default could reasonably be cured within said
sixty (60) day period, or fails to commence such
-24-
<PAGE>
cure within said sixty (60) day period and thereafter continuously with due
diligence prosecute such cure to completion where such default could not
reasonably be cured within said sixty (60) day period, then Tenant shall have
the following remedies:
A. Tenant may proceed in equity or at law to compel Landlord to
perform its obligations and/or to recover damages proximately caused by such
failure to perform (except to the extent Tenant has waived its right to damages
resulting from injury to person or damage to property as provided herein).
B. Tenant may cure any default of Landlord at Landlord's cost
and deduct the cost of such cure from the next installments of Annual Base Rent
and Percentage Rent and any other amounts payable under this Lease.
ARTICLE 12
----------
TERMINATION
12.1 Surrender on Termination: Upon termination of this Lease for any
------------------------
cause, Tenant shall quit and surrender the Property to Landlord without any
payment therefor by Landlord, without delay, in good order, condition and
repair, ordinary wear and tear excepted. Upon such termination, title to the
Improvements then existing on the Premises shall automatically vest in Landlord
without the execution of any further instrument. In no event shall the
provisions hereof impose any obligation upon Tenant to replace Improvements that
are demolished or removed or to restore and/or reconstruct Improvements
following any damage or condemnation unless Tenant is required to do so by
Article 9 or Article 10.
12.2 Recognition of Tenant's Subtenants: If this Lease is terminated
----------------------------------
for any reason prior to the expiration of the Lease Term, Landlord shall
recognize all subtenants of Tenant who are not then in default under the terms
of their respective subleases as provided in paragraph 13.3.
12.3 Removal of Trade Fixtures: If Tenant is not then in default,
-------------------------
Tenant may remove or cause to be removed all Trade Fixtures installed in the
Improvements which are the property of Tenant. Any of said Trade Fixtures that
are not removed from the Property within thirty (30) days after the date of any
termination of this Lease thereafter shall belong to Landlord without the
payment of any consideration.
12.4 Tenant's Quitclaim: Upon the expiration of the Lease Term, or any
------------------
sooner termination of this Lease, Tenant agrees to execute, acknowledge and
deliver to Landlord a proper instrument in writing, releasing and quitclaiming
to
-25-
<PAGE>
Landlord all right, title and interest of Tenant in and to the Property.
ARTICLE 13
----------
ASSIGNMENT AND SUBLETTING
13.1 Assignment by Tenant: Tenant shall have the following rights to
--------------------
assign or otherwise transfer Tenant's Estate:
A. Tenant shall have the absolute right to assign or otherwise
transfer all or part of Tenant's Estate so long as the assigning Tenant and its
assignee both agree to become personally liable for the full and faithful
performance of the Tenant's obligations under this Lease and the assignee
acquires all necessary licenses to continue the Gaming Operation then being
conducted on the Premises.
B. Tenant shall also have the right to assign or otherwise
transfer all or part of Tenant's Estate to (i) any person(s) or entity(s) with
the prior written consent of Landlord, which consent shall not be unreasonably
withheld or delayed, or (ii) a "Permitted Assignee" (as defined below) without
Landlord's consent. If Tenant so assigns or transfers Tenant's Estate pursuant
to this subparagraph 13.1B, then Tenant shall be released from all further
liability under this Lease arising or accruing after the effective date of such
assignment.
C. No assignment or transfer by Tenant pursuant to this
paragraph 13.1 shall be effective unless (i) Tenant shall have given Landlord
reasonable notice of the proposed assignment or transfer and, if applicable,
appropriate documentation as evidence that the proposed assignee or transferee
qualifies as a Permitted Assignee, and (ii) the proposed assignee or transferee
shall have agreed in writing to assume and perform all obligations of Tenant
under this Lease arising after the date of transfer.
13.2 Permitted Assignee Defined: As used herein, the term "Permitted
--------------------------
Assignee" shall mean (i) any Affiliate of Tenant, or (ii) any person or entity
whose tangible net worth on the date of assignment (computed according to
generally accepted accounting principles) is greater than the then equivalent
(adjusted for changes in the purchasing power of the dollar during the Lease
Term) of Ten Million Dollars ($10,000,000) in 1993.
13.3 Subletting: Tenant shall have the absolute and unrestricted right
----------
to sublease all or any part of the Property during the Lease Term to any
person(s) or entity(s) for uses consistent with the uses permitted by this
Lease, and Landlord shall recognize the rights of each such person or entity
under
-26-
<PAGE>
its respective sublease so long as it is not in default under such sublease;
provided, however, that no sublease to a subtenant to conduct gaming operations
at the Premises may be made without Landlord's prior written consent (not to be
unreasonably withheld or delayed). No sublease shall release Tenant from
primary liability for all obligations of Tenant under this Lease. Upon written
request by Tenant, Landlord shall execute with each such subtenant a recognition
and non-disturbance agreement in form reasonably satisfactory to Tenant in
substance providing that in the event this Lease is terminated, Landlord will
recognize the rights of such subtenant under its sublease so long as such
subtenant is not in default, all so long as each of the following is satisfied:
A. The term of the sublease does not exceed the Lease Term, as
it may be extended;
B. The sublease contains a provision reasonably satisfactory to
Landlord requiring the subtenant to attorn to (and pay sublease rent to)
Landlord if Tenant defaults under this Lease; and
C. Tenant shall have submitted to Landlord a true copy of the
sublease.
ARTICLE 14
----------
TRANSFER OF PREMISES BY LANDLORD
14.1 Transfer by Landlord: Subject to the restrictions set forth in
--------------------
this paragraph, to the right of first refusal of Tenant set forth in paragraph
14.2, and to Tenant's prior written consent (not to be unreasonably withheld or
delayed), Landlord may assign and transfer all of Landlord's Estate at any time
during the Lease Term, but only if such assignee shall have (A) currently in
force all licenses, permits and approvals (including, without limitation, gaming
licenses and liquor licenses) required for Tenant's uninterrupted use,
operation, possession and occupancy of the Property in Tenant's then-current
manner and Tenant's exercise of all its rights and privileges under this Lease,
and (B) by written agreement, agreed to (i) recognize Tenant under this Lease,
(ii) assume the obligations of Landlord imposed herein, and (iii) be bound by
each and every term hereof, including, without limitation, the terms of
paragraph 14.2 whereby Tenant has a continuing right of first refusal to
purchase Landlord's Estate. In no event shall Landlord have the right to
transfer or otherwise assign (a) less than all of Landlord's Estate without
Tenant's prior written consent, which consent may be refused in Tenant's sole
and absolute discretion, and any such transfer without Tenant's consent shall be
voidable by Tenant, or (b) any right, title or interest in Landlord's Estate if
such transfer or assignment would, directly or indirectly, impair, suspend,
-27-
<PAGE>
increase the cost of or otherwise interfere with Tenant's possession, occupancy,
use or operation of the Property to any extent, whether in its then-current
manner or in any other manner permitted under this Lease (including, without
limitation, any transfer or assignment to any person or entity that does not
then hold all full, final, properly issued and valid licenses required of such
person or entity to permit Tenant's gaming operations from and at the Property).
14.2 Tenant's Right of First Refusal: If, at any time during the Lease
-------------------------------
Term (as the same may be extended), Landlord Shall desire to transfer Landlord's
Estate, then Landlord shall first offer to Tenant the opportunity to purchase
Landlord's Estate by giving Tenant written notice of the terms upon which it
would be willing to sell Landlord's Estate ("Landlord's First Offer"). Tenant
shall have the exclusive right to purchase Landlord's Estate upon the terms and
conditions stated in Landlord's First Offer, which Tenant may exercise only by
giving written notice to Landlord of Tenant's exercise of said right within
thirty (30) days following the date of receipt by Tenant of Landlord's First
Offer. If Tenant timely exercises its right, it shall purchase Landlord's
Estate on the terms and conditions contained in Landlord's First offer.
However, in the event Tenant does not so accept Landlord's First Offer within
said thirty (30) day period, then Landlord may sell Landlord's Estate to any
third party for the same purchase price contained in Landlord's First Offer and
otherwise on the same terms and conditions contained in Landlord's First Offer
so long as such sale and transfer is consummated within one hundred twenty (120)
days after delivery to Tenant of Landlord's First Offer. If, within said one
hundred twenty day (120) period, Landlord receives a bona fide offer from a
third party to purchase Landlord's Estate for a price less than that contained
in Landlord's First Offer, or Landlord shall receive a bona fide offer from a
third party to purchase Landlord's Estate for the price contained in Landlord's
First Offer and not otherwise on the same terms and conditions contained in
Landlord's First Offer, and Landlord desires to accept such offer, then Landlord
shall give written notice to Tenant setting forth the terms of such offer and
the fact that Landlord is willing to accept such offer ("Landlord's Second
Notice"). Tenant shall have the right to purchase Landlord's Estate at the
price and upon the terms and conditions stated in Landlord's Second Notice
exercisable by giving written notice to Landlord of Tenant's exercise of such
right within fifteen (15) days following the day that Tenant receives Landlord's
Second Notice. In the event that Tenant shall elect to so purchase Landlord's
Estate, then it shall do so upon the terms and conditions contained in
Landlord's Second Notice. If Tenant does not notify Landlord of its agreement
to purchase Landlord's Estate upon such terms within said fifteen (15) day
period, then Landlord may sell Landlord's Estate to any third party in strict
accordance with the terms and conditions
-28-
<PAGE>
contained in Landlord's Second Notice. If Landlord's Estate has not been sold
and transferred after one hundred twenty (120) days have passed since Tenant
shall have received Landlord's First Offer, then any election by Landlord to
assign and sell Landlord's Estate shall be deemed a new determination to do so
and shall be subject to all of the procedures set forth in this paragraph.
Notwithstanding the election of Tenant not to exercise the right of first
refusal contained in this paragraph, the provisions of this paragraph shall
continue to apply to any successor in interest of Landlord. Notwithstanding
anything contained herein, the provisions of this paragraph 14.2 shall not apply
to any transfer by Landlord of Landlord's Estate to a single entity
(corporation, partnership or trust), the partners, shareholders or beneficial
owners of which are all immediate family members of Raphael Skrmetta (parents,
siblings, children, grandchildren or great-grandchildren). No capital stock,
partnership or other beneficial or ownership interest in any such entity may
thereafter be transferred to any persons other than such immediate family
members.
ARTICLE 15
----------
LEASEHOLD MORTGAGES
15.1 Right to Encumber Tenant's Estate: Tenant may at any time and from
---------------------------------
time to time during the Lease Tern encumber Tenant's Estate by one or more
mortgages, deeds of trust or other proper instruments as security for the
repayment of such loan(s) as Tenant may desire, without having Landlord consent
to or join in the execution of such instrument. Any such encumbrance shall be
referred to herein as a "Leasehold Mortgage", and the holder of any Leasehold
Mortgage shall be referred to as a "Leasehold Mortgagee". Any Leasehold
Mortgage shall be subject to all of the covenants and conditions of this Lease.
Any Leasehold Mortgage shall provide that the Leasehold Mortgagee shall be
subrogated to any and all of the rights of Landlord under this Lease in the
event the Leasehold Mortgagee cures a default by Tenant.
15.2 Notice: Tenant shall give written notice of any Leasehold Mortgage
------
to Landlord and shall forward to Landlord a copy of any instrument evidencing
such Leasehold Mortgage along with copies of all other loan documents signed by
Tenant with respect to such Leasehold Mortgage within thirty (30) days after the
recording thereof.
15.3 Leasehold Mortgagee's Rights and Obligations Prior to Foreclosure:
-----------------------------------------------------------------
Any Leasehold Mortgagee may, but shall not be required to unless and until the
Leasehold Mortgage is foreclosed, pay any of the rent due under this Lease,
procure and maintain any insurance, pay any Impositions, make any repairs or
improvements, and do any other act required of Tenant by the terms of this Lease
in order to cure a default
-29-
<PAGE>
of Tenant, prevent a forfeiture of the Lease, or otherwise protect its security
interest in the Property. In this regard, the Leasehold Mortgagee, pursuant to
the terms of its Leasehold Mortgage and for purposes of protecting its security
interest in the Property, may enter into possession of the Property, collect
rents due from subtenants of Tenant, and otherwise perform such acts as the
Leasehold Mortgagee may deem necessary to so protect its security. Any such
payment or act by the Leasehold Mortgagee shall be as effective hereunder as if
done by Tenant, and may be done by the Leasehold Mortgagee without assuming the
obligations of Tenant under this Lease and without causing a default under this
Lease.
15.4 Obligations of Landlord with Respect to any Leasehold Mortgagee:
---------------------------------------------------------------
After having been notified of the existence of a Leasehold Mortgage, Landlord
shall give any such Leasehold Mortgagee written notice of (i) any default by
Tenant hereunder and/or any other event authorizing the termination of this
Lease, and (ii) the exercise of any remedy by Landlord by reason of any default
by Tenant under this Lease. In this regard, Landlord shall not have the power
to (a) terminate the Lease unless Landlord shall have first given such Leasehold
Mortgagee sixty (60) days written notice of its intent to terminate this Lease,
or (b) terminate this Lease if, within said sixty (60) day period (or such
longer period of time as is reasonably required by such Leasehold Mortgagee to
obtain possession of the Property if that is necessary to cure Tenant's
default), such Leasehold Mortgagee either:
A. Cures Tenant's default whether by the payment of money or
the performance of any act required to so cure such default; or
B. Commences and thereafter continuously pursues foreclosure of
the Leasehold Mortgage or otherwise acquires the interest of Tenant under the
Lease, but only so long as such Leasehold Mortgagee performs all obligations to
be performed by Tenant (including the payment of rent, Impositions and all other
monetary obligations) until such time as Tenant's Estate is so acquired or sold
upon foreclosure or by way of other appropriate proceedings in the nature
thereof.
C. Notwithstanding anything contained in this Lease to the
contrary, Landlord may not terminate this Lease as a result of (i) the
occurrence of any Tenant's default described in subparagraphs C, D and E of
paragraph 11.1, or (ii) any default of Tenant that cannot be cured by the
Leasehold Mortgage, so long as any Leasehold Mortgagee has commenced and
thereafter is continuously pursuing the foreclosure of the Leasehold Mortgage,
but only so long as the Leasehold Mortgagee performs all other obligations to be
performed by Tenant (including the payment of rent,
-30-
<PAGE>
Impositions and all other monetary obligations) until such time as Tenant's
Estate is so acquired or sold upon foreclosure or by way of other appropriate
proceedings in the nature thereof.
15.5 Leasehold Mortgagee's Rights and Obligations Following a
---------------------------------------------------------
Foreclosure: Should a Leasehold Mortgagee or any other person acquire Tenant's
- -----------
Estate by private power of sale, by judicial foreclosure, or other appropriate
proceedings in the nature thereof, or as a result of any other action or remedy
provided by any Leasehold Mortgage, then the Leasehold Mortgagee or any such
person:
A. Shall acquire Tenant's Estate subject to all of the
provisions of this Lease, including without limitation the rights of Tenant set
forth in Article 14; and
B. Shall be liable for the performance of all the obligations
of Tenant under this Lease, including the curing of all the defaults of Tenant
existing prior to such acquisition except those defaults that cannot by their
nature be cured.
15.6 Non-Liability of Leasehold Mortgagee: A Leasehold Mortgagee shall
------------------------------------
not be obligated to perform Tenant's obligations under this Lease unless and
until the Leasehold Mortgagee acquires Tenant's interest in the Property by
foreclosure or other similar proceedings.
15.7 No Restriction on Assignment: Notwithstanding the provisions of
----------------------------
paragraph 13.1, if a Leasehold Mortgagee or any other person acquires Tenant's
Estate as a result of a sale under said Leasehold Mortgage pursuant to a power
of sale contained therein, a judgment of foreclosure, or by deed or other
instrument in lieu of foreclosure, such Leasehold Mortgagee or other person
shall have the privilege of assigning or transferring Tenant's Estate to any
other person(s) or entity(s) without the prior consent of Landlord, provided,
however, that there shall be delivered to Landlord in due form for recording (i)
a duplicate original of the instrument of assignment, and (ii) an instrument of
assumption by the transferee of all of Tenant's obligations under this Lease,
and the Leasehold Mortgagee or other person who so acquired Tenant's Estate
through foreclosure proceedings shall be relieved of any further liability under
the Lease from and after the effective date of such transfer.
15.8 New Lease: If a Leasehold Mortgagee acquires Tenant's Estate by
---------
way of foreclosure or otherwise, and if the Leasehold Mortgagee so requests,
Landlord shall enter into a new lease of the Premises with the Leasehold
Mortgagee, effective as of the date the Leasehold Mortgagee so acquired Tenant's
Estate (but with the same relative priority as this Lease with regard to
encumbrances on the Property) for the
-31-
<PAGE>
remainder of the Lease Term and at the same rent and upon the same terms and
conditions contained in this Lease. The Leasehold Mortgagee shall pay all
costs, fees, expenses and legal fees incurred by Landlord in connection with the
execution of such new lease.
15.9 Covenant of Cooperation: Landlord covenants and agrees to execute
-----------------------
any documents reasonably required by any lender making a leasehold Mortgage to
effectuate the foregoing so long as Landlord assumes no liability whatsoever
thereunder and this Lease shall remain prior to any such Leasehold Mortgage.
15.10 No Amendment: So long as any Leasehold mortgage is in effect and
------------
Landlord has been given notice of its existence, then this Lease will not be
voluntarily canceled, surrendered, terminated, amended, modified or in any
manner altered without the prior written consent of the Leasehold Mortgagee.
Landlord and Tenant covenant and agree to cooperate in including in this Lease
by suitable amendment, from time to time, any provision which may reasonably be
requested by any proposed Leasehold Mortgagee for the purpose of implementing
the mortgagee protection provisions contained in this Lease and allowing such
Leasehold Mortgagee reasonable means to protect or preserve the lien of the
Leasehold Mortgage on the occurrence of a default by Tenant hereunder. Landlord
and Tenant each agree to execute and deliver (and to acknowledge, if necessary,
for recording purposes) any document necessary to effect any such amendment;
provided, however, that any such amendment shall in no event affect the term or
rent under this Lease or otherwise adversely affect any rights of Landlord or
Tenant hereunder in any material respect.
15.11 No Merger: So long as there is a Leasehold Mortgage in effect,
---------
Tenant's Estate will not merge with Landlord's Estate by reason of the fact that
(i) Tenant's Estate is acquired by Landlord, or (ii) Landlord's Estate is
acquired by Tenant.
ARTICLE 16
----------
ENVIRONMENTAL
16.1 Landlord's Representations: Except as disclosed in writing to
--------------------------
Tenant by Landlord prior to the Effective Date or as disclosed in writing to
Tenant in any consultant's report prior to the Effective Date, Landlord warrants
and represents that (i) no Hazardous Material (as defined in paragraph 16.6) is
present on the Premises or the soil, surface water or groundwater thereof; (ii)
no underground storage tanks or asbestos containing building materials are
present on the Premises; and (iii) no action, proceeding or claim is pending or
threatened concerning the Premises
-32-
<PAGE>
concerning any Hazardous Material or pursuant to any Environmental Law (as
defined in paragraph 16.5). Landlord has delivered to Tenant all reports and
environmental assessments of the Premises conducted at the request of or
otherwise available to Landlord, and Landlord has complied with all
environmental disclosure obligations imposed upon Landlord by applicable law
with respect to this transaction.
16.2 Covenant to Comply with Environmental Laws: Within the time
------------------------------------------
permitted by applicable law, Tenant, at its sole cost, shall perform or cause to
be performed, any investigation, remediation, removal action or detoxification
of the Premises, and shall comply with any Environmental Law, relating to any
Hazardous Material released, disposed, discharged or emitted on or about the
Premises during the Lease Term by Tenant or Tenant's employees or agents.
Within the time permitted by applicable Law, Landlord, at its sole cost, shall
perform or cause to be performed, any investigation, remediation, removal action
or detoxification of the Premises and shall comply with any Environmental Law
relating to any Hazardous Material present at any time on or about the Premises
or the soil, air, improvements, groundwater or surface water thereof, except to
the extent that such Hazardous Material is released, discharged or emitted on or
about the Premises during the Lease Term by Tenant or Tenant's employees or
agents.
16.3 Tenant Indemnity: Tenant shall indemnify, defend with counsel
----------------
reasonably acceptable to Landlord, and hold harmless Landlord, its employees,
agents, contractors, stockholders, partners, officers, directors, successors,
personal representatives, and assigns (collectively the "Landlord
Indemnitees"),from and against all claims, actions, suits, proceedings,
judgments, losses, costs, personal injuries, damages, liabilities, deficiencies,
fines, penalties, attorneys' fees, consultants' fees, investigations,
detoxifications, remediations, removals and expenses of every type and nature
("Claims"), to the extent caused by the release, disposal, discharge or emission
of Hazardous Materials on or about the Premises during the Lease Term by Tenant
or Tenant's employees or agents. Notwithstanding anything to the contrary in
this Lease, Tenant shall have no other liability, responsibility or duty to
reimburse Landlord with respect to any Hazardous Material on or about the
Premises or any Environmental Law regarding the Premises or the soil, air,
improvements, groundwater or surface water thereof.
16.4 Landlord Obligations:
--------------------
A. Landlord shall undertake, control and complete, at
Landlord's sole cost and expense and to Tenant's reasonable satisfaction, to the
extent required by applicable Environmental Laws, investigation and remediation
of any and
-33-
<PAGE>
all Hazardous Materials in, on or under the Premises or about the Premises to
the extent caused by Hazardous Materials now or heretofore in, on or under the
Premises (i) known to Landlord as of April 9, 1993, or (ii) disclosed by any
environmental reports existing as of such date with respect to the Premises or
any portion thereof.
B. If any court or governmental agency orders Landlord to
investigate or remediate any Hazardous Materials located in, on, under or about
the Premises, Landlord shall comply with such order at its sole cost without
contribution from Tenant, except to the extent that the presence of such
Hazardous Materials was caused by Tenant or persons under Tenant's control.
C. Landlord shall indemnify, defend with counsel reasonably
acceptable to Tenant, and hold harmless Tenant, its employees, agents,
contractors, stockholders, partners, officers, directors, successors,
subtenants, personal representatives and assigns (collectively the "Tenant
Indemnitees") from and against all Claims (as defined in paragraph 16.3) arising
from or relating to compliance with the order of any court or governmental
agency regarding Hazardous Materials present at any time on or about the
Premises; except to the extent that the foregoing actually results from (i) the
release, disposal, discharge or emission of Hazardous Materials on or about the
Premises during the Lease Term by Tenant or Tenant's employees or agents or (ii)
the act or omission of any other party (other than Landlord or persons under
Landlord's control) who places, transports, discharges or releases Hazardous
Materials to the surface of the Premises after Tenant has the exclusive right to
occupy the Premises. Landlord's foregoing indemnification shall include
liability for any and all costs incurred by Tenant in connection with any such
court or governmental agency, including, without limitation, attorneys' and
consultants' fees, but shall not include any liability for any lost profits or
other consequential damages incurred by Tenant.
D. At such time as Tenant, at its cost and expense, undertakes
the demolition of those structures presently located on the Premises, Landlord
shall, in compliance with applicable Environmental Laws, remove and dispose of
any and all asbestos located in the structures being demolished. Landlord shall
coordinate such removal activities with Tenant's demolition and construction
activities. Prior to Tenant's awarding a demolition contract with respect to
existing structures on the Premises, Tenant, its consultants and Landlord shall
identify the location of all asbestos in such structures. As part of its
demolition contract award process, Tenant shall require contract applicants to
state the amount of their bid for demolition, assuming there was no asbestos in
the structures to be
-34-
<PAGE>
demolished. Tenant shall then identify all parts of such structures which will
be removed and disposed of by Landlord in accordance with its obligations
concerning asbestos removal described above. Tenant shall then require
applicants to state the amount of their bid for demolition, excluding the
obligation to demolish and remove such identified portions of the structures.
If the applicant to which Tenant awards the demolition contract reduces its bid
as a result of Landlord's removal and disposal of such identified portions of
the structures, Tenant shall pay Landlord an amount equal to such cost savings.
Such payment shall constitute payment in full for Landlord's asbestos removal
and disposal activities hereunder.
E. Notwithstanding the foregoing provisions of this paragraph
16.4, in the event that any Claims (as defined in paragraph 16.3) arise during
the Lease Term with respect to Hazardous Materials on or about the Premises that
have actually resulted directly from the release, disposal, discharge or
emission of Hazardous Materials in the Back Bay of Biloxi by parties other than
Landlord or Tenant, Landlord and Tenant shall each bear fifty percent (50%) of
all costs to remediate, remove or otherwise deal with such Hazardous Materials
in accordance with Environmental Laws, and Landlord and Tenant shall both join
in any resulting litigation and shall each bear fifty percent (50%) of all costs
(including attorneys' and consultants' fees) of such litigation.
F. Landlord shall perform all of its investigative, remediation
and other obligations under this paragraph 16.4 in a manner which will minimize
interference with and disruption of the operations of Tenant.
16.5 Definition of Environmental Laws: As used herein "Environmental
--------------------------------
Laws" shall mean all local, state or federal laws, statutes, ordinances, rules,
regulations, judgments, injunctions, stipulations, decrees, orders, permits,
approvals, treaties or protocols now or hereafter enacted, issued or promulgated
by any governmental authority which relate to any Hazardous Material or to the
use, handling, transportation, production, disposal, discharge, release,
emission, sale or storage of, or the exposure of any person to, a Hazardous
Material.
16.6 Definition of Hazardous Material: The term "Hazardous Material"
--------------------------------
shall mean any material or substance that is now or hereafter prohibited or
regulated by any law or that is now or hereafter designated by any governmental
authority to be radioactive, toxic, hazardous or otherwise a danger to health,
reproduction or the environment, including, without limitation, (i) oil and
petroleum products, (ii) explosives, (iii) radioactive substances and materials,
(iv) hazardous, ultra-hazardous or toxic substances or wastes, (v) asbestos,
(vi) urea formaldehyde, (vii) polychlorinated biphenyls and
-35-
<PAGE>
transformers or other equipment which contain fluid containing polychlorinated
biphenyls, (viii) radon gas, and (ix) chemicals, materials or substances now or
hereafter defined or included in the definition of "hazardous substances",
"hazardous waste", "hazardous materials", or "toxic substances", or words of
similar import, under any law, including, not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 as now or
hereafter amended ("CERCLA"), the Hazardous Materials Transportation Act, as now
or hereafter amended, the Resource Conservation Recovery Act, as now or
hereafter amended, the Federal Water Pollution Control Act, as now or hereafter
amended, the Clean Air Act, as now or hereafter amended, the Occupational Safety
and Health Act, as now or hereafter amended, and similar laws now or hereafter
enacted.
16.7 Exclusive Provisions: This Article 16 constitutes the entire
--------------------
agreement between Landlord and Tenant regarding Hazardous Materials and
Environmental Laws. No other provision of this Lease shall be deemed to apply
thereto.
ARTICLE 17
----------
GENERAL PROVISIONS
17.1 Estoppel Certificates: Each party agrees promptly following
---------------------
request by the other to execute and deliver to the other an estoppel
certificate, (i) certifying that this Lease is unmodified and in full force and
effect, or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect and the date to
which the rent and other charges are paid in advance, if any; and (ii)
acknowledging that, to the responding party's knowledge, there are not any
uncured defaults on the part of either party hereunder, or, if there exist any
such uncured defaults, stating the nature of such uncured defaults; and (iii)
evidencing the status of the Lease as may be required either by a lender making
a loan to be secured by Tenant's Estate or by a purchaser of the Premises or
Tenant's Estate. A party's failure to deliver an estoppel certificate as
required herein within twenty (20) days following receipt of written request
therefor shall be conclusive upon such party that as of the date of said request
(i) this Lease is in full force and effect, without modification; (ii) there are
no uncured defaults under this Lease on the part of either party; and (iii) no
rent more than one quarterly installment thereof has been paid in advance, all
except as may otherwise be set forth in such request.
17.2 Holding Over: This Lease shall terminate without further notice on
------------
the last day of the Lease Term. Any holding over by Tenant after such date
shall not constitute a renewal or extension of this Lease or give Tenant any
rights in or to
-36-
<PAGE>
the Property except as expressly provided herein. Any holding over after such
date with the consent of Landlord shall be construed to be a tenancy from month
to month, at the same rental (including Percentage Rent) due as of the last
month of the Lease Term, and shall otherwise be on the terms and conditions
herein specified insofar as applicable.
17.3 Notices: Any notice required or desired to be given pursuant to
-------
this Lease shall be in writing with copies directed as below indicated and shall
be personally served or, in lieu of personal service, by depositing same in the
United States mail, postage prepaid, certified or registered mail with request
for return receipt, in which latter event such notice shall be deemed delivered
seventy-two (72) hours after same shall have been so deposited in the United
States mail, or when actually delivered (if earlier), and if such notice shall
be addressed to Landlord, the address of Landlord is:
Raphael Skrmetta
c/o The Skrmetta Group, Inc.
Skrmetta Machinery Corporation
3536 Lowerline Street
New Orleans, Louisiana 70125
with a duplicate copy to:
Eric Skrmetta
4314 Bancroft Drive
New Orleans, Louisiana 70122
and if addressed to Tenant, the address of Tenant is:
Mississippi-I Gaming, L.P.
c/o Boomtown, Inc.
Interstate 80 at Garson Road Exit
Verdi, Nevada 89439
with a duplicate copy to:
______________________________
______________________________
______________________________
Either Landlord or Tenant may change its respective addresses by giving written
notice to the other in accordance with the provisions of this paragraph.
17.4 Attorney's Fees: In the event either party shall bring any action,
---------------
arbitration or legal proceeding for an alleged breach of any provision of this
Lease, to recover rent, to terminate this Lease, or to enforce, protect,
determine or establish any term, covenant or condition of this Lease or the
rights or obligations hereunder of either party, the prevailing party, in
addition to whatever other relief it
-37-
<PAGE>
may be entitled to, shall be entitled to recover from the non-prevailing party
reasonable attorneys' fees and expenses and court costs.
17.5 No Merger: The voluntary or other surrender of this Lease by
---------
Tenant, or a mutual cancellation thereof, shall not work a merger and shall, at
the option of Landlord, operate as an assignment to Landlord of any and/or all
subleases of subtenants.
17.6 Arbitration: Any question, dispute or controversy specifically
-----------
required to be determined by arbitration under any term or provision of this
Lease (and only such questions, disputes or controversies) shall be determined
pursuant to the provisions of this paragraph. Either Landlord or Tenant may
initiate such proceedings by giving written notice to the other stating an
intention to arbitrate, the issue to be arbitrated, and the relief sought. Such
arbitration shall be conducted pursuant to the provisions of the laws of the
State of Mississippi then in force, with the rules of procedure to be those of
the American Arbitration Association or its successor insofar as said rules of
procedure do not conflict with the laws of the State of Mississippi then in
force. Once notice to arbitrate has been given, Landlord and Tenant shall
jointly, within fifteen (15) days of such notice, select one arbitrator, or if
they cannot agree on one arbitrator then each shall select an arbitrator within
twenty (20) days of delivery of said notice, and the two arbitrators selected
shall designate the third arbitrator within twenty-five (25) days of delivery of
said notice. The three arbitrators shall convene as soon as practicable and
offer Landlord and Tenant the opportunity to present their cases. If any party
to the arbitration, after being duly notified, fails to appear, participate or
produce evidence at an arbitration hearing, the arbitrator(s) may make an award
based solely on the evidence actually presented. The arbitrators shall, by
majority vote, make such award and decision as is appropriate and in accord with
the terms of this Lease, and such award shall be binding upon Landlord and
Tenant and enforceable in a court of law. The cost of arbitration shall be
borne by Landlord and Tenant as determined by the arbitrators. In the event
either party fails to appoint an arbitrator or the two arbitrators fail to
select a third arbitrator within the time required by this paragraph, then upon
application of either party, the arbitrator shall be appointed by the American
Arbitration Association, or if there be no American Arbitration Association or
it shall refuse to perform this function, then at the request of either Landlord
or Tenant such arbitrator shall be appointed by the then senior judge of the
Chancery Court of the State of Mississippi for the Second Judicial District of
the County of Harrison.
-38-
<PAGE>
17.7 Quiet Enjoyment: Landlord covenants that Landlord has full right
---------------
to make this Lease and that Tenant shall have quiet and peaceful possession of
the Premises as against Landlord and any person claiming the same by, through or
under Landlord.
17.8 No Partnership: It is agreed that nothing contained in this Lease
--------------
shall be deemed or construed as creating a partnership, joint venture,
unincorporated association, or other similar relationship between Landlord and
Tenant, or cause Landlord to be responsible in any way for the debts or
obligations of Tenant. Neither the method of computing rent nor any other
provision contained in this Lease nor any acts of the parties hereto shall be
deemed to create any relationship between Landlord and Tenant other than the
relationship of landlord and tenant.
17.9 Captions: The captions used in this Lease are for the purpose of
--------
convenience only and shall not be construed to limit or extend the meaning of
any part of this Lease.
17.10 Duplicate Originals; Counterparts: Any executed copy of this Lease
---------------------------------
shall be deemed an original for all purposes. This Lease may be executed in one
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 Lease.
17.11 Time of the Essence: Time is of the essence of this Lease.
-------------------
17.12 Severability: In the event any one or more of the provisions
------------
contained herein shall for any reason be held to be invalid, illegal or
unenforceable in any respect, every other provision of this Lease shall remain
and subsist in full force and effect, and this Lease shall be construed as if
such invalid, illegal or unenforceable provision had not been contained herein.
17.13 Interpretation: The language in all parts of this Lease shall in
--------------
all cases be construed as a whole according to its fair meaning and not strictly
for or against either Landlord or Tenant. This Lease is the result of
negotiations among and has been reviewed by the parties and their respective
counsel. Accordingly, this Lease shall be deemed to be the product of both
parties hereto, and no ambiguity shall be construed in favor of or against
either party. In the event that Landlord or Tenant is comprised of more than
one person or entity, all covenants, obligations and liabilities of Landlord and
Tenant shall be the joint and several covenants, obligations and liabilities of
all such persons and entities comprising Landlord and Tenant, respectively.
When the context of this Lease requires, a reference to one gender includes the
other genders, a
-39-
<PAGE>
partnership, a corporation and a joint venture, and the singular includes the
plural. The validity, construction, effect, performance and enforcement of this
Lease shall be governed in all respects by the laws of the State of Mississippi.
17.14 Successors Bound: The covenants and agreements contained in this
----------------
Lease shall be binding upon and shall inure to the benefit of the parties hereto
and their respective heirs, successors, and permitted assigns, all subject to
the limitations contained in Articles 13 and 14.
17.15 No Waiver: The waiver by Landlord or Tenant of any breach of any
---------
term, covenant or condition herein contained shall not be deemed to be a waiver
of such term, covenant or condition or any subsequent breach of the same or any
other term, covenant or condition herein contained.
17.16 Covenant of Fair Dealing: Each party hereto agrees to act
------------------------
reasonably and in good faith with respect to the performance and fulfillment of
the terms of each and every covenant and condition contained in this Lease.
17.17 Delays: Any prevention, delay or stoppage due to strikes,
------
lockouts, inclement weather, labor disputes, acts of God, inability to obtain
labor, materials or fuels or reasonable substitute therefor, governmental
restrictions, regulations, controls, action or inaction, civil commotion, fire
or other casualty, and other causes beyond the reasonable control of the party
obligated to perform shall excuse the performance, for a period equal to the
period of any said prevention, delay or stoppage, of any obligation hereunder.
17.18 Integration: This Lease and all exhibits hereto constitute the
-----------
entire agreement between the parties, and there are no agreements or
representations between the parties except as expressed herein. Without
limiting the generality of the foregoing sentence, in the event of any conflict
between the terms and conditions of this Lease and the terms and conditions of
that certain Agreement to Lease Property in Biloxi, Mississippi, dated April 9,
1993, between Boomtown, Inc. and Landlord, this Lease shall control. Except as
otherwise provided herein, no subsequent change or addition to this Lease shall
be binding unless in writing and signed by the parties hereto.
17.19 Memorandum of Lease: Concurrently with the execution and delivery
-------------------
of this Lease, Landlord and Tenant shall execute a Memorandum of Lease in the
form of Exhibit "D" attached hereto and made a part hereof which Memorandum,
-----------
when fully executed, shall be recorded in the Official Records of Harrison
County, Mississippi.
-40-
<PAGE>
17.20 Limit on Tenant's Liability: Notwithstanding anything to the
---------------------------
contrary in this Lease, no stockholder or partner of Tenant nor any officer,
director, agent or employee of Tenant shall have any personal liability or
responsibility with respect to Tenant's covenants and obligations hereunder or
any other document executed or delivered in connection with the transactions
contemplated by this Lease. Recourse for all such covenants and obligations
shall be limited strictly to the corporate or partnership assets of Tenant. No
recourse may be had against the personal assets of any stockholder, partner,
officer, director, agent or employee of Tenant.
IN WITNESS WHEREOF, the parties hereto have executed this Ground Lease on
the respective dates below set forth to be effective as of the Effective Date.
LANDLORD:
--------
Dated: ____________ ___________________________
RAPHAEL SKRMETTA
TENANT:
------
MISSISSIPPI-I GAMING, L.P.,
a Mississippi limited
partnership
Dated: ____________ By: Bayview Yacht Club, Inc.,
a Mississippi corporation,
its sole General Partner
By: ______________________
Title: ___________________
-41-
<PAGE>
EXHIBIT "A"
Legal description of real property situated in the Second Judicial District of
Harrison County, Mississippi, and described as follows:
PROPERTY IN BLOCK 1: Commencing on the northern side of Bay View Avenue at a
point marked by a rod at the intersection of Bay View Avenue and extension of
the east line of Main Street; thence N 73 degree 28' E a distance of 440.7 feet
along Bay View Avenue to a point marked by a pipe; thence North 282.0 feet to a
pipe; thence to the Back Bay of Biloxi; thence westerly along Back Bay of Biloxi
to a point marked by a rod on the extension of the east line of Main Street;
thence South 344.4 feet to a point marked by a rod at the intersection of Bay
View Avenue and the extension of the east line of Main Street and the point of
beginning. Said piece of ground contains Lots 1 through 3, inclusive, Block 1,
Gorenflo's Addition, City of Biloxi, Second Judicial District of Harrison
County, Mississippi.
PROPERTY IN BLOCK 2: Commencing at a point in Block 2 on Bay View Avenue marked
by a pipe and thence South a Distance 230 feet along a line to a point marked by
an iron pipe; thence South 0 degree 10' East a distance of 150.4 feet to a point
marked by a post; thence South 31 37' East a distance of 67.6 feet to a Point
marked by a post; thence South 1 degree 00' West a distance of 257.5 feet to a
point marked by a post; thence South 89 degree 47' West a distance of 130 feet
to a point marked by a pipe; thence North along Davis Street a distance of 475.3
feet to a point marked by a pipe; thence North 89 degree 47' East a distance of
130 feet to a point marked by a pipe. Said piece of ground contains Lots 3
through 11 inclusive, Block 2, Gorenflo's Addition, Second Judicial District of
Harrison County, Mississippi.
PROPERTY IN BLOCK 3: Commencing at a point at the corner of Bay View Avenue and
Davis Street; thence South a distance of 652.5 feet along Davis Street to a
point marked by a pipe; thence South 89 degree 47' West a distance of 128 feet
to a point marked by a pipe; thence North 0 degree 16' West a distance of 288.1
feet to a point marked by a post; thence South 87 degree 05' West a distance of
122.3 feet to a point marked by post on Main Street; thence North a distance of
60 feet along Main Street to a point marked by a post; thence North 89 degree
02' East a distance of 76 feet to a point marked by a post; thence North 0
degree 04' West a distance of 253.9 feet to a point on Bay View Avenue marked by
a pipe; thence North 72 degree 51' East a distance of 184.5 feet along Bay View
Avenue to the point of be . Said piece of ground contains Lots 1 through 11
inclusive, Block 3, Gorenflo's Addition, and that lot having a front on Main
Street of 60 feet and bounded formerly on the North by property of St. Johns
Catholic Church and bounded formerly on the South by property of Bourgeois;
bounded formerly on the
EXHIBIT "A" - PAGE 1
<PAGE>
East by C.B. Foster Packing Company, and bounded on the West by Main Street,
located in Gorenflo's Addition to the City of Biloxi, in the Second Judicial
District of Harrison County, Mississippi.
This property is also described as shown on the following page 2 of this
Exhibit "A", and the following legal description is more expansive than the
legal description above (on this page).
EXHIBIT "A" - PAGE 2
<PAGE>
EXHIBIT "B"
ITEM 1. Any prior reservation or conveyance, together with release of damages,
of minerals of every kind and character including, but not limited to, oil, gas,
sand and gravel in, on and under subject property.
ITEM 2. Easements or other uses of subject property not visible from the
surface, or easements or claims of easements, not shown by the public records.
ITEM 3. Subject to riparian and/or littoral rights and title to that portion
of the captioned property which lies beneath the ordinary high water mark as
established as of the date the State of Mississippi was admitted to the Union,
subject to any changes that may have occurred.
ITEM 4. Subject to the Conditional Use Plat recorded in Plat Book 13 at Page
39 and 39A on file and of record in the Office of the Chancery Clerk of Harrison
County, Second Judicial District, Mississippi.
ITEM 5. Subject to the terms and conditions of this lease.
ITEM 6. Until such time as anticipated tidelands lease with State of
Mississippi is executed and made part of this policy by endorsement, approved by
the Company, the liability of this policy is limited to the value of said
insured leasehold interest as set forth on Schedule A of policy.
ITEM 7. Subject to the rights of the United States of America to protect,
regulate and improve navigation in the Gulf of Mexico and the Back Bay of Biloxi
and, in connection therewith, to establish harbor lines to regulate the
construction of piers, wharves, bulkheads or other works and the making of
deposits therein.
<PAGE>
EXHIBIT C
Calculation of Lease Amount
<TABLE>
<CAPTION>
===============================================================================
100% of Amt. 5% of Amt. 6% of Amt.
Adjusted From $10 MM greater than greater than Total
Gaming Win Base Lease to $15 MM $25 MM $50 MM Lease Amt.
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
8,000,000 500,000 500,000
- --------------------------------------------------------------------------------
9,000,000 500,000 500,000
- --------------------------------------------------------------------------------
10,000,000 500,000 500,000
- --------------------------------------------------------------------------------
11,000,000 1,000,000 100,000 1,100,000
- --------------------------------------------------------------------------------
12,000,000 1,000,000 200,000 1,200,000
- --------------------------------------------------------------------------------
13,000,000 1,000,000 300,000 1,300,000
- --------------------------------------------------------------------------------
14,000,000 1,000,000 400,000 1,400,000
- --------------------------------------------------------------------------------
15,000,000 2,000,000 2,000,000
- --------------------------------------------------------------------------------
16,000,000 2,000,000 2,000,000
- --------------------------------------------------------------------------------
17,000,000 2,000,000 2,000,000
- --------------------------------------------------------------------------------
18,000,000 2,000,000 2,000,000
- --------------------------------------------------------------------------------
19,000,000 2,000,000 2,000,000
- --------------------------------------------------------------------------------
20,000,000 2,000,000 2,000,000
- --------------------------------------------------------------------------------
21,000,000 2,000,000 2,000,000
- --------------------------------------------------------------------------------
22,000,000 2,000,000 2,000,000
- --------------------------------------------------------------------------------
23,000,000 2,000,000 2,000,000
- --------------------------------------------------------------------------------
24,000,000 2,000,000 2,000,000
- --------------------------------------------------------------------------------
25,000,000 2,000,000 2,000,000
- --------------------------------------------------------------------------------
26,000,000 2,000,000 50,000 2,050,000
- --------------------------------------------------------------------------------
27,000,000 2,000,000 100,000 2,100,000
- --------------------------------------------------------------------------------
28,000,000 2,000,000 150,000 2,150,000
- --------------------------------------------------------------------------------
29,000,000 2,000,000 200,000 2,200,000
- --------------------------------------------------------------------------------
30,000,000 2,000,000 250,000 2,250,000
- --------------------------------------------------------------------------------
31,000,000 2,000,000 300,000 2,300,000
- --------------------------------------------------------------------------------
32,000,000 2,000,000 350,000 2,350,000
- --------------------------------------------------------------------------------
33,000,000 2,000,000 400,000 2,400,000
- --------------------------------------------------------------------------------
34,000,000 2,000,000 450,000 2,450,000
- --------------------------------------------------------------------------------
35,000,000 2,000,000 500,000 2,500,000
- --------------------------------------------------------------------------------
36,000,000 2,000,000 550,000 2,550,000
- --------------------------------------------------------------------------------
37,000,000 2,000,000 600,000 2,600,000
- --------------------------------------------------------------------------------
38,000,000 2,000,000 650,000 2,650,000
- --------------------------------------------------------------------------------
39,000,000 2,000,000 700,000 2,700,000
- --------------------------------------------------------------------------------
40,000,000 2,000,000 750,000 2,750,000
- --------------------------------------------------------------------------------
41,000,000 2,000,000 800,000 2,800,000
- --------------------------------------------------------------------------------
42,000,000 2,000,000 850,000 2,850,000
- --------------------------------------------------------------------------------
43,000,000 2,000,000 900,000 2,900,000
- --------------------------------------------------------------------------------
44,000,000 2,000,000 950,000 2,950,000
- --------------------------------------------------------------------------------
45,000,000 2,000,000 1,000,000 3,000,000
- --------------------------------------------------------------------------------
46,000,000 2,000,000 1,050,000 3,050,000
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
47,000,000 2,000,000 1,100,000 3,100,000
- --------------------------------------------------------------------------------
48,000,000 2,000,000 1,150,000 3,150,000
- --------------------------------------------------------------------------------
49,000,000 2,000,000 1,200,000 3,200,000
- --------------------------------------------------------------------------------
50,000,000 2,000,000 1,250,000 3,250,000
- --------------------------------------------------------------------------------
51,000,000 2,000,000 1,300,000 60,000 3,360,000
- --------------------------------------------------------------------------------
52,000,000 2,000,000 1,350,000 120,000 3,470,000
- --------------------------------------------------------------------------------
53,000,000 2,000,000 1,400,000 180,000 3,580,000
- --------------------------------------------------------------------------------
54,000,000 2,000,000 1,450,000 240,000 3,690,000
- --------------------------------------------------------------------------------
55,000,000 2,000,000 1,500,000 300,000 3,800,000
- --------------------------------------------------------------------------------
56,000,000 2,000,000 1,550,000 360,000 3,910,000
- --------------------------------------------------------------------------------
57,000,000 2,000,000 1,600,000 420,000 4,020,000
- --------------------------------------------------------------------------------
58,000,000 2,000,000 1,650,000 480,000 4,130,000
- --------------------------------------------------------------------------------
59,000,000 2,000,000 1,700,000 540,000 4,240,000
- --------------------------------------------------------------------------------
60,000,000 2,000,000 1,750,000 600,000 4,350,000
================================================================================
</TABLE>
<PAGE>
EXHIBIT "D"
Prepared by and, when recorded, return to:
Wilson, Sonsini, Goodrich & Rosati
Two Palo Alto Square
Palo Alto, California 94306
Attention: Real Estate Dept./DKK
________________________________________________________________________________
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE is made as of the ___ day of October, 1993, by and
among RAPHAEL SKRMETTA, an individual resident of Louisiana ("Landlord"), and
Mississippi-I GAMING, L.P., a Mississippi limited partnership ("Tenant").
1. Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, that certain real property consisting of approximately eight and nine-
tenths (8.9) acres commonly known as 676 Bayview Avenue, Biloxi, Harrison
County, Mississippi, and more particularly described on Exhibit "A" attached
-----------
hereto and made a part hereof, together with (i) all buildings, structures and
improvements existing on such real property as of the date of the hereinafter-
defined Lease, and (ii) all easements, licenses, rights and privileges
appurtenant thereto (including, without limitation, all right, title and
interest of Landlord in, under and to the land lying in the streets and roads
abutting such real property to the central lines thereof) (all of which is
referred to collectively herein as the "Premises"), on the terms and conditions
of that certain Ground Lease (the "Lease") dated the date hereof by Landlord and
Tenant regarding the Premises.
2. Tenant shall be entitled to use and possess the Premises, without
payment of rent or other monetary obligations, from the date hereof to the
Commencement Date. The anticipated Commencement Date of the Lease Term is March
31, 1994, but the actual commencement Date of the Lease Term shall be as
provided in the Lease. The Lease Term shall be for ninety-nine (99) years
commencing on the Commencement Date and ending at midnight on the ninety-ninth
(99th) anniversary of the Commencement Date.
3. Tenant shall also be entitled to terminate the Lease prior to the
expiration of the Lease Term on the terms and conditions provided in the Lease.
4. Landlord hereby grants to Tenant both an option and a continuing right
of first refusal to purchase any or all right, title and interest of Landlord
in, under and to the
<PAGE>
Premises and the Lease on the terms and conditions provided in the Lease.
5. All capitalized terms used, but not defined, herein shall have the
meanings ascribed to them in the Lease. The purpose of this Memorandum is to
give public notice of the existence of the Lease. In the event, however, of any
inconsistency between this Memorandum and the terms and conditions of the Lease,
the Lease shall prevail.
IN WITNESS WHEREOF, the parties have executed this Memorandum of Lease, by
their duly-authorized representatives, as of the day and year first above
written.
LANDLORD:
______________________________
RAPHAEL SKRMETTA
Address: _____________________
Telephone: ___________________
TENANT:
MISSISSIPPI-I GAMING, L.P.,
a Mississippi limited
partnership
By: Bayview Yacht Club, Inc.
a Mississippi corporation,
its Sole General Partner
By: _____________________
Title: __________________
Address: c/o Boomtown, Inc.
Interstate 80 at
Garson Road Exit
Verdi, Nevada 89439
Telephone: (702) 345-6000
-2-
<PAGE>
STATE OF ____________________
COUNTY OF ___________________
Personally appeared before me, the undersigned authority in and for the
said county and state, on this ____ day of __________, 19__, within my
jurisdiction, the within named RAPHAEL SKRMETTA, duly identified before me, who
acknowledged that he executed the above and foregoing instrument.
[NOTARIAL SEAL] ______________________________
Notary Public
My commission expires: ________
STATE OF ____________________
COUNTY OF ___________________
Personally appeared before me, the undersigned authority in and for the
said county/parish and state, on this ____ day of __________, 19__, within my
jurisdiction, the within named
__________________________________________________, duly identified before me,
who acknowledged that _he_ is __________ of Bayview Yacht Club, Inc., a
Mississippi corporation, and that for and on behalf of said corporation, and as
its act and deed as sole general partner of MISSISSIPPI-I GAMING, L.P., a
Mississippi limited partnership, and as its act and deed, _he_ executed the
above and foregoing instrument, after first having been duly authorized by said
corporation and limited partnership so to do.
[NOTARIAL SEAL] ______________________________
Notary Public
My commission expires: ________
-3-
<PAGE>
EXHIBIT 10.34
FIRST AMENDMENT TO GROUND LEASE
This First Amendment to Ground Lease (this "Amendment") is dated as of
___________, 1993, by and among Raphael Skrmetta, an individual resident of
Louisiana ("Landlord"), and Mississippi-I Gaming, L.P., a Mississippi limited
partnership ("Tenant") with reference to the following facts and circumstances:
A. Landlord and Tenant are parties to that certain Ground Lease dated as
of the date hereof (the "Lease") pursuant to which Landlord has leased to
Tenant, and Tenant has leased from Landlord, certain real property commonly
known as 676 Bayview Avenue, Biloxi, Harrison County, Mississippi, and more
particularly described on Exhibit A attached hereto.
B. A Memorandum of Lease dated as of the date hereof by and among
Landlord and Tenant has been executed and shall be recorded in Harrison County,
Mississippi Records.
C. Landlord and Tenant desire to amend the Lease in the manner set forth
below.
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. The following two sentences are added at the end of paragraph 15.2 of
the Ground Lease:
"Tenant shall include with such written notice the address of the Leasehold
Mortgagee or its designee to which copies of notices shall be mailed. After
having been notified of the existence of a Leasehold Mortgage, Landlord shall
deliver to the Leasehold Mortgagee thereunder or its designee at such address a
duplicate copy of all notices delivered by Landlord to Tenant under the terms of
this Lease. Such duplicate copies shall be delivered to the Leasehold Mortgagee
concurrently with the delivery of the notices to Tenant."
2. The period at the end of paragraph 15.3 is hereby deleted and
replaced with the following:
", and Landlord shall accept such payment or act by or at the instance of
any Leasehold Mortgagee as if the same had been made by Tenant. Subject to
compliance by a Leasehold Mortgagee with the provisions of paragraph 15.4, no
default shall be deemed to exist under this Lease if proceedings shall in good
faith have been commenced properly to rectify the same and prosecuted to
completion with diligence and continuity."
<PAGE>
3. Paragraph 15.4 is deleted in its entirety and replaced with the
following:
15.4 Termination. Notwithstanding anything to the contrary in this Lease,
-----------
Landlord may terminate this Lease because of a default hereunder only after
Landlord has delivered to each Leasehold Mortgagee a written notice specifying
such default and:
(a) Such default is a failure by Tenant to pay any funds to Landlord
or its nominee, successor or assigns, and no Leasehold Mortgagee cures such
default within sixty (60) days after the expiration of Tenant's cure period; or
(b) In the event of any other default hereunder susceptible to being
cured by a Leasehold Mortgagee, no Leasehold Mortgagee commences within sixty
(60) days after the expiration of Tenant's cure period the work of curing such
default and carrying same to completion with all reasonable dispatch. If such
default cannot be cured by a Leasehold Mortgagee without such Leasehold
Mortgagee obtaining possession of the Property or title to Tenant's Estate, a
Leasehold Mortgagee commencing and thereafter pursuing to completion proceedings
to obtain possession and/or to foreclose the lien held by such Leasehold
Mortgagee or diligently proceeding to obtain title to Tenant's Estate by deed or
assignment in lieu of foreclosure shall be deemed to satisfy the foregoing
requirement that such Leasehold Mortgagee commence and carry to completion the
curing of such default, provided that such Leasehold Mortgagee commences within
thirty (30) days after obtaining such possession or such title the work of
curing such default and carries the same to completion with all reasonable
dispatch; or
(c) In the event of a default of this Lease that is not susceptible to
being cured by a Leasehold Mortgagee, such default shall be deemed to be cured
if within one hundred twenty (120) days after the expiration of Tenant's cure
period, a Leasehold Mortgagee shall have commenced foreclosure or other
appropriate proceedings in the nature thereof and such Leasehold Mortgagee shall
thereafter diligently prosecute such proceedings to completion;
(d) Notwithstanding anything to the contrary in this paragraph 15.4,
if a Leasehold Mortgagee has not cured any default within the time periods
prescribed above, so long as any Leasehold Mortgagee is proceeding diligently
pursuant to any of the provisions of this paragraph 15.4 and Landlord is
receiving rental payments hereunder, Landlord's right to terminate this Lease
shall be suspended. Nothing herein contained shall be deemed to require any
Leasehold Mortgagee to continue with such foreclosure or any other proceedings,
or once having obtained possession of the Property to continue in possession
thereof.
4. Paragraph 15.5 is deleted in its entirety and replaced with the
following:
15.5 Leasehold Mortgagee's Rights and Obligations Following a Foreclosure:
--------------------------------------------------------------------
Should a Leasehold Mortgagee or its designee acquire Tenant's Estate as a result
of a foreclosure, a deed or assignment in lieu of foreclosure, or a sale under a
Leasehold Mortgage pursuant to a power of sale contained therein, such Leasehold
Mortgagee or
2
<PAGE>
designee shall acquire Tenant's Estate subject to all of the provisions of this
Lease (specifically, including options to purchase, rights of first refusal and
the provisions of this Article 15); provided, however, that such Leasehold
Mortgagee or designee shall have no liability under this Lease except during
such time as it owns Tenant's Estate and only with respect to any loss, damage,
injury or liability resulting from its own (i) negligence, (ii) willful
misconduct, or (iii) act or omission constituting a breach under this Lease.
5. Paragraph 15.7 is amended by adding the following sentence to the
beginning of such paragraph:
"Notwithstanding anything to the contrary contained in this Lease, this
Lease may be transferred or assigned without Landlord's consent as a result of a
foreclosure, a deed or assignment in lieu of foreclosure or a sale under the
Leasehold Mortgage pursuant to a power of sale contained therein."
6. Paragraph 15.8 is deleted in its entirety and replaced with the
following:
15.8 New Lease: Upon termination of this Lease by Landlord on Tenant's
---------
default hereunder, or upon a Leasehold Mortgagee's acquisition of Tenant's
Estate by way of foreclosure or otherwise, at any Leasehold Mortgagee's request
given within sixty (60) days of such termination or acquisition Landlord shall
enter into a new lease of the Property and all improvements thereon with such
Leasehold Mortgagee, effective as of the date of such termination or acquisition
(but with the same relative priority as this Lease with regard to encumbrances
on the Property) for the remainder of the Lease Term and at the same rent and
upon the same terms and conditions contained in this Lease (including the option
to purchase and right of first refusal set forth herein); provided, however,
that the tenant under such lease shall have the right to assign its interest in
such lease on the terms set forth in Paragraph 15.7 hereof. The Leasehold
Mortgagee shall pay all costs, fees, expenses and legal fees incurred by
Landlord in connection with the execution of such new lease. Following the
termination of this Lease by Landlord on Tenant's default and until each
Leasehold Mortgagee has failed within sixty (60) days to demand a new lease,
Landlord shall not alter or in any way demolish any improvements on the
Property, nor modify or terminate any subleases. At the time of the execution
and delivery of any new lease pursuant to this Section 15.8, Landlord shall
execute and deliver to the party executing such new lease as the tenant, a grant
deed to the improvements on the Property and a bill of sale to the furnishings,
fixtures, furniture, equipment, and personal property thereon, both of which
documents shall be effective as of the effective date of such new lease.
Concurrent with the delivery of such grant deed and the bill of sale, Landlord
shall deliver to the new tenant under such new lease an assignment of Landlord's
rights under all subleases and sub-subleases affecting any portion of the
Property and memorandum of such new lease in recordable form. In the event that
a nominee or designee of any Leasehold Mortgagee shall be the tenant under such
new lease, such designee or nominee shall, at its election, have the right to
continue its lien against such new lease and the improvements located on the
Property as well as all fixtures and personal property located thereon to secure
payment of its then existing outstanding indebtedness.
3
<PAGE>
7. The first sentence of paragraph 15.10 is deleted in its entirety and
replaced with the following:
"So long as any Leasehold Mortgage is in effect and Landlord has been given
notice of its existence, then this Lease will not be voluntarily canceled,
surrendered, terminated, amended, modified or in any manner altered, or any
provision hereof waived or deferred by Tenant, without the prior written consent
of all Leasehold Mortgagees (except as otherwise provided or permitted under
their respective Leasehold Mortgages)."
8. The following new paragraphs are added at the end of Article 15:
15.2 Certain Obligations of Leasehold Mortgagee in Possession.
--------------------------------------------------------
Notwithstanding anything to the contrary in this Lease, after any party who is a
Leasehold Mortgagee has obtained or holds title to this Lease or possession of
the Property by foreclosure or deed in lieu of foreclosure, then no requirement
or covenant contained in this Lease requiring Tenant for any purpose to post a
bond or provide any other security shall be applicable or enforceable against
any such party.
15.13 Designees and Nominees: All references in this Lease to a mortgagee
----------------------
or beneficiary under a deed of trust or a Leasehold Mortgagee shall be construed
to also refer to any such mortgagee's, beneficiary's or Leasehold Mortgagee's
designee or nominee.
15.14 Tenant's Retention of Lease in Bankruptcy: If Tenant shall reject
-----------------------------------------
this Lease pursuant to Section 365(a) of the Bankruptcy Code, 11 U.S.C. (S)
365(a), then Landlord shall serve on each Leasehold Mortgagee written notice of
such rejection, together with a statement of all sums at the time due under this
Lease (without giving effect to any acceleration), and of all other defaults
under this Lease then known to Landlord (the "Rejection Notice"). Leasehold
Mortgagee shall have the right, but not the obligation, to serve on Landlord
within twenty (20) days after service of the Rejection Notice a notice (the
"Assumption Notice") that the Leasehold Mortgagee elects to (a) assume this
Lease and (b) cure all defaults outstanding thereunder (x) in accordance with
paragraph 15.4(a) of this Lease as to defaults in the payment of money, and (y)
in accordance with paragraph 15.4(b), (c) or (d) of this Lease as to other
defaults; provided, that Leasehold Mortgagee's failure to give an Assumption
Notice within said twenty (20) day period shall be deemed to be Leasehold
Mortgagee's election not to assume this Lease; provided further, that in the
event that the cure periods set forth in paragraph 15.4 would give to Leasehold
Mortgagee less than thirty (30) days from the receipt by Leasehold Mortgagee of
such Rejection Notice to make or commence such cure, then Leasehold Mortgagee
shall have thirty (30) days from receipt by Leasehold Mortgagee from Landlord of
such Rejection Notice to cure defaults described in paragraphs 15.4(a) and to
commence the cure of non-monetary defaults described in paragraphs 15.4(b), (c)
and (d) and complete such cures in accordance with such paragraphs
(collectively, the "Bankruptcy Cure Periods"). If Leasehold Mortgagee serves
the Assumption Notice, then, as between the Landlord and Leasehold Mortgagee (1)
the rejection of the Lease by Tenant shall not constitute a termination of this
Lease, (2) the Leasehold Mortgagee assumes the obligations of Tenant under this
Lease without any instrument of assignment or transfer from the Tenant and (3)
Leasehold Mortgagee shall
4
<PAGE>
consummate the assumption of the Lease by curing all defaults (susceptible of
being cured by Leasehold Mortgagee) under the Lease outstanding as of the date
or rejection or arising or accruing from such date to the date of assumption in
accordance with the Bankruptcy Cure Periods. Tenant acknowledges that in the
event Leasehold Mortgagee serves the Assumption Notice, then the Leasehold
Mortgagee's rights under this Lease following an assumption of the Lease by
Leasehold Mortgagee shall be free and clear of all rights, claims and
encumbrances of or in respect of Tenant.
The above notwithstanding, in the event that Landlord fails to give
Leasehold Mortgagee the Rejection Notice, Landlord shall have no liability to
Leasehold Mortgagee or Tenant under this Lease or otherwise for such failure to
give the Rejection Notice or any consequences resulting therefrom, and such
failure shall not constitute or be deemed to be a breach hereof or a default
hereunder.
Notwithstanding any provision of this Lease, if Tenant shall have rejected
this Lease pursuant to Section 365(a) of the Bankruptcy Code, 11 U.S.C. (S)
365(a), then as between Landlord and Leasehold Mortgagee this Lease shall remain
in full force and effect until the earlier to occur of the following: (i)
Landlord shall have given the Rejection Notice provided for above and Leasehold
Mortgagee shall have failed to give timely the Assumption Notice or, having
given the Assumption Notice, shall have failed to cure within the Bankruptcy
Cure Periods any defaults required to be cured hereunder, or (ii) Leasehold
Mortgagee shall have served on Landlord a notice of Leasehold Mortgagee's
election not to assume this Lease.
IN WITNESS WHEREOF, this First Amendment to Ground Lease has been executed
by the parties hereto as of the day and year first set forth above.
LANDLORD
------------------------------------
Raphael Skrmetta
TENANT
MISSISSIPPI-I-GAMING, L.P., a Mississippi limited
partnership
By: Bayview Yacht Club, Inc., a Mississippi
Corporation, its sole general partner
By:
-----------------------------------
Its:
-----------------------------------
5
<PAGE>
EXHIBIT "A"
Legal description of real property situated in the Second Judicial District of
Harrison County, Mississippi, and described as follows:
PROPERTY IN BLOCK 1: Commencing on the northern side of Bay View Avenue at a
point marked by a rod at the intersection of Bay View and extension of the east
line of Main Street; thence N 73 degree 28' E a distance of 440.7 feet along Bay
View Avenue to a point marked by a pipe; thence North 282.0 feet to a pipe;
thence to the Back Bay of Biloxi; thence westerly along Back Bay of Biloxi to a
point marked by a rod on the extension of the east line of Main Street; thence
South 344.4 feet to a point marked by a rod at the intersection of Bay View
Avenue and the extension of the east line of Main Street and the point of
beginning. Said piece of ground contains Lots 1 through 3, inclusive, Block 1,
Gorenflo's Addition, City of Biloxi, Second Judicial District of Harrison
County, Mississippi.
PROPERTY IN BLOCK 2: Commencing at a point in Block 2 on Bay View Avenue marked
by a pipe and thence South a Distance 230 feet along a line to a point marked by
an iron pipe; thence South 0 degree 10' East a distance of 150.4 feet to a point
marked by a post; thence 3 degree 37' East a distance of 67.6 feet to a point
marked by a post; thence 1 degree 00' West a distance of 257.5 feet to a point
marked by a post; thence South 89 degree 47' West a distance of 130 feet to a
point marked by a pipe; thence North along Davis Street a distance of 475.3 feet
to a point marked by a pipe; thence 89 degree 47' East a distance of 130 feet to
a point marked by a pipe. Said piece of ground contains Lots 3 through 11
inclusive, Block 2, Gorenflo's Addition, Second Judicial District of Harrison
County, Mississippi.
PROPERTY IN BLOCK 3: Commencing at a point at the corner of Bay View Avenue and
Davis Street; thence South a distance of 652.5 feet along Davis Street to a
point marked by a pipe; thence South 89 degree 47' West a distance of 128 feet
to a point marked by a pipe; thence North 0 degree 16' West a distance of 288.1
feet to a point marked by a post; thence South 87 degree 05' West a distance of
122.3 feet to a point marked by post on Main Street; thence North a distance of
60 feet along Main Street to a point marked by a post; thence 89 degree 02' East
a distance of 76 feet to a point marked by a post; thence North 0 degree 04'
West a distance of 253.9 feet to a point on Bay View Avenue marked by a pipe;
thence North 72 degree 51' East a distance of 184.5 feet along Bay View Avenue
to the point of beginning. Said piece of ground contains Lots 1 through 11
inclusive, Block 3, Gorenflo's Addition, and that lot having a front on Main
Street of 60 feet and bounded formerly on the North by property of St. Johns
Catholic Church and bounded formerly on the South by property of Bourgeois;
bounded formerly on the East by C.B. Foster Packing Company, and bounded on the
West by Main Street, located in Gorenflo's Addition to the City of Biloxi, in
the Second Judicial District of Harrison County, Mississippi.
This property is also described as shown on the following page 2 of this
Exhibit "A", and the following legal description is more expansive than the
legal description above (on this page).
Exhibit "A" - Page 1
6
<PAGE>
LEGAL DESCRIPTION - PARCEL "A"
- ------------------------------
For the POINT OF BEGINNING, commence at a point on the North margin of Bay
View Avenue, said point being at the intersection of said North margin of Bay
View Avenue, with the extension of the East line of Main Street; thence run
North 0 degree 30'07" East, for a distance of 352.72 feet to a point at the
Waters Edge in the Back Bay of Biloxi; thence run along said Waters Edge, the
following bearings and distances, to wit; North 65 degree 01'07" East, 106.37
feet; North 14 degree 59'07" West, 79.83 feet; North 11 degree 19'27" West,
27.44 feet; North 81 degree 26'23" East, 94.03 feet; South 08 degree 11'59"
East, 22.25 feet; North 81 degree 54'06" East, 49.27 feet; North 09 degree
13'15" West, 7.92 feet; North 75 degree 11'01" East, 39.18 feet; South 07 degree
16'10" East, 25.28 feet; South 0 degree 47'05" East, 18.55 feet; South 65 degree
11'04" East, 89.88 feet; South 02 degree 39'47" West, 9.06 feet; South 59 degree
34'39" East, 35.62 feet and South 89 degree 00'25" East, 54.89 feet; thence run
South 0 degree 30'07" West, for a distance of 283.54 feet to a point on the
North margin of Bay View Avenue; thence run South 73 degree 28'00" West, along
said North margin, for a distance of 440.97 feet to the POINT OF BEGINNING,
containing 163,937 Square Feet, or 3.76 Acres, approximately.
LEGAL DESCRIPTION - PARCEL "B" - (Tidelands)
- ------------------------------
COMMENCE at a point on the North margin of Bay View Avenue, said point
beginning at the intersection of said North margin with the extension of the
East margin of Main Street; thence run North 0 degree 30'07" East, for a
distance of 352.72 feet to a point on the waters edge in the Back Bay of Biloxi,
and the POINT OF BEGINNING; thence continue North 0 degree 30'07" East, for a
distance of 627.28 feet to a point; thence run South 89 degree 29'53" East, for
a distance of 421.62 feet to a point; thence run South 0 degree 30'07" West, for
a distance of 567.28 feet to a point on the waters edge in the Back Bay of
Biloxi, thence run along the waters edge, the following bearings and distances,
to wit; North 89 degree 00'25" West, 54.89 feet, 65 degree 11'04 West, 89.88
feet; North 0 degree 47'05" West, 18.55 feet; North 07 degree 16'10" West, 25.28
feet; South 75 degree 11.01" West, 39.18 feet, South 09 degree 13'15" East, 7.92
feet; South 81 degree 54'06" West, 49.27 feet; North 08 degree 11'59" West,
22.25 feet; South 81 degree 26'23" West, 94.03 feet; South 11 degree 19'27"
East, 27.44 feet; South 14 degree 59'07" East, 79.83 feet and South 65 degree
01'07" West, for a distance of 106.37 feet to the POINT OF BEGINNING, containing
222,022 Square Feet, or 5.10 Acres, approximately.
LEGAL DESCRIPTION - PARCEL "C"
- ------------------------------
For the POINT OF BEGINNING, commence at the point of intersection of the
South margin of Bay View Avenue with the West margin of Davis Street, said point
being further described as the Northeast corner of Lot 2, Block 3, Gorenflo's
Addition to the City of Biloxi, Harrison County, Mississippi, as shown on the
Official map or plat thereof on file and of record in Plat Book 6, Page 16 of
the Record of Plats of Harrison County, Mississippi; from said POINT OF
BEGINNING, thence run South 0 degree 24'25" West, for a distance of 184.84 feet
to a point; thence run South 44 degree 43'26" East, for a distance of 47.89 feet
to a point; thence run South 89 degree 51'38" East, for a distance of 135.80
feet to a point; thence run South 0 degree 20'38" West, for a distance of 110.63
feet to a point; thence run South 03 degree 12'31" East, for a distance of 67.25
feet to a point; thence run South 02 degree 10'03" West,
Exhibit "A" = Page 2
7
<PAGE>
for a distance of 63.79 feet to a point; thence run South 01 degree 22'27" West,
for a distance of 93.08 feet to a point; thence run South 89 degree 35'13" West,
for a distance of 141.84 feet to a point; thence runs South 45 degree 00'00"
West, for a distance of 41.00 feet to a point; thence run South 0 degree 24'45"
West, for a distance of 71.22 feet to a point; thence run South 89 degree 35'13"
West, for a distance of 127.46 feet to a point; thence run North 0 degree 01'17"
West, for a distance of 290.54 feet to a point; thence run South 88 degree
50'07" West, for a distance of 122.30 feet to a point on the East margin of Main
Street; thence run North 0 degree 50'06" East, along said East margin, for a
distance of 60.38 feet to a point; thence run South 89 degree 48'31" East, for a
distance of 75.51 feet to a point; thence run North 0 degree 04'33" East, for a
distance 254.95 feet to a point on the South margin of Bay View Avenue; thence
run North 73 degree 28'00" East, along said South margin, for a distance of
185.49 feet to the POINT OF BEGINNING, containing 160,140 Square Feet, or 3.68
Acres, approximately.
Less and except the following two parcels (excepted from page 1 and page 2
above):
LEGAL DESCRIPTION - PARCEL "D"
- ------------------------------
(CUL-DE-SAC PARCEL NO. 1)
For the POINT OF BEGINNING, commence at a point on the East margin of Davis
Street; said point being the Southwest property corner of Lot 11, Block 2,
Gorenflo's Addition to the City of Biloxi, Harrison County, Mississippi, as
shown on the official map or plat thereof on file and of record in Plat Book 6,
Page 16 of the Record of Plats of Harrison County, Mississippi; thence run North
0 degree 24'45" East, along said East margin, for a distance of 100.01 feet to a
point; thence run North 89 degree 35'13" East, for a distance of 130.63 feet to
a point: thence run South 01 degree 22'27" West, for a distance of 100.05 feet
to a point; thence run South 89 degree 35'13" West, for a distance of 128.95
feet to the POINT OF BEGINNING, containing 12,979 Square Feet, or 0.30 Acre,
approximately.
LEGAL DESCRIPTION - PARCEL "E"
- ------------------------------
(CUL-DE-SAC PARCEL NO. 2)
For the POINT OF BEGINNING, commence at a point on the East margin of Davis
Street; said point being the Northwest corner of Lot 3, Block 2, Gorenflo's
Addition to the City of Biloxi, Harrison County, Mississippi, as shown on the
Official map or plat thereof on file and of record in Plat Book 6, Page 16 of
the Record of Plats of Harrison County, Mississippi; thence run North 0 degree
24'45" East, along said East margin, for a distance of 60.0 feet to a point;
thence run South 89 degree 51'38" East, for a distance of 64.50 feet to a point:
thence run South 0 degree 20'38" West, for a distance of 60.0 feet to a point;
thence run South 89 degree 51'37" East, for a distance of 65.13 feet to a point;
thence run South 0 degree 20'38" West, for a distance of 40.0 feet to a point;
thence run North 89 degree 51'38" West, for a distance of 129.75 feet to a pint
on the East margin of Davis Street; thence run North 0 degree 24'45" East, along
said East margin, for a distance of 40.0 feet to the POINT OF BEGINNING,
containing 9,061 Square Feet, or 0.21 Acre, approximately.
Exhibit "A" - Page 3
8
<PAGE>
EXHIBIT 10.35
STATE OF MISSISSIPPI
COUNTY OF HARRISON
SECOND JUDICIAL DISTRICT
SECOND AMENDMENT TO GROUND LEASE
______________________
This Second Amendment to Ground Lease [this "Amendment"] is dated as of the
____ day of November, 1993, by and among RAPHAEL Q. SKRMETTA, an individual
resident of Louisiana ["LANDLORD"], and MISSISSIPPI-I GAMING, L.P., a
Mississippi limited partnership ["TENANT"], with reference to the following
facts and circumstances:
A. LANDLORD and TENANT are parties to that certain Ground Lease dated October
19, 1993, as amended by First Amendment to Ground Lease of same date [the
"LEASE"], pursuant to which LANDLORD has leased to TENANT, and TENANT has
leased from LANDLORD, certain real property commonly known as 676 BAYVIEW
AVENUE, BILOXI, HARRISON COUNTY, MISSISSIPPI, and more particularly
described on Exhibit "A" attached to the LEASE.
B. A Memorandum of Lease dated October 19, 1993, by and among LANDLORD and
TENANT was executed and recorded in Book 262 at Page 210, and re-recorded
in Book 262 at Page 359, of the Records in the Office of the Chancery Clerk
of Harrison County, Second Judicial District, Mississippi.
C. LANDLORD and TENANT acknowledge that the property description in the Lease
contains certain errors and they desire to amend the LEASE in the manner
set forth below to correct the property description.
<PAGE>
NOW THEREFORE, FOR GOOD AND VALUATION CONSIDERATION, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Exhibit "A" to the Lease is hereby deleted in its entirety and Exhibit "A"
attached hereto is hereby substituted in lieu thereof.
IN WITNESS WHEREOF, this Second Amendment to Ground Lease has been executed
by the parties hereto as of the day and year first set forth above.
LANDLORD
By:_______________________________
Raphael Q. Skrmetta
TENANT
MISSISSIPPI-I GAMING, L.P.,
a Mississippi limited partnership
By: BAYVIEW YACHT CLUB, INC.,
a Mississippi Corporation,
its sole general partner
By:_____________________________
ROBERT F. LIST, Vice President
-2-
<PAGE>
EXHIBIT "A"
Legal description of real property situated in the Second Judicial District of
Harrison County, Mississippi, and described as follows:
PROPERTY IN BLOCK 1: Commencing on the northern side of Bay View Avenue at a
point marked by a rod at the intersection of Bay View Avenue and extension of
the east line of Main Street; thence N 73 degree 28' E a distance of 440.7 feet
along Bay View Avenue to a point marked by a pipe: thence North 282.0 feet to a
pipe; thence to the Back Bay of Biloxi; thence westerly along Back Bay of Biloxi
to a point marked by a rod on the extension of the east line of Main Street;
thence South 344.4 feet to a point marked by a rod at the intersection of Bay
View Avenue and the extension of the east line of Main Street and the point of
beginning. Said piece of ground contains Lots 1 through 3, inclusive, Block 1,
Gorenflo's Addition, City of Biloxi, Second Judicial District of Harrison
County, Mississippi.
PROPERTY IN BLOCK 2: Commencing at a point in Block 2 on Bay View Avenue marked
by a pipe and thence South a Distance 230 feet along a line to a point marked by
an iron pipe; thence South 0 degree 10' East a distance of 150.4 feet to a point
marked by a post; thence South 337' East a distance of 67.6 feet to a point
marked by a post; thence South 1 degree 00' West a distance of 257.5 feet to a
point marked by a post; thence South 89 degree 47' West a distance of 130 feet
to a point marked by a pipe; thence North along Davis Street a distance of 475.3
feet to a point marked by a pipe; thence North 89 degree 47' East a distance of
130 feet to a point marked by a pipe. Said piece of ground contains Lots 3
through 11 inclusive, Block 2, Gorenflo's Addition, Second Judicial District of
Harrison County, Mississippi.
PROPERTY IN BLOCK 3: Commencing at a point at the corner of Bay View Avenue and
Davis Street; thence South a distance of 652.5 feet along Davis Street to a
point marked by a pipe; thence South 89 degree 47' West a distance of 128 feet
to a point marked by a pipe; thence North 0 degree 16' West a distance of 288.1
feet to a point marked by a post; thence South 87 degree 05' West a distance of
122.3 feet to a point marked by post on Main Street; thence North a distance of
60 feet along Main Street to a point marked by a post; thence North 89 degree
02' East a distance of 76 feet to a point marked by a post; thence North 0
degree 04' West a distance of 253.9 feet to a point on Bay View Avenue marked by
a pipe; thence North 72 degree 51' East a distance of 184.5 feet along Bay View
Avenue to the point of beginning. Said piece of ground contains Lots 1 through
11 inclusive, Block 3, Gorenflo's Addition, and that lot having a front on Main
Street of 60 feet and bounded formerly on the North by property of St. Johns
Catholic Church and bounded formerly on the South by property of Bourgeois;
bounded formerly on the East by C. B. Foster Packing Company, and bounded on the
West by Main Street, located in Gorenflo's addition to the City of Biloxi, in
the Second Judicial District of Harrison County, Mississippi.
This property is also described as shown on the following pages 2 and 3 of
this Exhibit "A", and the following legal description is more expansive than the
legal description above (on this page). The description on pages 2 and 3
includes tidelands property, part of Davis Street which has been vacated and
part of Lot 12, Block 3, Gorenflo's Addition. The description on the next two
pages excludes property which has been dedicated to the City of Biloxi for cul-
de-sacs.
EXHIBIT "A" - Page 1
<PAGE>
LEGAL DESCRIPTION - PARCEL "A"
- ------------------------------
For the POINT OF BEGINNING, commence at a point on the North margin of Bay
View Avenue, said point being at the intersection of said North margin of Bay
View Avenue, with the extension of the East line of Main Street; thence run
North 0 degree 30'07" East, for a distance of 352.72 feet to a point at the
Waters Edge in the Back Bay of Biloxi; thence run along said Waters Edge, the
following bearings and distances, to wit; North 65 degree 01'07" East, 106.37
feet; North 14 degree 59'07" West, 79.83 feet; North 11 degree 19'27" West,
27.44 feet; North 81 degree 26'23" East, 94.03 feet; South 08 degree 11'59"
East, 22.25 feet; North 81 degree 54'06" East, 49.27 feet; North 09 degree
13'15" West, 7.92 feet; North 75 degree 11'01" East, 39.18 feet; South 07 degree
16'10" East, 25.28 feet; South 0 degree 47'05" East, 18.55 feet; South 65 degree
11'04" East, 89.88 feet; South 02 degree 39'47" West, 9.06 feet; South 59 degree
34'39" East, 35.62 feet and South 89 degree 00'25" East, 54.89 feet; thence run
South 0 degree 30'07" West, for a distance of 283.54 feet to a point on the
North margin of Bay View Avenue; thence run South 73 degree 28'00" West, along
said North margin, for a distance of 440.97 feet to the POINT OF BEGINNING,
containing 163,937 Square Feet, or 3.76 Acres, approximately.
LEGAL DESCRIPTION - PARCEL "B" (Tidelands)
- ------------------------------
Commence at a point on the North margin of Bay View Avenue, said point
being at the intersection of said North margin with the extension of the East
margin of Main Street; thence run North 0 degree 30'07" East, for a distance of
352.72 feet to a point on the waters edge in the Back Bay of Biloxi, and the
POINT OF BEGINNING; thence continue North 0 degree 30'07" East, for a distance
of 627.28 feet to a point; thence run South 89 degree 29'53" East, for a
distance of 421.62 feet to a point; thence run South 0 degree 30'07" West, for a
distance of 567.28 feet to a point on the waters edge in the Back Bay of Biloxi,
thence run along the waters edge, the following bearings and distances, to wit:
North 89 degree 00'25" West, 54.89 feet, North 59 degree 34'39" West, 35.62
feet; North 02 degree 39'47" East, 9.06 feet; North 65 degree 11'04" West, 89.88
feet; North 0 degree 47'05" West, 18.55 feet; North 07 degree 16'10" West, 25.28
feet; South 75 degree 11'01" West, 39.18 feet, South 09 degree 13'15" East, 7.92
feet; South 81 degree 54'06" West, 49.27 feet; North 08 degree 11'59" West,
22.25 feet; South 81 degree 26'23" West, 94.03 feet; South 11 degree 19'27"
East, 27.44 feet; South 14 degree 59'07" East, 79.83 feet and South 65 degree
01'07" West, for a distance of 106.37 feet to the POINT OF BEGINNING, containing
222,022 Square Feet, or 5.10 Acres, approximately.
LEGAL DESCRIPTION - PARCEL "C"
- ------------------------------
For the POINT OF BEGINNING, commence at the point of intersection of the
South margin of Bay View Avenue with the west margin of Davis Street, said point
being further described as the Northeast corner of Lot 2, Block 3, Gorenflo's
Addition to the City of Biloxi, Harrison County, Mississippi, as shown on the
Official map or plat thereof on file and of record in Plat Book 6, Page 16 of
the Record of Plats of Harrison County, Mississippi; from said POINT OF
BEGINNING, thence run South 0 degree 24'45" West, for a distance of 184.84 feet
to a point; thence run South 44 degree 43'26" East, for a distance of 47.89 feet
to a point; thence run South 89 degree 51'38" East, for a distance of 6.05 feet
to a point on the East margin of Davis Street; thence run Northeasterly along a
curve to the left, said curve having a central angle of 78 degree 44'12" and a
radius of 50.0 feet; thence run along the arc of said curve, for a distance of
68.71 feet to a point which bears North 51 degree 02'40" East, 63.43 feet from
the previously described point; thence run South 89 degree 51'38" East, for a
distance of
EXHIBIT "A" - Page 2
<PAGE>
80.66 feet to a point; thence run South 0 degree 20'38" West, for a distance of
150.63 feet to a point; thence run South 03 degree 12'31" East, for a distance
of 67.25 feet to a point; thence run South 02 degree 10'03" West, for a distance
of 63.79 feet to a point; thence run South 01 degree 22'27" West, for a distance
of 193.13 feet to a point; thence run South 89 degree 35'13" West, for a
distance of 128.95 feet to a point on the East margin of Davis Street; thence
run along a curve to the left, said curve having a central angle of 180 degree
00' and a radius of 50.0 feet; thence run along the arc of said curve for a
distance of 157.08 feet to a point on the East margin of Davis Street; thence
run South 89 degree 35'13" West, for a distance of 11.21 feet to a point; thence
run South 45 degree 00'00" West, for a distance of 41.00 feet to a point; thence
run South 0 degree 24'45" West, for a distance of 71.22 feet to a point; thence
run South 89 degree 35'13" West, for a distance of 127.46 feet to a point;
thence run North 0 degree 01'17" West, for a distance of 290.54 feet to a point;
thence run South 88 degree 50'07" West, for a distance of 122.30 feet to a point
on the East margin of Main Street; thence run North 0 degree 50'06" East, along
said East margin, for a distance of 60.38 feet to a point; thence run South 89
degree 48'31" East, for a distance of 75.51 feet to a point; thence run North 0
degree 04'33" East, for a distance of 254.95 feet to a point on the South margin
of Bay View Avenue; thence run North 73 degree 28'00" East, along said South
margin, for a distance of 185.49 feet to the POINT OF BEGINNING, containing
180,763 Square Feet, or 4.15 Acres, approximately.
LEGAL DESCRIPTION - PARCEL "D"
- ------------------------------
For the POINT OF BEGINNING, commence at a point on the West margin of Davis
Street, said point being the Northeast corner of Lot 12, Block 3, Gorenflo's
Addition to the City of Biloxi, Harrison County, Mississippi, as shown on the
official map or plat thereof on file and of record in Plat Book 6, Page 16 of
the Record of Plats of Harrison County, Mississippi; thence run South 0 degree
24'45" West, along said West margin, for a distance of 13.11 feet to a point;
thence run South 89 degree 57'37" West, for a distance of 127.35 feet to a
point; thence run North 0 degree 01'17" West, for a distance of 12.28 feet to a
point; thence run North 89 degree 35'13" East, for a distance of 127.46 feet to
the POINT OF BEGINNING, containing 1617 Square Feet, or 0.04 Acre,
approximately.
EXHIBIT "A" - Page 3
<PAGE>
EXHIBIT 10.36
$ 125,000,000 PRINCIPAL AMOUNT OF
9 1/2% SENIOR SUBORDINATED NOTES DUE 2007
OF
HOLLYWOOD PARK, INC.
AND
HOLLYWOOD PARK OPERATING COMPANY
PURCHASE AGREEMENT
------------------
August 1, 1997
OPPENHEIMER & CO., INC.
BT SECURITIES CORPORATION
BANCAMERICA SECURITIES, INC.
c/o Oppenheimer & Co., Inc.
One World Financial Center
New York, New York 10281
Ladies and Gentlemen:
Hollywood Park Inc., a Delaware corporation (the "Company" or "Hollywood
Park") and Hollywood Park Operating Company, a Delaware corporation ("HPOC", and
collectively, together with Hollywood Park, the "Issuers"), propose, upon the
terms and conditions set forth in this agreement ("Agreement"), to issue and
---------
sell to Oppenheimer & Co., Inc., BT Securities Corporation and BancAmerica
Securities, Inc. (each, an "Initial Purchaser" and, collectively, the "Initial
----------------- -------
Purchasers") $125,000,000 in aggregate principal amount of the Issuers' 9 1/2%
- ----------
Senior Subordinated Notes due 2007 (the "Notes"). The Notes will be issued in
-----
minimum denominations of $1,000 principal amount pursuant to an Indenture (the
"Indenture"), to be dated as of August 1, 1997, among the Issuers, all of the
- ----------
Issuers' existing direct and indirect material restricted subsidiaries
(collectively, the "Guarantors") subject to receipt of any required gaming
approvals for each applicable subsidiary and The Bank of New York, a New York
banking corporation, as trustee (the "Trustee"). This Agreement, the Indenture
-------
and the Registration Rights Agreement are herein collectively referred to as the
"Transaction Documents."
---------------------
The Issuers and the Guarantors (collectively, the "Obligors") wish to
confirm as follows their agreement with the Initial Purchasers in connection
with the purchase and resale of the Notes:
1. Preliminary Offering Memorandum and Offering Memorandum. The Notes
-------------------------------------------------------
will be offered and sold to each of the Initial Purchasers without registration
under the Securities Act of 1933, as amended (the "Act"), in reliance on
---
exemptions therefrom. The Issuer has prepared a preliminary offering
memorandum, dated July 18, 1997 (the "Preliminary Offering Memorandum"), and an
-------------------------------
offering memorandum, dated August 1, 1997 (the "Offering Memorandum"), setting
-------------------
forth information regarding the Issuers and the Notes. Unless stated
<PAGE>
herein to the contrary, all references herein to the Offering Memorandum are to
the Offering Memorandum at the date hereof and do not include any supplement or
amendment subsequent thereto. The Issuers hereby confirm that they have
authorized the use of the Preliminary Offering Memorandum and the Offering
Memorandum in connection with the offering and resale of the Notes by the
Initial Purchasers.
The Issuers understand that the Initial Purchasers propose to make offers
and sales (the "Exempt Resales") of the Notes purchased by the Initial
--------------
Purchasers hereunder only on the terms and in the manner set forth in the
Offering Memorandum and Section 2 hereof, as soon as the Initial Purchasers deem
advisable after this Agreement has been executed and delivered, (i) to persons
in the United States whom the Initial Purchasers reasonably believe to be
qualified institutional buyers ("Qualified Institutional Buyers") as defined in
------------------------------
Rule 144A under the Act as such rule may be amended from time to time ("Rule
----
144A"), in transactions under Rule 144A, (ii) to a limited number of other
- ----
institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) and
(7) under Regulation D of the Act) ("Accredited Investors") in private sales
--------------------
exempt from registration under the Act and (iii) outside the United States to
non-U.S. persons ("foreign purchasers") in reliance on Regulation S (such
persons specified in clauses (i), (ii) and (iii) being referred to herein as the
"Eligible Purchasers").
-------------------
It is also understood and acknowledged that holders (including subsequent
transferees) of the Notes will have the registration rights set forth in the
registration rights agreement (the "Registration Rights Agreement")
-----------------------------
substantially in the form attached hereto as Exhibit A-1, to be dated as of
-----------
August 1, 1997, by and among the Issuers, the Guarantors and the Initial
Purchasers.
Each of the Initial Purchasers represents, covenants and agrees with the
Issuers that it will deliver an Offering Memorandum, as amended or supplemented
through the date of each Exempt Resale, contemporaneously with or prior to each
such Exempt Resale (to the extent made available by the Issuers) if the Issuers
have not already done so, and have not delivered, and will not after the date of
this Agreement deliver any other offering materials other than the Offering
Memorandum or any amendment or supplement thereto in connection with any Exempt
Resale without the prior consent of the Issuers. In addition, the Initial
Purchasers shall advise the Issuers (which advice may be by telephone) when
their initial distribution of the Notes has been completed.
2. Agreements to Sell, Purchase and Resell.
---------------------------------------
(a) The Issuers hereby agree, subject to all of the terms and
conditions set forth herein, and upon the basis of the representations,
warranties and agreements of each of the Initial Purchasers, to issue and sell
to the Initial Purchasers and, upon the basis of the representations, warranties
and agreements of the Issuers herein contained and subject to all of the terms
and conditions set forth herein, each of the Initial Purchasers severally agrees
to purchase from the Issuers the amount of Notes set forth on Schedule I
----------
attached hereto at a purchase price equal to $972.50 per Note. The Issuers
shall not be obligated to deliver any of the Notes except upon payment for all
of the Notes to be purchased as provided herein.
(b) The Initial Purchasers have advised the Issuers that they will
offer the Notes for sale upon the terms and conditions set forth in this
Agreement and in the Offering Memorandum. Each of the Initial Purchasers hereby
represents and warrants to, and agrees with, the Issuers that (i) such Initial
Purchaser is a Qualified Institutional Buyer; (ii) it has not solicited and will
not solicit offers for, or offer to sell, the Notes by means of any form of
general solicitation or general advertising or in any manner involving a public
offering within the meaning of Section 4(2) of the Act, and (iii) it will
solicit offers for the Notes only from, and will offer, sell or deliver the
Notes as part of its initial offering, only to (A) persons in the United States
whom such Initial Purchaser reasonably believes to be Qualified Institutional
Buyers, or if any such person is buying for one or more institutional accounts
for which such person is acting as fiduciary or agent, only when such person has
represented to such Initial Purchaser that each such account is a Qualified
Institutional Buyer, to whom notice
-2-
<PAGE>
has been given that such sale or delivery is being made in reliance on Rule
144A, in each case, in transactions under Rule 144A, (B) to a limited number of
Accredited Investors that make the representations to and agreements with the
Initial Purchasers specified in Annex A to the Offering Memorandum in private
sales exempt from registration under the Act and (C) to foreign purchasers (1)
that make the representations and agreements described in the Offering
Memorandum under the heading "Notice to Investors" and (2) agree only to resell
the Notes in the United States in accordance with the provisions of Rule 903 or
Rule 904; pursuant to registration of such Notes under the Act; or pursuant to
an available exemption from the registration requirements of the Act.
The Initial Purchasers have advised the Issuers that they will offer
the Notes to Eligible Purchasers at a price initially equal to $1,000.00 per
Note. Such price may be changed by the Initial Purchasers at any time
thereafter without notice.
The Initial Purchasers understand that the Issuers and, for the
purposes of the opinions to be delivered to the Initial Purchasers pursuant to
Section 7(c)(xii) and (xiii), 7(d) and 7(e) hereof, counsel to the Issuers and
counsel to the Initial Purchasers, will rely upon the accuracy and truth of the
foregoing representations and agreements and the Initial Purchasers hereby
consent to such reliance.
3. Delivery of the Notes and Payment Therefor. Delivery to the Initial
------------------------------------------
Purchasers of and payment for the Notes shall be made at the offices of Irell &
Manella LLP, 1800 Avenue of the Stars, Suite 900, Los Angeles, California 90067-
4276, at 10:45 a.m., Pacific Time, on August 6, 1997 (the "Closing Date"). The
------------
place of closing for the Notes and the Closing Date may be varied by agreement
among the Initial Purchasers and the Issuers.
The Notes shall be delivered to the Initial Purchasers against payment of
the purchase price therefor by one or more federal funds wire transfers in
immediately available funds no later than August 7, 1997 in accordance with
written instructions from the Issuers. The Notes will be represented by a
global security (the "Global Note") and will be registered in the name of Cede &
-----------
Co. as nominee of The Depository Trust Company ("DTC"). The Notes to be
---
delivered to the Initial Purchasers have already been or shall be made available
to the Initial Purchasers or the Trustee for inspection not later than 9:30
a.m., Pacific Time, on the business day preceding the Closing Date.
4. Agreements of the Obligors. The Issuers and, as applicable, the
--------------------------
Guarantors, agree with the Initial Purchasers as follows:
(a) During the period of time specified in clause (e) below of this
Section 4, the Issuers shall advise the Initial Purchasers promptly and, if
requested by them, shall promptly confirm such advice in writing, of any
material change, or of any event or condition which is reasonably likely to
result in a material change, in the condition (financial or other), business,
prospects, liabilities (contingent or otherwise), properties, net worth,
solvency or results of operations of the Issuers or the Issuers and Guarantors
(as defined herein) taken as a whole (whether or not arising in the ordinary
course of business), or of the happening of any event, any information becoming
known or the existence of any condition that would require any amendment or
supplement to the Offering Memorandum (as then amended or supplemented) so that
the Offering Memorandum (as so amended or supplemented) would not contain any
untrue statement of a material fact or omit to state 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.
(b) The Issuers will furnish to the Initial Purchasers, without
charge, such number of copies of the Preliminary Offering Memorandum and the
Offering Memorandum and any amendments or supplements thereto, as they may
reasonably request.
-3-
<PAGE>
(c) The Issuers will not make any amendment or supplement to the
Preliminary Offering Memorandum or to the Offering Memorandum of which the
Initial Purchasers shall not previously have been furnished a copy a reasonable
time prior to the making thereof or, at any time prior to the payment for the
Notes on the Closing Date, to which they shall reasonably object after being so
advised.
(d) The Issuers consent to the use of the Offering Memorandum (and of
any amendment or supplement thereto prepared in accordance with Section 4(c)
hereof) in accordance with the securities or Blue Sky laws of the jurisdictions
in which the Notes are offered by the Initial Purchasers and by all dealers to
whom Notes may be sold, in connection with the offering and sale of the Notes.
(e) If, at any time prior to completion of the distribution of the
Notes by the Initial Purchasers to Eligible Purchasers, any event shall occur,
any information shall become known or any condition shall exist that in the
judgment of the Issuers or in the opinion of counsel for the Initial Purchasers
would require any amendment or supplement to the Offering Memorandum (as then
amended or supplemented) so that the Offering Memorandum (as so amended or
supplemented) would not contain any untrue statement of a material fact or omit
to state 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, the Issuers will, in each such case subject to Section
4(c) hereof, forthwith prepare, at the sole expense of the Issuers, an
appropriate supplement or amendment thereto, and will expeditiously furnish to
the Initial Purchasers and dealers that number of copies thereof as they shall
request.
(f) The Issuers will cooperate with the Initial Purchasers and with
their counsel in connection with the qualification of the Notes for offering and
sale by the Initial Purchasers and by dealers under the securities or Blue Sky
laws of such jurisdictions as the Initial Purchasers may designate and will file
such consents to service of process or other documents necessary or appropriate
in order to effect such qualification; provided, however, that neither Issuer
-------- -------
shall be required (A) to qualify generally to do business in any jurisdiction
wherein it is not then so qualified, (B) to take any action that would subject
it to general service of process in any such jurisdiction wherein it is not then
so subject or (C) to subject itself to taxation in excess of a nominal dollar
amount in any such jurisdiction wherein it is not then so subject.
(g) For a period of five (5) years after the Closing Date, the Issuers
will furnish to the Initial Purchasers (i) as soon as available, a copy of each
quarterly or annual report of the Issuers mailed to stockholders or filed with
the Securities and Exchange Commission (the "Commission"), and (ii) from time to
----------
time such other information concerning the Issuers as the Initial Purchasers may
reasonably request; provided that, without limiting the foregoing, no such
-------------
records, information or documents shall be used by any person or entity
obtaining access thereto in connection with any market transactions in
securities of the Issuers or the Guarantors in violation of law, and provided
--------
further that the Issuers and the Guarantors shall not be required to provide any
- -------
information to the Initial Purchasers that the Issuers and the Guarantors are
prohibited by law from disclosing. The Initial Purchasers shall treat any such
information which has been identified to them as confidential, non-public
information in accordance with their usual standards for handling such
information; provided, that nothing contained in this sentence shall restrain
the disclosure by the Initial Purchasers of any such information (1) to their
accountants, attorneys or similar professionals, (ii) as required by law or by
compulsion of legal process, (iii) in connection with any lawsuit to which an
Initial Purchaser is a party, (iv) to their respective successors and assigns,
including any assignees of their respective rights and interests under this
Agreement or (v) to any regulating authority.
(h) The Obligors will apply the net proceeds from the sale of the
Notes in accordance with the description set forth under "Use of Proceeds" in
the Offering Memorandum.
-4-
<PAGE>
(i) Except as stated in this Agreement and in the Offering Memorandum,
none of the Obligors has taken, nor will any Obligor take, directly or
indirectly, any action designed to or that might reasonably be expected to cause
or result in stabilization or manipulation of the price of the Notes to
facilitate the sale or resale of the Notes. Except as permitted by the Act, the
Obligors will not distribute any offering material in connection with the Exempt
Resales. The Obligors will not, and will not permit any person acting on their
behalf to, solicit any offers to buy and will not offer to sell the Notes by
means of any form of general solicitation or general advertising or by means of
any directed selling efforts (as defined under Regulation S and the Commission's
releases related thereto).
(j) The Issuers will use their best efforts to cause the Notes to be
eligible for trading on PORTAL.
(k) From and after the Closing Date, so long as any of the Notes are
outstanding and are "restricted securities" within the meaning of Rule 144(a)(3)
under the Act or, if earlier, until three years after the Closing Date, and
during any period in which the Issuers are not subject to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
------------
Issuers will furnish to holders and beneficial owners of the Notes and
prospective purchasers of Notes designated by such holders, upon request of such
holders or beneficial owners or such prospective purchasers, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Act to permit
compliance with Rule 144A in connection with resales of the Notes.
(l) The Obligors represent that they have not, and agree that they
will not, sell, offer for sale or solicit offers to buy or otherwise negotiate
in respect of any security (as defined in the Act) that could be integrated with
the sale of the Notes in a manner that would require the registration under the
Act of the sale by the Issuers to the Initial Purchasers or by the Initial
Purchasers to the Eligible Purchasers of the Notes.
(m) Each of the Obligors agrees to comply in all material respects
with the terms and conditions of the Registration Rights Agreement applicable to
such Obligor and all agreements set forth in the representation letters of the
Issuers to DTC relating to the approval of the Notes by DTC for "book entry"
transfer.
(n) The Obligors agree that prior to any registration of the Notes
pursuant to the Registration Rights Agreement, or at such earlier time as may be
so required, the Indenture shall be qualified under the Trust Indenture Act of
1939 (the "1939 Act") and the Obligors will enter into any necessary
--------
supplemental indentures and take any other necessary action in connection
therewith.
(o) As soon as they have been prepared by the Issuers, the Issuers
will furnish to the Initial Purchasers, copies of any unaudited interim
consolidated quarterly financial statements of the Company for any period
subsequent to the period covered by the most recent consolidated financial
statements of the Company appearing in the Offering Memorandum.
(p) The Obligors shall not, until 90 days following the Closing Date,
without the prior written consent of the Initial Purchasers, offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly, or announce
the offering of, any debt securities issued by any of the Obligors (other than
the Notes, or any debt securities of the Issuers issued pursuant to the
Registration Rights Agreement in exchange for the Notes).
(q) No Obligor will claim voluntarily, and each Obligor will, subject
to the fiduciary duties of the Board of Directors of such Obligor and applicable
law, resist actively any attempts to claim, the benefit of any usury laws
against the holders of any Notes.
-5-
<PAGE>
(r) Each Obligor will do and perform in all material respects all
things required to be done and performed under this Agreement and the other
Transaction Documents by it on, prior to, and after the Closing Date.
5. Representations and Warranties of the Obligors. The Issuers, and the
----------------------------------------------
Guarantors as applicable, represent and warrant to the Initial Purchasers on the
date hereof and as of the Closing Date that:
(a) No order or decree preventing the use of the Preliminary Offering
Memorandum or the Offering Memorandum or any amendment or supplement thereto, or
any order asserting that the transactions contemplated by this Agreement are
subject to the registration requirements of the Act has been issued, and no
proceeding for that purpose has commenced or is pending or, to the knowledge of
either Issuer, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum as
of their respective dates and the Offering Memorandum as of the Closing Date and
any amendment or supplement thereto as of its date and as of the Closing Date
(in each case taken together with the documents expressly incorporated by
reference therein (the "Incorporated Documents")), did not and will not (as of
the Closing Date) contain an untrue statement of a material fact or omit to
state 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, except that this representation and warranty does not
apply (i) to statements in or omissions from the Preliminary Offering Memorandum
and Offering Memorandum made in reliance upon and in conformity with information
relating to the Initial Purchasers furnished to the Issuers in writing by or on
behalf of the Initial Purchasers expressly for use therein and (ii) statements
in or omissions from the Preliminary Offering Memorandum that are supplemented,
revised or added in the Offering Memorandum. The Issuers make no representation
or warranty with respect to any projected financial information or other
forecasts except as provided in Section 5(q) of this Agreement.
(c) The Indenture has been duly and validly authorized by each Issuer
and each Guarantor and, upon its execution, delivery and performance by each
Issuer and each Guarantor and assuming due authorization, execution, delivery
and performance by the Trustee, will be a valid and binding agreement of each
Issuer and each Guarantor, enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance or other similar laws affecting the enforcement of creditors' rights
generally and subject to the applicability of general principles of equity; the
Indenture conforms in all material respects to the description thereof in the
Offering Memorandum; and no qualification of the Indenture under the 1939 Act is
required in connection with the offer and sale of the Notes contemplated hereby
(except for sales of Notes pursuant to the Exchange Offer, as defined in the
Indenture) or in connection with the Exempt Resales.
(d) Each Obligor has all the requisite power and authority to execute,
deliver and perform each of its obligations under each of the Transaction
Documents; the execution and delivery of, and the performance by each Obligor of
each of its obligations under, each of the Transaction Documents have been duly
and validly authorized by such Obligor, and as of the Closing Date, each of the
Transaction Documents will have been duly executed and delivered by each Obligor
and will constitute the valid and legally binding agreement of each Obligor,
enforceable against each Obligor in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally and
subject to the applicability of general principles of equity, and except as
rights to indemnity and contribution under such Transaction Document may be
limited by Federal or state securities laws or principles of public policy.
(e) The Notes have been duly authorized by each Issuer, and, when
executed by the Obligors, authenticated by the Trustee in accordance with the
Indenture and delivered to the Initial Purchasers
-6-
<PAGE>
against payment therefor in accordance with the terms hereof, will have been
validly issued and delivered, and will constitute valid and binding obligations
of the Issuers, entitled to the benefits of the Indenture and enforceable in
accordance with their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting
the enforcement of creditors' rights generally and subject to the applicability
of general principles of equity, and the Notes conform in all material respects
to the description thereof in the Offering Memorandum.
(f) Each Issuer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware with full corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum, and is duly registered and
qualified to conduct its business and is in good standing in each jurisdiction
where the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify could not, singly or in the aggregate with all other such failures,
reasonably be expected to have a material adverse effect on the condition
(financial or otherwise), business, prospects, liabilities (contingent or
otherwise), properties, net worth, solvency or results of operations of either
the Issuers or of the Issuers and the Guarantors, taken as a whole (any such
event, a "Material Adverse Effect").
-----------------------
(g) Each Guarantor is a corporation, limited partnership or limited
liability corporation duly organized, validly existing and in good standing
under the laws of the state in which it is incorporated or organized with full
corporate power and authority to own, lease, and operate its properties and to
conduct its business as described in the Offering Memorandum, and is duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the failure so to
register or qualify could not, singly or in the aggregate with all other such
failures, reasonably be expected to have a Material Adverse Effect.
(h) The Guarantors are, on the date of this Agreement, those
corporations, limited partnerships and limited liability companies set forth on
Schedule II attached hereto. Each Material Restricted Subsidiary of Hollywood
- -----------
Park on the date hereof is a Guarantor.
(i) There are no legal or governmental proceedings pending or, to the
knowledge of either Issuer or any Guarantor, threatened, against either of the
Issuers or any of the Guarantors or to which either of the Issuers or any of the
Guarantors or any of their respective properties or assets is subject, that are
not disclosed in the Offering Memorandum or the Incorporated Documents and that,
if adversely decided, could, singly or in the aggregate with all other such
proceedings, reasonably be expected to have a Material Adverse Effect or
materially affect the issuance of the Notes or the consummation of any of the
transactions contemplated by the Transaction Documents. Except as could not
reasonably be expected to have a Material Adverse Effect, neither the Issuers
nor any Guarantor is involved in any strike, job action or labor dispute with
any group of employees, and, to the knowledge of the Issuers and the Guarantors,
no such action or dispute is threatened.
(j) No statute, rule, regulation or order that has been enacted,
adopted or issued by any governmental agency and no injunction, restraining
order or order of any nature by a Federal or state court of competent
jurisdiction to which either of the Issuers or any of the Guarantors is subject
has been issued or is pending that (i) could interfere with or adversely affect
the issuance of the Notes or (ii) could in any manner draw into question the
validity of this Agreement or any other Transaction Document.
(k) To the knowledge of the Issuers, no Obligor has violated any
Federal, state or local law relating to discrimination in hiring, promotion or
pay of employees except where such violation could not reasonably be expected to
have a Material Adverse Effect. No Issuer will cause or permit any goods to be
manufactured, sold or distributed by any of its employees in violation of the
minimum wage or overtime laws of Sections 6 and 7 of the Federal Fair Labor
Standards Act.
-7-
<PAGE>
(l) To the knowledge of the Guarantors, no Obligor has violated any
Federal, state or local law relating to discrimination in hiring, promotion or
pay of employees except where such violation could not reasonably be expected to
have a Material Adverse Effect. No Guarantor will cause or permit any goods to
be manufactured, sold or distributed by any of its employees in violation of the
minimum wage or overtime laws of Sections 6 and 7 of the Federal Fair Labor
Standards Act.
(m) Neither Issuer nor any of the Guarantors is (i) in violation of
(A) its certificate or articles of incorporation or partnership or membership
agreement or bylaws or other organizational documents or (B) of any statute,
ordinance, law, administrative or governmental rule or regulation or filing or
judgment, injunction, order or decree of any court or governmental agency or
body applicable to either of the Issuers or any of the Guarantors or any of
their respective properties or assets (collectively, "Law and Legal
-------------
Requirements"), except where any such violation could not, singly or in the
- ------------
aggregate with all other such violations, reasonably be expected to have a
Material Adverse Effect or (ii) in breach of or in default in the performance of
(including any event which, with notice or lapse of time or both, would
constitute a breach of or a default in the performance of) any obligation,
agreement or condition contained in any bond, debenture, note or any other
evidence of indebtedness, material agreement, indenture, lease or other
instrument to which either of the Issuers or any of the Guarantors is a party or
by which either of the Issuers or any of the Guarantors or any of their
respective properties may be bound (collectively, "Agreements and Instruments"),
--------------------------
except (A) as may be disclosed in the Offering Memorandum or the Incorporated
Documents or (B) where any such breach or default could not, singly or in the
aggregate with all other such breaches and defaults, reasonably be expected to
have a Material Adverse Effect.
(n) The issuance, offer, sale and delivery of the Notes by the
Issuers, the execution, delivery and performance of the Transaction Documents by
the Issuers and the Guarantors and the consummation by the Issuers and the
Guarantors of the transactions contemplated hereby and thereby do not and will
not (it being understood that no representation or warranty is made with respect
to any Consents or Filings (as defined below), provisions of the certificate or
articles of incorporation or bylaws or other organizational documents,
Agreements or Instruments or Law or Legal Requirements not in existence on the
date hereof or on the Closing Date): (i) require any consent, approval,
authorization or other order of, or registration or filing with, any court,
regulatory body, administrative agency or other governmental body, agency or
official (collectively, "Consents and Filings"), except (A) as have been
--------------------
obtained and are in full force and effect, (B) such as may be required under the
Act, and other than as may be required under the Mississippi Gaming Control Act
and the rules and regulations promulgated thereunder for the approval of the
guaranty of the Exchange Notes by Mississippi-I Gaming, L.P., in connection with
the performance of the Issuers' and the Guarantors' obligations under the
Registration Rights Agreement and the qualification of the Indenture under the
1939 Act in connection with the consummation of the transactions contemplated by
the Registration Rights Agreement and (C) compliance with the securities or Blue
Sky laws of various jurisdictions, and (D) as may be required by applicable
Gaming Laws and Gaming Authorities (each as defined in the Indenture) in
connection with the registration, sale and issuance of the Exchange Notes and
any Guaranties thereof (as defined in the Indenture); (ii) conflict with or
constitute a breach of or a default under (including any event which, with
notice or lapse of time or both, would constitute a breach of or a default
under), the certificate or articles of incorporation or bylaws or other
organizational documents of either Issuer or any of the Guarantors; (iii)
conflict with or constitute a breach of or a default under (including any event
which, with notice or lapse of time or both, would constitute a breach of or a
default under) any Agreement or Instrument, except any such conflict, breach or
default that could not, singly or in the aggregate with all other such
conflicts, breaches and defaults, reasonably be expected to have a Material
Adverse Effect; (iv) violate any Law or Legal Requirement, except any such
violation that could not, singly or in the aggregate with all other such
violations, reasonably be expected to have a Material Adverse Effect; and (v)
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of either Issuer or any of the Guarantors pursuant to the
terms of any Agreement or Instrument.
-8-
<PAGE>
(o) No consents or waivers from any other person are required for the
execution, delivery and performance of this Agreement and the other Transaction
Documents by either Issuer or, as applicable, any of the Guarantors and the
consummation of the transactions contemplated hereby and thereby, other than
such consents and waivers as have been obtained and are in full force and effect
and other than certain consents (i) required under the Mississippi Gaming
Control Act and the rules and regulations promulgated thereunder for the
approval of the guaranty of the Exchange Notes by Mississippi-I Gaming, L.P. or
(ii) as may be required by any other applicable Gaming Laws and Gaming
Authorities (each as defined in the Indenture) in connection with the
registration, sale and issuance of the Exchange Notes and any Guaranties thereof
(as defined in the Indenture).
(p) The consolidated financial statements of the Company included in
the Offering Memorandum, present fairly the consolidated financial position,
results of operations and cash flows of the Company, at the dates and for the
periods to which they relate, and have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis ("GAAP").
----
The pro forma financial information included in the Offering Memorandum (A)
--- -----
present fairly in all material respects the information shown therein and (B)
have been properly computed on the basis described therein.
(q) The projections and forecasts, if any, contained in the Offering
Memorandum have been prepared by the Company and are based on the reasonable and
good faith estimates and assumptions of the Company and the Company has no
reason to believe that such estimates and assumptions are not fair and
reasonable, it being recognized that projections as to future events are not to
be viewed as fact and that actual results during the period or periods covered
by any such projections will differ from the projected results and that the
differences may be material. All important factors that could result in a
material variance between projected and actual results have been described in
the assumptions underlying the projections.
(r) Except as disclosed in the Offering Memorandum, subsequent to the
date as of which such information is given in the Offering Memorandum, neither
Issuer nor any of the Guarantors has incurred any liability or obligation,
direct or contingent, or entered into or agreed to enter into any transaction,
whether or not in the ordinary course of business, that is material to such
Issuer or to the Issuers and the Guarantors taken as a whole, and there has not
been any material increase in the short-term or long-term debt of either of the
Issuers or any of the Guarantors, or any material adverse change, or any
development involving or which could reasonably be expected to involve a
prospective material adverse change in or affect the condition (financial or
otherwise), business, prospects, liabilities (contingent or otherwise),
properties, net worth, solvency or results of operations of the Issuers or the
Issuers and the Guarantors, taken as a whole (whether or not arising in the
ordinary course of business), and there have not been dividends or distributions
of any kind declared, paid or made by either of the Issuers or any of the
Guarantors on any class of its capital stock.
(s) Each Issuer and each Guarantor has good and marketable title to
all property (real and personal) described in the Offering Memorandum (or
reflected in the financial statements included in the Offering Memorandum) as
being owned by it, free and clear of all liens, claims, security interests or
other encumbrances, except as specifically described in the Offering Memorandum
or the Incorporated Documents and except for any such lien, claim, security
interest or other encumbrance which is permitted by the Indenture, and all the
property described in the Offering Memorandum as being held under lease by any
Issuer or Guarantor is, to such Issuer's knowledge or, as the case may be, such
Guarantor's knowledge, held by it under valid, subsisting and enforceable
leases, with only such exceptions as in the aggregate are not materially
burdensome and do not interfere in any material respect with the conduct of the
business of either Issuer or the Issuers and the Guarantors, taken as a whole,
and no default by either of the Issuers or any of the Guarantors has occurred
and is continuing thereunder, except, with respect to the foregoing, such as are
described in the Offering Memorandum or the Incorporated Documents or as could
not, singly or in the aggregate with all such other
-9-
<PAGE>
defaults, reasonably be expected to have a Material Adverse Effect, and to the
knowledge of each Issuer and each Guarantor no material defaults by the landlord
are existing under any such lease.
(t) Except as permitted by the Act, neither Issuer nor any of the
Guarantors has distributed and, prior to the later to occur of the Closing Date
and completion of the initial distribution of the Notes (which includes the sale
by the Initial Purchasers), no such Obligor will distribute, any offering
material in connection with the offering and sale of the Notes other than the
Preliminary Offering Memorandum and Offering Memorandum (and any amendment or
supplement thereto in accordance with Section 4(c) hereof).
(u) Except as set forth in the Offering Memorandum or the Incorporated
Documents, each Issuer and each of the Guarantors has all such permits,
licenses, franchises, certificates of need and other approvals or authorizations
of governmental or regulatory authorities as are necessary under applicable law
to own its properties and to conduct their respective businesses in the manner
conducted as of the Closing Date as described in the Offering Memorandum,
including all governmental licenses, permits, approvals and authorizations
necessary for the operation of their respective gaming and racing facilities and
for the operation of their respective hotel, restaurant, entertainment,
truckstop and related facilities (the "Permits") except to the extent that the
-------
failure to have any such Permit could not, singly or in the aggregate with all
other such failures, reasonably be expected to have a Material Adverse Effect;
each Issuer and each of the Guarantors has fulfilled and performed, in all
material respects, all their respective material obligations with respect to the
Permits and no event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or has resulted or after notice
or lapse of time would result in any other material impairment of the rights of
the holder of any such Permit subject in each case to such qualification as may
be set forth in the Offering Memorandum or the Incorporated Documents and except
to the extent that any such revocation or termination could not, singly or in
the aggregate with all other such revocations and terminations, reasonably be
expected to have a Material Adverse Effect; and, except as described in the
Offering Memorandum or the Incorporated Documents, none of the Permits contains
any restriction more burdensome than the restrictions typically applicable to
operators of gaming businesses or enterprises, the compliance with which could
reasonably be expected to have a Material Adverse Effect.
(v) To the knowledge of each Issuer and each Guarantor, neither Issuer
nor any of the Guarantors, nor any employee or agent of the Issuer or any
Guarantor has made any payment of funds of any Issuer or any Guarantor or
received or retained any funds in violation of any law, rule or regulation,
which violation could, singly or in the aggregate with all other such
violations, reasonably be expected to have a Material Adverse Effect.
(w) Except as disclosed in the Offering Memorandum or the Incorporated
Documents, each Issuer and each of the Guarantors have filed all tax returns
required to be filed, and such returns are true and correct in all material
respects, and neither Issuer nor any Guarantor is in default in the payment of
any taxes which were payable pursuant to said returns or any assessments with
respect thereto, except insofar as the failure to file any such return or make
any such payment could not, singly or in the aggregate with all other such
failures, reasonably be expected to have a Material Adverse Effect. The Issuers
and the Guarantors do not know of any material proposed additional tax
assessments against either Issuer or any Guarantor.
(x) Except as provided in this Agreement, no holder of any security of
either Issuer (other than holders of the Notes) has any right to request or
demand registration of any security of either Issuer because of the consummation
of the transactions contemplated by the Transaction Documents.
(y) Except as set forth in the Offering Memorandum or the Incorporated
Documents, each Issuer and each of the Guarantors owns or possesses or has the
right to use, without known infringement of the rights of any person, all
patents, trademarks, trademark registrations,service marks, service mark
registrations,
-10-
<PAGE>
trade names, copyrights, licenses, inventions, trade secrets and rights
necessary for the conduct of their respective businesses (collectively, the
"Intellectual Property"), except to the extent that the failure to own or
---------------------
possess such Intellectual Property could not, singly or in the aggregate with
all such other failures, reasonably be expected to result in any Material
Adverse Effect.
(z) No Obligor is and, upon sale of the Notes to be issued and sold
hereby in accordance herewith and the application of the net proceeds to the
Issuers of such sale as described in the Offering Memorandum under the caption
"Use of Proceeds," no Obligor will be an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
(aa) When the Notes are issued and delivered pursuant to this
Agreement, such Notes will not be of the same class (within the meaning of Rule
144A(d)(3) under the Act) as any security of either of the Issuers or any
Guarantor that is listed on a national securities exchange registered under
Section 6 of the Exchange Act or that is quoted in a United States automated
interdealer quotation system.
(bb) Neither Issuer nor any of the Guarantors has directly, or
through any agent (provided that no representation is made as to the Initial
Purchasers or any person acting on their behalf): (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any security (as
defined in the Act) that is or will be integrated with the offering and sale of
the Notes in a manner that would require the registration of the Notes under the
Act; (ii) engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Act) in connection with the
offering of the Notes including, but not limited to, articles, notices or other
communications published in any newspaper, magazine, or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising; or (iii)
engaged in any directed selling efforts within the meaning of Rule 903 under the
Act and the Commission's Release No. 33-6883. No securities of the same class as
the Notes have been issued and sold by either Issuer within the six-month period
immediately prior to the date hereof.
(cc) Assuming (i) that the representations and warranties in Sections
1 and 2 hereof are true and correct in all material respects, (ii) that the
Initial Purchasers comply in all material respects with the covenants set forth
in Section 2 hereof and (iii) that each person to whom the Initial Purchasers
offer, sell or deliver the Notes is an Eligible Purchaser, the purchase and sale
of the Notes pursuant hereto (including the Initial Purchasers' proposed
offering of the Notes on the terms and in the manner set forth in the Offering
Memorandum and Sections 1 and 2 hereof) is exempt from the registration
requirements of the Act.
(dd) Each Issuer and each Guarantor is in compliance with, and not
subject to any liability under, the common law and all applicable Federal,
state, local and foreign laws, regulations, rules, codes, ordinances,
directives, and orders relating to pollution or to protection of public or
employee health or safety or to the environment, including, without limitation,
those that relate to any Hazardous Material (as defined herein) ("Environmental
-------------
Laws"), except, in each case, where noncompliance or liability, singly or in the
- ----
aggregate with all other such noncompliance and liabilities, could not
reasonably be expected to have a Material Adverse Effect. The term "Hazardous
---------
Material" means any pollutant, contaminant or waste, or any hazardous,
- --------
dangerous, or toxic chemical, material, waste, substance or constituent subject
to regulation under any Environmental Law.
(ee) Neither Issuer is, nor will it be, as a result of or after
giving effect to the issuance of the Notes and the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, (i) insolvent, (ii) left with an unreasonably small capital
with which to engage in its existing and anticipated businesses or (iii)
incurring debts beyond its ability to pay such debts as they mature. Neither
Issuer is issuing the Notes in anticipation of insolvency.
-11-
<PAGE>
(ff) The Guarantors taken as a whole, are not, nor will they be as a
result of or after giving effect to the issuance of the Notes, or the incurrence
of liabilities thereunder, the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby, (i)
insolvent, (ii) left with an unreasonably small capital with which to engage in
their existing and anticipated businesses or (iii) incurring debts beyond their
ability to pay such debts as they mature. None of the Guarantors is issuing its
guaranty of the Notes in anticipation of insolvency.
(gg) The Offering Memorandum, as of its date, and each amendment or
supplement thereto, as of its date, in each case taken together with the
Incorporated Documents, contains all the information specified in, and meets the
requirements of, Rule 144A(d)(4) under the Act.
6. Indemnification and Contribution. (a) The Issuers and the Guarantors
--------------------------------
jointly and severally agree to indemnify and hold harmless each of the Initial
Purchasers, and their respective directors and officers and each person, if any,
who controls any Initial Purchaser within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in the Preliminary Offering Memorandum or Offering
Memorandum (including the Exhibits thereto and the Incorporated Documents) or in
any amendment or supplement thereto, or arising out of or based upon any
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, except, insofar as
such losses, claims, damages, liabilities or expenses arise out of or are based
upon any untrue statement or omission or alleged untrue statement or omission
which has been made therein or omitted therefrom in reliance upon and in
conformity with the information relating to any Initial Purchaser furnished in
writing to the Issuers by or on behalf of any Initial Purchaser expressly for
use therein. The foregoing indemnity agreement shall be in addition to any
liability which the Issuers or the Guarantors may otherwise have; provided,
--------
however, that the indemnification contained in this paragraph (a) with respect
- -------
to the Preliminary Offering Memorandum shall not inure to the benefit of any
Initial Purchaser (or to the benefit of any person controlling any Initial
Purchaser) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Notes by such Initial Purchaser to any person if it
is established in the related proceeding that each untrue statement or alleged
untrue statement contained in, or omission or alleged omission of a material
fact from, the Preliminary Offering Memorandum or the Offering Memorandum, or
any supplement thereto, upon which such loss, claim, damage, liability or
expense is based was completely corrected in the Offering Memorandum, or any
supplement thereto, and that such Initial Purchaser sold Notes to that person
without sending or giving at or prior to the written confirmation of such sale,
a copy of the Offering Memorandum (as then amended or supplemented), which the
Issuers have previously furnished sufficient copies thereof to such Initial
Purchaser as required hereby.
(b) If any action, suit or proceeding shall be brought against any
Initial Purchaser or any person who controls any Initial Purchaser in respect of
which indemnity may be sought against any of the Issuers or the Guarantors, such
Initial Purchaser or any such person who controls such Initial Purchaser shall
promptly notify the parties against whom indemnification is being sought (the
"indemnifying parties"), and such indemnifying parties shall assume the defense
- ---------------------
thereof, including the employment of counsel reasonably satisfactory to the
indemnified parties and payment of all reasonable fees and expenses. Each of
the Initial Purchasers or any person who controls any Initial Purchaser shall
have the right to employ separate counsel in any such action, suit or proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Initial Purchaser or any such person who
controls such Initial Purchaser unless (i) the indemnifying parties have agreed
to pay such fees and expenses, (ii) the indemnifying parties have failed to
assume the defense and employ counsel reasonably satisfactory to the indemnified
parties on a timely basis, or (iii) the named parties to any such action, suit
or proceeding (including any impleaded parties) include both (a) such Initial
Purchaser or any such person who controls such Initial Purchaser and (b) any of
the
-12-
<PAGE>
indemnifying parties, and such Initial Purchaser or any such person who controls
such Initial Purchaser shall have reasonably concluded, upon advice of its
counsel, that representation of such indemnified party and any such indemnifying
party by the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the indemnifying party shall not have the right to assume the defense
of such action, suit or proceeding on behalf of such Initial Purchaser or any
such person who controls the Initial Purchaser). It is understood, however, that
the indemnifying parties shall, in connection with any one such action, suit or
proceeding or separate but substantially similar or related actions, suits or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
each Initial Purchaser and any such person who controls each Initial Purchaser,
which firm shall be designated in writing by each Initial Purchaser and be
reasonably acceptable to the Issuers, and that all such reasonable fees and
expenses shall be reimbursed on a monthly basis. The indemnifying parties shall
not be liable for any settlement of any such action, suit or proceeding effected
without their written consent (which shall not be unreasonably withheld or
delayed), but if settled with such written consent, or if there be a final
judgment for the plaintiff in any such action, suit or proceeding, the
indemnifying parties agree to indemnify and hold harmless each of the Initial
Purchasers, to the extent provided in paragraph (a), and any person who controls
such Initial Purchaser from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(c) Each of the Initial Purchasers agrees to indemnify and hold
harmless the Issuers, the Guarantors, and their respective directors and
officers, and any person who controls the Issuers or any of the Guarantors
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act to
the same extent as the indemnity from the Issuer and the Guarantors to each of
the Initial Purchasers set forth in paragraph (a) hereof, but only with respect
to information relating to such Initial Purchasers furnished in writing by or on
behalf of such Initial Purchasers expressly for use in the Preliminary Offering
Memorandum or Offering Memorandum or any amendment or supplement thereto. If
any action, suit or proceeding shall be brought against either of the Issuers,
or any of the Guarantors, any of their respective directors or officers, or any
such controlling person based on the Preliminary Offering Memorandum or Offering
Memorandum, or any amendment or supplement thereto, and in respect of which
indemnity may be sought against each of the Initial Purchasers pursuant to this
paragraph (c), each of the Initial Purchasers shall have the rights and duties
given to the Issuer and the Guarantors by paragraph (b) above (except that if
either of the Issuers or any of the Guarantors shall have assumed the defense
thereof each of the Initial Purchasers shall not be required to, but may, employ
separate counsel therein and participate in the defense thereof, but the fees
and expenses of such counsel shall be at each of the Initial Purchasers'
expense), and either of the Issuers or any of the Guarantors, their respective
directors and officers, and any such controlling person shall have the rights
and duties given to each of the Initial Purchasers by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which each
of the Initial Purchasers may otherwise have.
(d) If the indemnification provided for in this Section 6 is
unavailable for any reason to an indemnified party under paragraphs (a) or (c)
hereof or is insufficient to hold any such indemnified party completely harmless
in respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuers and the Guarantors, collectively, on the one hand and each of the
Initial Purchasers on the other hand from the offering of the Notes, or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Issuers and
the Guarantors, collectively, on the one hand and each of the Initial Purchasers
on the other in connection with the statements or omissions that resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the
Issuers and the
-13-
<PAGE>
Guarantors, collectively, on the one hand and each of the Initial Purchasers on
the other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Issuers and the
Guarantors, collectively, bear to the total discounts and commissions received
by each of the Initial Purchasers, in each case as set forth in the table on the
cover page of the Offering Memorandum. The relative fault of the Issuers and the
Guarantors, collectively, on the one hand and each of the Initial Purchasers on
the other hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Issuers and the Guarantors, collectively, on the one hand or by each of the
Initial Purchasers on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The Issuers, the Guarantors and each of the Initial Purchasers
agree that it would not be just and equitable if contribution pursuant to this
Section 6 were determined by a pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to in paragraph (d) above. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, liabilities and expenses referred to in
paragraph (d) above shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating any claim or depending on any such
action, suit or proceeding. Notwithstanding the provisions of this Section 6,
none of the Initial Purchasers shall be required to contribute any amount in
excess of the amount by which the total price of the Notes purchased by it
exceeds the amount of any damages which any such Initial Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 6 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. Each
successor to any Initial Purchaser or any person who controls such Initial
Purchaser, or to the Issuers, the Guarantors, their respective directors or
officers or any person controlling the Issuers or the Guarantors, shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 6.
(g) No indemnifying party shall, without the prior written consent of
the indemnified parties (which consent shall not be unreasonably withheld),
effect any settlement or compromise of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party, or
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional written release of such indemnified
party, in form and substance reasonably satisfactory to such indemnified party,
from all liability on claims that are the subject matter of such proceeding.
7. Conditions of the Initial Purchaser's Obligations. The obligation of
-------------------------------------------------
each of the Initial Purchasers to purchase the Notes hereunder is subject to the
fulfillment, in the Initial Purchaser's sole discretion, of the following
conditions:
(a) At the time of execution of this Agreement and on the Closing
Date, no order or decree preventing the use of the Offering Memorandum or any
amendment or supplement thereto, nor any order asserting that the transactions
contemplated by this Agreement are subject to the registration requirements of
the Act shall have been issued, and no proceedings for that purpose shall have
been commenced or shall be pending or, to the knowledge of either of the Issuers
or any Guarantor, be contemplated. No order suspending the sale of the Notes in
any jurisdiction shall have been issued, and no proceedings for that purpose
shall have been
-14-
<PAGE>
commenced or shall be pending or, to the knowledge of either of the Issuers or
any Guarantor, shall be contemplated.
(b) Subsequent to the date hereof (i) there shall not have occurred
any material adverse change, or any development involving a prospective material
adverse change, in or affecting the condition (financial or otherwise),
business, prospects, liabilities (contingent or otherwise), properties, assets,
net worth, solvency or results of operations of either of the Issuers or any of
the Guarantors, and (ii) the conduct of the business and operations of the
Issuers and the Guarantors has not been interfered with by strike, fire, flood,
hurricane, accident or other calamity (whether or not insured) and, except as
otherwise stated in the Offering Memorandum, the properties of each of the
Issuers and the Guarantors have not sustained any loss or damage (whether or not
insured) as a result of any such occurrence, except any such interference, loss
or damage which could not, singly or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(c) The Initial Purchasers shall have received on the Closing Date an
opinion of Irell & Manella LLP, counsel for the Issuers and the Guarantors,
dated the Closing Date and addressed to the Initial Purchasers, in form and
substance reasonably satisfactory to Wilson Sonsini Goodrich & Rosati, P.C.,
counsel for the Initial Purchasers, to the effect that:
(i) Each Issuer is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware with full
corporate power and authority to own, lease and operate its properties and
to conduct its business as described in the Offering Memorandum and is duly
registered and qualified to conduct its business and is in good standing as
a foreign corporation in each jurisdiction where the nature of its
properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify or to be
in good standing could not, singly or in the aggregate with all other such
failures, reasonably be expected to have a Material Adverse Effect;
(ii) Each Guarantor is an entity duly incorporated and validly
existing in good standing under the laws of its jurisdiction of
incorporation or organization with full corporate, partnership or other
applicable power and authority to own, lease and operate its properties and
to conduct its business as described in the Offering Memorandum and is duly
registered and qualified to conduct its business and is in good standing as
a foreign corporation, partnership or other entity in each jurisdiction
where the nature of its properties or the conduct of its business requires
such registration or qualification, except where the failure so to register
or qualify or to be in good standing could not, singly or in the aggregate
with all other such failures, reasonably be expected to have a Material
Adverse Effect;
(iii) Each Issuer has corporate power and authority to enter into
this Agreement and the other Transaction Documents and to issue, sell and
deliver the Notes to be sold by it to the Initial Purchasers as provided
herein, and this Agreement and each of the other Transaction Documents
(other than the Notes) have been duly authorized, executed and delivered by
each Issuer and each of the Transaction Documents (other than this
Agreement) are valid, legal and binding agreements of each Issuer,
enforceable against each Issuer in accordance with their respective terms;
(iv) Each Guarantor has corporate, partnership or other power and
authority to enter into this Agreement and the other Transaction Documents,
and this Agreement and each of the other applicable Transaction Documents
have been duly authorized, executed and delivered by each Guarantor and
each of the Transaction Documents (other than this Agreement) are valid,
legal and binding agreements of each Guarantor, enforceable against each
Guarantor in accordance with their respective terms;
-15-
<PAGE>
(v) The Notes have been duly and validly authorized by each
Obligor, and, when executed by the Obligors, authenticated by the Trustee
in accordance with the Indenture delivered to the Initial Purchasers
against payment therefor in accordance with the terms hereof, will have
been validly issued and delivered, and will constitute valid and binding
obligations of each Obligor, entitled to the benefits of the Indenture;
(vi) (x) The offer, sale or delivery of the Notes as of the
Closing Date, and (y) the execution, delivery or performance by the Issuers
of this Agreement and the other Transaction Documents, and (z) compliance
by the Issuers with the provisions hereof or thereof and consummation by
the Issuers of the transactions contemplated hereby or thereby, do not and
will not conflict with and do not and will not constitute a breach of, or a
default under (including any event which, with notice or lapse of time or
both, would be a breach of or a default under), (a) the certificate or
articles of incorporation or partnership or membership agreement or bylaws
or other organizational documents of the Issuers or any of the Guarantors
as in effect on the Closing Date or (b) any Agreement or Instrument known
to such counsel as in effect on the Closing Date, except, with respect to
this clause (b) any such conflict, breach or default that could not, singly
or in the aggregate, with all such other conflicts, breaches and defaults,
reasonably be expected to have a Material Adverse Effect, and other than as
described in the Offering Memorandum or the Incorporated Documents, and,
based solely on facts known to such counsel, no such action will result in
any violation of any Law or Legal Requirement in effect as of the Closing
Date which in such counsel's experience is customarily applicable to
transactions of the type contemplated by the Transaction Documents
(assuming for the purposes of this paragraph compliance with all applicable
state securities and Blue Sky laws and, in the case of the Registration
Rights Agreements, the Act, the Exchange Act and the 1939 Act);
(vii) No Consent or Filing based on Law or Legal Requirements as
in effect on the Closing Date which in such counsel's experience is
customarily applicable to transactions of the type contemplated by the
Transaction Documents or as a result of the Issuers' business is required
on the part of either of the Issuers or any Guarantor for the valid
issuance and sale of the Notes to the Initial Purchasers as contemplated by
this Agreement or the execution, delivery or performance by the Issuers and
the Guarantors of each of the Transaction Documents, to which each is a
party, except (A) as have been obtained and are in full force and effect,
(B) as may be required under state securities or Blue Sky laws governing
the purchase and distribution of the Notes or such as may be required under
the Act, the Exchange Act or the 1939 Act in connection with the
performance by the Issuers of their obligations under the Registration
Rights Agreement and (C) as may be required by applicable Gaming Laws and
Gaming Authorities in connection with the registration, sale and issuance
of the Exchange Notes and any Guaranties thereof, as to which such counsel
need not express an opinion;
(viii) To the knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened against either of the
Issuers or any of the Guarantors, or to which either of the Issuers or any
of the Guarantors or any of their respective property or assets is subject,
which are not disclosed in the Offering Memorandum or the Incorporated
Documents and which, if adversely decided, could, singly or in the
aggregate with all other such proceedings, reasonably be expected to have a
Material Adverse Effect or materially adversely affect the consummation of
the transactions contemplated by the Transaction Documents;
(ix) The statements in the Offering Memorandum, insofar as they
are descriptions of contracts, agreements or other legal documents, or
refer to statements of law or legal conclusions (other than the discussion
in the last paragraph of the Offering Memorandum under the caption
"Business - Possible Restoration of REIT/Paired-Share Structure," which
shall be subject to the standard described
-16-
<PAGE>
in Section 7(c)(xv) hereof, are true and accurate in all material respects
and summarize fairly the information required to be shown in all material
respects;
(x) Except as described in the Offering Memorandum or the
Incorporated Documents, to the knowledge of such counsel, no holder of any
securities of either Issuer (except for the holders of the Notes) or any
other person has the right to have any securities of either Issuer included
in any registration statement contemplated by the Registration Rights
Agreement;
(xi) No registration of any of the Notes under the Act is
required for the sale of the Notes to the Initial Purchasers as
contemplated in this Agreement or for the Exempt Resales (assuming (A) that
each Initial Purchaser is a Qualified Institutional Buyer, (B) that any
person who buys the Notes in the Exempt Resales is an Eligible Purchaser,
(C) the accuracy of the Initial Purchasers' representations in this
Agreement, (D) the accuracy of the representations of the Issuers and the
Guarantors in this Agreement regarding the absence of general solicitation
in connection with the Exempt Resales and (E) the accuracy of the
representations made by each Accredited Investor who purchases Notes
pursuant to an Exempt Resale as set forth in the letter of representation
executed by such Accredited Investor in the form of Annex A to the Offering
Memorandum) and (F) the accuracy of the representations made by, and
compliance with the agreements made by, all purchasers under the terms set
forth in the Offering Memorandum under the caption "Notice to Investors";
(xii) Except for sales of Notes pursuant to the Exchange Offer,
as defined in the Indenture, no qualification of the Indenture under the
1939 Act is required in connection with the offer and sale of the Notes
contemplated hereby or in connection with the Exempt Resales;
(xiii) Assuming that the proceeds of issuance of the Notes are
used as set forth in the Offering Memorandum, neither the consummation of
the transactions contemplated hereby nor the sale, issuance, execution or
delivery of the Notes, nor the application of the proceeds therefrom (if
applied as described in the Offering Memorandum under the caption "Use of
Proceeds"), will violate Regulation G (12 C.F.R. Part 207), T (12 C.F.R.
Part 220), U (12 C.F.R. Part 221) or X (12 C.F.R. Part 224) of the Board of
Governors of the Federal Reserve System;
(xiv) Such counsel will have considered, reviewed and discussed
with certain officers and employees of the Issuers, and with you, the
information furnished with respect to the Offering Memorandum. On the
basis of such consideration, review and discussion, but without any
independent investigation, examination or verification, no facts will have
come to such counsel's attention that will have caused such counsel to
believe that the Offering Memorandum as of its date and as of the date
hereof, contains an untrue statement of a material fact or (taken together
with the Incorporated Documents) omits to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, it being understood that such counsel
need express no belief with respect to the financial statements, schedules
and other financial and statistical data (including forecasts) included in
the Offering Memorandum.
(xv) The discussion in the last paragraph of the Offering
Memorandum under the caption "Business - Possible Restoration of
REIT/Paired-Share Structure," insofar as such discussion refers to
statements of federal income tax law or legal conclusions thereunder (the
"Tax Discussion"), is true and accurate in all material respects.
The opinion of such counsel shall be limited to the laws of the United
States, the State of California and the internal corporation law of the State of
Delaware.
-17-
<PAGE>
In giving such opinion, such counsel may also state that, insofar as
such opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Issuers and the Guarantors and
certificates of public officials; provided, however, that such certificates have
-------- -------
been delivered to the Initial Purchasers prior to the Closing Date. In
addition, with respect to any opinion interpreting the laws of the State of New
York, such counsel may state that, for the purposes of rendering such opinion,
they have assumed all such laws to be identical to the corresponding laws of the
State of California in all pertinent respects. The foregoing opinion shall be
limited in scope to the laws of the States of California and Delaware, the laws
of the State of New York subject to the assumption described in the preceding
sentence, and the federal laws of the United States. To the extent that any of
the opinions required above address matters governed by the respective laws of
Nevada, Louisiana, Mississippi and Arizona, the applicable opinions described in
sections 7(d)(i), (ii), (iii) and (iv), respectively, shall address such
matters. Such opinion shall be subject to customary exceptions and
qualifications.
(d) The Initial Purchasers shall have received on the Closing Date
the following opinions, dated the Closing Date, addressed to the Initial
Purchasers and in form and substance reasonably satisfactory to the Initial
Purchasers with respect to certain gaming matters and matters of local law:
(i) Opinion of Schreck Morris, gaming counsel for the Issuers
and the Guarantors in the State of Nevada;
(ii) Opinion of Smith Martin, gaming counsel for the Issuers
and the Guarantors in the State of Louisiana;
(iii) Opinion of Watkins, Ludlam & Stennis, P.A., gaming counsel
for the Issuers and the Guarantors in the State of Mississippi; and
(iv) Opinion of Jennings, Strouss & Salomon, P.L.C., counsel
for the Issuers and the Guarantors in the State of Arizona.
(e) Wilson Sonsini Goodrich & Rosati, P.C. shall have received on the
Closing Date a reliance letter from Irell & Manella LLP, dated the Closing Date,
addressed to Wilson Sonsini Goodrich & Rosati, P.C. and in form and substance
reasonably satisfactory to Wilson Sonsini Goodrich & Rosati, P.C., acknowledging
the reliance of Wilson, Sonsini, Goodrich & Rosati, P.C. on the opinion of Irell
& Manella LLP described in Section 7(c) herein in rendering the opinion of
Wilson, Sonsini, Goodrich & Rosati, P.C. set forth in Section 7(f) herein.
(f) The Initial Purchasers shall have received on the Closing Date an
opinion of Wilson Sonsini Goodrich & Rosati, P.C., counsel for the Initial
Purchasers, dated the Closing Date, addressed to the Initial Purchasers and in
form and substance reasonably satisfactory to the Initial Purchasers with
respect to the Notes, the Transaction Documents and including, inter alia, the
----- ----
enforceability of the Notes and Transaction Documents under the internal
substantive laws of the State of New York and such other matters as may be
requested by the Initial Purchasers and satisfactory in form and substance to
the Initial Purchasers, and the Issuers and the Guarantors shall have furnished
to such counsel such documents and other instruments and information as they may
reasonably request for the purpose of enabling them to pass upon such matters.
(g) (i) There shall not have been any material increase in the
consolidated short-term or consolidated long-term debt of either of the Issuers
or any Guarantor (other than in the ordinary course of business) from that set
forth in or contemplated by the Offering Memorandum; (ii) there shall not have
been, since the respective dates as of which information is given in the
Offering Memorandum, except as otherwise expressly stated in the Offering
Memorandum, any material adverse change in the condition (financial or other),
-18-
<PAGE>
business, prospects, liabilities (contingent or otherwise), properties, net
worth, solvency or results of operations of the Issuers or the Issuers and the
Guarantors taken as a whole; (iii) the Issuers and the Guarantors shall not have
any liabilities or obligations, direct or contingent (whether or not in the
ordinary course of business), that are material to the Issuers or the Issuers
and the Guarantors taken as a whole, other than those reflected in the Offering
Memorandum; (iv) each of the representations and warranties of each Issuer and
each of the Guarantors contained in this Agreement shall be true and correct in
all material respects on and as of the date hereof and on and as of the Closing
Date as if made on and as of the Closing Date; (v) each Issuer and each
Guarantor shall have executed and delivered each other Transaction Document to
which such Issuer or such Guarantor is or is required to be a party; (vi) the
Initial Purchasers shall have received a certificate, dated the Closing Date and
signed on behalf of each Issuer by the chief executive officer and the chief
financial officer of each Issuer (or such other officers as are acceptable to
the Initial Purchasers), certifying the matters set forth in this Section 7(g)
and in Section 7(h) hereof, to the effect that such Issuer is not, nor will it
be, as a result of or after giving effect to the issuance of the Notes and the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby and thereby, (x) insolvent, (y) left with
an unreasonably small capital with which to engage in its existing and
anticipated businesses or (z) incurring debts beyond its ability to pay such
debts as they mature and to the effect that, to the knowledge of such
individuals, the Offering Memorandum, and any amendment or supplement thereto,
does not contain any untrue statement of 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; (vii) the Initial
Purchasers shall have received a certificate from the Guarantors and signed by
each Guarantor, dated the Closing Date and signed on behalf of each Guarantor by
the chief executive officer and chief financial officer of the Guarantor (or
such other officers as are acceptable to the Initial Purchasers), certifying the
matters set forth in this Section 7(g) and in Section 7(h) hereof, to the effect
that, collectively, the Guarantors are not, nor will be, after giving effect to
the issuance of the Notes and the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby, (x)
insolvent, (y) left with an unreasonably small capital with which to engage in
their respective existing and anticipated businesses or (z) incurring debts
beyond their ability to pay such debts as such debts mature and to the effect
that, to the knowledge of such individuals, the Offering Memorandum, and any
amendment or supplement thereto, does not contain any untrue statement of
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.
(h) None of the Issuers nor the Guarantors shall have failed at or
prior to the Closing Date to have performed or complied in any material respect
with any of its agreements herein contained and required to be performed or
complied with by it hereunder at or prior to the Closing Date.
(i) The Notes shall have been approved for trading on PORTAL.
(j) At the time of the execution of this Agreement, the Initial
Purchasers shall have received from Arthur Andersen LLP, independent public
accountants, and Ernst & Young LLP, independent auditors, respectively, letters
dated as of the Closing Date, each substantially in the form contemplated for
"comfort letters addressed to underwriters" by Statement of Auditing Standards
No. 72 ("SAS 72"), and addressing such matters as, and in form and substance
previously provided to for review and agreed to as, satisfactory to the Initial
Purchasers in their sole discretion.
(k) The Issuers and the Guarantors shall have furnished or caused to
be furnished to the Initial Purchasers such further certificates, documents and
opinions as the Initial Purchasers shall have reasonably requested.
-19-
<PAGE>
(l) There shall not have been made any amendment or supplement to the
Offering Memorandum to which any of the Initial Purchasers has objected.
All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Initial Purchasers and Wilson Sonsini
Goodrich & Rosati, P.C., counsel for the Initial Purchasers.
Any certificate or document signed by any officer of either of the
Issuers or any Guarantor and delivered to the Initial Purchasers, or to counsel
for the Initial Purchasers, at the Closing, shall be deemed a representation and
warranty by such Issuer or such Guarantor to the Initial Purchasers as to the
statements made therein.
Acceptance of the proceeds of the issuance and sale of the Notes shall
be a representation and warranty by the Issuers to the Initial Purchasers that
each of the conditions set forth in clauses (a), (b), (g) and (h) of this
Section 7 have been satisfied or, to the knowledge of the Issuer, waived.
8. Expenses. (a) Whether or not the purchase and sale of the Notes
--------
hereunder is consummated or this Agreement is terminated pursuant to Section 9
hereof, the Issuers agree to pay the following costs and expenses and all other
costs and expenses incident to the performance by it of its obligations
hereunder: (i) the preparation, word processing, printing, delivery and
reproduction of the Preliminary Offering Memorandum and the Offering Memorandum
(including financial statements thereto), and each amendment or supplement to
any of them; (ii) the delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the Offering Memorandum,
the Preliminary Offering Memorandum and all amendments or supplements as may be
reasonably requested for use in connection with the offering and sale of the
Notes as part of the initial distribution thereof pursuant to Exempt Resales;
(iii) the preparation, printing, authentication, issuance and delivery of
certificates for the Notes, including any stamp taxes in connection with the
original issuance and sale of the Notes; (iv) the printing (or reproduction) and
delivery of all other agreements and documents printed (or reproduced) and
delivered in connection with the offering of the Notes; (v) the application for
quotation of the Notes on PORTAL; (vi) the performance by the Issuers of their
obligations under the Registration Rights Agreement (including fees and expenses
of the Trustee, including fees and expenses of their counsel); and (vii) the
fees and expenses of the Issuers' accountants and the fees and expenses of
counsel (including local and special counsel) for the Issuers and the
Guarantors; provided, however, that the Initial Purchasers agree to reimburse
-------- -------
the Issuers for $100,000 of the foregoing costs and expenses to be applied as
designated by the Issuers. The Initial Purchasers shall pay their own costs and
expenses (including the costs and expenses of their counsel).
(b) If the purchase and sale of the Notes hereunder is not
consummated because any condition to the obligations of the Initial Purchasers
set forth in Section 7 hereof is not satisfied, because this Agreement is
terminated pursuant to Section 9 hereof or because of any failure, refusal or
inability on the part of the Issuers or the Guarantors to perform all
obligations and satisfy all conditions on their part to be performed or
satisfied hereunder other than by reason of a default by the Initial Purchasers
in payment for the Notes on the Closing Date after all conditions set forth
herein have been satisfied, the Issuers shall reimburse the Initial Purchasers
promptly upon demand for all out-of-pocket expenses (including reasonable fees
and expenses of counsel) that shall have been incurred by the Initial Purchasers
in connection with the proposed purchase and sale of the Notes and the other
transactions contemplated hereby.
9. Termination of Agreement. This Agreement shall be subject to
------------------------
termination in the absolute discretion of the Initial Purchasers, without
liability on the part of the Initial Purchasers to the Issuers, by notice to the
Issuers, if at or prior to the delivery and payment for Notes, (i) trading in
securities generally on the New York Stock Exchange, American Stock Exchange or
the Nasdaq National Market shall have been suspended or materially limited, (ii)
a general moratorium on commercial banking activities in New York shall have
been
-20-
<PAGE>
declared by either Federal or state authorities, or (iii) there shall have
occurred any outbreak or escalation of hostilities or other international or
domestic calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States or
the market for the Notes is such as to make it, in the reasonable judgment of
the Initial Purchasers, impracticable or inadvisable to commence or continue the
offering of the Notes on the terms set forth in the Offering Memorandum or to
enforce contracts for the resale of the Notes by the Initial Purchasers. Notice
of such termination may be given to the Issuers by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.
10. Information Furnished by the Initial Purchasers. The statements set
-----------------------------------------------
forth in the last paragraph on the cover page and in the second, fifth and
eighth paragraphs under the caption "Plan of Distribution" in the Offering
Memorandum, constitute the only information furnished by or on behalf of the
Initial Purchasers as such information is referred to in Sections 5(b) and 6
hereof.
11. Miscellaneous. Except as otherwise provided in Sections 4 and 9
-------------
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Issuers, at the office of the
Company at 1050 South Prairie Avenue, Inglewood, California 90301, Attention:
President, Sports and Entertainment, Executive Vice President, Treasurer and
Chief Financial Officer, or (ii) if to the Initial Purchasers, to Oppenheimer &
Co., Inc., One World Financial Center, New York, New York, 10281, Attention:
Managing Director, Investment Banking Division.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
This Agreement has been and is made solely for the benefit of the Initial
Purchasers, the Issuers and the Guarantors, and their respective directors,
officers and the controlling persons referred to in Section 6 hereof and their
respective successors and assigns, to the extent provided herein, and no other
person shall acquire or have any right under or by virtue of this Agreement.
Neither the term "successor" nor the terms "successors and assigns" as used in
this Agreement shall include a purchaser from the Initial Purchasers of any of
the Notes in such purchaser's status as such purchaser.
12. Survival. The respective representations, warranties, agreements,
--------
covenants, indemnities and other statements of the Issuers set forth in this
Agreement or made by or on behalf of the Issuers (including, pursuant to any
officer's certificate) pursuant to this Agreement shall remain in full force and
effect, regardless of (i) any investigation made by or on behalf of the Initial
Purchasers, any director, officer, employee or agent of the Initial Purchasers
or any controlling person referred to in Section 6 hereof, and (ii) delivery of
and payment for the Notes. The respective agreements, covenants, indemnities and
other statements set forth in Sections 6, 8 and 13 hereof shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement.
13. APPLICABLE LAW; COUNTERPARTS. THIS AGREEMENT SHALL BE GOVERNED BY AND
----------------------------
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WITHIN THE STATE OF NEW YORK.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-21-
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Issuer and the Initial Purchasers.
Very truly yours,
HOLLYWOOD PARK, INC.
By:
-----------------------------------
Name:
Title:
Confirmed as of the date first HOLLYWOOD PARK OPERATING COMPANY
above mentioned.
OPPENHEIMER & CO., INC.
By:
-----------------------------------
Name:
Title:
By:
--------------------------
Name:
Title: HOLLYWOOD PARK FOOD SERVICES, INC.
BT SECURITIES CORPORATION By:
-----------------------------------
Name:
Title:
By: HOLLYWOOD PARK FALL OPERATING COMPANY
--------------------------
Name:
Title:
By:
-----------------------------------
Name:
BANCAMERICA SECURITIES, INC. Title:
TURF PARADISE, INC.
By:
--------------------------
Name:
Title: By:
-----------------------------------
Name:
Title:
-22-
<PAGE>
HP/COMPTON, INC.
By:
-----------------------------------
Name:
Title:
CRYSTAL PARK HOTEL AND CASINO DEVELOPMENT
COMPANY, LLC
By its Manager
HP/COMPTON, INC.
By:
-----------------------------------
Name:
Title:
BOOMTOWN, INC.
By:
-----------------------------------
Name:
Title:
BOOMTOWN HOTEL & CASINO, INC.
By:
-----------------------------------
Name:
Title:
LOUISIANA GAMING ENTERPRISES, INC.
By:
-----------------------------------
Name:
Title:
-23-
<PAGE>
LOUISIANA-I GAMING, A LOUISIANA PARTNERSHIP IN
COMMENDAM
By its General Partner
LOUISIANA GAMING ENTERPRISES, INC.
By:
-------------------------------------------
Name:
Title:
BAYVIEW YACHT CLUB, INC.
By:
-------------------------------------------
Name:
Title:
MISSISSIPPI-I GAMING, L.P.
By its General Partner
BAYVIEW YACHT CLUB, INC.
By:
-------------------------------------------
Name:
Title:
HP YAKAMA, INC.
By:
-------------------------------------------
Name:
Title:
-24-
<PAGE>
SCHEDULE I
LIST OF INITIAL PURCHASERS
<TABLE>
<CAPTION>
INITIAL PURCHASER PRINCIPAL AMOUNT
- ------------------------------ --------------------------
<S> <C>
Oppenheimer & Co., Inc. $68,750,000
BT Securities Corporation $37,500,000
BancAmerica Securities, Inc. $18,750,000
</TABLE>
<PAGE>
SCHEDULE II
GUARANTORS
Hollywood Park Food Services,
Inc.
Hollywood Park Fall Operating
Company
Turf Paradise, Inc.
HP/Compton, Inc.
Crystal Park Hotel and Casino
Development Company, LLC
HP Yakama, Inc.
Boomtown, Inc.
Boomtown Hotel & Casino, Inc.
Louisiana Gaming Enterprises, Inc.
Louisiana-I Gaming, a Louisiana
partnership in commendam
Bayview Yacht Club, Inc.
Mississippi-I Gaming, L.P.
<PAGE>
EXHIBIT 10.37
================================================================================
HOLLYWOOD PARK, INC.
HOLLYWOOD PARK OPERATING COMPANY
Companies
BAYVIEW YACHT CLUB, INC.
BOOMTOWN HOTEL & CASINO, INC.
BOOMTOWN, INC.
CRYSTAL PARK HOTEL & CASINO DEVELOPMENT COMPANY, LLC
HOLLYWOOD PARK FALL OPERATING COMPANY
HOLLYWOOD PARK FOOD SERVICES, INC.
HP/COMPTON, INC.
HP YAKAMA, INC.
LOUISIANA GAMING ENTERPRISES, INC.
LOUISIANA-I GAMING, A LOUISIANA PARTNERSHIP IN COMMENDAM
MISSISSIPPI-I GAMING, L.P.
TURF PARADISE, INC.
Initial Guarantors
9 1/2% SERIES A SENIOR SUBORDINATED NOTES DUE 2007
9 1/2% SERIES B SENIOR SUBORDINATED NOTES DUE 2007
_________________
INDENTURE
Dated as of August 1, 1997
_________________
_________________
THE BANK OF NEW YORK
_________________
Trustee
<PAGE>
================================================================================
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1 -- DEFINITIONS AND INCORPORATION BY REFERENCE...................... 1
Section 1.01. Definitions.............................................. 1
Section 1.02. Other Definitions........................................ 19
Section 1.03. Incorporation by Reference of Trust Indenture Act........ 20
Section 1.04. Rules of Construction.................................... 20
ARTICLE 2 -- THE NOTES....................................................... 21
Section 2.01. Form and Dating.......................................... 21
Section 2.02. Execution and Authentication............................. 21
Section 2.03. Registrar and Paying Agent............................... 21
Section 2.04. Paying Agent to Hold Money in Trust...................... 22
Section 2.05. Holder Lists............................................. 22
Section 2.06. Transfer and Exchange.................................... 22
Section 2.07. Replacement Notes........................................ 28
Section 2.08. Outstanding Notes........................................ 29
Section 2.09. Treasury Notes........................................... 29
Section 2.10. Temporary Notes.......................................... 29
Section 2.11. Cancellation............................................. 29
Section 2.12. Defaulted Interest....................................... 30
Section 2.13. CUSIP Numbers............................................ 30
ARTICLE 3 -- REDEMPTION AND PREPAYMENT....................................... 30
Section 3.01. Notices to Trustee....................................... 30
Section 3.02. Selection of Notes to Be Redeemed........................ 30
Section 3.03. Notice of Redemption..................................... 31
Section 3.04. Effect of Notice of Redemption........................... 31
Section 3.05. Deposit of Redemption Price.............................. 32
Section 3.06. Notes Redeemed in Part................................... 32
Section 3.07. Redemption............................................... 32
Section 3.08. Mandatory Redemption..................................... 33
Section 3.09. Offer to Purchase by Application of Excess Proceeds...... 33
ARTICLE 4 -- COVENANTS....................................................... 35
Section 4.01. Payment of Notes......................................... 35
Section 4.02. Maintenance of Office or Agency.......................... 35
Section 4.03. Reports.................................................. 36
Section 4.04. Compliance Certificate................................... 36
Section 4.05. Taxes.................................................... 37
Section 4.06. Stay, Extension and Usury Laws........................... 37
Section 4.07. Restricted Payments...................................... 37
Section 4.08. Incurrence of Indebtedness and Issuance of Preferred
Stock................................................... 41
</TABLE>
ii
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 4.09. Asset Sales............................................. 41
Section 4.10. Transactions with Affiliates............................ 43
Section 4.11. Continued Existence..................................... 43
Section 4.12. Offer to Repurchase Upon Change of Control.............. 44
Section 4.13. Limitation on Liens..................................... 45
Section 4.14. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries....................... 45
Section 4.15. No Subordinated Debt Senior To The Notes or Guaranties.. 46
Section 4.16. Designation Of Restricted and Unrestricted Subsidiaries. 46
Section 4.17. Material Restricted Subsidiaries To Become Guarantors.. 46
Section 4.18. Lines of Business....................................... 47
ARTICLE 5 -- SUCCESSORS................................................... 47
Section 5.01. Merger, Consolidation, or Sale of Assets................ 47
Section 5.02. Successor Corporation Substituted....................... 48
ARTICLE 6 -- DEFAULTS AND REMEDIES........................................ 48
Section 6.01. Events of Default....................................... 48
Section 6.02. Acceleration............................................ 50
Section 6.03. Other Remedies.......................................... 51
Section 6.04. Waiver of Past Defaults................................. 51
Section 6.05. Control by Majority..................................... 51
Section 6.06. Limitation on Suits..................................... 52
Section 6.07. Rights of Holders of Notes to Receive Payment........... 52
Section 6.08. Collection Suit by Trustee.............................. 52
Section 6.09. Trustee May File Proofs of Claim........................ 53
Section 6.10. Priorities.............................................. 53
Section 6.11. Undertaking for Costs................................... 53
ARTICLE 7 -- TRUSTEE...................................................... 54
Section 7.01. Duties of Trustee....................................... 54
Section 7.02. Rights of Trustee....................................... 55
Section 7.03. Individual Rights of Trustee............................ 55
Section 7.04. Trustee's Disclaimer.................................... 55
Section 7.05. Notice of Defaults...................................... 56
Section 7.06. Reports by Trustee to Holders of the Notes.............. 56
Section 7.07. Compensation and Indemnity.............................. 56
Section 7.08. Replacement of Trustee.................................. 57
Section 7.09. Successor Trustee by Merger, etc. ...................... 58
Section 7.10. Eligibility; Disqualification........................... 58
Section 7.11. Preferential Collection of Claims Against Companies..... 58
</TABLE>
iii
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 8 -- LEGAL DEFEASANCE AND COVENANT DEFEASANCE..................... 58
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance 58
Section 8.02. Legal Defeasance and Discharge.......................... 58
Section 8.03. Covenant Defeasance..................................... 59
Section 8.04. Conditions to Legal or Covenant Defeasance.............. 59
Section 8.05. Deposited Money and Government Securities to be Held
in Trust; Other Miscellaneous Provisions................ 60
Section 8.06. Repayment to Company.................................... 61
Section 8.07. Reinstatement........................................... 61
ARTICLE 9 -- AMENDMENT, SUPPLEMENT AND WAIVER............................. 62
Section 9.01. Without Consent of Holders of Notes..................... 62
Section 9.02. With Consent of Holders of Notes........................ 63
Section 9.03. Compliance with Trust Indenture Act..................... 64
Section 9.04. Revocation and Effect of Consents....................... 64
Section 9.05. Notation on or Exchange of Notes........................ 64
Section 9.06. Trustee to Sign Amendments, etc. ....................... 64
ARTICLE 10 -- SUBORDINATION............................................... 65
Section 10.01. Agreement to Subordinate................................ 65
Section 10.02. Certain Definitions..................................... 65
Section 10.03. Liquidation; Dissolution; Bankruptcy.................... 66
Section 10.04. Default on Designated Senior Debt....................... 66
Section 10.05. Acceleration of Notes................................... 67
Section 10.06. When Distribution Must Be Paid Over..................... 67
Section 10.07. Notice by Companies..................................... 68
Section 10.08. Subrogation............................................. 68
Section 10.09. Relative Rights......................................... 68
Section 10.10. Subordination May Not Be Impaired by Obligors........... 69
Section 10.11. Distribution or Notice to Representative................ 69
Section 10.12. Rights of Trustee and Paying Agent...................... 70
Section 10.13. Authorization to Effect Subordination................... 70
Section 10.14. Amendments.............................................. 71
ARTICLE 11 -- MISCELLANEOUS............................................... 71
Section 11.01. Trust Indenture Act Controls............................ 71
Section 11.02. Notices................................................. 71
Section 11.03. Communication by Holders of Notes with Other Holders
of Notes................................................ 72
Section 11.04. Certificate and Opinion as to Conditions Precedent...... 72
</TABLE>
iv
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 11.05. Statements Required in Certificate or Opinion........... 73
Section 11.06. Rules by Trustee and Agents............................. 73
Section 11.07. No Personal Liability of Directors, Officers, Employees
and Stockholders........................................ 73
Section 11.08. Governing Law........................................... 73
Section 11.09. No Adverse Interpretation of Other Agreements........... 73
Section 11.10. Successors.............................................. 74
Section 11.11. Severability............................................ 74
Section 11.12. Counterpart Originals................................... 74
Section 11.13. Table of Contents, Headings, etc. ...................... 74
ARTICLE 12 -- GUARANTY.................................................... 74
Section 12.01. The Guaranty............................................ 74
Section 12.02. Nature of Guaranty...................................... 74
Section 12.03. Authorization........................................... 75
Section 12.04. Certain Waivers......................................... 76
Section 12.05. No Subrogation; Certain Agreements...................... 77
Section 12.06. Bankruptcy No Discharge................................. 77
Section 12.07. Severability of Void Guaranteed Obligations Under
Guaranty................................................ 78
Section 12.08. Right of Contribution................................... 78
Section 12.09. Additional Guarantors................................... 78
Section 12.10. Release of a Guarantor.................................. 79
</TABLE>
v
<PAGE>
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B CERTIFICATE OF TRANSFEROR
Exhibit C INVESTMENTS SCHEDULE
vi
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
310(a)(1).......................................... 7.10
(a)(2).......................................... 7.10
(a)(3).......................................... N.A.
(a)(4).......................................... N.A.
(a)(5).......................................... 7.10
(b)............................................. 7.10
(c)............................................. N.A.
311(a)............................................. 7.11
(b)............................................. 7.11
(c)............................................. N.A.
312(a)............................................. 2.05
(b).............................................11.03
(c).............................................11.03
313(a)............................................. 7.06
(b)(1).......................................... N.A.
(b)(2).......................................... 7.07
(c)........................................7.06;11.02
(d)............................................. 7.06
314(a)........................................4.03;11.02
(b)............................................. N.A.
(c)(1)..........................................11.04
(c)(2)..........................................11.04
(c)(3).......................................... N.A.
(d)............................................. N.A.
(e).............................................11.05
(f)............................................. N.A.
315(a)............................................. 7.01
(b)........................................7.05,11.02
(c)............................................. 7.01
(d)............................................. 7.01
(e)............................................. 6.11
316(a)(last sentence).............................. 2.09
(a)(1)(A)....................................... 6.05
(a)(1)(B)....................................... 6.04
(a)(2).......................................... N.A.
(b)............................................. 6.07
(c)............................................. 2.12
317(a)(1).......................................... 6.08
(a)(2).......................................... 6.09
(b)............................................. 2.04
318(a).............................................11.01
(b)............................................. N.A.
(c).............................................11.01
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of this Indenture.
<PAGE>
INDENTURE dated as of August 1, 1997 among Hollywood Park, Inc., a
Delaware corporation ("HPI"), Hollywood Park Operating Company, a Delaware
corporation ("HPOC" and collectively, together with HPI, the "Companies"), all
of the existing and future Material Restricted Subsidiaries (as defined below)
of the Companies (other than HPOC) (collectively, the "Guarantors") and The Bank
of New York, a New York banking corporation, as trustee (the "Trustee").
The Companies, 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 Companies' 9 1/2% Series A Senior Subordinated Notes due 2007 (the "Series A
Notes") and the 9 1/2% Series B Senior Subordinated Notes (the "Series B Notes")
and collectively, together with the Series A Notes, (the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Acquired Debt" means, with respect to any specified Person,
Indebtedness of another Person and any of such other Person's Subsidiaries
existing at the time such other Person becomes a Subsidiary of such Person or at
the time it merges or consolidates with such Person or any of such Person's
Subsidiaries or is assumed by such Person or any Subsidiary of such Person in
connection with the acquisition of assets from such other Person and in each
case not Incurred by such Person or any Subsidiary of such Person or such other
Person in connection with, or in anticipation or contemplation of, such other
Person becoming a Subsidiary of such Person or such acquisition, merger or
consolidation.
"Addendum to Guaranty" has the meaning provided in Section 12.09
hereof.
"Affiliate" means, when used with reference to any Person, (i) any
other Person directly or indirectly controlling, controlled by, or under direct
or indirect common control with, the referent Person or such other Person, as
the case may be, or (ii) any directors, officer or partner of such Person or any
Person specified in clause (i) above. For the purposes of this definition, the
term "control" when used with respect to any specified Person means the power to
direct or cause the direction of management or policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "affiliated," "controlling," and "controlled" have
meanings correlative of the foregoing. None of the Initial Purchasers nor any
of their respective Affiliates shall be deemed to be Affiliates of any Obligor
or of any of their respective Affiliates. No Wholly Owned Restricted Subsidiary
of either Company shall be deemed to be an Affiliate of any Obligor.
"Asset Acquisition" means (i) an Investment by any Obligor in any
other Person, as a result of which such Person shall become an Obligor or a
Wholly Owned Restricted Subsidiary of an Obligor or shall be merged with or into
any Obligor or any Wholly Owned Restricted Subsidiary of an Obligor, or (ii) the
acquisition by any Obligor of assets of any Person comprising a division or line
of business of such Person or all or substantially all of the assets of such
Person.
<PAGE>
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other disposition (for purposes of this definition,
each a "disposition") by any Obligor (including, without limitation, pursuant to
any Sale and Leaseback Transaction or any merger or consolidation of any
Restricted Subsidiary of either Company with or into another Person (other than
another Obligor) whereby such Restricted Subsidiary shall cease to be a
Restricted Subsidiary of either Company) to any Person of (i) any property or
assets of any Obligor to the extent that any such disposition is not in the
ordinary course of business of such Obligor or (ii) any Capital Stock of any
Restricted Subsidiary, other than (1) any disposition to either Company, (2) any
disposition to any Obligor or Wholly Owned Restricted Subsidiary, (3) any
disposition that constitutes a Restricted Payment or a Permitted Investment that
is made in accordance with Section 4.07 hereof, (4) any transaction or series of
related transactions resulting in net cash proceeds to such Obligor of less than
$1 million, (5) any transaction that is consummated in accordance with Section
5.01 hereof, (6) the sale or discount, in each case without recourse (direct or
indirect), of accounts receivable arising in the ordinary course of business of
either Company or such Restricted Subsidiary, as the case may be, but only in
connection with the compromise or collection thereof, (7) any pledge, assignment
by way of collateral security, grant of security interest, hypothecation or
mortgage, permitted by this Indenture or any foreclosure, judicial or other
sale, public or private, by the pledgee, assignee, mortgagee or other secured
party of the subject assets, (8) a disposition of assets constituting a
Permitted Investment or (9) distributions, recapitalizations or
reclassifications of Equity Interests (other than Disqualified Capital Stock) of
HPI or HPOC in connection with the REIT Restructuring.
"Bank Credit Facility" means the Credit Facility provided to HPI
pursuant to the Reducing Revolving Loan Agreement, dated as of March 27, 1997,
by and among HPI, the financial institutions from time to time named therein
(the "Banks"), Bank of Scotland, Bankers Trust Company and Societe Generale, as
Co-Agents for the Banks, and Bank of America National Trust and Savings
Association, as Managing Agent, as amended, restated, modified, renewed,
refunded, replaced or refinanced in whole or in part from time to time by the
same or different institutional lenders.
"Bankruptcy Law" means the United States Bankruptcy Code and any other
bankruptcy, insolvency, receivership, reorganization, moratorium or similar law
providing relief to debtors, in each case, as from time to time amended and
applicable to the relevant case.
"Board" means the Board of Directors or similar governing entity of an
Obligor, the members of which are elected by the holders of Capital Stock of
such Obligor or, if applicable, a duly-appointed committee of such Board of
Directors or similar governing body, having jurisdiction over the subject matter
at issue.
"Boomtown Notes" means the 11 1/2% First Mortgage Notes due 2003
issued by Boomtown and remaining outstanding after Boomtown's offer to
repurchase and repurchase of such notes pursuant to an Offer to Purchase and
Consent Solicitation Statement dated March 28, 1997, as amended.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, rights, interests, participations or other
equivalents (however designated and whether or not voting) of corporate stock,
including each class of common stock and preferred stock of such Person, and
(ii) with
2
<PAGE>
respect to any Person that is not a corporation, any and all partnership,
membership or other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the discounted
rental stream payable by such Person that is required to be classified and
accounted for as a capital lease obligation under GAAP and, for purposes of this
definition, the amount of such obligation at any date shall be the capitalized
amount of such obligation at such date, determined in accordance with GAAP. The
final maturity of any such obligation shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be terminated by the lessee without penalty.
"Cash Equivalents" means (i) Government Securities; (ii) certificates
of deposit, Eurodollar time deposits and bankers acceptances maturing within 12
months from the date of acquisition thereof by any Obligor and issued by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia or any U.S. branch of foreign bank
having, at the date of acquisition of the applicable Cash Equivalent, (A)
combined capital and surplus of not less than $500 million and (B) a commercial
paper rating of at least A-1 from S&P or at least P-1 from Moody's; (iii)
repurchase obligations with a term of not more than seven days after the date of
acquisition thereof by any Obligor for underlying securities of the types
described in clauses (i), (ii) and (vi) hereof, entered into with any financial
institution meeting the qualifications specified in clause (ii) above; (iv)
commercial paper having a rating of at least P-1 from Moody's or a rating of at
least A-1 from S&P on the date of acquisition thereof by any Obligor; (v) debt
obligations of any corporation maturing within 12 months after the date of
acquisition thereof by any Obligor, having a rating of at least P-1 or aaa from
Moody's or A-1 or AAA from S&P on the date of such acquisition; and (vi) mutual
funds and money market accounts investing at least 90% of the funds under
management in instruments of the types described in clauses (i) through (v)
above and, in each case, maturing within the period specified above for such
instrument after the date of acquisition thereof by any Obligor.
"Certificated Notes" means Notes that are in the form of the Notes
attached hereto as Exhibit A, that do not include the information called for by
footnotes 1, 2 and 3 thereof.
"Change of Control" means the occurrence of any of the following: (i)
the REIT Restructuring, (ii) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one transaction
or a series of related transactions, of all or substantially all of the assets
of either Company or the Companies and their Restricted Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act) (as defined below), (iii) the adoption, or, if applicable, the approval of
any requisite percentage of either Company's stockholders of a plan relating to
the liquidation or dissolution of such Company, (iv) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (as defined above), other than a Principal,
becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only upon
the occurrence of a subsequent condition), directly or indirectly, of more than
50% of the Voting Stock of either Company (measured by voting power rather than
number of shares), or (v) during any consecutive two-year period, individuals
who at the beginning of such period constituted the Board of either Company
(together with any new directors whose election to such Board or whose
nomination for election by the stockholders of such Company was approved by a
vote of a majority of the directors of such Company then still in office who
were either directors at the beginning of such period or whose election or
nomination for
3
<PAGE>
election was previously so approved) cease for any reason to constitute a
majority of the Board of such Company then in office. Except as otherwise
expressly provided, the term "Change of Control" shall include a REIT Change of
Control.
"Company" means either HPI or HPOC until a successor replaces either
such Person in accordance with the terms of this Indenture and thereafter means
such successor.
"Consolidated Coverage Ratio" means, with respect to any Person on any
date of determination, the ratio of (a) Consolidated EBITDA for the period of
four fiscal quarters most recently ended prior to such date for which internal
financial reports are available, ended not more than 135 days prior to such date
to (b) (i) Consolidated Interest Expense during such period plus (ii) dividends
on or in respect of any Capital Stock of any such Person paid in cash during
such period; provided that the Consolidated Coverage Ratio shall be calculated
giving pro forma effect, as of the beginning of the applicable period, to any
acquisition, Incurrence or redemption of Indebtedness (including the Notes),
issuance or redemption of Disqualified Capital Stock, acquisition, Asset Sale,
purchases of assets that were previously leased, redemption of the Convertible
Preferred Stock or re-designation of a Restricted Subsidiary as an Unrestricted
Subsidiary, at any time during or subsequent to such period, but on or prior to
the applicable Determination Date. In making such computation, Consolidated
Interest Expense (i) attributable to any Indebtedness bearing a floating
interest rate shall be computed on a pro forma basis as if the rate in effect on
the date of computation had been the applicable rate for the entire period, or
(ii) attributable to interest on any Indebtedness under a revolving Credit
Facility shall be computed on a pro forma basis based upon the average daily
balance of such Indebtedness outstanding during the applicable period.
For purposes of calculating Consolidated EBITDA of the Companies for
the most recently completed period of four full fiscal quarters ending on the
last day of the last quarter for which internal financial statements are
available (such period of four fiscal quarters, the "Measurement Period"), not
more than 135 days prior to the transaction or event giving rise to the need to
calculate the Consolidated EBITDA, (A) any Person that is a Restricted
Subsidiary on such Determination Date (or would become a Restricted Subsidiary
on such Determination Date in connection with the transaction that requires the
determination of the Consolidated Coverage Ratio) shall be deemed to have been a
Restricted Subsidiary at all times during such Measurement Period, (B) any
Person that is not a Restricted Subsidiary on such Determination Date (or would
cease to be a Restricted Subsidiary on such Determination Date in connection
with the transaction that requires the determination of the Consolidated
Coverage Ratio) will be deemed not to have been a Restricted Subsidiary at any
time during such Measurement Period, (C) if either Company or any Restricted
Subsidiary shall have in any manner (1) acquired (including through an Asset
Acquisition or the commencement of activities constituting such operating
business) or (2) disposed of (including by way of an Asset Sale or the
termination or discontinuance of activities constituting such operating
business) any operating business during such Measurement Period or after the end
of such Measurement Period and on or prior to the Determination Date, such
calculation shall be made on a pro forma basis in accordance with GAAP as if, in
the case of an Asset Acquisition or the commencement of activities constituting
such operating business, all such transactions had been consummated on the first
day of such Measurement Period and, in the case of an Asset Sale or termination
or discontinuance of activities constituting such operating business, all such
transactions had been consummated prior to the first day of such Measurement
Period; provided, however, that such pro forma adjustment shall not give effect
to the Consolidated EBITDA of any acquired Person to the extent that such
Person's net income would be excluded pursuant to clause (vi) of the definition
of Consolidated Net Income and (D) any Indebtedness Incurred and proceeds
thereof received and
4
<PAGE>
applied as a result of the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio will be deemed to have been so Incurred, received
and applied on the first day of such Measurement Period.
"Consolidated EBITDA" means, with respect to any Person for any
period, the sum (without duplication) of (i) the Consolidated Net Income of such
Person for such period, plus (ii) to the extent that any of the following shall
have been taken into account in determining such Consolidated Net Income, and
without duplication, (A) all income taxes of such Person and its Restricted
Subsidiaries paid or accrued in accordance with GAAP for such period (other than
income taxes attributable to extraordinary, unusual or nonrecurring gains or
losses or taxes attributable to sales or dispositions of assets outside the
ordinary course of business), (B) the Consolidated Interest Expense of such
Person for such period, (C) the amortization expense (including the amortization
of deferred financing charges) and depreciation expense for such Person and its
Restricted Subsidiaries for such period and (D) other non-cash items (other than
non-cash interest) of such Person or any of its Restricted Subsidiaries
(including any non-cash compensation expense attributable to stock option or
other equity compensation arrangements), other than any non-cash item for such
period that requires the accrual of or a reserve for cash charges for any future
period and other than any non-cash charge for such period constituting an
extraordinary item of loss, less (iii)(A) all non-cash items of such Person or
any of its Restricted Subsidiaries increasing such Consolidated Net Income for
such period and (B) all cash payments during such period relating to non-cash
items that were added back in determining Consolidated EBITDA in any prior
period.
"Consolidated Interest Expense" means, with respect to any Person for
any period, the sum of (i) the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or accrued (including,
without limitation, amortization of original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capitalized Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations) and (ii) the consolidated interest of
such Person and its Subsidiaries that was capitalized during such period, and
(iii) 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
Support Obligation or Lien is called upon) and (iv) the product of (a) all
dividend payments on any series of preferred stock of such Person or any of its
Restricted Subsidiaries, times (b) a fraction, the numerator of which is one and
the denominator of which is one minus the then current combined federal, state
and local statutory tax rate of such Person, expressed as a decimal, in each
case, on a consolidated basis and in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided, however, that there shall be excluded therefrom (i) net
after-tax gains and losses from all sales or dispositions of assets outside of
the ordinary course of business, (ii) net after-tax extraordinary or non-
recurring gains or losses, (iii) the net income of any Person acquired in a
"pooling of interests" transaction accrued prior to the date it becomes a
Restricted Subsidiary of such Person or is merged or consolidated with or into
such Person or any Restricted Subsidiary, (iv) the cumulative effect of a change
in accounting principles, (v) any net income of any other Person if such other
Person is not a Restricted Subsidiary and is accounted for by the equity method
of accounting, except that such Person's equity in the net income of any such
other Person for such period shall be included in such Consolidated Net Income
up to the aggregate amount of cash actually distributed by such other Person
during such period to such Person or a Restricted Subsidiary as a dividend or
other distribution,
5
<PAGE>
(subject, in case of a dividend or other distribution to a Restricted
Subsidiary, to the limitation that such amount so paid to a Restricted
Subsidiary shall be excluded to the extent that such amount could not at that
time be paid to the Companies due to the restrictions set forth in clause
(vi) below (regardless of any waiver of such conditions), (vi) any net income of
any Restricted Subsidiary if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, by contract, operation of law, pursuant to
its charter or otherwise on the payment of dividends or the making of
distributions by such Restricted Subsidiary to such Person except that (A) such
Person's equity in the net income of any such Restricted Subsidiary for such
period shall be included in such Consolidated Net Income up to the aggregate
amount of cash that could have been paid or distributed during such period to
such Person as a dividend or other distribution (provided that such ability is
not due to a waiver of such restriction) and (B) such Person's equity in a net
loss of any such Restricted Subsidiary for such period shall be included in
determining such Consolidated Net Income regardless of any such restriction,
(vii) any restoration to income of any contingency reserve, except to the extent
that provision for such reserve was made out of Consolidated Net Income accrued
at any time following the Issue Date, (viii) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued), (ix) in the case of a successor to such Person by consolidation
or merger or as a transferee of such Person's assets, any net income or loss of
the successor corporation prior to such consolidation, merger or transfer of
assets and (x) the net income (but not loss) of any Unrestricted Subsidiary,
whether or not distributed to any Obligor.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of such
Person and its consolidated Subsidiaries as of such date, plus (ii) the
respective amounts reported on such Person's consolidated balance sheet as of
such date with respect to any series of preferred stock (other than Disqualified
Capital Stock) that by its terms is not entitled to the payment of dividends
unless such dividends may be declared and paid only out of net earnings in
respect of the year of such declaration and payment, but only to the extent of
any cash received by such Person upon issuance of such preferred stock, less (A)
all write-ups (other than write-ups resulting from foreign currency translations
and write-ups of tangible assets of a going concern business made within 12
months after the acquisition of such business) subsequent to the Issue Date in
the book value of any asset owned by such Person or a consolidated Subsidiary of
such Person, (B) all investments as of such date in unconsolidated Subsidiaries
and in Persons that are not Subsidiaries (except, in each case, Permitted
Investments), and (C) all unamortized debt discount and expense and unamortized
deferred charges as of such date, all of the foregoing determined in accordance
with GAAP.
"Convertible Preferred Stock" means HPI's $70.00 Convertible Preferred
Stock, par value $1.00 per share, and all depository shares relating thereto.
"Core Businesses" means the gaming, card club, racing, sports,
entertainment, lodging, restaurant, riverboat operations, real estate
development and all other businesses and activities necessary for or reasonably
related or incident thereto, including without limitation related acquisition,
construction, development or operation of truck stop, transportation, retail and
other facilities designed to enhance any of the foregoing.
"Corporate Trust Office of the Trustee" shall mean the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Companies.
"Credit Facilities" means, with respect to any Obligor, one or more
debt facilities or commercial paper facilities with any combination of banks,
other institutional lenders and other Persons
6
<PAGE>
extending financial accommodations or holding corporate debt obligations in the
ordinary course of their business, providing for revolving credit loans, term
loans, receivables financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time by the same or different institutional lenders.
"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.
"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, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
"Determination Date" means, with respect to any calculation, the date
on or as at which such calculation is made in accordance with the terms hereof.
"Disqualified Capital Stock" means any Capital Stock, other than the
Convertible Preferred Stock, which by its terms (or by the terms of any security
into which it is, by its terms, convertible or for which it is, by its terms,
exchangeable at the option of the holder thereof), or upon the happening of any
specified event, is required to be redeemed or is redeemable (at the option of
the holder thereof) at any time prior to the earlier of the repayment of all
Notes or the stated maturity of the Notes or is exchangeable at the option of
the holder thereof for Indebtedness at any time prior to the earlier of the
repayment of all Notes or the stated maturity of the Notes.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Event of Default" has the meaning provided in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer that shall be made by the Companies
pursuant to the Registration Rights Agreement to exchange the Series A Notes for
the Series B Notes.
"Exchange Offer Registration Statement" means the registration
statement relating to the Exchange Offer to be filed by the Companies pursuant
to the Registration Rights Agreement.
"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 may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Issue Date.
"Gaming Approval" means any governmental approval relating to any
gaming business or enterprise.
7
<PAGE>
"Gaming Authority" means any governmental authority with regulatory
oversight of, authority to regulate or jurisdiction over any gaming businesses
or enterprises, including the State Gaming Control Board of Nevada, the Washoe
County, Nevada or the Nevada, Mississippi or Louisiana commission with
regulatory oversight of, authority to regulate or jurisdiction over any gaming
operation (or proposed gaming operation) owned, managed or operated by any
Obligor.
"Gaming Laws" means all applicable provisions of all (i)
constitutions, treaties, statutes, laws, rules, regulations and ordinances of
any Gaming Authority, (ii) Gaming Approvals and (iii) orders, decisions,
judgments, awards and decrees of any Gaming Authority.
"Global Note" means a Note in substantially the form of Exhibit A
hereto, including footnotes 1, 2 and 3 thereto.
"Government Securities" means marketable direct obligations issued by,
or unconditionally guaranteed by, the United States government or issued by any
agency or instrumentality thereof and backed by the full faith and credit of the
United States, in each case maturing within 12 months from the date of
acquisition thereof by any Obligor.
"Guarantor" means any existing or future Material Restricted
Subsidiary of either Company, which has guaranteed the obligations of the
Companies arising under or in connection with the Notes, as required by Section
4.17 hereof.
"Guaranty" means a guaranty by a Guarantor of the Obligations of the
Companies pursuant to Article 12 hereof or an Addendum to Guaranty.
"Hedging Obligations" means all obligations of the Obligors arising
under or on connection with any rate or basis swap, forward contract, commodity
swap or option, equity or equity index swap or option, bond, note or bill
option, interest rate option, foreign currency exchange transaction, cross
currency rate swap, currency option, cap, collar or floor transaction, swap
option, synthetic trust product, synthetic lease or any similar transaction or
agreement.
"Holder" means a Person in whose name a Note is registered on the
Registrar's books.
"HPI" has the meaning provided in the preamble.
"HPOC" has the meaning provided in the preamble.
"Incur" means, with respect to any Indebtedness or any Lien, to
create, issue, incur (by conversion, exchange or otherwise), assume, guarantee
or otherwise become liable in respect of such Indebtedness or Lien or the
recording, as required pursuant to GAAP or otherwise, of any such Indebtedness
or Lien on the balance sheet of any Person (and "Incurrence," "Incurred,"
"Incurrable," and "Incurring" shall have meanings correlative to the foregoing).
"Indebtedness" means with respect to any Person, without duplication,
whether contingent or otherwise, (i) any obligations for money borrowed,
(ii) any obligation evidenced by bonds, debentures, notes, or other similar
instruments, (iii) Letter of Credit Obligations and obligations under other
similar instruments, (iv) any obligations to pay the deferred purchase price of
property or services, including
8
<PAGE>
Capitalized Lease Obligations, (v) the maximum fixed redemption or repurchase
price of Disqualified Capital Stock, (vi) Indebtedness of other Persons of the
types described in clauses (i) through (v) above, secured by a Lien on the
assets of such Person or its Restricted Subsidiaries, valued, in such cases
where the recourse thereof is limited to such assets, at the lesser of the
principal amount of such Indebtedness or the fair market value of the subject
assets, (vii) indebtedness of other Persons of the types described in clauses
(i) through (v) above, guaranteed by such Person or any of its Restricted
Subsidiaries and (viii) the net obligations of such Person under Hedging
Obligations; provided that the amount of any Indebtedness at any date shall be
calculated as the outstanding balance of all unconditional obligations and the
maximum liability supported by any contingent obligations at such date.
Notwithstanding the foregoing, "Indebtedness" shall not be construed to include
trade payables, credit on open account, accrued liabilities, provisional credit,
daylight overdrafts or similar items. For purposes hereof, the "maximum fixed
redemption or repurchase price" of any Disqualified Capital Stock that does not
have a fixed repurchase price shall be calculated in accordance with the terms
of such Disqualified Capital Stock as if such Disqualified Capital Stock were
repurchased on the date on which Indebtedness shall be required to be determined
pursuant to this Indenture, and if such price is based upon, or measured by, the
fair market value of such Disqualified Capital Stock, such fair market value
shall be determined reasonably and in good faith by the Board of the issuing
Person. Unless otherwise specified herein, the amount outstanding at any time of
any Indebtedness issued with original issue discount is the full amount of such
Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with
GAAP.
"Indenture" means this Indenture, as amended or supplemented from
time to time in accordance with the terms hereof.
"Indiana Joint Venture Project" means the possible development of a
riverboat casino facility in Switzerland County, Indiana.
"Initial Purchasers" means Oppenheimer & Co., Inc., BT Securities
Corporation and BancAmerica Securities, Inc.
"Interest Payment Date" means the Stated Maturity of an installment
of interest on the Notes.
"Interest Swap Obligations" means the net obligations of any Person
under any interest rate protection agreement, interest rate future, interest
rate option, interest rate swap, interest rate cap, collar or swap or other
interest rate Hedging Obligation.
"Investment" by any Person means any direct or indirect (i) loan,
advance or other extension of credit or capital contribution (valued at the fair
market value thereof as of the date of contribution or transfer) (by means of
transfers of cash or other property or services for the account or use of other
Persons, or otherwise); (ii) purchase or acquisition of Capital Stock, bonds,
notes, debentures or other securities or evidences of Indebtedness issued by any
other Person (whether by merger, consolidation, amalgamation or otherwise and
whether or not purchased directly from the issuer of such securities or
evidences of Indebtedness); (iii) guarantee or assumption of any Indebtedness or
any other obligation of any other Person (except for an assumption of
Indebtedness for which the assuming Person receives consideration at the time of
such assumption in the form of property or assets with a fair market value at
least equal to the principal amount of the Indebtedness assumed); (iv) the
acquisition, by purchase or otherwise, of all or substantially all of the
business or assets or other beneficial ownership of any Person; and (v) all
9
<PAGE>
other items that would be classified as investments (including, without
limitation, purchases of assets outside the ordinary course of business) on a
balance sheet of such Person prepared in accordance with GAAP. Notwithstanding
the foregoing, the purchase or acquisition of any securities, Indebtedness or
Productive Assets of any other Person solely with Qualified Capital Stock shall
not be deemed to be an "Investment." The term "Investments" shall also exclude
extensions of trade credit and advances to customers and suppliers to the extent
made in the ordinary course of business on ordinary business terms. The amount
of any non-cash Investment shall be the fair market value of such Investment, as
determined conclusively in good faith by management of affected Obligor unless
the fair market value of such Investment exceeds $5 million, in which case the
fair market value shall be determined conclusively in good faith by the Board of
such Obligor at the time such Investment is made. The amount of any Investment
shall not be adjusted for increases or decreases in value, or write-ups, write-
downs or write-offs subsequent to the date such Investment is made with respect
to such Investment.
"Issue Date" means August 6, 1997.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"Letter of Credit Obligations" means all Obligations of any Obligor in
respect of letters of credit, which Indebtedness shall be calculated as (a) the
aggregate maximum amount then available to be drawn under all such letters of
credit (the determination of such maximum amount to assume compliance with all
conditions for drawing), (b) the aggregate amount that has then been paid for
the account of, and not reimbursed by, such Obligor under such letters of
credit, and (c) any accrued and unpaid interest, fees or other charges arising
in connection therewith.
"Lien" means, with respect to any assets, any mortgage, lien, pledge,
charge, security interest or other similar encumbrance (including without
limitation, any conditional sale or other title retention agreement or lease in
the nature thereof, any option or other agreement to sell, and any filing of or
agreement to give, any security interest).
"Liquidated Damages" means, on any date of reference thereto, any
liquidated damages then owing pursuant to Section 4 of the Registration Rights
Agreement.
"Material Restricted Subsidiary" means any Subsidiary which is both a
Material Subsidiary and a Restricted Subsidiary.
"Material Subsidiary" means, at any date of determination, any
Subsidiary of either Company which together with its Subsidiaries either (i) had
assets which, as of the date of the Companies' most recent quarterly
consolidated balance sheet, constituted 5% or more of the Companies' total
assets on a consolidated basis as of such date, in each case determined in
accordance with GAAP, (ii) had Consolidated EBITDA for the 12-month period
ending on the date of the Companies' most recent quarterly consolidated
statement of income which constituted 5% or more of the Companies' Consolidated
EBITDA (such calculation of Consolidated EBITDA of the Companies for the
purposes of this definition to be calculated without giving effect to clause
(vi) of the definition of Consolidated Net Income) for such period or (iii)
would constitute a Significant Subsidiary.
10
<PAGE>
"Moody's" means Moody's Investors Services, Inc., and its successors.
"Net Cash Proceeds" means with respect to any Asset Sale, the proceeds
in the form of cash or Cash Equivalents including payments in respect of
deferred payment obligations when received in the form of cash or Cash
Equivalents received by any Obligor from such Asset Sale, net of (i) reasonable
out-of-pocket expenses, fees and other direct costs relating to such Asset Sale
(including, without limitation, brokerage, legal, accounting and investment
banking fees and sales commissions), (ii) taxes paid or payable after taking
into account any reduction in tax liability due to available tax credits or
deductions and any tax sharing arrangements, (iii) repayment of Indebtedness
(other than any intercompany Indebtedness) that is required by the terms thereof
to be repaid or pledged as cash collateral, or the holders of which otherwise
have a contractual claim that is legally superior to any claim of the holders
(including a restriction on transfer) to the proceeds of the subject assets, in
connection with such Asset Sale, and (iv) appropriate amounts to be provided by
any applicable Obligor as a reserve, in accordance with GAAP, against any
liabilities associated with such Asset Sale and retained by limitation, pension
and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale and any reserve for adjustment to the sale price
received in such Asset Sale for so long as such reserve is held.
"Net Proceeds Offer" has the meaning provided in Section 4.09.
"Non-Recourse Indebtedness" means Indebtedness of an Unrestricted
Subsidiary (a) as to which none of the Obligors (i) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (ii) is directly or indirectly liable (as a guarantor
or otherwise) or (iii) constitutes the lender; (b) 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 being offered hereby) of either Company or any of their 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
(c) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of either Company or any of their
Restricted Subsidiaries.
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Notes" means the Series A Notes and the Series B Notes, as amended or
supplemented from time to time in accordance with the terms of this Indenture,
that are issued pursuant to this Indenture, treated as a single class of
securities for all purposes and in particular, for voting and exercise of other
consensual rights, which may be exercised by the Holders of Series A Notes and
Series B Notes only as a single class.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities, whether
absolute or contingent, payable under the documentation governing any
Indebtedness.
"Obligor" means either Company or any Guarantor.
11
<PAGE>
"Offering Memorandum" means the Offering Memorandum dated August 1,
1997, of the Companies relating to the offering of the Notes.
"Officer" means, (i) with respect to any Person that is a corporation,
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, the Assistant Secretary or any Vice-
President of such Person and (ii) with respect to any other Person, the
individuals selected by the Board of Directors or corresponding governing or
managing body of such Person to perform functions similar to those of the
officers listed in clause (i).
"Officers' Certificate" means (i) with respect to the Companies, a
certificate signed on behalf of the Companies by two Officers of each Company,
one of whom must be the principal executive officer, the principal financial
officer or the principal accounting officer of such Company, or (ii) with
respect to any other Obligor, a certificate signed on behalf of such Obligor by
two officers of such Obligor, one of whom must be the principal executive
officer, the principal financial officer or the principal accounting officer of
such Obligor and in each case, that meets the requirements of Sections 11.04 and
11.05 hereof.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
11.04 and 11.05 hereof, as they relate to the giving of an Opinion of Counsel.
"Paying Agent" means the Person so designated by the Companies in
accordance with Section 2.03 hereof, initially the Trustee.
"Permitted Indebtedness" means, without duplication, each of the
following:
(i) Indebtedness of the Obligors outstanding on the Issue Date and
reflected in the financial statements set forth in the Offering Memorandum as in
effect on the Issue Date as reduced by the amount of any scheduled amortization
payments or mandatory prepayments when actually paid or permanent reductions
thereon;
(ii) Indebtedness Incurred by the Companies under the Notes
and by the Guarantors under the Guaranties;
(iii) Indebtedness Incurred by any Obligor pursuant to the
Boomtown Notes and the Bank Credit Facility; provided that the aggregate
principal amount of Indebtedness of the Obligors outstanding thereunder as of
any date of Incurrence shall not exceed $100 million, to be reduced dollar-for-
dollar by the amount of any increase to the face amount of Support Obligations
permitted to be Incurred pursuant to clause (xi) of this definition;
(iv) Indebtedness of either Company to any Obligor or of any
Guarantor to any other Obligor for so long as such Indebtedness is held by
either Company or by another Obligor; provided that (A) any Indebtedness of
either Company to any other Obligor is unsecured and evidenced by an
intercompany promissory note that is subordinated, pursuant to a written
agreement, to such Company's obligations under this Indenture, the Notes and the
Registration Rights Agreement, and (B) if as of any date any Person other than
either Company or a Guarantor owns or holds any such Indebtedness or holds a
Lien
12
<PAGE>
in respect of such Indebtedness, such date shall be deemed to be an Incurrence
of Indebtedness not constituting Permitted Indebtedness under this clause (iv)
by the issuer of such Indebtedness ;
(v) Indebtedness of a Restricted Subsidiary to either Company for so
long as such Indebtedness is held by an Obligor; provided that if as of any date
any Person other than an Obligor acquires any such Indebtedness or holds a Lien
in respect of such Indebtedness, such acquisition shall be deemed to be an
Incurrence of Indebtedness not constituting Permitted Indebtedness under this
clause (v) by the issuer of such Indebtedness;
(vi) Permitted Refinancing Indebtedness;
(vii) the Incurrence by Unrestricted Subsidiaries of Non-Recourse
Indebtedness, provided that, if any such Indebtedness ceases to be Non-Recourse
Indebtedness of an Unrestricted Subsidiary, such event shall be deemed to
constitute an Incurrence of Indebtedness that is not permitted by this clause
(vii);
(viii) Indebtedness Incurred by any Obligor solely to finance the
construction, acquisition or improvement of, or consisting of Capitalized Leased
Obligations Incurred to acquire rights of use in, capital assets useful in such
Obligor's business and, in any such case, Incurred prior to or within 180 days
after the construction, acquisition, improvement or leasing of the subject
assets, not to exceed in aggregate principal amount outstanding at any time,
(A) $15 million per Obligor or (B) $100 million in the aggregate for all of the
Obligors, and additional Indebtedness of the kind described in this clause
(viii) with respect to which no Obligor is directly or indirectly liable and
which is expressly made non-recourse to the Obligors and all of their assets,
except the asset so financed;
(ix) Interest Swap Obligations entered into not as speculative
Investments but as hedging transactions designed to protect the Obligors against
fluctuations in interest rates in connection with Indebtedness otherwise
permitted hereunder;
(x) Indebtedness of any Obligor arising in respect of performance
bonds and completion guaranties (to the extent that the Incurrence thereof does
not result in the Incurrence of any obligation for the payment of borrowed money
of others), in the ordinary course of business, in amounts and for the purposes
customary in such Obligor's industry for businesses comparable to those of such
Obligor; provided, that such Indebtedness shall be Incurred solely in connection
with the development, construction, improvement or enhancement of assets useful
in such Obligor's business; and
(xi) other Indebtedness consisting of Support Obligations not
exceeding $25 million in aggregate principal amount at any time, which may be
increased by the Companies in their discretion, subject to availability under,
and a corresponding reduction to, the principal amount of Indebtedness permitted
to be Incurred under the Bank Credit Facility pursuant to clause (iii) of this
definition.
"Permitted Investments" means, without duplication, each of the
following:
(i) Investments in cash (including deposit accounts with major
commercial banks) and Cash Equivalents;
13
<PAGE>
(ii) Investments by the Obligors in any Obligor or in any Person
that is or will become upon giving effect to such Investment or as a result of
which, such Person is merged, consolidated or liquidated into, or conveys
substantially of all its assets to, an Obligor or a Wholly Owned Restricted
Subsidiary; provided that for purposes of calculating at any date the aggregate
amount of Investments made since the Issue Date pursuant to Section 4.07 hereof,
any such Investment shall be a Permitted Investment only so long as any
Subsidiary in which any such Investment has been made continues to be an Obligor
or a Wholly Owned Restricted Subsidiary;
(iii) Investments existing on the Issue Date, each such Investment
to be (A) in an amount less than $1 million, (B) listed on a schedule hereto or
(C) an existing Investment by a member or members of the Hollywood Park, Inc.
consolidated group in other members of such group;
(iv) accounts receivable created or acquired in the ordinary
course of business of any Obligor on ordinary business terms;
(v) Investments arising from transactions by the Obligors with trade
creditors or customers in the ordinary course of business (including any such
Investment received pursuant to any plan of reorganization or similar
arrangement pursuant to the bankruptcy or insolvency of such trade creditors or
customers or otherwise in settlement of a claim);
(vi) Investments made as the result of non-cash consideration
received from an Asset Sale that was made pursuant to and in compliance with
Section 4.09 hereof; and
(vii) Investments consisting of advances to officers, directors
and employees of the Obligors for travel, entertainment, relocation, purchases
of Capital Stock of an Obligor permitted hereby and analogous ordinary business
purposes.
"Permitted Junior Securities" means Equity Interests in the Obligors
or debt securities that are subordinated to all Senior Debt (and any debt
securities issued in exchange for Senior Debt) to substantially the same extent
as, or to a greater extent than, the Notes and the Guaranties are subordinated
to Senior Debt pursuant to Article 10 hereof.
"Permitted Liens" means (i) Liens (A) in favor of either Company or
(B) encumbering the assets of any Guarantor, for so long as any such Lien is
held by either Company or another Guarantor; provided, that as of the date any
Person other than either Company or a Guarantor owns or holds any such Lien,
such date shall be deemed to be an Incurrence of a Lien not constituting a
Permitted Lien under this clause (i)(B); (ii) Liens on property of a Person
existing at the time such Person is merged into or consolidated with any
Obligor; provided that such Liens were not Incurred in anticipation of such
merger or consolidation and do not extend to any assets other than those of the
Person merged into or consolidated with such Obligor; (iii) Liens on property
existing at the time of acquisition thereof by any Obligor; provided that such
Liens were not Incurred in anticipation of such acquisition; (iv) Liens Incurred
to secure Indebtedness permitted by clause (viii) of the definition of Permitted
Indebtedness, attaching to or encumbering only the subject assets and directly
related property such as proceeds and products thereof and accessions and
replacements thereto; (v) 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; (vi) Liens created by
"notice" or "precautionary" filings in connection with operating leases or other
transactions pursuant to which no Indebtedness is Incurred by any Obligor;
(vii) Liens existing on the
14
<PAGE>
Issue Date; (viii) Liens for taxes, assessments or governmental charges or
claims (including, without limitation, Liens securing the performance of workers
compensation, social security, or unemployment insurance obligations) 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 accordance with
GAAP shall have been made therefor; (ix) Liens on shares of any equity security
or any warrant or operation to purchase an equity security or any security which
is convertible into an equity security issued by any Obligor that holds,
directly or indirectly through a holding company or otherwise, a license under
any applicable Gaming Laws; provided that this clause (ix) shall apply if and
only so long as such Gaming Laws provide that the creation of any restriction on
the disposition of any of such securities shall not be effective and, if such
Gaming Laws at any time cease to so provide, then this clause (ix) shall be of
no further effect; and (x) Liens on securities constituting "margin stock"
within the meaning of Regulation G, T, U or X promulgated by the Board of
Governors of the Federal Reserve System, to the extent that (A) prohibiting such
Liens would result in the classification of the Obligations of the Companies
under the Notes as a "purpose credit" and (B) the Investment by any Obligor in
such margin stock is permitted hereby; (xi) Liens securing Permitted Refinancing
Indebtedness; provided that any such Lien attaches only to the assets encumbered
by the predecessor Indebtedness, unless the Incurrence of such Liens is
otherwise permitted hereunder; (xii) Liens securing stay and appeal bonds or
judgment Liens in connection with any judgment not giving rise to an Event of
Default under Section 6.01(e); (xiii) statutory Liens of landlords and Liens of
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other
Liens imposed by law incurred in the ordinary course of business, in respect of
obligations not constituting Indebtedness and not past due; provided that
adequate reserves shall have been established therefor in accordance with GAAP;
(xiv) easements, rights-of-way, zoning restrictions, reservations, encroachments
and other similar charges or encumbrances in respect of real property which do
not individually or in the aggregate, materially interfere with the conduct of
business by any Obligor; (xv) any interest or title of a lessor under any
Capitalized Lease Obligation permitted to be Incurred hereunder; (xvi) Liens
upon specific items of inventory or equipment and proceeds thereof, Incurred to
secure obligations in respect of bankers' acceptances issued or created for the
account of any Obligor in the ordinary course of business to facilitate the
purchase, shipment, or storage of such inventory or equipment; (xvii) Liens
securing Letter of Credit Obligations permitted to be Incurred hereunder
Incurred in connection with the purchase of inventory or equipment by an Obligor
in the ordinary course of the business and secured only by such inventory or
equipment, the documents issued in connection therewith and the proceeds thereof
and (xviii) Liens in favor of the Trustee arising under Section 7.07 hereof.
"Permitted Refinancing Indebtedness" means any Indebtedness of any
Obligor issued in exchange for, or the net proceeds of which are used to repay,
redeem, extend, refinance, renew, replace, defease or refund other Permitted
Indebtedness of such Obligor arising under clauses (i), (viii), (x) or (xi) of
the definition of "Permitted Indebtedness" or Indebtedness Incurred under the
Consolidated Coverage Ratio test pursuant to Section 4.08 hereof (any such
Indebtedness, "Existing Indebtedness"); provided that: (i) the principal amount
of such Permitted Refinancing Indebtedness does not exceed the principal amount
of such Existing Indebtedness (plus the amount of prepayment penalties, premiums
and expenses incurred or paid in connection therewith), except to the extent
that the Incurrence of such excess is otherwise permitted by this Indenture;
(ii) if such Indebtedness is subordinated to, or pari passu in right of payment
with, the Notes, such Permitted Refinancing Indebtedness has a final maturity
date on or 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, such Existing Indebtedness, (iii) if such Existing Indebtedness is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date on or later than the final maturity date
of, and is subordinated in right of payment to, the Notes on terms at least as
favorable
15
<PAGE>
to the holders of Notes as those contained in the documentation governing the
Indebtedness being repaid, redeemed, extended, refinanced, renewed, replaced,
defeased or refunded and (iv) such Permitted Refinancing Indebtedness shall be
Indebtedness solely of the Obligors originally liable thereunder, unless the
Incurrence of Indebtedness by additional Obligors is otherwise permitted
hereby.
"Person" means an individual, partnership, corporation, limited
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
"Plan of Liquidation" means, with respect to any Person, a plan
(including by operation of law) that provides for, contemplates or the
effectuation of which is preceded or accomplished by (whether or not
substantially contemporaneously) (i) the sale, lease or conveyance of all or
substantially all of the assets of such Person otherwise than as an entirety or
substantially as an entirety and (ii) the distribution of all or substantially
all of the proceeds of such sale, lease, conveyance, or other disposition and
all or substantially all of the remaining assets of such Person to holders of
Capital Stock of such Person.
"Principals" means (a) R.D. Hubbard, (b) any spouse, parent or child
of such Principal or (c) any trust, corporation, partnership or other Person,
the beneficiaries, stockholders, partners, owners or other Persons holding an
80% or more controlling interest in which are Persons described in clause (a) or
(b) of this definition.
"Productive Assets" means assets (including assets owned directly or
indirectly through Capital Stock of a Restricted Subsidiary) of a kind used or
usable in the businesses of the Obligors as they are conducted on the date of
the Asset Sale.
"Public Equity Offering" means a public equity offering, underwritten
by a nationally recognized underwriter pursuant to an effective registration
statement under the Securities Act, of Qualified Capital Stock.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Rating Agencies" means (i) S&P, (ii) Moody's or (iii) a nationally
recognized securities rating agency or agencies, as the case may be, selected by
the Companies, which may be substituted for S&P or Moody's or both.
"Rating Category" means (i) with respect to S&P, any of the following
categories: BB, B, CCC, CC, C and D (or equivalent successor categories); (ii)
with respect to Moody's, any of the following categories: Ba, B, Caa, Ca, C and
D (or equivalent successor categories); and (iii) the equivalent of any such
category of S&P or Moody's used by another Rating Agency. In determining
whether the rating of the Notes has decreased by one or more gradations,
gradations within Rating Categories (+ and - for S&P, 1, 2 and 3 for Moody's; or
the equivalent gradations for another Rating Agency) shall be taken into account
(e.g., with respect to S&P, a decline in a rating from BB+ to BB, as well as
from BB to BB-, will constitute a decrease of one gradation).
"Rating Decline" means (i) if the Notes are rated, immediately prior
to the announcement of the REIT Restructuring, as investment grade instruments
by both Rating Agencies, a subsequent decline in rating to a rating below
investment grade by at least one Rating Agency, (ii) if the Notes are rated,
immediately prior to the announcement of the REIT Restructuring, as investment
grade instruments by
16
<PAGE>
either Rating Agency, a subsequent decline in the rating of the Notes by both
Rating Agencies to a rating below investment grade or (iii) if the Notes are
rated, immediately prior to the announcement of the REIT Restructuring, as below
investment grade instruments by both Rating Agencies, a subsequent decline in
the rating of the Notes by either or both of the Rating Agencies by one or more
gradations (including gradations within Rating Categories as well as between
Rating Categories).
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of August 1, 1997, by and among the Companies, the
Guarantors and the Initial Purchasers, as such agreement may be amended,
modified or supplemented from time to time.
"REIT" means a real estate investment trust into which HPI may be
reorganized pursuant to the REIT Restructuring.
"REIT Change of Control" means the occurrence of both (i) the REIT
Restructuring and (ii) a Rating Decline within 30 days after giving effect to
the REIT Restructuring.
"REIT Restructuring" means a restructuring, the possibility of which
is currently being explored by the Companies, after giving effect to which (if
implemented), inter alia, HPI would become the REIT and the common stock of HPI
and HPOC would be paired so that they would be transferable and tradeable only
in combination as units, including the distribution of the stock of HPOC to the
stockholders of HPI and any transfer of assets among the Obligors in connection
with such distribution.
"Responsible Officer," when used with respect to the Trustee, means
any officer within the corporate trust department of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Payments" has the meaning provided in Section 4.07.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that has not been designated as an Unrestricted Subsidiary. If
no referent Person is specified, "Restricted Subsidiary" means a Subsidiary of
either Company.
"S&P" means Standard & Poors Rating Group, a division of The McGraw-
Hill Industries, Inc., and its successors.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party providing for
the leasing pursuant to a capitalized lease to either Company or a Subsidiary of
any property, whether owned by such Company or such Subsidiary at the
17
<PAGE>
Issue Date or later acquired, which has been or is to be sold or transferred by
such Company or such Subsidiary to such Person or to any other Person by whom
funds have been or are to be advanced on the security of such property.
"SEC" means the Securities and Exchange Commission or any successor
governmental agency having similar responsibilities and powers.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Series A Notes" has the meaning provided in the preamble hereto.
"Series B Notes" has the meaning provided in the preamble hereto.
"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.
"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," with respect to any Person, means (i) any corporation or
comparably organized entity, a majority of whose voting stock (defined as any
class or class of capital stock having voting power under ordinary circumstances
to elect a majority of the Board of such Person) is owned, directly or
indirectly, by any one or more of the Obligors and (ii) any other Person (other
than a corporation) in which any one or more of the Obligors, directly or
indirectly, has at least a majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof, or of which such Obligor is
the managing general partner.
"Support Obligation" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any other
Person and, without limiting the generality of the foregoing, any obligation,
direct or indirect, contingent or otherwise, of such Person (i) to purchase or
pay (or advance or supply funds for the purchase or payment of) such
Indebtedness of such other Person (whether arising by virtue of partnership
arrangements, or by 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 purposes of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided that the term "Support Obligation" shall not include (a) endorsements
for collection or deposit in the ordinary course of business, or (b) commitments
to make Permitted Investments in Obligors or their Restricted Subsidiaries.
"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, except as provided in Section 9.03.
18
<PAGE>
"Transfer Restricted Security" has the meaning assigned to the term
"restricted securities" in Rule 144(a)(3) under the Securities Act; provided,
however, that the Trustee shall be entitled to request and conclusively rely on
an Opinion of Counsel with respect to whether any Note constitutes a Transfer
Restricted Security.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means (i) any Subsidiary of either Company
that is designated by the Board of such Company as an Unrestricted Subsidiary
pursuant to a board resolution; but only to the extent that such Subsidiary
(a) has, or will have after giving effect to such designation, no Indebtedness
other than Non-Recourse Indebtedness, (b) is not party to any agreement,
contract, arrangement or understanding with any Obligor unless the terms of any
such agreement, contract, arrangement or understanding are no less favorable to
such Obligor than those that might be obtained at the time from Persons who are
not Affiliates of such Obligor, (c) is a Person with respect to which none of
the Obligors has any direct or indirect obligation (x) to subscribe for
additional equity interests or (y) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results, (d) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of any Obligor, and (e) has at
least one director on its Board that is not a director or executive officer of
any Obligor and has at least one executive officer that is not a director or
executive officer of any Obligor. Any such designation by the Board of either
Company 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 foregoing
conditions and was permitted by Section 4.07 hereof. If at any time any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes hereof and any Indebtedness of such Subsidiary shall be
deemed to be Incurred by a Restricted Subsidiary as of such time (and, if such
Indebtedness is not permitted to be Incurred as of such date under Section 4.08
hereof the Companies shall be in default of such covenant). The Board of either
Company 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 any outstanding Indebtedness of
such Unrestricted Subsidiary and such designation shall only be permitted if
(i) such Indebtedness is permitted under Section 4.08 hereof calculated on a
pro forma basis as if such designation had occurred at the beginning of the
reference period, and (ii) 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
such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment or
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" means any Wholly Owned Subsidiary
of either Company that is a Restricted Subsidiary.
19
<PAGE>
"Wholly Owned Subsidiary" of any Person means any Subsidiary of such
Person of which all the outstanding voting securities (other than directors'
qualifying shares) which normally have the right to vote in the election of
directors are owned by such Person or any wholly owned Subsidiary of such
Person.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined
in
Term Section
---- --------
<S> <C>
"Accrued Bankruptcy Interest".................... 10.02
"Affiliate Transaction".......................... 4.10
"Asset Sale Offer"............................... 3.09
"Beneficiary".................................... 12.01
"Change of Control Offer"........................ 4.12
"Change of Control Payment"...................... 4.12
"Change of Control Payment Date"................. 4.12
"Covenant Defeasance"............................ 8.03
"Designated Senior Debt"......................... 10.02
"Event of Default"............................... 6.01
"Fair Saleable Value"............................ 12.08
"Fair Valuation"................................. 12.08
"Funding Guarantor".............................. 12.08
"Guaranteed Obligations"......................... 12.01
"Hedging Obligations"............................ 10.02
"Legal Defeasance"............................... 8.02
"Maximum Net Worth".............................. 12.08
"Net Proceeds Offer Amount"...................... 4.09
"Net Proceeds Offer Payment Date"................ 4.09
"Net Proceeds Offer Trigger Date"................ 4.09
"Net Worth"...................................... 12.08
"Offer Amount"................................... 3.09
"Offer Period"................................... 3.09
"Other Guaranty"................................. 12.02
"Paying Agent"................................... 2.03
"Payment Default"................................ 6.01
"Payment Restriction"............................ 4.14
"Purchase Date".................................. 3.09
"Registrar"...................................... 2.03
"Remaining Guarantor"............................ 12.08
"Representative"................................. 10.02
"Restricted Payment"............................. 4.07
"Senior Debt".................................... 10.02
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
20
<PAGE>
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means any Obligor and any successor obligor
upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the respective meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions;
(6) references to sections of or rules under the Securities Act, the
Exchange Act, the TIA or any other applicable statute shall be deemed to
include substitute, replacement or successor sections or rules adopted by
the SEC from time to time; and
(7) references to any contract, instrument or agreement shall be
deemed to include any amendments, modifications or supplements thereto or
restatements thereof not prohibited hereby, through the date of reference
thereto.
21
<PAGE>
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Notes may have notations,
legends or endorsements required by law, stock exchange rule or usage. Each
Note shall be dated the date of its authentication. The Notes shall be in
denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture and the Companies, 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.
Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the amount of outstanding Notes represented thereby
shall be made by the Trustee or the Note Custodian, at the direction of the
Trustee, in accordance with instructions given by the Holder thereof as required
by Section 2.06 hereof.
Section 2.02. Execution and Authentication.
One Officer shall sign the Notes for each Obligor by manual or
facsimile signature.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture.
The Trustee shall, upon a written order of the Companies signed by two
Officers of each Company, 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
Companies 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 the Companies
or an Affiliate of the Companies.
22
<PAGE>
Section 2.03. Registrar and Paying Agent.
The Companies 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 Companies 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 Companies may change
any Paying Agent or Registrar without notice to any Holder. The Companies shall
notify the Trustee in writing of the name and address of any Agent not a party
to this Indenture. If the Companies fail to appoint or maintain another entity
as Registrar or Paying Agent, the Trustee shall act as such. Either Company or
any of their Subsidiaries may act as Paying Agent or Registrar.
The Companies initially appoint The Depository Trust Company ("DTC")
to act as Depositary with respect to the Global Notes.
The Companies initially appoint the Trustee to act as the Registrar
and Paying Agent and to act as Note Custodian with respect to the Global Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Companies 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 Companies 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 Companies 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 either Company or a
Subsidiary) shall have no further liability for the money. If either Company or
a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent.
Upon any bankruptcy or reorganization proceedings relating to either Company,
the Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee is
not the Registrar, the Companies 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 Companies shall otherwise comply with TIA (S) 312(a).
23
<PAGE>
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Certificated Notes. When Certificated
Notes are presented by a Holder to the Registrar with a request:
(y) to register the transfer of the Certificated Notes; or
(z) to exchange such Certificated Notes for an equal principal
amount of Certificated Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Certificated Notes presented or surrendered for register of transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly executed
by such Holder or by his attorney, duly authorized in writing; and
(ii) in the case of a Certificated Note that is a Transfer
Restricted Security, such request shall be accompanied by the following
additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being delivered to
the Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification to that effect from such Holder (in
substantially the form of Exhibit B hereto); or
(B) if such Transfer Restricted Security is being transferred to
a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act or
pursuant to an exemption from registration in accordance with Rule 144 or
Rule 904 under the Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that effect from
such Holder (in substantially the form of Exhibit B hereto); or
(C) if such Transfer Restricted Security is being transferred in
reliance on another exemption from the registration requirements of the
Securities Act, a certification to that effect from such Holder (in
substantially the form of Exhibit B hereto) and an Opinion of Counsel from
such Holder or the transferee reasonably acceptable to the Companies and to
the Registrar to the effect that such transfer is in compliance with the
Securities Act.
24
<PAGE>
(b) Transfer of a Certificated Note for a Beneficial Interest in a
Global Note. A Certificated Note may not be exchanged for a beneficial interest
in a Global Note except upon satisfaction of the requirements set forth below.
Upon receipt by the Trustee of a Certificated Note, duly endorsed or accompanied
by appropriate instruments of transfer, in form satisfactory to the Trustee,
together with:
(i) if such Certificated Note is a Transfer Restricted Security,
a certification from the Holder thereof (in substantially the form of
Exhibit B hereto) to the effect that such Certificated Note is being
transferred by such Holder to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in accordance with Rule 144A under
the Securities Act; and
(ii) whether or not such Certificated Note is a Transfer
Restricted Security, written instructions from the Holder thereof directing
the Trustee to make, or to direct the Note Custodian to make, an
endorsement on the Global Note to reflect an increase in the aggregate
principal amount of the Notes represented by the Global Note,
in which case the Trustee shall cancel such Certificated Note in accordance with
Section 2.11 hereof and cause, or direct the Note Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Note Custodian, the aggregate principal amount of Notes
represented by the Global Note to be increased accordingly. If no Global Notes
are then outstanding, the Companies shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the Trustee shall
authenticate, a new Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and exchange
of Global Notes or beneficial interests therein shall be effected through the
Depositary, in accordance with this Indenture and the procedures of the
Depositary therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global Note for a
Certificated Note or New Note.
(i) Any Person having a beneficial interest in a Global Note may
upon request exchange such beneficial interest for a Certificated Note.
Upon receipt by the Trustee of written instructions or such other form of
instructions as is customary for the Depositary, from the Depositary or its
nominee on behalf of any Person having a beneficial interest in a Global
Note, and, in the case of a Transfer Restricted Security, the following
additional information and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the beneficial owner, a
certification to that effect from such Person (in substantially the form of
Exhibit B hereto); or
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities
25
<PAGE>
Act) in accordance with Rule 144A under the Securities Act or pursuant to
an exemption from registration in accordance with Rule 144 or Rule 904
under the Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to that effect from the
transferor (in substantially the form of Exhibit B hereto); or
(C) if such beneficial interest is being transferred in reliance
on another exemption from the registration requirements of the Securities
Act, a certification to that effect from the transferor (in substantially
the form of Exhibit B hereto) and an Opinion of Counsel from the transferee
or transferor reasonably acceptable to the Companies and to the Registrar
to the effect that such transfer is in compliance with the Securities Act,
in which case the Trustee or the Note Custodian, at the direction of the
Trustee, shall, in accordance with the standing instructions and
procedures existing between the Depositary and the Note Custodian, cause
the aggregate principal amount of Global Notes to be reduced accordingly
and the Trustee shall authenticate and deliver to the transferee a
Certificated Note or a New Note, as the case may be, in the appropriate
principal amount.
(ii) Certificated Notes or New Notes issued in exchange for a
beneficial interest in a Global Note pursuant to this Section 2.06(d) shall
be registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
deliver such Certificated Notes or New Notes, as the case may be, to the
Persons in whose names such Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.06), a Global Note may not be
transferred as a whole except by the 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.
(f) Authentication of Certificated Notes in Absence of Depositary.
If at any time:
(i) the Depositary for the Notes notifies the Companies that the
Depositary is unwilling or unable to continue as Depositary for the Global
Notes and a successor Depositary for the Global Notes is not appointed by
the Companies within 90 days after delivery of such notice; or
(ii) the Companies, at their sole discretion, notify the Trustee
in writing that they elect to cause the issuance of Certificated Notes
under this Indenture
26
<PAGE>
in exchange for all or any part of the Notes represented by one or more
Global Notes,
then the Obligors shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, Certificated Notes in an aggregate principal amount equal to the
principal amount of the Global Notes in exchange for such Global Notes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii) and
(iii), each Note certificate evidencing Global Notes and Certificated Notes
(and all Notes issued in exchange therefor or substitution thereof) shall
bear a legend in substantially the following form:
"THE SECURITY (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
SECURITY 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 SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANIES THAT
(A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY
(1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE
THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANIES SO REQUEST), (2) TO
THE COMPANIES OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND,
IN EACH CASE, IN ACCORDANCE WITH ANY 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
27
<PAGE>
PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global Note)
pursuant to Rule 144 under the Securities Act or pursuant to an effective
registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Certificated Note, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Certificated Note that
does not bear the first legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security represented
by a Global Note, such Transfer Restricted Security shall not be required
to bear the first legend set forth in (i) above, but shall continue to be
subject to the provisions of Section 2.06(c) hereof; provided, however,
that with respect to any request for an exchange of a Transfer Restricted
Security that is represented by a Global Note for a Certificated Note that
does not bear the first legend set forth in (i) above, which request is
made in reliance upon Rule 144, the Holder thereof shall certify in writing
to the Registrar that such request is being made pursuant to Rule 144 (such
certification to be substantially in the form of Exhibit B hereto).
(iii) Notwithstanding the foregoing, upon consummation of the
Exchange Offer, the Companies shall issue and the Guarantors shall execute
and, upon receipt of an authentication order in accordance with Section
2.02 hereof, the Trustee shall authenticate Series B Notes in exchange for
Series A Notes accepted for exchange in the Exchange Offer, which Series B
Notes shall not bear the legend set forth in (i) above, and the Registrar
shall rescind any restriction on the transfer of such new debt securities,
in each case unless the Holder of such Series B Notes is either (A) a
broker-dealer, (B) a Person participating in the distribution of the Series
A Notes or (C) a Person who is an affiliate (as defined in Rule 144A) of
either Company.
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in Global Notes have been exchanged for Certificated
Notes, redeemed, repurchased or canceled, all Global Notes shall be returned to
or retained and canceled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for Certificated Notes, redeemed, repurchased or canceled, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note, by the Trustee
or the Note Custodian, at the direction of the Trustee, to reflect such
reduction.
28
<PAGE>
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Obligors shall execute and the Trustee shall authenticate Certificated
Notes and Global Notes at the Registrar's request. The Companies will take
such further action as any Holder or beneficial owner may reasonably
request to enable such Holder or beneficial owner to transfer its Notes
without registration under the Securities Act within the limitation of the
exemption provided by Rule 144A, at the expense of such requesting Holder
or beneficial owner.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Companies 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, 3.09 and 9.05 hereto).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Certificated Notes and Global Notes issued upon any
registration of transfer or exchange of Certificated Notes or Global Notes
shall be the valid obligations of the Obligors evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Certificated
Notes or Global Notes surrendered upon such registration of transfer or
exchange.
(v) The Companies shall not be required:
(A) to issue, to register the transfer of or to exchange Notes
during a period beginning at the opening of business 15 days before the day
of any selection of Notes for redemption under Section 3.02 hereof and
ending at the close of business on the day of selection; or
(B) to register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion
of any Note being redeemed in part; or
(C) to register the transfer of or to exchange a Note between a
record date and the next succeeding interest payment date.
(vi) Prior to due presentment for the registration of a transfer
of any Note, the Trustee, any Agent and the Companies may deem and treat
the Person in whose name any Note is registered as the absolute owner of
such Note for the purpose of receiving payment of principal of and interest
on such Notes, and neither the Trustee, any Agent nor the Companies shall
be affected by notice to the contrary.
29
<PAGE>
(vii) The Trustee shall authenticate Certificated Notes and
Global Notes in accordance with the provisions of Section 2.02 hereof.
Each Holder of a Note agrees to indemnify the Obligors and the Trustee
against any liability that may result from the transfer, exchange or assignment
of such Holder's Note in violation of any provision of this Indenture and/or
applicable U.S. federal or state securities law.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or either Company,
or if the Companies and the Trustee receive evidence to their satisfaction of
the destruction, loss or theft of any Note, the Companies shall issue, the
Guarantors shall execute and the Trustee, upon the written order of the
Companies signed by two Officers of each Company, shall authenticate a
replacement Note if the Trustee's requirements are met. An indemnity bond must
be supplied by the Holder that is sufficient in the judgment of the Trustee and
the Companies to protect the Companies, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Companies may charge for their expenses in replacing a Note.
Every replacement Note is an additional obligation of the Obligors 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 a Company or an Affiliate of a Company
holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a "bona fide purchaser" or "protected purchaser", as
such terms may from time to time be defined in Article 8 of the Uniform
Commercial Code as in effect in the State of New York.
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 an Obligor, 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
Obligors or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Companies shall be considered
as though not outstanding, except that for the purposes of determining whether
the Trustee
30
<PAGE>
shall be protected in relying on any such direction, waiver or consent, only
Notes that a Trustee actually knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes.
Until Certificated Notes are ready for delivery, the Companies may
prepare, the Guarantors may execute and the Trustee shall authenticate temporary
Notes upon a written order of the Companies signed by two Officers of each
Company. Temporary Notes shall be substantially in the form of Certificated
Notes but may have variations that the Companies consider appropriate for
temporary Notes and as shall be reasonably acceptable to the Trustee. Without
unreasonable delay, the Companies shall prepare, the Guarantors shall execute
and the Trustee shall authenticate Certificated 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 Companies at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). All canceled Notes shall be delivered to the Companies. The Companies
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 Obligors 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 Companies 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 Companies shall fix or cause to be
fixed each such special record date and payment date; provided that no such
special record date shall be less than 10 days prior to the related payment date
for such defaulted interest. At least 15 days before the special record date,
the Companies (or, upon the written request of the Companies, the Trustee in the
name and at the expense of the Companies) 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.
Section 2.13. CUSIP Numbers.
The Companies in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Companies will promptly notify the Trustee of any
change in the CUSIP numbers.
31
<PAGE>
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Companies 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 but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed at any time, the
Trustee will select the Notes to be redeemed among the Holders of Notes in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed, or, if the Notes are not so listed, on a
pro rata basis, by lot or in accordance with any other method the Trustee
considers fair and appropriate.
The Trustee shall promptly notify the Companies in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
provided, 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. If any Note is to be redeemed in part only, the
notice of redemption that relates to such Note shall state the portion of the
principal amount thereof to be redeemed. A new Note in principal amount equal
to the unredeemed portion thereof 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.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days but
not more than 60 days before a redemption date, the Companies shall mail or
cause to be mailed, by first class mail, a notice of redemption to each Holder
whose Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed (including CUSIP
number, if applicable), and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption
date upon surrender of such Note, a new Note or Notes in principal amount
equal to the unredeemed portion shall be issued upon cancellation of the
original Note;
32
<PAGE>
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless the Companies default in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and
after the redemption date;
(g) the paragraph of the Notes and any applicable Section of this
Indenture pursuant to which the Notes called for redemption are being
redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Companies' request, the Trustee shall give the notice of
redemption in the Companies' name and at their expense; provided, however, that
the Companies shall have delivered to the Trustee, at least 45 days prior to the
redemption date (unless a shorter period is acceptable to the Trustee), an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price.
On or before 10:00 a.m. New York time on the redemption date, the
Companies shall deposit with the Trustee or with the Paying Agent money
sufficient to pay the redemption price of and accrued interest on all Notes to
be redeemed on that date. Funds so deposited later than 12 noon New York time
on the day prior to a redemption will not be invested. The Trustee or the
Paying Agent shall promptly return to the Companies any money deposited with the
Trustee or the Paying Agent by the Companies in excess of the amounts necessary
to pay the redemption price of, and accrued interest on, all Notes to be
redeemed.
If the Companies 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. If a Note is redeemed
on or after an interest record date but on or prior to the related interest
payment date, then any accrued and unpaid interest shall be paid to the Person
in whose name such Note was registered at the close of business on such record
date. If any Note called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Companies 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.
33
<PAGE>
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Companies shall
issue, the Guarantors shall execute and, upon the Companies' written request,
the Trustee shall authenticate for the Holder at the expense of the Companies a
new Note equal in principal amount to the unredeemed portion of the Note
surrendered.
Section 3.07. Redemption.
(a) Except as set forth in clause (b) of this Section 3.07, the
Companies shall not have the option to redeem the Notes pursuant to this Section
3.07 prior to August 1, 2002. Thereafter, the Companies shall have the option
to redeem the Notes, in whole or in part, at the redemption prices (expressed as
percentages of the aggregate principal amount thereof) set forth below plus
accrued and unpaid interest and Liquidated Damages thereon, if any, 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>
2002.......................... 104.75%
2003.......................... 102.375%
2004.......................... 101.188%
2005 and thereafter........... 100%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this Section 3.07,
(i) the Companies may, during the first 36 months after the Issue Date, redeem
up to 25% of the initially outstanding aggregate principal amount of Notes with
the net cash proceeds of one or more Public Equity Offerings of common stock of
HPI at a redemption price in cash of 109.5% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
redemption date; provided that at least 75% of the initially outstanding
aggregate principal amount of Notes remains outstanding immediately after the
occurrence of such redemption; and provided, further, that written notice of any
such redemption shall be given by the Companies to the Holders and the Trustee
within 15 days after the consummation of any such Public Equity Offering and
such redemption shall occur within 60 days after the date of such notice and
(ii) if any Gaming Authority requires that a Holder or beneficial owner of Notes
must be licensed, qualified or found suitable under any applicable gaming law
and such Holder or beneficial owner (A) fails to apply for a license,
qualification or a finding of suitability within 30 days (or such shorter period
as may be required by the applicable Gaming Authority) after being requested to
do so by the Gaming Authority or (B) is denied such license or qualification or
not found suitable, the Companies shall have the right, at their option, (1) to
require any such Holder or beneficial owner to dispose of its Notes within 30
days (or such earlier date as may be required by the applicable Gaming
Authority) of receipt of such notice or finding by such Gaming Authority or
(2) to call for the redemption of the Notes of such Holder or beneficial owner
at a redemption price equal to the least of (x) the principal amount thereof,
(y) the price at which such Holder or beneficial owner acquired the Notes in
either such case, together with accrued interest and Liquidated Damages, if any,
to the earlier of the date of redemption or the date of the denial of license or
qualification or of the finding of unsuitability by such Gaming Authority or
(z) such other lesser amount as may be required by any Gaming Authority. The
Companies shall notify the Trustee in writing of any such redemption as soon as
practicable. The Holder or beneficial owner applying for license, qualification
or a finding of suitability must pay all costs of the licensure or investigation
for such qualification or finding of suitability.
34
<PAGE>
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
Except as set forth under Sections 4.09 and 4.12 hereof, the Companies
shall not be required to make mandatory redemption payments or sinking fund
payments with respect to the Notes.
Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.09 hereof, the Companies
shall be required to commence an offer to all Holders to purchase Notes (an
"Asset Sale Offer"), they shall follow the procedures specified below.
The Asset Sale Offer shall comply in all respects with Regulation 14E
under the Exchange Act and the rules promulgated thereunder, including Rule
14(e)(1), and in particular, shall remain open for a period of at least 20
Business Days, except to the extent that a different period is required by
applicable law or the rules of any national exchange on which the Notes are
listed (the "Offer Period"). No later than five Business Days after the
termination of the Offer Period (the "Purchase Date"), the Companies shall
purchase the principal amount of Notes required to be purchased pursuant to
Section 4.09 hereof (the "Offer Amount") or, if less than the Offer Amount has
been tendered, all Notes tendered in response to the Asset Sale 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 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 or Liquidated Damages,
if any, shall be payable to Holders who tender Notes pursuant to the Asset Sale
Offer.
Upon the commencement of an Asset Sale Offer, the Companies shall
send, by first class mail, a notice to the Trustee and each of the Holders. The
notice shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer
shall be made to all Holders. The notice, which shall govern the terms of the
Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.09 hereof and the length of time the Asset Sale 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;
(d) that, unless the Companies default in making such payment, any
Note accepted for payment pursuant to the Asset Sale Offer shall cease to
accrue interest or Liquidated Damages, if applicable, after the Purchase
Date;
35
<PAGE>
(e) that any Holder electing to have a Note purchased pursuant to an
Asset Sale Offer may only elect to have all of such Note purchased and may
not elect to have only a portion of such Note purchased;
(f) that any Holder electing to have a Note purchased pursuant to any
Asset Sale 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 Companies, a
depositary, if appointed by the Companies, or a Paying Agent at the address
specified in the notice at least three Business Days before the Purchase
Date;
(g) that a Holder shall be entitled to withdraw its election if the
Companies, the depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of the Note such Holder delivered for purchase and a statement that
such Holder is withdrawing its election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Companies shall select the Notes to
be purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Companies so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); 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 Companies shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
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 Companies in
accordance with the terms of this Section 3.09. The Companies, the depositary
or the Paying Agent, as the case may be, shall promptly (but in any case not
later than three 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 Companies for purchase, and the Companies shall
promptly issue a new Note, and the Trustee, upon written request from the
Companies 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 Companies
to the Holder thereof. The Companies shall publicly announce the results of the
Asset Sale Offer on the Purchase Date or as soon as practicable thereafter (and
in no event later than such an announcement may be required by applicable law).
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.
36
<PAGE>
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
The Companies 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 an Obligor, holds as of 10:00 a.m.
Eastern Time on the due date money deposited by any Obligor in immediately
available funds and designated for and sufficient to pay all principal, premium,
if any, and interest then due. The Companies 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 Companies shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; they 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 Companies 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 Companies in respect of the Notes and this Indenture may
be served. The Companies 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 Companies 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 Companies 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
Companies of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Companies shall give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
The Companies hereby designate the Corporate Trust Office of the
Trustee as one such office or agency of the Companies in accordance with Section
2.03.
Section 4.03. Reports.
(a) The Companies (at their own expense) shall file with the SEC and
shall send to the Trustee within 15 days after such filing with the SEC, copies
of the quarterly, annual and current reports and of the information, documents,
and other reports (or copies of such portions of any of the foregoing as the SEC
may by rules and regulations prescribe) of the Companies required to be filed
pursuant to Section 13 or 15(d) of the Exchange Act (without regard to whether
the Companies are subject on or after such time to
37
<PAGE>
the requirements of such Section 13 or 15(d) of the Exchange Act unless the SEC
declines to accept such a filing), on or prior to the date on which such items
are required. The year-end financial statements contained in such reports shall
be audited by a "big six" accounting firm. Upon qualification of this Indenture
under the TIA, the Companies shall also comply with the provisions of TIA (S)
314(a).
(b) In addition, for so long as any Notes remain outstanding, the
Companies covenant and agree that they shall, during any period in which the
Companies are not subject to Section 13 or 15(d) under the Exchange Act or not
filing the reports and other information required thereby when so subject, make
available to any Holder or beneficial owner of Notes that continue to be
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of Notes from such Holder or beneficial owner the
information required pursuant to Rule 144A(d)(4) under the Securities Act upon
the request of any Holder or beneficial owner of the Notes.
(c) Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein, including
the Companies' compliance with any of their covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
(d) For the purposes of compliance with the reporting requirements of
the foregoing subsections (a) and (b), the Companies may deliver to the Trustee
the consolidated reports of HPI.
Section 4.04. Compliance Certificate.
(a) The Companies shall deliver to the Trustee, within 120 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Obligors and their Subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Obligors have kept, observed, performed and
fulfilled their respective obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Obligors have kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and are not in default in
the performance or observance of any of the terms, provisions and conditions of
this Indenture (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she may have
knowledge and what action the Obligors are taking or propose to take with
respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes are prohibited or if such event
has occurred, a description of the event and what action the Obligors are taking
or propose to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Companies' independent public accountants (which shall
be a "big six" firm) 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 any Obligor has violated any provisions of Article
Four 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.
38
<PAGE>
(c) The Companies shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer of the Companies becoming
aware of any Default or Event of Default, an Officers' Certificate specifying
such Default or Event of Default and what action the Companies are taking or
propose to take with respect thereto.
Section 4.05. Taxes.
The Companies shall pay, and shall cause each of their Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
Each Obligor 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 Obligor (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
Section 4.07. Restricted Payments.
(a) No Obligor will, directly or indirectly, (i) declare or pay any
dividend or make any other payment or distribution (other than dividends or
distributions payable solely in Qualified Capital Stock of HPI or dividends or
distributions payable to an Obligor) in respect of any Obligor's Equity
Interests (including, without limitation, any payment in connection with any
merger or consolidation involving any Obligor) or to the direct or indirect
holders of any Obligor's Equity Interests in their capacity as such, (ii)
purchase, redeem or otherwise acquire or retire for value (including, without
limitation, any payment in connection with any merger or consolidation involving
any Obligor) Equity Interests of any Obligor or of any direct or indirect parent
or Affiliate of any Obligor (other than any such Equity Interests owned by any
Obligor), (iii) make any payment on or with respect to, or purchase, defease,
redeem, prepay, decrease or otherwise acquire or retire for value any
Indebtedness that is subordinate in right of payment to the Notes, except a
payment of principal, interest, or other amounts required to be paid at Stated
Maturity, or (iv) make any Investment (other than Permitted Investments) (each
of the foregoing prohibited actions set forth in clauses (i), (ii), (iii) and
(iv) being referred to as a "Restricted Payment"), if at the time of such
proposed Restricted Payment or immediately after giving effect thereto, (A) a
Default or an Event of Default has occurred and is continuing or would result
therefrom, or (B) the Companies are not, or would not be, able to Incur at least
$1.00 of additional Indebtedness under the Consolidated Coverage Ratio test
described in the second paragraph of Section 4.08 hereof or (C) the aggregate
amount of Restricted Payments (including such proposed Restricted Payment) made
subsequent to the Issue Date (the amount expended for such purposes, if other
than in cash, being the fair market value of such property as determined
reasonably and in good faith by the Board of the applicable Obligor) exceeds or
would exceed the sum, without duplication, of:
39
<PAGE>
(1) 50% of the cumulative Consolidated Net Income (or if cumulative
Consolidated Net Income shall be a loss, minus 100% of such loss) of the
Companies during the period (treating such period as a single accounting period)
beginning on the Issue Date and ending on the last day of the most recent fiscal
quarter of the Companies ending immediately prior to the date of the making of
such Restricted Payment for which internal financial statements are available
ending not more than 135 days prior to the date of determination, plus
(2) 100% of the aggregate net cash proceeds received by HPI from any
Person (other than from a Subsidiary of HPI) from the issuance and sale of
Qualified Capital Stock of HPI or the conversion of debt securities or
Convertible Preferred Stock into Qualified Capital Stock of HPI (to the extent
that proceeds of the issuance of such Qualified Capital Stock would be
includable in this clause upon initial issuance for cash), subsequent to the
Issue Date and on or prior to the date of the making of such Restricted Payment
(excluding any Qualified Capital Stock of HPI, the purchase price of which has
been financed directly or indirectly using funds (A) borrowed from any Obligor,
unless and until and to the extent such borrowing is repaid, or (B)
contributed, extended, guaranteed or advanced by any Obligor (including, without
limitation, in respect of any employee stock ownership or benefit plan)), plus
(3) 100% of the aggregate cash received by HPI subsequent to the Issue
Date and on or prior to the date of the making of such Restricted Payment upon
the exercise of options or warrants (whether issued prior to or after the Issue
Date) to purchase Qualified Capital Stock of HPI, plus
(4) to the extent that any Restricted Investment that was made after
the Issue Date is sold for cash or Cash Equivalents or otherwise liquidated or
repaid for cash or Cash Equivalents, or any dividends, distributions, principal
repayments, or returns of capital are received by any Obligor in respect of any
Restricted Payment, valued, in each such case, the lesser of (A) the cash or
marked-to-market value of Cash Equivalents received with respect to such
Restricted Investment (less the cost of disposition, if any) and (B) the initial
amount of such Restricted Investment, plus
(5) 50% of the aggregate dividends and distributions received by any
Obligor from an Unrestricted Subsidiary, to the extent not already included in
the calculation of Consolidated Net Income.
(b) Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph shall not prohibit:
(1) the payment of any dividend or the making of any distribution
within 60 days after the date of declaration of such dividend or distribution if
the making thereof would have been permitted on the date of declaration;
provided such dividend will be deemed to have been made as of its date of
declaration or the giving of such notice for purposes of this clause (1);
(2) the redemption, repurchase, retirement or other acquisition of
Capital Stock of HPI or warrants, rights or options to acquire Capital Stock of
HPI either (A) solely in exchange for shares of Qualified Capital Stock of HPI
or warrants, rights or options to acquire Qualified Capital Stock of HPI, or (B)
through the application of net proceeds of a substantially concurrent sale for
cash (other than to a Subsidiary of HPI) of shares of Qualified Capital Stock of
HPI or warrants, rights or options to acquire Qualified Capital Stock of HPI;
provided that no Default or Event of Default shall have occurred and be
continuing at the time of such Restricted Payment or would result therefrom;
40
<PAGE>
(3) the redemption, repurchase, retirement, defeasance or acquisition
of Indebtedness of any Obligor that is subordinate or junior in right of payment
to the Notes or the Guaranties either (A) solely in exchange for shares of
Qualified Capital Stock of HPI or for Permitted Refinancing Indebtedness, or (B)
through the application of the net proceeds of a substantially concurrent sale
for cash (other than to an Obligor) of (I) shares of Qualified Capital Stock of
HPI or warrants, rights or options to acquire Qualified Capital Stock of HPI or
(II) Permitted Refinancing Indebtedness; provided that no Default or Event of
Default shall have occurred and be continuing at the time of such Restricted
Payment pursuant to this clause (3) and would not result therefrom;
(4) repurchases by HPI of its common stock; provided that the
aggregate amount expended for all such common stock repurchases by HPI shall not
exceed $10 million on a cumulative basis commencing on the Issue Date; and
provided, further, that no Default or Event of Default shall have occurred and
be continuing at the time of such Restricted Payment or would result therefrom;
(5) (A) scheduled dividends payable in respect of the Convertible
Preferred Stock not to exceed $2 million in the aggregate in any fiscal year;
provided, that no Event of Default shall have occurred and be continuing at the
time of such Restricted Payment or would result therefrom and (B) redemption of
all of the outstanding Convertible Preferred Stock by means of conversion into
shares of HPI's common stock plus payment of accrued and unpaid dividends;
(6) redemptions, repurchases or repayments to the extent required by
any Gaming Authority having jurisdiction over any Obligor or deemed necessary by
the Board of either Company in order to avoid the suspension, revocation or
denial of a gaming license by any Gaming Authority;
(7) Investments in the Indiana Joint Venture Project, not to exceed
$70 million in the aggregate;
(8) other Restricted Payments not to exceed $20 million in the
aggregate at any time; provided no Default or Event of Default then exists or
would result therefrom;
(9) repurchases by HPI of common stock of HPI or options or warrants
or other securities exercisable or convertible into such common stock from
employees and directors of HPI or any of its subsidiaries upon death, disability
or termination of employment or directorship of such employees or directors;
(10) the payment of any amounts in respect of Equity Interests by any
Restricted Subsidiary organized as a partnership or a limited liability or other
pass-through entity, to the extent of capital contributions made to such
Restricted Subsidiary (other than capital contributions made to such Restricted
Subsidiary by the Obligors); provided, that no Default or Event of Default has
occurred and is continuing at the time of such Restricted Payment or would
result therefrom;
(11) the payment of any amounts in respect of Equity Interests by any
Restricted Subsidiary organized as a partnership or a limited liability company
or other pass-through entity (A) to the extent required by applicable law or (B)
to the extent necessary for holders thereof to pay taxes with respect to the net
income of such Restricted Subsidiary, the payment of which amounts under this
clause (B) is required by the terms of the relevant partnership agreement,
limited liability company operating agreement
41
<PAGE>
or other governing document; provided, that except in the case of clause (A), no
Default or Event of Default has occurred and is continuing at the time of such
Restricted Payment or would result therefrom;
(12) the payment of dividends or other distributions on minority
interests in Equity Interests of Restricted Subsidiaries pursuant to
requirements under partnership agreements, membership or other organizational
agreements of other pass-through entities as in effect on the Issue Date;
provided such distributions are made pro rata with the distributions paid
contemporaneously to an Obligor or its Affiliates holding an interest in such
Equity Interests; provided, further, that no Default or Event of Default has
occurred and is continuing at the time of such Restricted Payment or would
result therefrom;
(13) Investments in Unrestricted Subsidiaries, joint ventures,
partnerships or limited liability companies consisting of conveyances of
substantially undeveloped real estate in a number of acres which, after giving
effect to any such conveyance, would not exceed in the aggregate for all such
conveyances after the Issue Date, 50% of the sum of (A) the acres of undeveloped
real estate held by the Obligors on the date of such conveyance plus (B) the
acres of undeveloped real estate previously so conveyed by the Obligors after
the Issue Date; provided, that no Default or Event of Default has occurred and
is continuing at the time of such Restricted Payment or would result therefrom;
or
(14) Investments, not to exceed $10 million in the aggregate at any
time outstanding, in any combination of (A) readily marketable equity securities
and (B) assets of the kinds described in the definition of "Cash Equivalents";
provided, that for the purposes of this clause (14), such Investments may be
made without regard to the rating requirements or maturity limitations set forth
in such definition.
(c) In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date, Restricted Payments made pursuant to clauses (1)-
(5), (7) and (8) of this subsection 4.07(b) shall, in each case, be excluded
from such calculation; provided, that any amounts expended or liabilities
incurred in respect of fees, premiums or similar payments in connection
therewith shall be included in such calculation.
(d) No later than the date of making any Restricted Payment, the
applicable Obligor shall deliver to the Trustee an Officers' Certificate stating
that such Restricted Payment complies with this Section 4.07 and setting forth
in reasonable detail the basis upon which the required calculations were
computed (upon which the Trustee may conclusively rely without any investigation
whatsoever), which calculations may be based upon the Companies' latest
available internal quarterly financial statements.
(e) The Board of either Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if such designation would not cause
a Default. For purposes of making such determination, all outstanding
Investments by the Obligors (except to the extent repaid in cash or in kind) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
greatest of (i) the net book value of such Investments at the time of such
designation, (ii) the fair market value of such Investments at the time of such
designation and (iii) the original fair market value of such Investments at the
time they were made. Such designation will only be permitted if such Restricted
Payment would be permitted at such time and if such Restricted Subsidiary
otherwise meets the definition of an Unrestricted Subsidiary.
42
<PAGE>
Section 4.08. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Companies will not, directly or indirectly, (i) Incur any
Indebtedness or issue any Disqualified Capital Stock, other than Permitted
Indebtedness, or (ii) cause or permit any of their Subsidiaries to Incur any
Indebtedness or issue any Disqualified Capital Stock or preferred stock, in each
case, other than Permitted Indebtedness.
Notwithstanding the foregoing limitations, either Company may issue
Disqualified Capital Stock, and any Obligor may Incur Indebtedness (including,
without limitation, Acquired Debt) or issue preferred stock, if (i) no Default
or Event of Default shall have occurred and be continuing on the date of the
proposed Incurrence or issuance or would result as a consequence of such
proposed Incurrence or issuance and (ii) immediately after giving pro forma
effect to such proposed Incurrence or issuance and the receipt and application
of the net proceeds therefrom, the Companies' Consolidated Coverage Ratio would
not be less, for any period of four fiscal quarters ending during the applicable
period specified in the table below, than the ratio specified opposite such
period:
<TABLE>
<CAPTION>
Period Ratio
------ ---------
<S> <C>
Issue Date - December 31, 1998 2.00:1.00
January 1, 1999 - December 31, 1999 2.25:1.00
January 1, 2000 and thereafter 2.50:1.00
</TABLE>
Any Indebtedness of any Person existing at the time it becomes a
Restricted Subsidiary (whether by merger, consolidation, acquisition of capital
stock or otherwise) shall be deemed to be Incurred as of the date such Person
becomes a Restricted Subsidiary.
For purposes of determining compliance with this covenant, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness described in clauses (i) through (xi) of
such definition or is entitled to be Incurred pursuant to the second paragraph
of this covenant, the Companies will, in their sole discretion, classify such
item of Indebtedness in any manner that complies with this covenant and such
item of Indebtedness will be treated as having been Incurred pursuant to only
one of such clauses or pursuant to the second paragraph hereof. The Companies
may reclassify such Indebtedness from time to time in their sole discretion.
Accrual of interest and the accretion of principal amount will not be deemed to
be an Incurrence of Indebtedness for purposes of this covenant.
Section 4.09. Asset Sales.
No Obligor will, directly or indirectly, consummate or enter into a
binding commitment to consummate an Asset Sale unless (a) such Obligor, 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 sold or of which other disposition
is made (as determined reasonably and in good faith by the Board of such
Obligor) and (b) at least 75% of the consideration received by such Obligor from
such Asset Sale will be cash or Cash Equivalents and will be received at the
time of the consummation of any such Asset Sale; provided, however, that the
amount of (x) any liabilities as shown on the Obligors' most recent balance
sheet (or in the notes thereto) (other than
43
<PAGE>
(i) Indebtedness subordinate in right of payment to the Notes, (ii) contingent
liabilities, (iii) liabilities or Indebtedness to Affiliates of the Companies
and (iv) Non-Recourse Indebtedness) that are assumed by the transferee of any
such assets and (y) to the extent of the cash received, any notes or other
obligations received by such Obligor or any such Restricted Subsidiary from such
transferee that are converted by such Obligor into cash within 60 days of
receipt, will be deemed to be cash for purposes of this provision.
Notwithstanding the foregoing, an Obligor will be permitted to
consummate an Asset Sale without complying with the foregoing provisions if
(i) such Obligor receives consideration at the time of such Asset Sale at least
equal to the fair market value of the assets or other property sold, issued or
otherwise disposed of (as evidenced by a resolution of the Board of such Obligor
as set forth in an Officers' Certificate delivered to the Trustee), (ii) the
transaction constitutes a "like-kind exchange" of the type contemplated by
Section 1031 of the Internal Revenue Code and (iii) the consideration for such
Asset Sale constitutes Productive Assets; provided that any non-cash
consideration not constituting Productive Assets received by such Obligor in
connection with such Asset Sale that is converted into or sold or otherwise
disposed of for cash or Cash Equivalents at any time within 360 days after such
Asset Sale and any Productive Assets constituting cash or Cash Equivalents
received by such Obligor in connection with such Asset Sale shall constitute Net
Cash Proceeds subject to the provisions set forth above.
Upon the consummation of an Asset Sale, the Issuers or the affected
Obligor will be required to apply all Net Cash Proceeds that are received from
such Asset Sale within 360 days of the receipt thereof either (A) to reinvest
(or enter into a binding commitment to invest, if such investment is effected
within 360 days after the date of such commitment) in Productive Assets or in
Asset Acquisitions not otherwise prohibited by this Indenture, or (B) to
permanently prepay or repay Indebtedness of any Obligor other than Indebtedness
that is subordinate in right of payment to the Notes. Pending the final
application of any such Net Cash Proceeds, the Obligors may temporarily reduce
revolving Indebtedness or otherwise invest such Net Cash Proceeds in any manner
not prohibited by this Indenture. On the 361st day after an Asset Sale or such
earlier date, if any, as the Board of each Issuer or the affected Obligor
determines not to apply the Net Cash Proceeds relating to such Asset Sale as set
forth in clauses (A) or (B) of the preceding sentence (each a "Net Proceeds
Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which have not
been applied on or before such Net Proceeds Offer Trigger Date as permitted in
clauses (A) or (B) of the preceding sentence (each a "Net Proceeds Offer
Amount"), will be applied by the Issuers to make an offer to purchase (the "Net
Proceeds Offer") on a date (the "Net Proceeds Offer Payment Date") not less than
30 nor more than 60 days following the applicable Net Proceeds Offer Trigger
Date, from all holders on a pro rata basis, Notes in an amount equal to the Net
Proceeds Offer Amount at a price in cash equal to 100% of the aggregate
principal amount of Notes, in each case, plus accrued and unpaid interest and
Liquidated Damages, if any, thereon on the Net Proceeds Offer Payment Date;
provided that if at any time within 360 days after an Asset Sale any non-cash
consideration received by the Issuers or the affected Obligor in connection with
such Asset Sale is converted into or sold or otherwise disposed of for cash,
then such conversion or disposition will be deemed to constitute an Asset Sale
hereunder and the Net Cash Proceeds thereof will be applied in accordance with
this covenant. To the extent that the aggregate principal amount of Notes
tendered pursuant to the Net Proceeds Offer is less than the Net Proceeds Offer
Amount, the Obligors may use any remaining proceeds of such Asset Sales for
general corporate purposes (but subject to the other terms of this Indenture).
Upon completion of a Net Proceeds Offer, the Net Proceeds Offer Amount relating
to such Net Proceeds Offer will be deemed to be zero for purposes of any
subsequent Asset Sale. In the event that a Restricted Subsidiary consummates an
Asset Sale, only that portion of the Net Cash Proceeds therefrom (including any
Net Cash Proceeds received upon the sale or other disposition of any non-
44
<PAGE>
cash proceeds received in connection with an Asset Sale) that are distributed to
any Obligor will be required to be applied by the Obligors in accordance with
the provisions of this paragraph.
Notwithstanding the foregoing, if a Net Proceeds Offer Amount is less
than $10 million the application of the Net Cash Proceeds constituting such Net
Proceeds Offer Amount to a Net Proceeds Offer may be deferred until such time as
such Net Proceeds Offer Amount plus the aggregate amount of all Net Proceeds
Offer Amounts arising subsequent to the Issue Date of the Notes from all Asset
Sales by the Obligors in respect of which a Net Proceeds Offer has not been made
aggregate at least $10 million at which time the affected Obligor will apply all
Net Cash Proceeds constituting all Net Proceeds Offer Amounts that have been so
deferred to make a Net Proceeds Offer (each date on which the aggregate of all
such deferred Net Proceeds Offer Amounts is equal to $10 million or more will be
deemed to be a Net Proceeds Offer Trigger Date). In connection with any Asset
Sale with respect to assets having a book value in excess of $10 million or as
to which it is expected that the aggregate consideration therefor be received by
the affected Obligor will exceed $10 million in value, such Asset Sale will be
approved, prior to the consummation thereof, by the Board of the applicable
Obligor.
Section 4.10. Transactions with Affiliates.
No Obligor will make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (a) such Affiliate Transaction is, considered in light of any series of
related transactions of which it comprises a part, on terms that are fair and
reasonable and no less favorable to such Obligor than those that might
reasonably have been obtained at such time in a comparable transaction or series
of related transactions on an arms-length basis from a Person that is not such
an Affiliate, (b) with respect to any Affiliate Transaction involving aggregate
consideration of $3 million or more, a majority of the disinterested members of
the Board of HPI (and of any other affected Obligor, where applicable) shall,
prior to the consummation of any portion of such Affiliate Transaction, have
reasonably and in good faith determined, as evidenced by a resolution of its
Board, that such Affiliate Transaction meets the requirements of the foregoing
clause; and (c) with respect to any Affiliate Transaction involving value of $10
million or more, the Board of the applicable Obligor shall have received prior
to the consummation of any portion of such Affiliate Transaction, a written
opinion from an independent investment banking, accounting or appraisal firm of
recognized national standing that such Affiliate Transaction is on terms that
are fair to such Obligor from a financial point of view. The foregoing
restrictions will not apply to (i) reasonable fees and compensation (including
any such compensation in the form of Equity Interests not derived from
Disqualified Capital Stock, together with loans and advances, the proceeds of
which are used to acquire such Equity Interests) paid to, and indemnity provided
on behalf of, officers, directors, employees or consultants of the Obligors as
determined in good faith by the Board or senior management, (ii) any transaction
solely between or among Obligors to the extent any such transaction is otherwise
in compliance with, or not prohibited by, this Indenture or (iii) any Restricted
Payment permitted by the terms of Section 4.07 hereof.
Section 4.11. Continued Existence.
Except as otherwise provided in Article 5 hereof, each of the Obligors
shall do or shall cause to be done all things necessary to preserve and keep in
full force and effect (i) its corporate existence, and the corporate,
partnership, limited liability company or other existence of each of its
Subsidiaries, in
45
<PAGE>
accordance with the respective organizational documents (as the same may be
amended from time to time) of each such Obligor and each such Subsidiary and
(ii) the material rights (charter and statutory), licenses and franchises of
each Obligor and each Subsidiary; provided, however, that no Obligor shall be
required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any of its Subsidiaries, if its Board shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Companies or the Obligors, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders.
Section 4.12. Offer to Repurchase Upon Change of Control.
Within 30 days after the occurrence of a Change of Control, the
Companies shall commence an offer (a "Change of Control Offer") to each Holder
to repurchase all or any part (equal to $1,000 or an integral multiple thereof)
of each Holder's Notes at an offer price in cash (the "Change of Control
Payment") equal to 101%, or, in the case of a REIT Change of Control, 102%, of
the aggregate principal amount thereof to the date of repurchase plus accrued
and unpaid interest and Liquidated Damages, if any. The Change of Control Offer
shall be made in compliance with all applicable laws, including, without
limitation, Regulation 14E of the Exchange Act and the rules thereunder and all
applicable federal and state securities laws, and shall include all instructions
and materials necessary to enable Holders to tender their Notes.
Within 30 days following any Change of Control, the Companies shall
mail a notice to the Trustee and each Holder stating:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.12 and that all Notes tendered will be accepted for payment;
(2) the purchase price and the purchase date, which shall be no
earlier than 30 days nor later than 60 days from the date such notice is
mailed (the "Change of Control Payment Date");
(3) that any Note not tendered will continue to accrue interest;
(4) that, unless the Companies default in the payment of the Change
of Control Payment, all Notes accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest after the Change of Control
Payment Date;
(5) that Holders electing to have any Notes purchased pursuant to a
Change of Control Offer will be required to surrender the Notes, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Notes completed, or transfer by book-entry transfer, to the Companies, the
depository (if appointed by the Companies) or to the Paying Agent at the
address specified in the notice prior to the close of business on the third
Business Day preceding the Change of Control Payment Date;
(6) that a Holder will be entitled to withdraw its election if either
Company, the depository or the Paying Agent receives, not later than the
close of business on the second Business Day preceding the Change of
Control Payment Date, a facsimile
46
<PAGE>
transmission or letter setting forth the name of such Holder, the
principal amount of Notes delivered for purchase, and a statement that
such Holder is withdrawing its election to have the Notes purchased;
(7) that Holders whose Notes are being purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof; and
(8) a brief summary of the circumstances and relevant facts regarding
such Change of Control.
On the Change of Control Payment Date, the Companies shall, to the
extent lawful, (i) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (iii) deliver or cause to be delivered to
the Trustee the Notes so accepted, together with an Officers' Certificate
stating the aggregate principal amount of Notes or portions thereof being
purchased by the Companies. 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 by such Holder, if any; provided, that each
such new Note shall be in a principal amount of $1,000 or an integral multiple
thereof. The Companies shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
Prior to complying with the foregoing provisions of this Section 4.12,
but in any event within 90 days following the occurrence of a Change of Control,
the Companies shall either (x) repay all Obligations outstanding with respect to
Senior Debt, (y) obtain the requisite consents, if any, from the holders of
Senior Debt to permit the Companies to repurchase Notes under this Section 4.12,
or (z) deliver to the Trustee an Officers' Certificate to the effect that no
action of the kind described in clauses (x) or (y) is necessary.
Section 4.13. Limitation on Liens.
No Obligor will, directly or indirectly, create, Incur or assume any
Lien, except a Permitted Lien, securing Indebtedness that is pari passu with or
subordinate in right of payment to the Notes or the Guaranties, on or with
respect to any of its property or assets including any shares of stock or
Indebtedness of any Restricted Subsidiary, whether owned on the Issue Date or
thereafter acquired, or any income, profits or proceeds therefrom unless (x) in
the case of any Lien securing Indebtedness that is pari passu in right of
payment with the Notes or the Guaranties, the Notes or the Guaranties are
secured by a Lien on such property, assets or proceeds that is senior in
priority to or pari passu with such Lien and (y) in the case of any Lien
securing Indebtedness that is subordinate in right of payment to the Notes or
the Guaranties, the Notes or the Guaranties are secured by a Lien on such
property, assets or proceeds that is senior in priority to such Lien.
47
<PAGE>
Section 4.14. Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries.
No Obligor will, directly or indirectly, create or otherwise cause or
permit or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions on its Capital Stock, (b) make loans or advances to or pay any
Indebtedness or other obligations owed to any Obligor or Restricted Subsidiary
or (c) transfer any of its property or assets to any Obligor or to any
Restricted Subsidiary (each such encumbrance or restriction in clause (a), (b)
or (c), a "Payment Restriction"), except for such encumbrances or restrictions
existing under or by reason of: (1) applicable law; (2) this Indenture; (3)
customary non-assignment provisions of any purchase money financing contract or
lease of any Restricted Subsidiary entered into in the ordinary course of
business of such Restricted Subsidiary; (4) any instrument governing Acquired
Debt Incurred in connection with an acquisition by any Obligor in accordance
with this Indenture as the same is in effect on the date of such Incurrence;
provided that such encumbrance or restriction is not, and will not be,
applicable to any Person, or the properties or assets of any Person, other than
the Person and its Subsidiaries or the property or assets, including directly-
related assets, such as accessions and proceeds so acquired or leased; (5) any
restriction or encumbrance contained in contracts for the sale of assets to be
consummated in accordance with this Indenture solely in respect of the assets to
be sold pursuant to such contract; (6) any restrictions of the nature described
in clause (c) above with respect to the transfer of assets secured by a Lien
that is permitted by this Indenture to be Incurred; (7) any encumbrance or
restriction contained in Permitted Refinancing Indebtedness; provided that the
provisions relating to such encumbrance or restriction contained in any such
Permitted Refinancing Indebtedness are no less favorable to the holders of the
Notes in any material respect in the good faith judgment of the Board of either
Company than the provisions relating to such encumbrance or restriction
contained in the Indebtedness being refinanced or (8) Indebtedness or
Investments existing on the Issue Date, as in effect on the Issue Date.
Section 4.15. No Subordinated Debt Senior To The Notes or Guaranties.
Notwithstanding the provisions of Section 4.08 hereof, no Obligor
shall Incur any Indebtedness that is subordinate or junior in right of payment
to any Senior Debt and senior in any respect in right of payment to the Notes or
the Guaranties.
Section 4.16. Designation Of Restricted and Unrestricted Subsidiaries.
The Board of either Company may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary at any time; provided, however, that immediately
after giving effect to such designation on a pro forma basis as if the same had
occurred at the beginning of the most recently ended full fiscal quarter of the
Obligors for which internal consolidated financial statements are available, (i)
the Obligors would be permitted to incur at least $1.00 of additional
Indebtedness under the Consolidated Coverage Ratio test and (ii) an Officers'
Certificate with respect to such designation is delivered to the Trustee within
45 days after the end of the fiscal quarter of the Obligors in which such
designation is made (or, in the case of a designation made during the last
fiscal quarter of the Companies' fiscal year, within 120 days after the end of
such fiscal year), which Officers' Certificate states the effective date of such
designation; and provided, further, that such designation shall be deemed to be
an Incurrence of Indebtedness by a Restricted Subsidiary of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if no Default or Event of Default would result from or be in existence
following such designation.
48
<PAGE>
The Board of either Company may designate any Restricted Subsidiary to
be an Unrestricted Subsidiary if such designation would not cause a Default;
provided, however, that immediately after giving effect to such designation on a
pro forma basis, the Companies would be in compliance with Section 4.07 hereof.
For purposes of making such determination, all outstanding Investments by the
Obligors (except to the extent repaid in cash or in the form in which such
Investment was originally made) in the Subsidiary so designated, whether made
before or after the Issue Date, shall be deemed to be Restricted Payments at the
time of such designation and shall reduce the amount available for Restricted
Payments. All such outstanding Investments shall be deemed to constitute
Investments in an amount equal to the greatest of (i) the net book value of such
Investments at the time of such designation, (ii) the fair market value of such
Investments at the time of such designation and (iii) the original fair market
value of such Investments at the time they were made. Such designation shall
only be permitted if such Restricted Payments would be permitted at such time
and if such Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary.
Section 4.17. Material Restricted Subsidiaries To Become Guarantors.
The Companies shall cause each Person which becomes a Material
Restricted Subsidiary after the Issue Date to become a Guarantor by executing
and delivering an Addendum to Guaranty in accordance with Section 12.09 hereof,
subject to applicable Gaming Laws. The Companies shall use their best efforts
to obtain all Gaming Approvals necessary to permit their Material Restricted
Subsidiaries to become Guarantors as promptly as is practicable.
Section 4.18. Lines of Business.
No Obligor will engage in any lines of business other than the Core
Businesses.
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
No Obligor may, in a single transaction or a series of related
transactions, consolidate or merge with or into any Person, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of such
Obligor's properties or assets whether as an entirety or substantially as an
entirety to any Person or adopt a Plan of Liquidation unless:
(i) either (1) in the case of a consolidation or merger, such Obligor
shall be the surviving or continuing corporation or (2) the Person (if other
than such Obligor) formed by such consolidation or into which such Obligor is
merged or the Person which acquires by sale, assignment, transfer, lease,
conveyance or other disposition of the properties and assets of such Obligor and
of such Obligor's Subsidiaries substantially as an entirety, or in the case of a
Plan of Liquidation, the Person to which assets of such Obligor and such
Obligor's Subsidiaries have been transferred (x) shall be a corporation
organized and validly existing under the laws of the United States or any State
thereof or the District of Columbia and (y) shall expressly assume, by
supplemental indenture (in form and substance satisfactory to the Trustee),
executed and delivered to the Trustee, the due and punctual payment of the
principal of, and premium, if any, and interest on all of the Notes and, if
applicable, the Guaranties and the performance of
49
<PAGE>
every covenant of the Notes, this Indenture and the Registration Rights
Agreement on the part of such Obligor to be performed or observed;
(ii) immediately after giving effect to such transaction and the
assumption contemplated by clause (i)(2)(y) above (including giving effect to
any Indebtedness and Acquired Debt Incurred or anticipated to be Incurred in
connection with or in respect of such transaction), (1) the Obligors (including
any Person becoming an Obligor through the operation of clause (i)(2) above)
shall have a Consolidated Net Worth immediately after the transaction equal to
or greater than the Consolidated Net Worth of the Obligors immediately preceding
the transaction; and (2) (A) the Obligors (including any Person becoming an
Obligor through the operation of clause (i)(2) above) could Incur at least $1.00
of Indebtedness pursuant to the Consolidation Coverage Ratio test set forth in
Section 4.08 hereof or (B) any other Person which would, as a result of the
applicable transaction, properly classify such Obligor as a consolidated
Subsidiary in accordance with GAAP, satisfies the conditions set forth in clause
(i)(2)(x) above and also either (x) satisfies the condition set forth in clause
(i)(2)(y) above and causes each acquired Company to become a Guarantor or (y)
becomes a Guarantor, and, in either such case, after giving effect to the
assumption of the Notes or the Incurrence of Obligations under the Guaranty such
assuming or guarantying Person would be able to Incur at least $1.00 of
Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.08
hereof;
(iii) immediately before and immediately after giving effect to such
transaction and the assumption contemplated by clause (i)(2)(y) above
(including, without limitation, giving effect to any Indebtedness and Acquired
Debt Incurred or anticipated to be Incurred and any Lien granted in connection
with or in respect of the transaction) no Default and no Event of Default shall
have occurred or be continuing; and
(iv) such Obligor or such other Person shall have delivered to the
Trustee (A) an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, sale, assignment, transfer, lease, conveyance,
other disposition or Plan of Liquidation and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture,
comply with the applicable provisions of this Indenture and that all conditions
precedent in this Indenture relating to such transaction have been satisfied and
(B) a certificate from the Companies' independent certified public accountants
stating that such Obligor has made the calculations required by clause (ii)
above in accordance with the terms of this Indenture and the Notes after the
consummation of such transaction.
Notwithstanding clause (ii)(2) above, (A) any Restricted Subsidiary may
consolidate with, or merge with or into, or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its assets to an
Obligor or to a Wholly Owned Restricted Subsidiary of such Obligor (and a
Company may effect such a transaction with the other Company) and (B) any
Obligor may consolidate with or merge with or into any Person that has conducted
no business and Incurred no Indebtedness or other liabilities if such
transaction is solely for the purpose of effecting a change in the state of
incorporation of such Obligor. Notwithstanding any other provision of this
Section 5.01, the Companies may effect the REIT Restructuring if the respective
Boards of the Companies determine, in good faith and in the exercise of their
reasonable business judgment, that it is in the best interest of each of the
Companies to do so.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties and assets of one or more Subsidiaries of
any Obligor, the Capital Stock of which constitutes all or substantially all of
the properties
50
<PAGE>
and assets of such Obligor, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the such Obligor.
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 any Obligor in accordance with Section 5.01 hereof, the successor corporation
formed by such consolidation or into or with which such Obligor is merged or to
which such sale, assignment, transfer, lease, conveyance or other disposition is
made, or any successor Person described in Section 5.0(ii)(B)(x) above, 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 such Obligor shall refer instead to
the successor Person and not to such Obligor), and may exercise every right and
power of such Obligor under this Indenture with the same effect as if such
successor Person had been named as an Obligor herein; provided, however, that
the predecessor Obligor shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale of all or
substantially all of such Obligor's assets that meets the requirements of
Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An event of default (an "Event of Default") shall occur upon the
happening of any of the following (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(a) the failure to pay interest or Liquidated Damages on any Note or
Guaranty for a period of 30 days or more after the same becomes due and payable
(whether or not such payment is prohibited by the provisions of Article 10
hereof); or
(b) the failure to pay the principal or principal amount of any Note
or Guaranty, when such principal or principal amount becomes due and payable, at
maturity, upon acceleration or redemption, pursuant to a Net Proceeds Offer, a
Change of Control Offer or otherwise (whether or not such payment is prohibited
by the provisions of Article 10 hereof); or
(c) a default in the observance or performance of any other covenant
or agreement contained in this Indenture, the Notes or the Guaranties, which
default continues for a period of 45 days after the Companies receive a written
notice stating that the notice is a "notice of default", specifying the default
and requiring that such default be remedied from the Trustee or from Holders of
not less than 25% in aggregate principal amount of outstanding Notes; or
(d) 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 any Obligor (or the payment of which is
guaranteed by any Obligor), whether such Indebtedness or guarantee now exists,
or is created after the Issue Date, which default (i) is caused by a failure to
pay principal of or premium, if
51
<PAGE>
any, or interest on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default (a "Payment
Default") or (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 $10 million or more; or
(e) one or more judgments in an aggregate amount in excess of $10
million (which are not paid or covered by third-party insurance by financially
sound carriers or underwriters that have acknowledged liability in writing)
being rendered against any Obligor and such judgment or judgments remain
undischarged, or unstayed or unsatisfied for a period of 60 days after such
judgment or judgments become final and non-appealable; or
(f) as a consequence of the occurrence or continuation of any
nonscheduled event comparable to a default having the effect of an acceleration
in a transaction in which "defaults" are not designated, any Obligor has become
obligated to purchase or repay Indebtedness before its express maturity or
before its regularly scheduled dates of payment in an aggregate principal amount
of at least $10 million; or
(g) any Obligor (i) commences a voluntary case or proceeding under any
Bankruptcy Law with respect to itself, (ii) consents to the entry of a judgment,
decree or order for relief against it in an involuntary case or proceeding under
any Bankruptcy Law, (iii) consents to the appointment of a custodian of it or
for substantially all of its property, (iv) consents to or acquiesces in the
institution of a bankruptcy or an insolvency proceeding against it, (v) makes a
general assignment for the benefit of its creditors, or (F) takes any formal
corporate action to authorize or effect any of the foregoing; or
(h) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of any Obligor in an involuntary case or proceeding
under any Bankruptcy Law, which shall (i) approve as properly filed a petition
seeking reorganization, arrangement, adjustment or composition in respect of any
Obligor, (ii) appoint a custodian of any Obligor or for substantially all of its
property, or (iii) order the winding-up or liquidation of its affairs; and such
judgment, decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or
(i) any holder of at least $10 million in aggregate principal amount
of Indebtedness of any Obligor shall commence judicial proceedings to foreclose
upon assets of any Obligor having an aggregate fair market value, individually
or in the aggregate, of at least $10 million or shall have exercised any right
under applicable law or applicable security documents to take ownership of any
such assets in lieu of foreclosure.
The Companies shall provide an Officers' Certificate to the Holders
and the Trustee promptly upon any Officer of either Company obtaining knowledge
of any Default or Event of Default (provided, however, that pursuant to the
reporting requirements of Section 4.04 hereof such Officers shall provide such
certification at least annually whether or not they know of any Default or Event
of Default) that has occurred and, if applicable, describe such Default or Event
of Default and the status thereof.
52
<PAGE>
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default specified in
clauses (d)(ii), (f), (g) or (h) of Section 6.01 hereof) occurs and is
continuing, then and in every such case, the Trustee or the Holders of not less
than 25% in aggregate principal amount of the then outstanding Notes may declare
the principal amount, together with any accrued and unpaid interest, premium and
Liquidated Damages on all the Notes and Guaranties then outstanding to be due
and payable, by a notice in writing to the Companies (and to the Trustee, if
given by Holders) specifying the Event of Default and that it is a "notice of
acceleration" and on the fifth Business Day after delivery of such notice the
principal amount, in either case, together with any accrued and unpaid interest,
premium and Liquidated Damages on all the Notes or the Guaranties then
outstanding will become immediately due and payable, notwithstanding anything
contained in this Indenture, the Notes or the Guaranties to the contrary. Upon
the occurrence of any Event of Default specified in clauses (d)(ii), (f), (g) or
(h) of Section 6.01 hereof, the principal amount, together with any accrued and
unpaid interest, premium and Liquidated Damages, will immediately and
automatically become due and payable, without the necessity of notice or any
other action by any Person. Holders of the Notes may not enforce this
Indenture, the Notes or the Guaranties except as provided herein.
After a declaration of acceleration, but before a judgment decree of
money due in respect to the Notes has been obtained, the Holders of not less
than a majority in aggregate principal amount of the Notes then outstanding by
written notice to the Trustee may rescind an acceleration and its consequences
if all existing Events of Default (other than the nonpayment of principal of and
premium, if any, interest and Liquidated Damages, if any, on the Notes which has
become due solely by virtue of such acceleration) have been cured or waived and
if the rescission would not conflict with any judgment or decree. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.
If an Event of Default occurs on or after August 1, 2002 by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of any
Obligor with the intention of avoiding payment of the premium that the Companies
would have had to pay had the Companies then elected to redeem the Notes
pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to August 1, 2002
by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of any Obligor with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, an additional premium shall also become and be immediately due and
payable in an amount, for each of the years beginning on August 1 of the years
set forth below, as set forth below (expressed as a percentage of the principal
to the date of payment that would otherwise be due but for the provisions of
this sentence):
<TABLE>
<CAPTION>
YEAR PERCENTAGE
------- ------------
<S> <C>
1997..................... 9.50%
1998..................... 8.3125%
1999..................... 7.125%
2000..................... 5.9375%
2001..................... 4.75%
</TABLE>
53
<PAGE>
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by notice to the Trustee may on behalf of the Holders
of all of the Notes waive any existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on, the Notes or Guaranties (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 solely from such
acceleration). The waiver by the holders of any Indebtedness described in
clauses (d) or (f) of Section 6.01 of the predicating default under such
Indebtedness shall be deemed a waiver of such Default or Event of Default
arising under, and a rescission of any acceleration automatically resulting from
the application of clause (d)(ii) or (f), from the effective date, during the
effective period and to the extent of, the waiver by the holders of such other
Indebtedness. Upon any waiver granted or deemed granted in accordance with the
terms hereof, such Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured and waived for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture that the Trustee determines may be unduly
prejudicial to the rights of other Holders of Notes or that may involve the
Trustee in personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy (including, without limitation,
the institution of any proceeding, judicial or otherwise, with respect to the
Notes or this Indenture or for the appointment of a receiver or trustee) 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;
54
<PAGE>
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of another
Holder of a Note or to obtain a preference or priority over another Holder of a
Note.
Section 6.07. 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 such Note (including in connection with an offer to purchase), or
to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Companies 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 any
Obligor, 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
55
<PAGE>
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,
subject to the provisions of Section 10.06 hereof, 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 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 or at the direction of the Companies, 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 and expenses, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its
56
<PAGE>
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, 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 7.01;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Companies. Money held
in trust by the Trustee need not be segregated from other funds except to the
extent required by law.
57
<PAGE>
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its selection and the 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 any Obligor shall be sufficient if
signed by an Officer of such Obligor.
(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 any Obligor or any
Affiliate of any Obligor with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Companies' use of the proceeds from the Notes or any money
paid to any Obligor or upon any Obligor's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
58
<PAGE>
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after the Trustee obtains knowledge
thereof. Except in the case of a Default or Event of Default in payment of
principal of, premium, if any, or interest on any Note, the Trustee may withhold
the notice if and so long as a committee of its Responsible Officers in good
faith determines that withholding the notice is in the interests of the Holders
of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA (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 Companies and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA (S) 313(d). The
Companies shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
Section 7.07. Compensation and Indemnity.
The Companies shall pay to the Trustee from time to time such
compensation as shall be agreed among the Companies and the Trustee 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 Companies shall reimburse the Trustee promptly upon request for all
reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents and
counsel.
The Obligors shall indemnify each of the Trustee and any predecessor
Trustee against any and all losses, damages, claims, liabilities or expenses,
including taxes (other than taxes based on the income of the Trustee) incurred
by it arising out of or in connection with the acceptance or administration of
its duties under this Indenture, including the costs and expenses of enforcing
this Indenture, the Registration Rights Agreement or the Notes against any
Obligor (including this Section 7.07) and defending itself against any claim
(whether asserted by any Obligor or any Holder or any other Person) or liability
in connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability or expense may be
attributable to its negligence or bad faith. The Trustee shall notify the
Companies promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Companies shall not relieve the Obligors of their
obligations hereunder. The Obligors shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Obligors shall pay the reasonable fees and expenses of such counsel. No Obligor
need pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.
59
<PAGE>
The obligations of any Obligor under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Obligor's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to
the extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Companies. The Holders of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Companies in writing. The Companies
may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged bankrupt or 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 Companies shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Companies.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Companies, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
60
<PAGE>
If the Trustee, after written request by any Holder who has been a
Holder for at least six months, fails to comply with Section 7.10, such Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Companies. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee; provided
that all sums owing to the Trustee hereunder and subject to the Lien provided in
Section 7.07 hereof have been paid. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Obligors' obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA
(S) 310(b).
Section 7.11. Preferential Collection of Claims Against Companies.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Companies may, at the option of each of their Boards of Directors
evidenced by resolutions set forth in Officers' Certificates, at any time, elect
to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes
upon compliance with the conditions set forth below in this Article Eight.
61
<PAGE>
Section 8.02. Legal Defeasance and Discharge.
Upon the Companies' exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, each Obligor shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied ("Legal Defeasance"). For
this purpose, Legal Defeasance means that the Obligors 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 of their other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Companies, 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, premium, if any, and interest and Liquidated Damages on such
Notes when such payments are due, (b) the Companies' 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 Companies'
obligations in connection therewith and (d) this Article Eight. Subject to
compliance with this Article Eight, the Companies 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 Companies' exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, each Obligor 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,
4.14 and 4.15 hereof with respect to the outstanding Notes on and after the date
the conditions set forth below are satisfied ("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 Companies 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 Companies' exercise
under Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(c) through 6.01(f) hereof shall not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding Notes:
(a) the Companies must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, cash in United States dollars, non-
callable Government Securities, or a combination
62
<PAGE>
thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest and Liquidated Damages on the
outstanding Notes on the stated maturity or on the applicable redemption
date, as the case may be and the Companies must specify whether the Notes
are being defeased to maturity or to a particular redemption date;
(b) in the case of Legal Defeasance, the Obligors shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (A) the Companies have
received from, or there has been published by, the Internal Revenue Service
a ruling or (B) since the Issue Date, there has been a change in the
applicable federal income tax law, in either case to the effect that, and
based thereon such Opinion of Counsel shall confirm that, 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 Covenant Defeasance, the Obligors shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Covenant Defeasance
had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the Incurrence of Indebtedness all or a portion of
the proceeds of which will be used to defease the Notes pursuant to this
Article Eight concurrently with such Incurrence) or insofar as an Event of
Default under Sections 6.01(g) or 6.01(h) hereof is concerned, at any time
in the period ending on the 91st day after the date of deposit;
(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 any Obligor is
a party or by which any Obligor is bound;
(f) the Obligors shall have delivered to the Trustee an Opinion of
Counsel to the effect that as of the date of such Opinion of Counsel,
assuming that no Holder would be considered an insider of any Obligor under
applicable Bankruptcy Law, after the 91st day following the deposit, the
trust funds will not be subject to the effect of any Bankruptcy Law as
applied to any Obligor;
(g) the Obligors shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Obligors with the
intent of preferring the Holders over any other creditors of the Obligors,
or with the intent of defeating, hindering, delaying or defrauding any
other creditors of the Obligors or others; and
(h) the Obligors shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
63
<PAGE>
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 any Obligor acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Companies 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 Companies from time to time upon the request
of the Companies any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Section 8.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Companies, in trust for the payment of the principal of, premium or
Liquidated Damages, if any, or interest on any Note and remaining unclaimed for
two years after such principal, premium or Liquidated Damages, if any, or
interest has become due and payable shall be paid to the Companies on its
request or (if then held by the Companies) shall be discharged from such trust;
and the Holder of such Note shall thereafter look only to the Companies for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Companies as trustees
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 Companies cause to be published once, in the New York Times and
The Wall Street Journal (national editions), 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 Companies.
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 an order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the obligations of the Obligors under this Indenture, the
Guaranties 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
64
<PAGE>
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 Companies make any payment of principal of, premium, if
any, or interest on any Note following the reinstatement of its obligations, the
Companies 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 Obligors, when
authorized by a resolution of the Board, and the Trustee, together, may amend or
supplement this Indenture, a Guaranty or the Notes without notice to or consent
of any Holder: (i) to cure any ambiguity, defect or inconsistency; provided,
however, that such amendment or supplement does not adversely affect the rights
of any Holder; (ii) to effect the assumption by a successor Person of all
obligations of the Obligors under the Notes, the Guaranties, this Indenture and
the Registrations Rights Agreement in connection with any transaction complying
with Article 5 hereof, (iii) to provide for uncertificated Notes in addition to
or in place of Certificated Notes; (iv) to comply with any requirements of the
SEC in order to effect or maintain the qualification of this Indenture under the
TIA, or to comply with any other requirement of applicable law; (v) to make any
change that would provide any additional benefit or rights to the Holders; (vi)
to provide for issuance of Series B Senior Subordinated Notes pursuant to the
Registration Rights Agreement (which will have terms substantially identical in
all material respects to the Notes except that the transfer restrictions
contained in the Notes will be modified or eliminated, as appropriate), and
which will be treated together with any outstanding Notes as a single issue of
securities; (vii) to make any other change that does not adversely affect the
rights of any Holder under this Indenture; or (viii) to provide for the REIT
Restructuring and such related modifications to this Indenture and the Notes as
may be necessary to permit the implementation of, and the continuing operations
of HPOC and the REIT after giving effect to, the REIT Restructuring, including
the making of operating lease payments by HPOC to HPI, the distribution by HPI
of such amounts as may be required by the Internal Revenue Code and the
regulations promulgated thereunder to maintain REIT status, which would include
95% of its taxable income (excluding net capital gains) under current law, and
any other modifications to the covenants that may be necessary to comply with
the applicable provisions of the Internal Revenue Code and the regulations
promulgated thereunder, or may be necessary, in the good faith determination of
the respective Boards of the Companies as evidenced by Board resolutions, to
provide for the same relative benefits and restrictions as existed under this
Indenture prior to the REIT Restructuring; provided, however, that the Obligors
shall, in any of the foregoing cases, have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel stating that such amendment or supplement
is authorized by the provisions of this Indenture (it being understood that the
necessity for making such amendment, supplement or modification in the case of
clause (viii) above is a determination of the Boards of the Companies only); and
provided, further, that in the case of an amendment or supplement of the kind
described in clause (viii) above, the Companies shall have delivered to the
Depositary a letter in the customary form then used by the Depositary, pursuant
to which the Companies shall have agreed not to refuse to transfer securities of
the Issuers to Cede & Co., as nominee of the Depositary, or to the participants
of the Depositary, by reason of the fact that Cede & Co., Inc. or certain of the
Depositary's participants may from time to time hold, as custodian or in "street
name", 10% or more of all or any class of such securities, so long as neither
Cede & Co., Inc. nor any such participant is directly or indirectly the
beneficial owner
65
<PAGE>
(including any securities constructively owned under applicable federal income
tax law) of any amount or percentage of such securities greater than the amount
or percentage permitted to be so owned under any restrictions on ownership set
forth in the certificates of incorporation and bylaws of the Issuers.
Notwithstanding any provision of clause (viii) above to the contrary,
no transaction described therein may be effected except in compliance with the
"Asset Sale" covenant in effect on the Issue Date or as amended in accordance
with the terms of this Indenture (excluding such clause (viii)).
Upon the request of the Companies accompanied by resolutions 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 9.06 hereof, the Trustee shall join with the Obligors in
the execution of any amended or supplemental Indenture authorized or permitted
by the terms of this Indenture and to make any further appropriate agreements
and stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into any 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 Obligors and the
Trustee may amend or supplement this Indenture (including, without limitation,
Sections 3.09, 4.09 and 4.12 hereof, and including the defined terms used
therein), any Guaranty and the Notes with the consent of the Holders of at least
a majority in principal amount of the Notes then outstanding (including consents
obtained in connection with a purchase of, or a tender offer or exchange offer
for, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing
Default or Event of Default (other than a Default or Event of Default in the
payment of the principal of, premium, if any, or interest on the Notes, except a
payment default resulting from an acceleration that has been rescinded) or
compliance with any provision of this Indenture or the Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a purchase of,
or a tender offer or exchange offer for, the Notes).
Upon the request of the Obligors accompanied by a resolution of the
Board 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 9.06 hereof, the Trustee shall
join with the Obligors in the execution of such amended or supplemental
Indenture unless such amended or supplemental Indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Obligors shall mail to the Holders of the Notes affected thereby
a notice briefly describing the amendment, supplement or waiver. Any failure of
the Obligors 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.
66
<PAGE>
Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate
principal amount of the Notes then outstanding may waive compliance in a
particular instance by any Obligor with any provision of this Indenture, any
Guaranty or the Notes. However, without (a) the consent of the Holders of at
least 66 2/3% of the outstanding principal amount of the Notes, an amendment or
waiver may not (with respect to any Notes held by a non-consenting Holder)
modify the provisions of Article 10 in any manner which would have an adverse
effect on the Holders or (b) the consent of each Holder affected, an amendment
or waiver may not (with respect to any Notes held by a non-consenting Holder):
(i) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver, (ii) reduce the principal of or change the
fixed maturity of any Note or alter the provisions with respect to the
redemption of the Notes (other than provisions under Sections 3.09, 4.09 and
4.12 hereof), (iii) reduce the rate of or change the time for payment of
interest on any Note, (iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Notes (except a rescission
of acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the Notes and a waiver of the payment default that resulted
from such acceleration), (v) make any Note payable in money other than that
stated in the Notes, (vi) make any change in the provisions of this Indenture
relating to waivers of past Defaults or the rights of Holders of Notes to
receive payments of principal of or premium, if any, or interest on the Notes,
(vii) waive a redemption payment with respect to any Note (other than a payment
required by Sections 3.09, 4.09 and 4.12 hereof), (viii) release any Guarantor
from its obligations under any Guaranty, or (ix) make any change in the
foregoing amendment and waiver provisions.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in a amended or supplemental Indenture that complies with the TIA as
then in effect.
Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder is a continuing consent by such Holder 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 or subsequent Holder may revoke the consent as
to its Note if the Trustee receives written notice of revocation prior to the
earlier of (i) the date of a press release or (ii) the date on which notice has
been duly given to all the Holders of the acceptance of the requisite percentage
of consents. 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 Companies, in
exchange for all Notes, may issue, the Guarantors may execute and the Trustee
shall thereupon 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.
67
<PAGE>
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Obligors may not sign an amendment or supplemental Indenture until their
Boards approve it. In executing any amended or supplemental indenture, the
Trustee shall be entitled to receive and (subject to Section 7.01) shall be
fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.
Each Obligor agrees, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Note is subordinated in right of payment, to
the extent and in the manner provided in this Article, to the prior payment in
full of all Senior Debt (whether outstanding on the date hereof or hereafter
created, Incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Debt. No holder of Senior Debt need prove its
reliance on this Article 10 to enforce the provisions hereof.
Section 10.02. Certain Definitions.
"Accrued Bankruptcy Interest" means, with respect to any Senior Debt,
all interest accruing thereon after the filing of a petition or commencement of
any other proceeding by or against any Obligor under any Bankruptcy Law, in
accordance with and at the rate (including any rate applicable upon any default
or event of default, to the extent lawful) specified in the documents evidencing
or governing such Indebtedness or Hedging Obligations, whether or not the claim
for such interest is allowed as a claim after such filing in any proceeding
under such Bankruptcy Law.
"Designated Senior Debt" means any Indebtedness under the Bank Credit
Facility (which is outstanding or which the lenders thereunder have a commitment
to extend) and, if applicable, any other Senior Debt permitted under this
Indenture, the principal amount (committed or outstanding) of which is $25
million or more and that has been designated by the Companies as "Designated
Senior Debt."
"Hedging Obligations" means all obligations of the Obligors arising
under or in connection with any rate or basis swap, forward contract, commodity
swap or option, equity or equity index swap or option, bond, note or bill
option, interest rate option, foreign currency exchange transaction, cross
currency rate swap, currency option, cap, collar or floor transaction, swap
option, synthetic trust product, synthetic lease or any similar transaction or
agreement.
"Representative" means the indenture trustee or other trustee, agent
or representative for any Senior Debt.
68
<PAGE>
"Senior Debt" means, with respect to any Obligor, (i) all Indebtedness
of such Obligor outstanding under Credit Facilities and all Hedging Obligations
with respect thereto, (ii) any other Indebtedness permitted to be Incurred by
such Obligor under the terms of this Indenture, unless the instrument under
which such Indebtedness is Incurred expressly provides that it is on a parity
with or subordinated in right of payment to the Notes and (iii) all Obligations
with respect to the foregoing. Notwithstanding anything to the contrary in the
foregoing, Senior Debt will not include (A) any liability for federal, state,
local or other taxes owed or owing by such Obligor, (B) any Indebtedness of such
Obligor to any of its Restricted Subsidiaries or other Affiliates, (C) any trade
payables, (D) any Indebtedness that is incurred in violation of this Indenture
and (E) Indebtedness which, when Incurred and without respect to any election
under Section 1111(b) of Title 11, United States Code, is without recourse to
such Obligor.
A distribution may consist of cash, securities or other property, by
set-off or otherwise.
All Designated Senior Debt now or hereafter existing and all other
Obligations relating thereto shall not be deemed to have been paid in full
unless the holders or owners thereof shall have received payment in full in cash
with respect to such Designated Senior Debt and all other Obligations with
respect thereto including, without limitation, all Accrued Bankruptcy Interest.
Section 10.03. Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of any Obligor in a liquidation or
dissolution of such Obligor or in a proceeding under Bankruptcy Law relating to
such Obligor or its property, in an assignment for the benefit of creditors or
any marshaling of such Obligor's assets and liabilities:
(i) holders of Senior Debt shall be entitled to receive payment in
full of all Obligations in respect of such Senior Debt (including Accrued
Bankruptcy Interest) and to have all outstanding Letter of Credit
Obligations and applicable Hedging Obligations fully cash collateralized
before the Trustee or the Holders shall be entitled to receive any payment
or distribution of Obligations with respect to the Notes (except that the
Trustee or the Holders may receive payments and other distributions made
from any defeasance trust created pursuant to Section 8.01 hereof and
Permitted Junior Securities); and
(ii) until all Obligations with respect to Senior Debt (as provided
in clause (i) above) are paid in full and all outstanding Letter of Credit
Obligations and applicable Hedging Obligations are fully cash
collateralized, any distribution to which the Trustee or the Holders would
be entitled but for this Article, including any such distribution that is
payable or deliverable by reason of the payment of any other Indebtedness
of such Obligor being subordinated to the payment of the Notes, shall be
made to holders of Senior Debt or their Representatives, ratably in
accordance with the respective amounts of the principal of such Senior
Debt, interest (including, without limitation, Accrued Bankruptcy Interest)
thereon and all other Obligations with respect thereto (except that Holders
may receive payments and other distributions made from any defeasance trust
created pursuant to Section 8.01 and Permitted Junior Securities hereof),
as their respective interests may appear.
Any holder of Designated Senior Debt may file any proof of claim or
similar document on behalf of the Trustee or any Holder if such a document has
not been filed by the date which is 30 days prior to the last day specified for
filing of such documents. In any proceeding under Bankruptcy Law,
69
<PAGE>
neither the Trustee nor any Holder shall initiate, or vote in support of, any
challenge to the rights of the holders of Senior Debt.
Section 10.04. Default on Designated Senior Debt.
The Obligors may not make any payment or distribution to the Trustee
or any Holder in respect of Obligations arising under in connection with the
Notes and may not acquire from the Trustee or any Holder any Notes for cash or
property (other than payments and other distributions made from any defeasance
trust created pursuant to Section 8.01 hereof and Permitted Junior Securities)
until all principal and other Obligations arising under or in connection with
the Senior Debt have been paid in full or fully cash-collateralized, if not yet
due if:
(i) a default in the payment of any Obligations with respect to
Designated Senior Debt occurs and is continuing (including any default in
payment upon the maturity of any Designated Senior Debt by lapse of time,
acceleration or otherwise), or any judicial proceeding is pending to
determine whether any such default has occurred; or
(ii) a default or event of default (as such terms may be defined
in any agreement, indenture or other document governing such Designated
Senior Debt), other than a payment default described in subsection (i)
above, on Designated Senior Debt, including any default or event of default
that would result upon any payment or distribution with respect to the
Notes, that would cause or permit the acceleration of the maturity of the
Designated Senior Debt, occurs and is continuing with respect to Designated
Senior Debt that permits holders of the Designated Senior Debt as to which
such default relates to accelerate its maturity and the Trustee receives a
notice of such default (a "Payment Blockage Notice") from the affected
Obligors or the holders of any Designated Senior Debt. If the Trustee
receives any such Payment Blockage Notice, no subsequent Payment Blockage
Notice shall be effective for purposes of this Section unless and until at
least 360 days shall have elapsed since the first day of effectiveness of
the immediately prior Payment Blockage Notice. No nonpayment default that
existed or was continuing on the date of delivery of any Payment Blockage
Notice to the Trustee shall be, or be made, the basis for a subsequent
Payment Blockage Notice unless such default shall have been waived for a
period of not less than 180 days.
If the Companies are prohibited from making payments on or
distributions in respect of the Notes or from acquiring any Notes under
subsection (i) or (ii) above, the Companies may and shall resume payments on and
distributions in respect of the Notes and may acquire them upon:
(1) in the case of any prohibition referred to in Section 10.04(i)
hereof, the date upon which the default, event of default or other event giving
rise to such prohibition is cured or waived or shall have ceased to exist,
unless another default, event of default or other event that would prohibit such
payment, distribution or acquisition under Section 10.04(i) has occurred and is
continuing, or all Obligations in respect of such Designated Senior Debt shall
have been discharged or paid in full, or
(2) in the case of any prohibition referred to in Section 10.04(ii)
hereof, the earlier of the date on which the default, event of default or other
event giving rise to such prohibition is cured or waived or 179 days pass after
the relevant Payment Blockage Notice is received by the Trustee thereunder,
70
<PAGE>
unless the maturity of any Designated Senior Debt has been accelerated, in each
such case, if this Article otherwise permits the payment, distribution or
acquisition.
The provisions of this Article shall not be construed to prohibit the
Companies from repurchasing, redeeming, repaying or prepaying any or all of the
Notes to the extent required to do so by any Gaming Authority having authority
over any Obligor.
Section 10.05. Acceleration of Notes.
If payment of the Notes is accelerated because of an Event of Default,
the Companies shall promptly notify holders of Senior Debt of the acceleration.
Section 10.06. When Distribution Must Be Paid Over.
If, notwithstanding the provisions of Sections 10.03 and 10.04, any
direct or indirect payment or distribution on account of principal of or
interest on or other Obligations with respect to the Notes or acquisition,
repurchase, redemption, retirement or defeasance of any of the Notes shall be
made by or on behalf of any Obligor (including any payments or distribution by
any liquidating trustee or agent or other Person in a proceeding referred to in
Section 10.03) and received by the Trustee or any Holder at a time when such
payment or distribution was prohibited by the provisions of Section 10.03 or
10.04 or such payment or distribution was required to be made to holders of
Senior Debt or their Representatives, then, unless and until such payment or
distribution is no longer prohibited by Section 10.03 or 10.04, such payment or
distribution shall be received, segregated from other funds or assets and held
in trust by the Trustee or such Holder, as the case may be, for the benefit of,
and shall be immediately paid or delivered over to, those Persons known to the
Trustee or, as the case may be, such Holder, as, or identified by the Companies
as, or to a fund for the benefit of, the holders of Senior Debt or their
Representatives, ratably in accordance with the respective amounts of the
principal of such Senior Debt, interest (including, without limitation, Accrued
Bankruptcy Interest) thereon and all other Obligations with respect thereto held
or represented by each, until the principal of all Senior Debt, interest
(including Accrued Bankruptcy Interest) thereon and all other Obligations with
respect thereto have been paid in full and all outstanding Letter of Credit
Obligations and applicable Hedging Obligations have been fully cash
collateralized. Any distribution to the holders of Senior Debt or their
Representatives of assets other than cash may be held by such holders or such
Representatives as additional collateral without any duty to the Holder to
liquidate or otherwise realize on such assets or to apply such assets to any
Senior Debt or other Obligations relating thereto.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall in good faith mistakenly pay over or distribute to or on behalf of
Holders or any Obligor or any other Person money or assets to which any holders
of Senior Debt shall be entitled by virtue of this Article 10, except if such
payment is made as a result of the willful misconduct or gross negligence of the
Trustee. Nothing in this Section 10.06 shall affect the obligation of any
Person other than the Trustee to hold such payment or distribution for the
benefit of, and to pay or deliver such payment or distribution over to, the
holders of Senior Debt or their Representatives.
71
<PAGE>
Section 10.07. Notice by Companies.
The Companies shall promptly notify the Trustee and the Paying Agent
of any facts known to the Companies that would cause a payment of any
Obligations with respect to the Notes to violate this Article, but failure to
give such notice shall not affect the subordination of the Notes and the
Guaranties to the Senior Debt as provided in this Article.
Section 10.08. Subrogation.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders have been applied to the payment
of Senior Debt. A distribution made under this Article to holders of Senior
Debt that otherwise would have been made to Holders is not, as between the
Obligors and Holders, a payment by any Obligor on the Notes or the Guaranties.
Section 10.09. Relative Rights.
This Article 10 defines the relative rights of Holders and holders of
Senior Debt. Nothing in this Article 10 shall:
(1) impair, as between the Obligors and Holders, the obligation of
the Obligors, which is absolute and unconditional, to pay principal of and
interest, including Liquidated Damages, if any, on the Notes and the
Guaranties in accordance with their terms;
(2) affect the relative rights of Holders and creditors of the
Obligors other than their rights in relation to holders of Senior Debt; or
(3) prevent the Trustee or any Holder from exercising its available
remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Senior Debt to receive distributions and payments
otherwise payable to Holders.
If any Obligor fails because of this Article to pay principal of or
interest, including Liquidated Damages, if any, on a Note or Guaranty on the due
date, the failure is still a Default or Event of Default.
Section 10.10. Subordination May Not Be Impaired by Obligors.
No right of any present or future holder of Senior Debt to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by any Obligor or any Holder of Notes or any holder of
Senior Debt or by the failure of any Obligor or any Holder of Notes or any
holder of Senior Debt to comply with this Indenture regardless of any knowledge
thereof that any such Holder of Notes or holder of Senior Debt, as the case may
be, may have or be otherwise charged with. The holders of Senior Debt may
extend, renew, restate, supplement, modify or amend the terms of the Senior Debt
or any Obligations with respect thereto or any security therefor and release,
sell or exchange such security and otherwise deal freely with any Obligor and
its Subsidiaries and Affiliates all without affecting the liabilities and
obligations of the parties to this Indenture or the Holders. No provision in
any
72
<PAGE>
supplemental indenture that adversely affects the subordination of the Notes
or other provisions of this Article 10 shall be effective against the holders of
the Designated Senior Debt unless the requisite percentage of such holders have
consented thereto.
Each Holder of the Notes by its acceptance thereof: (a) acknowledges
and agrees that the holders of any Senior Debt or their Representative, in its
or their discretion, and without affecting any rights of any holder of Senior
Debt under this Article 10, may foreclose any mortgage or deed of trust covering
interest in real property securing such Senior Debt or any guarantee thereof by
judicial or nonjudicial sale, even though such action may release an Obligor or
any guarantor of such Senior Debt from further liability under such Senior Debt
or any guarantee thereof or may otherwise limit the remedies available to the
holders thereof; and (b) hereby waives any defense that such Holder may
otherwise have to the enforcement of this Article 10 by any holder of any Senior
Debt or any Representative of such holder against such Holder after or as a
result of any action, including any such defense based on any loss or impairment
of rights of subrogation.
If at any time any payment of Obligations with respect to any Senior
Debt is rescinded or must otherwise be returned upon the insolvency, bankruptcy,
reorganization or liquidation of any Obligor or otherwise, the provisions of
this Article 10 shall continue to be effective or reinstated, as the case may
be, to the same extent as though such payments had not been made.
Section 10.11. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of any Obligor referred to
in this Article 10, the Trustee and the Holders shall be entitled to rely upon
any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders for the
purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of such
Obligor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
Subject to the provisions of Section 7.01, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Debt (or a trustee or agent on
behalf of such holder) to establish that such notice has been given by a holder
of Senior Debt (or a trustee or agent on behalf of any such holder). In the
event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior Debt to
participate in any payment or distribution pursuant to this Article 10, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Debt held by such Person,
the extent to which such Person is entitled to participate in such payment or
distribution and any other facts pertinent to the rights of such Person under
this Article 10, and if such evidence is not furnished, the Trustee may defer
any payment which it may be required to make for the benefit of such Person
pursuant to the terms of this Indenture pending judicial determination as to the
rights of such Person to receive such payment.
73
<PAGE>
Section 10.12. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless a Responsible Officer of the Trustee shall
have received at its Corporate Trust Office at least two Business Days prior to
the date of such payment written notice of facts that would cause the payment of
any Obligations with respect to the Notes to violate this Article. Only the
Companies or a Representative may give the notice. Nothing in this Article 10
shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may
do the same with like rights.
Section 10.13. Authorization to Effect Subordination.
Each Holder of a Note by the Holder's acceptance thereof authorizes
and directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes.
Each Obligor, the Trustee and each Holder by their acceptance of the
Notes acknowledge that damages would be inadequate to compensate the holders of
Senior Debt for any breach or default by any Obligor, the Trustee or any such
Holder of its obligations under this Article 10, and, therefore, agree that the
holders of Senior Debt and their Representatives shall be entitled to equitable
relief, including injunctive relief and specific performance, in the enforcement
thereof.
Section 10.14. Amendments.
(a) The provisions of this Article 10 shall not be amended or modified
without the written consent of the holders of all Senior Debt unless such
amendment or modification does not adversely affect the holders of such Senior
Debt.
(b) Without the consents of the Holders of at least 66 2/3% in
principal amount of the Notes then outstanding, no Obligor will amend, modify or
alter the terms of any indebtedness subordinated to the Notes or the Guaranties
in any way that will (i) increase the rate of or change the time for payment of
interest on any indebtedness subordinated to the Notes, (ii) increase the
principal of, advance the final maturity date of or shorten the Weighted Average
Life to Maturity of any such subordinated indebtedness, (iii) alter the
redemption provisions or the price or terms at which the Companies are required
to offer to purchase such subordinated indebtedness or (iv) amend the
subordination provisions of any documents, instruments or agreements governing
any such subordinated indebtedness, except to the extent that any of the
foregoing would be required to permit any Obligor to make a Restricted Payment
permitted by Section 4.07 hereof.
74
<PAGE>
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA (S)318(c), the imposed duties shall control.
Section 11.02. Notices.
Any notice or communication by the Companies or the Trustee to the
other is duly given if in writing and delivered in Person or mailed by first
class mail, telecopier or overnight air courier guaranteeing next day delivery,
to the other's address:
If to the Companies:
Hollywood Park, Inc.
Hollywood Park Operating Company
1050 South Prairie Avenue
P.O. Box 369
Inglewood, CA 90306-0369
Telecopier No.: 310/671-4460
Attention: G. Michael Finnigan
With a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067-4276
Telecopier No.: 310/203-7199
Attention: Alvin G. Segel, Esq.
If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Telecopier No.: (212) 815-5915
Attention: Corporate Trust Trustee Administration
Either Company or the Trustee, by notice to the other 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 receipt is acknowledged, if telecopied; and the
next
75
<PAGE>
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 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 the Companies mail a notice or communication to Holders, they shall
mail a copy to the Trustee and each Agent at the same time.
Section 11.03. 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 Companies,
any Guarantor, the Trustee, the Registrar and anyone else shall have the
protection of TIA (S) 312(c).
Section 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Companies to the Trustee to
take any action under this Indenture, except the initial authentication and
delivery of the Notes on the Issue Date, the Companies shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 11.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied. Such counsel
may rely on representations, warranties and certificates of other Persons
as to matters of fact, and may qualify the Opinion of Counsel with
customary assumptions and exceptions.
Section 11.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided 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;
76
<PAGE>
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 11.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, agent,
manager, partner, member, incorporator or stockholder of any Obligor, in such
capacity, shall have any liability for any obligations of the Obligors under the
Notes, this Indenture or the Guaranties, or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes and the Guaranties.
Section 11.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE NOTES, SUBJECT TO APPLICABLE GAMING LAWS.
Section 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of any Obligor or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 11.10. Successors.
All agreements of the Obligors in this Indenture and the Notes shall
bind their successors. All agreements of the Trustee in this Indenture shall
bind its successors.
Section 11.11. Severability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
77
<PAGE>
Section 11.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
Section 11.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
ARTICLE 12
GUARANTY
Section 12.01. The Guaranty.
The Guarantors hereby absolutely and unconditionally, jointly and
severally guaranty and promise to pay to the Holders and the Trustee (each a
"Beneficiary"), as their respective interests appear, on demand, in lawful money
of the United States of America, any and all Guaranteed Obligations of the
Companies from time to time owed to the Beneficiaries. The term "Guaranteed
Obligations" means any and all present and future obligations and liabilities
of the Companies of every type and description to the Beneficiaries under this
Indenture, the Notes and the Registration Rights Agreement, whether for
principal, premium (if any), interest, expenses, indemnities or other amounts,
in each case whether due or not due, absolute or contingent, voluntary or
involuntary, liquidated or unliquidated, determined or undetermined, now or
hereafter existing, renewed or restructured, whether or not from time to time
decreased or extinguished and later increased, created or incurred, whether or
not arising after the commencement of a proceeding under Bankruptcy Law
(including post-petition interest) and whether or not allowed or allowable as a
claim in any such proceeding, and whether or not recovery of any such obligation
or liability may be barred by a statute of limitations or such obligation or
liability may otherwise be unenforceable. All Guaranteed Obligations shall be
conclusively presumed to have been created in reliance on this Guaranty. This
Guaranty is a continuing guaranty of the Guaranteed Obligations and, except as
otherwise provided in Section 9.02 or 12.10, may not be revoked and shall not
otherwise terminate unless and until any and all Guaranteed Obligations have
been indefeasibly paid and performed in full.
Section 12.02. Nature of Guaranty.
The liability of each Guarantor under this Guaranty is independent of
and not in consideration of or contingent upon the liability of the Companies or
any other Obligor and a separate action or actions may be brought and prosecuted
against any Guarantor, whether or not any action is brought or prosecuted
against the Companies or any other Obligor or whether either Company or any
other Obligor is joined in any such action or actions. This Guaranty given by
each Guarantor shall be construed as a continuing, absolute and unconditional
guaranty of payment (and not merely of collection) without regard to:
(a) the legality, validity or enforceability of the Notes, this
Indenture or any of the Guaranteed Obligations, or the Guaranty given by any
other Guarantor (an "Other Guaranty");
78
<PAGE>
(b) any defense (other than payment), set-off or counterclaim that may
at any time be available to either Company or any other Obligor against, and any
right of set-off at any time held by, any Beneficiary; or
(c) any other circumstance whatsoever (with or without notice to or
knowledge of any Guarantor or any other Obligor), whether or not similar to any
of the foregoing, that constitutes, or might be construed to constitute, an
equitable or legal discharge of either Company or any other Obligor, in
bankruptcy or in any other instance.
Any payment by any Obligor or other circumstance that operates to toll
any statute of limitations applicable to such Obligor shall also operate to toll
the statute of limitations applicable to each Guarantor.
Section 12.03. Authorization.
Each Guarantor authorizes each Beneficiary, without notice to or
further assent by such Guarantor, and without affecting any Guarantor's
liability hereunder (regardless of whether any subrogation or similar right that
such Guarantor may have or any other right or remedy of such Guarantor is
extinguished or impaired or the risk to such Guarantor is materially increased),
from time to time to do any or all of the following:
(a) permit either Company to increase or create Guaranteed Obligations
(including by issuing Series B Notes), or terminate, release, compromise,
subordinate, extend, accelerate or otherwise change the amount or time, manner
or place of payment of, or rescind any demand for payment or acceleration of,
the Guaranteed Obligations or any part thereof, consent or enter into
supplemental indentures (including without limitation, one or more supplemental
indentures necessary to effect the REIT Restructuring and to permit the making
of lease payments by HPOC, distributions by the REIT and such other amendments
as may be necessary to permit the operations of the REIT) or otherwise amend the
terms and conditions of this Indenture, the Notes or the Registration Rights
Agreement or any provision thereof;
(b) take and hold collateral security from either Company or any other
Person, perfect or refrain from perfecting a Lien on any such collateral
security, and exchange, enforce, subordinate, release (whether intentionally or
unintentionally), or take or fail to take any other action in respect of, any
such collateral security or Lien or any part thereof;
(c) exercise in such manner and order as it elects in its sole
discretion, fail to exercise, waive, suspend, terminate or suffer expiration of,
any of the remedies or rights of such Beneficiary against either Company or any
other Obligor in respect of any Guaranteed Obligations or any collateral
security;
(d) release, add or settle with any Obligor in respect of the
Guaranty or the Guaranteed Obligations;
(e) accept partial payments on the Guaranteed Obligations and apply
any and all payments or recoveries from such Obligor or collateral security to
such of the Guaranteed Obligations as any Beneficiary may elect in its sole
discretion, whether or not such Guaranteed Obligations are secured or entitled
to the benefits of Support Obligations;
79
<PAGE>
(f) refund at any time, at such Beneficiary's sole discretion, any
payments or recoveries received by such Beneficiary in respect of any Guaranteed
Obligations or collateral security; and
(g) otherwise deal with either Company, any other Obligor and any
collateral security as such Beneficiary may elect in its sole discretion.
Section 12.04. Certain Waivers.
Each Guarantor waives:
(a) the right to require the Beneficiaries to proceed against either
or both of the Companies or any other Obligor, to proceed against or exhaust any
collateral security or to pursue any other remedy in any Beneficiary's power
whatsoever and the right to have the property of either Company or any other
Obligor first applied to the discharge of the Guaranteed Obligations;
(b) all rights and benefits under applicable law purporting to reduce
a guarantor's obligations in proportion to the obligation of the principal or
providing that the obligation of a surety or guarantor must neither be larger
nor in other respects more burdensome than that of the principal;
(c) the benefit of any statute of limitations affecting the Guaranteed
Obligations or any Guarantor's liability hereunder;
(d) any requirement of marshaling or any other principle of election
of remedies;
(e) any right to assert against any Beneficiary any defense (legal or
equitable), set-off, counterclaim and other right that any Guarantor may now or
any time hereafter have against either or both of the Companies or any other
Obligor;
(f) presentment, demand for payment or performance (including
diligence in making demands hereunder), notice of dishonor or nonperformance,
protest, acceptance and notice of acceptance of this Guaranty, and, except to
the extent expressly required by this Indenture, the Notes or the Registration
Rights Agreement, all other notices of any kind, including (i) notice of any
action taken or omitted by the Beneficiaries in reliance hereon, (ii) notice of
any default by either Company or any other Obligor, (iii) notice that any
portion of the Guaranteed Obligations is due, (iv) notice of any action against
either Company or any other Obligor, or any enforcement of other action with
respect to any collateral security, or the assertion of any right of any
Beneficiary hereunder; and
(g) all defenses that at any time may be available to any Guarantor by
virtue of any valuation, stay, moratorium or other law now or hereafter in
effect.
Section 12.05. No Subrogation; Certain Agreements
(a) EACH GUARANTOR WAIVES ANY AND ALL RIGHTS OF SUBROGATION, INDEMNITY
OR REIMBURSEMENT, AND ANY AND ALL BENEFITS OF AND RIGHTS TO ENFORCE ANY POWER,
RIGHT OR REMEDY THAT ANY BENEFICIARY MAY NOW OR HEREAFTER HAVE IN RESPECT OF THE
GUARANTEED OBLIGATIONS AGAINST THE
80
<PAGE>
COMPANIES OR OTHER OBLIGOR (OTHER THAN RIGHTS OF CONTRIBUTION FROM OTHER
GUARANTORS), ANY AND ALL BENEFITS OF AND RIGHTS TO PARTICIPATE IN ANY
COLLATERAL, WHETHER REAL OR PERSONAL PROPERTY, NOW OR HEREAFTER HELD BY ANY
BENEFICIARY, AND ANY AND ALL OTHER RIGHTS AND CLAIMS (WITHIN THE MEANING OF
APPLICABLE BANKRUPTCY LAW) ANY GUARANTOR MAY HAVE AGAINST EITHER COMPANY, UNDER
APPLICABLE LAW OR OTHERWISE, AT LAW OR IN EQUITY, BY REASON OF ANY PAYMENT UNDER
THE GUARANTY, WHETHER OR NOT THE GUARANTEED OBLIGATIONS SHALL HAVE BEEN PAID IN
FULL.
(b) Each Guarantor assumes the responsibility for being and keeping
itself informed of the financial condition of each other Obligor and of all
other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations that diligent inquiry would reveal, and agrees that the
Beneficiaries shall have no duty to advise any Guarantor of information
regarding such condition or any such circumstances.
Section 12.06. Bankruptcy No Discharge
(a) Without limiting Section 12.02, the Guaranty shall not be
discharged or otherwise affected by any bankruptcy, reorganization or similar
proceeding commenced by or against either Company or any other Obligor,
including (i) any discharge of, or bar or stay against collecting, all or any
part of the Guaranteed Obligations in or as a result of any such proceeding,
whether or not assented to by any Beneficiary, (ii) any disallowance of all or
any portion of any Beneficiary's claim for repayment of the Guaranteed
Obligations, (iii) any use of cash or other collateral in any such proceeding,
(iv) any agreement or stipulation as to adequate protection in any such
proceeding, (v) any failure by any Beneficiary to file or enforce a claim
against either Company or any other Obligor or its estate in any bankruptcy or
reorganization case, (vi) any amendment, modification, stay or cure of any
Beneficiary's rights that may occur in any such proceeding, (vii) any election
by any Beneficiary under Section 1111(b)(2) of the Bankruptcy Code, or (viii)
any borrowing or grant of a Lien under Section 364 of the Bankruptcy Code. Each
Guarantor understands and acknowledges that by virtue of this Guaranty, it has
specifically assumed any and all risks of any such proceeding with respect to
the Company and each other Obligor.
(b) Notwithstanding anything in this Article Twelve to the contrary,
any Event of Default under Section 6.01(d)(ii), (g) or (h) of this Indenture
shall render all Guaranteed Obligations automatically due and payable for
purposes of the Guaranty, without demand on the part of the Trustee or any
Holder.
(c) Notwithstanding anything to the contrary herein contained, the
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment, or any part thereof, of any or all of the Guaranteed
Obligations is rescinded, invalidated, declared to be fraudulent or preferential
or otherwise required to be restored or returned by any Beneficiary in
connection with any bankruptcy, reorganization or similar proceeding involving
either Company, any other Obligor or otherwise, if the proceeds of any
collateral security are required to be returned by such Beneficiary under any
such circumstances, or if any Beneficiary elects to return any such payment or
proceeds or any part thereof in its sole discretion, all as though such payment
had not been made or such proceeds not been received.
Section 12.07. Severability of Void Guaranteed Obligations Under Guaranty.
81
<PAGE>
The obligations of any Guarantor hereunder shall be limited to the
maximum amount that would not render its obligations hereunder subject to
avoidance under Section 548 of the Bankruptcy Code or any applicable provisions
of other Bankruptcy Law or comparable state law.
Section 12.08. Right of Contribution.
In order to provide for just and equitable contribution among the
Guarantors in connection with the Guaranty, the Guarantors have agreed among
themselves that if any Guarantor satisfies some or all of the Guaranteed
Obligations (a "Funding Guarantor"), the Funding Guarantor shall be entitled to
contribution from the other Guarantors that have positive Maximum Net Worth (as
defined below) for all payments made by the Funding Guarantor in satisfying the
Guaranteed Obligations, so that each Guarantor that remains obligated under the
Guaranty at the time that a Funding Guarantor makes such payment (a "Remaining
Guarantor") and has a positive Maximum Net Worth shall bear a portion of such
payment equal to the percentage that such Remaining Guarantor's Maximum Net
Worth bears to the aggregate Maximum Net Worth of all Remaining Guarantors that
have positive Maximum Net Worth.
As used herein, "Net Worth" means, with respect to any Guarantor, the
amount, as of any date of calculation, by which the sum of a Person's assets
(including subrogation, indemnity, contribution, reimbursement and similar
rights that such Guarantor may have notwithstanding Section 12.05), determined
on the basis of a "fair valuation" or their "fair salable value" (whichever is
the applicable test under Section 548 and other relevant provisions of the
Bankruptcy Code or other Bankruptcy Law and the relevant state fraudulent
conveyance or transfer laws) is greater than the amount that will be required to
pay all of such Person's debts, in each case matured or unmatured, contingent or
otherwise, as of the date of calculation, but excluding liabilities arising
under the Guaranty and excluding, to the maximum extent permitted by applicable
law with the objective of avoiding rendering such Person insolvent, liabilities
subordinated to the Guaranteed Obligations arising out of loans or advances made
to such Person by any other Person. "Maximum Net Worth" means, with respect to
any Guarantor, the greatest of the Net Worths calculated as of the following
dates: (A) the date on which the Guarantor becomes a Guarantor hereunder, (B)
the date on which such Guarantor expressly reaffirms the Guaranty, (C) the date
on which demand for payment is made on such Guarantor hereunder, (D) the date on
which payment is made by such Guarantor hereunder or (E) the date on which any
judgment, order or decree is entered requiring such Guarantor to make payment
hereunder or in respect hereof. The meaning of the terms "fair valuation" and
"fair salable value" and the calculation of assets and liabilities shall be
determined and made in accordance with the relevant provisions of the Bankruptcy
Code, other Bankruptcy Law and applicable state fraudulent conveyance or
transfer laws.
Section 12.09. Additional Guarantors.
Each Subsidiary that executes and delivers to the Trustee from time to
time an Addendum to Guaranty after the Issue Date shall, from and after the date
of such execution and delivery, be a Guarantor with the same effect as if such
Subsidiary had been a signatory to this Indenture, and no such Addendum to
Guaranty must be executed and delivered by any other Obligors. Each Obligor
hereby consents to the execution, delivery and effectiveness of any such
Addendum, whether or not it receives notice thereof. Subject to compliance with
applicable Gaming Laws, each Person that becomes a Material Restricted
Subsidiary of either Company after the date hereof shall automatically be deemed
to be a Guarantor for all purposes of this Indenture, notwithstanding any such
Material Restricted Subsidiary's failure to execute and deliver an Addendum to
Guaranty as required by Section 4.17 hereof.
82
<PAGE>
Section 12.10. Release of a Guarantor.
Upon either (a) the designation of a Guarantor as an Unrestricted
Subsidiary in accordance with the provisions of Section 4.16 hereof or (b) the
substitution of a successor Person for any Guarantor as contemplated by Section
5.02 hereof, such Guarantor shall be released from, and thereupon cease to have
or accrue any further liability under, its Guaranty. Upon receipt of an
Officers' Certificate and Opinion of Counsel as to compliance with Section 4.16
and this Section 12.10, the Trustee shall deliver to the Companies an
appropriate instrument evidencing such release.
[Signatures on following page]
83
<PAGE>
SIGNATURES
THE ISSUERS
-----------
Dated as of August 1, 1997 HOLLYWOOD PARK, INC.
By:_________________________________________
Name:
Title:
HOLLYWOOD PARK OPERATING COMPANY
By:_________________________________________
Name:
Title:
THE GUARANTORS
--------------
BAYVIEW YACHT CLUB, INC.
By:_________________________________________
Name:
Title:
BOOMTOWN, INC.
By:_________________________________________
Name:
Title:
BOOMTOWN HOTEL & CASINO, INC.
By:_________________________________________
Name:
Title:
84
<PAGE>
CRYSTAL PARK HOTEL & CASINO DEVELOPMENT
COMPANY, LLC
By its Manager
HP/COMPTON, INC.
By:_________________________________________
Name:
Title:
HOLLYWOOD PARK FALL OPERATING COMPANY
By:_________________________________________
Name:
Title:
HOLLYWOOD PARK FOOD SERVICES, INC.
By:_________________________________________
Name:
Title:
HP/COMPTON, INC.
By:_________________________________________
Name:
Title:
HP YAKAMA, INC.
By:_________________________________________
Name:
Title:
85
<PAGE>
LOUISIANA GAMING ENTERPRISES, INC.
By:_________________________________________
Name:
Title:
LOUISIANA-I GAMING, A LOUISIANA PARTNERSHIP
IN COMMENDAM
By its General Partner
LOUISIANA GAMING ENTERPRISES, INC.
By:_________________________________________
Name:
Title:
MISSISSIPPI I-GAMING, L.P.
By its General Partner
BAYVIEW YACHT CLUB, INC.
By:_________________________________________
Name:
Title:
TURF PARADISE, INC.
By:_________________________________________
Name:
Title:
THE TRUSTEE
-----------
Dated as of August 1, 1997 THE BANK OF NEW YORK,
Trustee
By:_________________________________________
Name:
Title:
86
<PAGE>
Title:
================================================================================
Exhibit A
(Face of Note)
[Series A] [Series B] 9 1/2% Senior Subordinated Notes due 2007
No. $__________
HOLLYWOOD PARK, INC. CUSIP NO. _____
HOLLYWOOD PARK OPERATING COMPANY
promises to pay to
or registered assigns,
the principal sum of
Dollars on August 1, 2007.
Interest Payment Dates:
Record Dates:
ISSUERS
-------
HOLLYWOOD PARK, INC.
By: ________________________________________
Name:
Title:
HOLLYWOOD PARK OPERATING COMPANY
By: ________________________________________
Name:
Title:
================================================================================
A-1
<PAGE>
GUARANTORS
----------
BAYVIEW YACHT CLUB, INC.
By: ________________________________________
Name:
Title:
BOOMTOWN, INC.
By: ________________________________________
Name:
Title:
BOOMTOWN HOTEL & CASINO, INC.
By: ________________________________________
Name:
Title:
CRYSTAL PARK HOTEL & CASINO
DEVELOPMENT COMPANY, LLC
By its Manager
HP/COMPTON, INC.
By: ________________________________________
Name:
Title:
HOLLYWOOD PARK FALL OPERATING COMPANY
By: ________________________________________
Name:
Title:
A-2
<PAGE>
HOLLYWOOD PARK FOOD SERVICES, INC.
By: ________________________________________
Name:
Title:
HP/COMPTON, INC.
By: ________________________________________
Name:
Title:
HP YAKAMA, INC.
By: ________________________________________
Name:
Title:
LOUISIANA GAMING ENTERPRISES, INC.
By: ________________________________________
Name:
Title:
LOUISIANA-I GAMING, A LOUISIANA
PARTNERSHIP IN COMMENDAM
By its General Partner
LOUISIANA GAMING ENTERPRISES, INC.
By: ________________________________________
Name:
Title:
A-3
<PAGE>
MISSISSIPPI I-GAMING, L.P.
By its General Partner
BAYVIEW YACHT CLUB, INC.
By: ________________________________________
Name:
Title:
TURF PARADISE, INC.
By: ________________________________________
Name:
Title:
Dated: ________________________
This is one of the [Global]
Notes referred to in the
within-mentioned Indenture:
The Bank of New York,
as Trustee
By: ___________________________
Authorized Signatory
A-4
<PAGE>
(Back of Note)
[Series A] [Series B] 9 1/2% Senior Subordinated Notes due 2007
[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 Companies or their agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or such other name as may be requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as may be requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.]/1/
[THE SECURITY (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 SECURITY
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 SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANIES THAT (A) SUCH SECURITY
MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT), IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d)
IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANIES SO
REQUEST), (2) TO THE COMPANIES OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY 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
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN
(A) ABOVE.]/2/
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
_____________
/1/ To be included only if the Note is issued in Global form.
/2/ This legend should be included on the Series A Notes and omitted from
the Series B Notes.
A-5
<PAGE>
1. Interest. Hollywood Park, Inc., a Delaware corporation and Hollywood
Park Operating Company, a Delaware corporation (collectively, the "Companies")
jointly and severally promise (i) to pay interest on the principal amount of
this Note at 9 1/2% per annum, accruing from the Issue Date until maturity and
(ii) to pay the Liquidated Damages payable pursuant to Section 4 of the
Registration Rights Agreement referred to below. The Companies will pay
interest and Liquidated Damages semi-annually 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"). Interest on the Notes will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from the date of issuance; provided that if there is no existing Default
in the payment of interest, and if this Note is authenticated between a record
date referred to on the face hereof and the next succeeding Interest Payment
Date, interest shall accrue from such next succeeding Interest Payment Date;
provided, further, that the first Interest Payment Date shall be February 1,
1998. The Companies shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the rate
then in effect; they 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 periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months. Upon consummation of the
Exchange Offer, the Series A Notes accepted for exchange shall cease to accrue
interest, and all accrued and unpaid interest thereon shall, subject to the
provisions of Articles 3, 4 and 6 of the Indenture, be payable on the first
Interest Payment Date for the Series B Notes, and interest on the Series B Notes
shall accrue from the date of consummation of the Exchange Offer.
2. Method of Payment. The Companies will pay interest on the Notes
(except defaulted interest) and Liquidated Damages 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, interest and Liquidated Damages at the
office or agency of the Companies maintained for such purpose within or without
the City and State of New York, or, at the option of the Companies, payment of
interest and Liquidated Damages may be made by check mailed to the Holders at
their addresses set forth in the register of Holders; provided that payment by
wire transfer of immediately available funds will be required with respect to
principal of and interest, premium and Liquidated Damages on, all Global Notes
and all other Notes the Holders of which shall have provided wire transfer
instructions to the Companies 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.
The payment by the Companies of their Obligations arising under and in
connection with the Notes to Holders is guaranteed pursuant to the Guaranty by
each Guarantor, on the terms set forth in Article 12 of the Indenture. Each of
the Guarantors hereby indorses this Note as a joint payor, intending to incur
joint and several liability within the meaning of Article 3 of the Uniform
Commercial Code as enacted and in effect in the State of New York.
3. Paying Agent and Registrar. Initially, The Bank of New York, the
Trustee under this Indenture, will act as Paying Agent and Registrar. The
Companies may change any Paying Agent or Registrar without notice to any Holder.
The Companies or any of their Subsidiaries may act in any such capacity.
4. Indenture. The Companies issued the Notes under an Indenture dated as
of August 1, 1997 (the "Indenture") among the Companies, the Guarantors and the
Trustee. The terms of the Notes include those
A-6
<PAGE>
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. The Notes are obligations of the
Companies limited to $125 million in aggregate principal amount.
5. Optional Redemption. The Companies shall have the option to redeem
the Notes, in whole or in part, at the redemption prices (expressed as
percentages of the principal amount thereof) set forth below plus accrued and
unpaid interest and Liquidated Damages thereon, if any, 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>
2002...................... 104.75 %
2003...................... 102.375%
2004...................... 101.188%
2005 and thereafter....... 100.000%
</TABLE>
Notwithstanding the foregoing, (a) the Companies may, during the first 36
months after the Issue Date, redeem up to 25% of the initially outstanding
aggregate principal amount of Notes with the net cash proceeds of one or more
Public Equity Offerings of the common stock of HPI at a redemption price in cash
of 109.5% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the redemption date; provided that at
least 75% of the initially outstanding aggregate principal amount of Notes
remains outstanding immediately after the occurrence of such redemption; and
provided, further, that written notice of any such redemption shall be given by
the Companies to the Holders and the Trustee within 15 days after the
consummation of any such Public Equity Offering and redemption shall occur
within 60 days after the date of such notice and (b) if any Gaming Authority
requires that a Holder or beneficial owner of Notes must be licensed, qualified
or found suitable under any applicable gaming law and such Holder or beneficial
owner (i) fails to apply for a license, qualification or a finding of
suitability within 30 days (or such shorter period as may be required by the
applicable Gaming Authority) after being requested to do so by the Gaming
Authority or (ii) is denied such license or qualification or not found suitable,
the Companies shall have the right, at their option, (A) to require such Holder
or beneficial owner to dispose of its Notes within 30 days (or such earlier date
as may be required by the applicable Gaming Authority) of receipt of such notice
or finding by such Gaming Authority or (B) to call for the redemption of the
Notes of such Holder or beneficial owner at a redemption price equal to the
least of (x) the principal amount thereof, (y) the price at which such Holder or
beneficial owner acquired the Notes, in either case, together with, accrued
interest and Liquidated Damages, if any, to the earlier of the date of
redemption or the date of the denial of license or qualification or of the
finding of unsuitability by such Gaming Authority or (z) such other lesser
amount as may be required by any Gaming Authority. The Companies shall notify
the Trustee in writing of any such redemption as soon as practicable. The
Holder or beneficial owner applying for license, qualification or a finding of
suitability must pay all costs of the licensure or investigation for such
qualification or finding of suitability.
6. Mandatory Redemption. Except as set forth in paragraph 7 below, the
Companies shall not be required to make mandatory redemption or sinking fund
payments with respect to the Notes.
7. Repurchase at Option of Holders.
(a) Upon the occurrence of a Change of Control, each Holder will have
the right to require the Companies to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
(the "Change in Control Payment") equal to 101% or, in the case of a REIT Change
of Control, 102% of the
A-7
<PAGE>
aggregate principal amount of Notes, in each case, plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of repurchase.
Within 30 days following any Change of Control, the Companies will mail a notice
to each Holder describing the transactions or transactions that constitute the
Change of Control and offering to repurchase Notes on the date specified in such
notice, which date shall be no earlier than 30 days from the date such notice is
mailed (the "Change of Control Payment Date"), pursuant to the procedures
required by this Indenture and described in such notice.
(b) If any Obligor consummates any Asset Sale and the aggregate
amount of Net Cash Proceeds not employed as contemplated by Section 4.09 of the
Indenture within the time periods therein specified exceeds $10 million, the
Companies shall commence an offer to all Holders of Notes (an "Asset Sale
Offer") pursuant to Sections 3.09 and 4.09 of the Indenture to purchase the
maximum principal amount of Notes that may be purchased out of the Excess
Proceeds at an offer price in cash equal to 100% of the principal amount of the
Notes plus accrued and unpaid interest and Liquidated Damages, if any, thereon
on the Net Proceeds Offer Payment Date in accordance with the procedures set
forth in the Indenture. To the extent that the aggregate amount of Notes
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Companies may use such deficiency for general corporate purposes. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes to be purchased on
a pro rata basis. Holders of Notes that are the subject of an offer to purchase
will receive an Asset Sale Offer from the Companies prior to any related
purchase date and may elect to have such Notes purchased by completing the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Notes.
8. Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and the
Companies may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Companies 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, they need not
exchange or register the transfer of any Notes for a period of 15 days before a
selection of Notes to be redeemed or during the period between a record date and
the corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the then outstanding
Notes, and any existing default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes. Without the consent
of any Holder, the Indenture or the Notes may be amended or supplemented to cure
any ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Companies' obligations to Holders in case of a merger or consolidation, to
make any change that would provide any additional rights or benefits to the
Holders or that does not adversely affect the legal rights under the Indenture
of any such
A-8
<PAGE>
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
provide for the REIT Restructuring and such related modifications to the
Indenture and the Notes as may be necessary to permit the implementation of, and
the continuing operations of the Companies after giving effect to, the REIT
Restructuring, including the making of operating lease payments by HPOC to HPI,
the distribution by HPI of such amounts as may be required by the Internal
Revenue Code and the regulations promulgated thereunder to maintain REIT status,
and any other modifications to the covenants that may be necessary to comply
with the applicable provisions of the Internal Revenue Code and the regulations
promulgated thereunder, or as may be necessary in the good faith determination
of the respective Boards of the Companies, as evidenced by Board resolutions, to
provide for the same relative benefits and restrictions as existed under the
Indenture prior to the REIT Restructuring.
12. Defaults and Remedies. Events of Default include: (i) default for 30
days in the payment when due of interest on or Liquidated Damages with respect
to the Notes or the Guaranties; (ii) default in payment when due of principal of
or premium, if any, on the Notes or the Guaranties when the same becomes due and
payable at maturity, upon acceleration, redemption (including in connection with
an offer to purchase) or otherwise, (iii) failure by the Obligors for 45 days
after notice to the Companies by the Trustee or the Holders of at least 25% in
principal amount of the Notes then outstanding to comply with certain agreements
in the Indenture or the Notes; (iv) default under certain other agreements
relating to Indebtedness of the Obligors which default results in the
acceleration of such Indebtedness prior to its express maturity; (v) certain
final judgments for the payment of money that remain undischarged for a period
of 60 days; and (vi) certain events of bankruptcy or insolvency. If any Event
of Default occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of the then outstanding Notes may declare all the Notes to
be due and payable. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy, insolvency or cross-
acceleration, 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 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 on, or the principal of, the Notes. The Companies are required to
deliver to the Trustee annually a statement regarding compliance with the
Indenture, and the Companies 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. Subordination of Notes and Guaranties. The Indebtedness evidenced by
this Note and the Guaranties in respect hereof is, to the extent and in the
manner provided in the Indenture, subordinate in right of payment to the prior
payment in full of all Senior Debt and subject to the other subordination
provisions set forth in Article 10 of the Indenture. The Holder of this Note, by
its acceptance hereof, (a) agrees to be bound by such provisions, (b) authorizes
and directs the Trustee, on behalf of such Holder, to take such action as may be
necessary to or appropriate to effectuate the subordination as provided in the
Indenture and (c) appoints the Trustee attorney-in-fact of such Holder for the
purpose of taking any such action in the name of the Holder.
14. Trustee Dealings with Obligors. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Obligors or their Affiliates, and may otherwise deal with the
Obligors or their Affiliates, as if it were not the Trustee.
A-9
<PAGE>
15. No Recourse Against Others. No past, present or future director,
officer, employee, agent, manager, partner, member, incorporator or stockholder,
of any Obligor, as such, shall have any liability for any obligations of such
Obligor under the Notes, the Guaranties or the Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the Notes and the
Guaranties.
16. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
17. 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).
18. Additional Rights of Holders of Transfer Restricted Securities. In
addition to the rights provided to Holders of Notes under the Indenture, Holders
of Transferred Restricted Securities shall have all the rights set forth in the
Registration Rights Agreement dated as of August 1, 1997, among the Companies,
the Guarantors and the Initial Purchasers (the "Registration Rights Agreement").
19. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Companies 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 Companies 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:
Assistant Treasurer
Hollywood Park, Inc.
1050 South Prairie Avenue
Inglewood, California 90301
Telephone: 301-419-1609
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THE NOTES AND THE INDENTURE, SUBJECT TO APPLICABLE GAMING LAWS.
A-10
<PAGE>
Assignment Form
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Companies. 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: ___________________________________
Signature must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include
membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may
be determined by the Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
A-11
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Companies
pursuant to Section 4.09 or 4.12 of this Indenture, check the box below:
[_] Section 4.09 [_] Section 4.12
If you want to elect to have only part of the Note purchased by the
Companies pursuant to Section 4.09 or Section 4.12 of this Indenture, state the
amount you elect to have purchased: $___________
Date: ________________________ Your Signature: _______________________________
(Sign exactly as your name
appears on the Note)
Tax Identification No.: _______________________
Signature Guarantee:_________________________________
Signature must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include
membership or participation in the Security Transfer Agent Medallion
Program ("STAMP") or such other "signature guarantee program" as may
be determined by the Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
A-12
<PAGE>
SCHEDULE OF EXCHANGES/3/
The following exchanges of a part of this Global Note have been made:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF SIGNATURE OF
AMOUNT OF DECREASE IN AMOUNT OF INCREASE IN THIS GLOBAL NOTE AUTHORIZED SIGNATORY
PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF FOLLOWING SUCH DECREASE OF TRUSTEE OR
DATE OF EXCHANGE THIS GLOBAL NOTE THIS GLOBAL NOTE (OR INCREASE) NOTE CUSTODIAN
- ---------------- --------------------- --------------------- ----------------------- --------------------
<S> <C> <C> <C> <C>
</TABLE>
/3/ This should be included only if the Note is issued in global form.
A-13
<PAGE>
================================================================================
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: 9 1/2% Senior Subordinated Notes due 2007 of Hollywood Park, Inc. and
Hollywood Park Operating Company
This Certificate relates to $_____ principal amount of Notes held in *
________ book-entry or *_______ certificated form by ________________ (the
"Transferor").
The Transferor*:
[_] has requested the Trustee by written order to deliver in
exchange for its beneficial interest in the Global Note held by the Depositary a
Note or Notes in certificated, registered form of authorized denominations in an
aggregate principal amount equal to its beneficial interest in such Global Note
(or the portion thereof indicated above); or
[_] has requested the Trustee by written order to exchange or
register the transfer of a Note or Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that Transferor is familiar with the Indenture
relating to the above captioned Notes and as provided in Section 2.06 of such
Indenture, the transfer of this Note does not require registration under the
Securities Act (as defined below) because:*
[_] Such Note is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section
2.06(d)(i)(A) of the Indenture).
[_] Such Note is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.06(a)(ii)(B), Section 2.06(b)(i) or Section 2.06(d)(i)(B) of the Indenture) or
pursuant to an exemption from registration in accordance with Rule 904 under the
Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture.)
[_] Such Note is being transferred in accordance with Rule 144 under
the Securities Act, or pursuant to an effective registration statement under the
Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture).
[_] Such Note is being transferred in reliance on and in compliance
with an exemption from the registration requirements of the Securities Act,
other than Rule 144A, Rule 144 or Rule 904 under the Securities Act. An Opinion
of Counsel to the effect that such transfer does not require registration under
the Securities Act accompanies this Certificate (in satisfaction of Section
2.06(a)(ii)(C) or Section 2.06(d)(i)(C) of the Indenture).
____________________________________
[INSERT NAME OF TRANSFEROR]
By: ________________________________
Date: __________________________________
____________
* Check applicable box.
================================================================================
B-1
<PAGE>
EXHIBIT 10.38
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of August 1, 1997
By and Among
HOLLYWOOD PARK, INC.
HOLLYWOOD PARK OPERATING COMPANY,
(the Issuers)
THE GUARANTORS (AS DEFINED HEREIN)
AND
OPPENHEIMER & CO., INC.,
BT SECURITIES CORPORATION
and
BANCAMERICA SECURITIES, INC.
(the Initial Purchasers)
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions............................................................. 1
2. Exchange Offer.......................................................... 5
3. Shelf Registration...................................................... 8
4. Liquidated Damages...................................................... 10
5. Registration Procedures................................................. 11
6. Registration Expenses................................................... 19
7. Indemnification......................................................... 20
8. Rules 144 and 144A...................................................... 23
9. Underwritten Registrations.............................................. 23
10. Miscellaneous........................................................... 24
(a) No Inconsistent Agreements........................................ 24
(b) Adjustments Affecting Registrable Notes........................... 24
(c) Amendments and Waivers............................................ 24
(d) Notices........................................................... 24
(e) Successors and Assigns............................................ 26
(f) Counterparts...................................................... 26
(g) Headings.......................................................... 26
(h) Governing Law; Jurisdiction....................................... 26
(i) Severability...................................................... 26
(j) Securities Held by the Issuer or Its Affiliates................... 26
(k) Third Party Beneficiaries......................................... 27
(l) Entire Agreement.................................................. 27
</TABLE>
-i-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is dated as of
August 1, 1997, by and among HOLLYWOOD PARK, INC., a Delaware corporation (the
"Company" or "Hollywood Park"), HOLLYWOOD PARK OPERATING COMPANY, a Delaware
corporation ("HPOC", and together with Hollywood Park, the "Issuers"), all of
the Issuers' existing direct and indirect material restricted subsidiaries (the
"Guarantors") (the Issuers and the Guarantors, collectively, the "Obligors") and
OPPENHEIMER & CO., INC., BT SECURITIES CORPORATION and BANCAMERICA SECURITIES,
INC. (each an "Initial Purchaser" and collectively, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated August
1, 1997, among the Issuers, the Guarantors, and the Initial Purchasers (the
"Purchase Agreement"), relating to, among other things, the sale by the Issuers
to the Initial Purchasers of $125,000,000 in aggregate principal amount of
Series A 9 1/2% Senior Subordinated Notes due 2007 (the "Notes") of the Issuers.
In order to induce the Initial Purchasers to enter into the Purchase Agreement,
the Issuers and the Guarantors have agreed to provide to the Initial Purchasers
and the Holders (as defined herein), among other things, the registration rights
for the Notes set forth in this Agreement. The execution and delivery of this
Agreement is a condition to the performance by the Initial Purchasers of their
obligations under the Purchase Agreement.
In consideration of the forgoing premises, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Obligors hereby agree with the Initial Purchasers, for the
benefit of, as their respective interests appear, (i) the Initial Purchasers,
(ii) the holders from time to time of the Notes (including the Initial
Purchasers in such capacity, if applicable) and (iii) the Participating Broker-
Dealers (as defined below), as follows:
1. Definitions
Terms defined in the Purchase Agreement, whether directly or
indirectly by reference, and used herein without other definition shall have the
respective meanings herein assigned to such terms in the Purchase Agreement. In
addition, the following defined terms shall have the respective meanings set
forth below or in the sections of this agreement referred to below:
Advice: See Section 5 hereof.
Agreement: See the introductory paragraphs hereto.
Applicable Period: See Section 2 hereof.
Business Day: Any day other than a Saturday, Sunday or other day on
which banking institutions in New York are required or authorized by law or
executive order to be closed.
<PAGE>
Effectiveness Date: With respect to any Registration Statement, the
date on which such Registration Statement is declared effective by the SEC.
Effectiveness Period: See Section 3 hereof.
Event Date: See Section 4 hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Exchange Indenture: The Indenture, or a new indenture described in
Section 2(a) hereof, as the case may be, pursuant to which the Exchange Notes
are issued.
Exchange Notes: See Section 2 hereof.
Exchange Offer: See Section 2 hereof.
Exchange Registration Statement: See Section 2 hereof.
Fungible: With respect to any class of securities, any other
securities which would properly be considered as in the same class as, in a
class similar to, or being fungible with, the securities of the first mentioned
class.
Filing Date: (A) With respect to the Exchange Registration Statement,
forty-five (45) calendar days following the Issue Date; and (B) with respect to
the Shelf Registration Statement (which may be applicable notwithstanding the
consummation of an Exchange Offer), the 30th day after the delivery of a Shelf
Notice.
Guarantors: See the introductory paragraphs hereto.
Holder: Any holder of a Registrable Note or Registrable Notes.
Indemnified Person: See Section 7(c) hereof.
Indemnifying Person: See Section 7(c) hereof.
Indenture: The Indenture, of even date herewith, among the Issuers,
the Guarantors and The Bank of New York, as trustee, pursuant to which the Notes
are being issued, as amended or supplemented from time to time in accordance
with the terms thereof.
Initial Purchasers: See the introductory paragraphs hereto.
Initial Shelf Registration: See Section 3(a) hereof.
-2-
<PAGE>
Inspectors: See Section 5(o) hereof.
Issue Date: The Issue Date specified in the Indenture.
Issuer: See the introductory paragraphs hereto.
Liquidated Damages: See Section 4 hereof.
NASD: See Section 5(t) hereof.
Notes: See the introductory paragraphs hereto.
Obligor: See the introductory paragraphs hereto.
Participant: See Section 7(a) hereof.
Participating Broker-Dealer: See Section 2 hereof.
Person: An individual, trustee, corporation, partnership, joint stock
company, trust, limited liability company, unincorporated association, union,
business association, firm or other legal entity.
Private Exchange: See Section 2 hereof.
Private Exchange Notes: See Section 2 hereof.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any infor mation previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: See the introductory paragraphs hereto.
Records: See Section 5(o) hereof.
Registrable Notes: Each Note upon its original issuance and at all
times subsequent thereto, each Exchange Note as to which Section 2(c)(iv) hereof
is applicable upon original issuance and at all times subsequent thereto and
each Private Exchange Note upon original issuance thereof and at all times
subsequent thereto, until in the case of any such Note, Exchange Note or Private
Exchange Note, as the case may be, the earliest to occur of (i) a Registration
Statement (other than, with respect to any Exchange Note as to which Section
2(c)(iv) hereof is applicable, the Exchange
-3-
<PAGE>
Registration Statement) covering such Note, Exchange Note or such Private
Exchange Note has been declared effective by the SEC and such Note or such
Private Exchange Note, as the case may be, has been disposed of in accordance
with such effective Registration Statement, (ii) such Note, Exchange Note or
Private Exchange Note, as the case may be, may at the time of determination be
sold to the public pursuant to Rule 144 promulgated under the Securities Act
without the lapse of any further time or the satisfaction of any condition,
(iii) such Note has been exchanged for an Exchange Note or Exchange Notes
pursuant to an Exchange Offer which may be resold without restriction (other
than restrictions imposed on Participating Broker-Dealers pursuant to the "Plan
of Distribution" contemplated by the Exchange Registration Statement, including
the Prospectus delivery requirements) under state and federal securities laws,
or (iv) such Note, Exchange Note or Private Exchange Note, as the case may be,
ceases to be outstanding for purposes of the Indenture.
Registration Default: See Section 4 hereof.
Registration Statement: Any registration statement of the Issuers,
including, but not limited to, the Exchange Registration Statement, filed with
the SEC pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such registration statement, including post-
effective amendments, all exhibits, and all material incorporated by reference
or deemed to be incorporated by reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as such
Rule may be amended from time to time, or any similar rule (other than Rule 144)
or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c) hereof.
Shelf Registration: Either or both of the Initial Shelf Registration
and any Subsequent Shelf Registration, as the context suggests.
Subsequent Shelf Registration: See Section 3(b) hereof.
-4-
<PAGE>
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent, the
trustee under any indenture governing the Exchange Notes and any Private
Exchange Notes.
Underwritten registration or underwritten offering: A registration in
which securities of either Issuer are sold to an underwriter for reoffering to
the public.
2. Exchange Offer
(a) The Issuers shall file with the SEC no later than the Filing Date
an offer to exchange (the "Exchange Offer") any and all of the Registrable Notes
(other than Private Exchange Notes, if any) for a like aggregate principal
amount of debt securities of the Issuers which are identi cal in all respects
to the Notes (the "Exchange Notes") except that the Exchange Notes (i) shall
have been registered pursuant to an effective Registration Statement under the
Securities Act and shall contain neither restrictive legends nor any provisions
requiring registration or payment of Liquidated Damages, (ii) shall be issued
after the Issue Date and (iii) shall be designated the Issuers' Series B 9 1/2%
Senior Subordinated Notes due 2007. The Exchange Notes shall be entitled to the
benefits of the Indenture, or a trust indenture which is identical in all
material respects to the Indenture (other than such changes to the Indenture or
any such identical trust indenture as are necessary to comply with any
requirements of the SEC or to effect or maintain the qualification thereof under
the TIA) and which, in either case, has been qualified under the TIA. The
Exchange Offer shall be registered under the Securities Act on the appropriate
form (the "Exchange Registration Statement") and shall comply with all
applicable tender offer rules and regulations under the Exchange Act and other
applicable law. The Issuers shall use their best efforts (x) to cause the
Exchange Registration Statement to be declared effective under the Securities
Act as soon as reasonably practicable in order to consummate the Exchange Offer
by the required date; (y) to keep the Exchange Offer open for at least 20
Business Days (or longer if required by applicable law) after the date that
notice of the Exchange Offer is mailed to Holders; and (z) to consummate the
Exchange Offer prior to or on the 150th day following the Filing Date.
Each Holder who participates in the Exchange Offer will be required to
represent that it will acquire any Exchange Notes pursuant to the Exchange Offer
in the ordinary course of its busi ness, that at the time of the consummation
of the Exchange Offer such Holder is not engaged in, and does not intend to
engage in, and has and will have no arrangement or understanding with any Person
to participate in, the distribution of the Exchange Notes in violation of the
provisions of the Securities Act, and that such Holder is not an affiliate of
any Obligor within the meaning of the Securities Act.
Upon consummation of the Exchange Offer in accordance with this
Section 2, the provisions of this Agreement (other than this Section 2) shall
continue to apply, mutatis mutandis, solely with respect to any Registrable
----------------
Notes that are Private Exchange Notes and Exchange Notes held by Participating
Broker-Dealers, and the Issuers shall have no further obligation to register
-5-
<PAGE>
Registrable Notes (other than Private Exchange Notes and other than in respect
of any Exchange Notes as to which clause 2(c)(iv) hereof applies) pursuant to
Section 3 hereof.
No securities other than the Exchange Notes shall be offered pursuant
to the Exchange Registration Statement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Registration Statement a section entitled "Plan of Distribution,"
reasonably acceptable to the Initial Purchasers, which shall contain a summary
statement of the positions taken or policies made by the staff of the SEC with
respect to the potential "underwriter" status of any broker-dealer that acquired
Notes as a result of market making activities or other trading activities (and
not directly from the Issuers or the Guarantors) and is the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) of Exchange Notes received by such
broker-dealer in the Exchange Offer (a "Participating Broker-Dealer"), whether
such positions or policies have been publicly disseminated by the staff of the
SEC or such positions or policies, in the judgment of the Initial Purchasers,
represent the prevailing views of the staff of the SEC. Such "Plan of
Distribution" section shall also expressly permit the use of the Prospectus by
all Persons subject to the prospectus delivery requirements of the Securities
Act, including, among others, all Participating Broker-Dealers, and include a
statement describing the means by which Participating Broker-Dealers may resell
the Exchange Notes.
The Issuers shall use their best efforts, as described in Section
5(b)(ii) hereof, to keep the Exchange Registration Statement effective and to
amend and supplement the Prospectus contained therein in order to permit such
Prospectus to be lawfully delivered by all Persons subject to the prospectus
delivery requirements of the Securities Act for such period of time as is
necessary to comply with applicable law in connection with any resale of the
Exchange Notes; provided, however, that such period shall not exceed 180 days
-------- -------
after the Exchange Registration Statement is declared effective (or such longer
period if extended pursuant to the last paragraph of Section 5 hereof) (the
"Applicable Period").
If, prior to consummation of the Exchange Offer, the Initial
Purchasers hold any Notes acquired by them which have, or are reasonably likely
to be determined to have, the status of an unsold allotment in the initial
distribution, or any other Holder is not entitled to participate in the Exchange
Offer because such Holder (i) is prohibited by law or SEC policy from
participating in the Exchange Offer or (ii) may not resell the Exchange Notes
acquired by it in the Exchange Offer to the public without delivering a
prospectus and the Prospectus contained in the Exchange Registration Statement
is not appropriate or available for such resales, the Issuer, upon the written
request of either of the Initial Purchasers or any such Holder delivered at
least ten (10) days prior to the consummation of the Exchange Offer, shall
simultaneously with the delivery of the Exchange Notes in the Exchange Offer, or
in the case of any such request dated after the 10th day prior to the Exchange
Offer, ten (10) days after the date of such request, issue and deliver to the
Initial Purchasers and any such Holder, in exchange (the "Private Exchange") for
such Notes held by the Initial Purchasers and any such Holder, a like principal
amount of debt securities of the Issuers that are identical in all material
respects to the Exchange Notes (the "Private Exchange Notes") (and
-6-
<PAGE>
which are issued pursuant to the same indenture as the Exchange Notes). The
Private Exchange Notes shall bear the same CUSIP number as the Exchange Notes.
In connection with the Exchange Offer, the Issuers shall:
(i) mail to each Holder a copy of the Prospectus forming part of
the Exchange Registration Statement, together with an appropriate letter of
transmittal and related documents;
(ii) utilize the services of a depositary for the Exchange Offer
with an address in the Borough of Manhattan, The City of New York;
(iii) permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York time, on the last business day on which the
Exchange Offer shall remain open; and
(iv) otherwise comply in all material respects with all applicable
laws, rules and regulations, including all applicable Gaming Laws (as
defined in the Indenture).
As soon as practicable after the close of the Exchange Offer or the
Private Exchange, as the case may be, the Issuer shall:
(i) accept for exchange all Notes validly tendered and not validly
withdrawn pursuant to the Exchange Offer or the Private Exchange;
(ii) deliver to the Trustee for cancellation all Notes so accepted
for exchange; and
(iii) cause the Trustee to authenticate and deliver promptly to each
Holder of Notes which have been validly tendered and accepted for exchange,
Exchange Notes or Private Exchange Notes, as the case may be, in a
principal amount equal to the principal amount of such Notes.
Neither the Exchange Offer nor the Private Exchange shall be subject
to any conditions, except that (i) neither the Exchange Offer nor the Private
Exchange, as the case may be, shall, in the opinion of counsel to the Issuers
and the Guarantors, violate any applicable law or interpretation of the staff of
the SEC, (ii) no action or proceeding shall have been instituted or threatened
in any court or by any governmental agency which might materially impair the
ability of the Issuers to proceed with the Exchange Offer or the Private
Exchange and no material adverse development shall have occurred in any existing
action or proceeding with respect to either Issuer or the Issuers and the
Guarantors taken as a whole and (iii) all governmental approvals shall have been
obtained, including from Gaming Authorities (as defined in the Indenture), which
approvals the Issuers deem necessary for the consummation of the Exchange Offer
or Private Exchange and (iv) no cessation of trading on Nasdaq or any exchange,
nor any banking moratorium, shall have occurred,
-7-
<PAGE>
as a result of which the Issuers are unable to proceed with the Exchange Offer
or the Private Exchange.
The Exchange Notes and the Private Exchange Notes shall be issued
under the Exchange Indenture. The Exchange Indenture shall provide that the
Exchange Notes, the Private Exchange Notes and the Notes shall for all purposes
be treated as securities of a single class, and in particular vote and exercise
other consensual rights as a single class and that none of the Exchange Notes,
the Private Exchange Notes or the Notes will have the right to vote or exercise
other consensual rights as a separate class on any matter.
(c) If, (i) because of any change in law or in currently prevailing
interpretations of the staff of the SEC, the Issuers are not permitted to effect
an Exchange Offer, (ii) the Exchange Offer is not consummated within 150 days
after the Filing Date, (iii) Private Exchange Notes have been issued to any
Initial Purchaser or Holder pursuant to Section 2(b) herein or (iv) any Holder
notifies the Issuers that it may not resell the Exchange Notes acquired by it in
the Exchange Offer to the public without delivering a prospectus and the
Prospectus contained in the Exchange Registration Statement is not appropriate
or available for such resales, in any of the foregoing cases, the Issuers shall
promptly deliver to the Holders and the Trustee written notice of such
occurrence and the Issuers' resulting intention to file a Shelf Registration (a
"Shelf Notice") and shall thereupon file such Shelf Registration pursuant to
Section 3 hereof.
3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c) hereof,
then:
(a) Initial Shelf Registration. The Issuers shall file with the SEC a
--------------------------
"shelf" Registration Statement for an offering to be made on a continuous basis
pursuant to Rule 415 covering all of the Registrable Notes (the "Initial Shelf
Registration") on or prior to 30 days following delivery of a Shelf Notice by
the Issuers. The Initial Shelf Registration shall be on Form S-1 or another
appropriate form permitting registration of such Registrable Notes for resale by
Holders in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings). The Issuers shall not permit
any securities other than the Registrable Notes to be included in the Initial
Shelf Registration or any Subsequent Shelf Registration (as defined below).
The Issuers shall use their best efforts, as described in Section
5(b)(ii) hereof, to cause the Initial Shelf Registration to be declared
effective under the Securities Act prior to or on the 90th day after the
delivery of a Shelf Notice by the Issuers and to keep the Initial Shelf
Registration continuously effective under the Securities Act until the date
which is 36 months after the Effectiveness Date, subject to extension pursuant
to the last paragraph of Section 5 hereof (the "Effectiveness Period"), or such
shorter period ending when (i) all then outstanding Registrable Notes covered by
the Initial Shelf Registration have been sold in the manner contemplated by the
Initial Shelf Registration or (ii) a Subsequent Shelf Registration covering all
of the Registrable Notes has been declared effective under the Securities Act;
provided, however, that the Effectiveness
- -------- -------
-8-
<PAGE>
Period shall be extended to the extent necessary to permit dealers to comply
with the applicable prospectus delivery requirements of Rule 174 under the
Securities Act and as otherwise provided herein.
So long as the Initial Shelf Registration Statement in accordance with this
Section 3 remains effective, the Issuers shall have no further obligation to
issue Exchange Notes in an Exchange Offer pursuant to Section 2 of this
Agreement, and any Liquidated Damages shall cease to accrue during such
effective period; provided that the other provisions of this Agreement shall
continue to apply as set forth in such provisions.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
------------------------------
or any Subsequent Shelf Registration ceases to be effective for any reason at
any time during the Effectiveness Period (other than because of the sale of all
of the securities registered thereunder), the Issuers shall use their best
efforts to obtain the prompt withdrawal of any order suspending the effec
tiveness thereof, and in any event shall within 30 days of such cessation of
effectiveness amend the Initial Shelf Registration to obtain the withdrawal of
the order suspending the effectiveness thereof, or file an additional "shelf"
Registration Statement pursuant to Rule 415 covering all of the Registrable
Notes (a "Subsequent Shelf Registration"). If a Subsequent Shelf Registration
is filed, the Issuers shall use their best efforts to cause the Subsequent Shelf
Registration to be declared effective under the Securities Act as soon as
practicable after such filing and to keep such Registration Statement
continuously effective for a period equal to the number of days in the
Effectiveness Period, less the aggregate number of days during which the Initial
Shelf Registration or any Subsequent Shelf Registration was previously
continuously effective.
(c) Supplements and Amendments. The Issuers shall promptly supplement
--------------------------
and amend the Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested by
the Holders of a majority in aggregate principal amount of the Registrable Notes
covered by such Registration Statement or by any underwriter of such Registrable
Notes.
(d) Hold-Back Agreements
--------------------
(i) Restrictions on Public Sale by Holders of Registrable Notes.
-----------------------------------------------------------
Each Holder of Registrable Notes whose Registrable Notes are (A) covered by
a Shelf Registration filed pursuant to Section 3 hereof and (B) not being
sold in the underwritten offering described below agrees, if requested
(pursuant to a timely written notice) by the managing underwriter or
underwriters in an underwritten offering, not to effect any public sale or
distribution of any securities Fungible with the class of securities
covered by such Shelf Registration, including a sale pursuant to Rule 144
or Rule 144A (except as part of such underwritten offering), during the
period beginning 10 days prior to, and ending 60 days after, the closing
date of each underwritten offering made pursuant to such Shelf
Registration, to the extent timely notified in writing by the Issuers or by
the managing underwriter or underwriters; provided, however, that each
-------- -------
holder of Registrable Notes shall be subject to the hold-back restrictions
of this Section 3(d)(i) only once during the term of this Agreement.
-9-
<PAGE>
The foregoing provisions shall not apply to any Holder of
Registrable Notes if such Holder is prevented by applicable statute or
regulation from entering into any such agreement; provided, however, that
-------- -------
any such Holder shall undertake, in its request to participate in any such
underwritten offering, not to effect any public sale or distribution of any
securities Fungible with the class of securities covered by such Shelf
Registration (except as part of such underwritten offering) during such
period unless it has provided 45 days' prior written notice of such sale or
distribution to the Issuer or the managing underwriter or underwriters, as
the case may be.
(ii) Restrictions on the Issuers and Others. Each of the Issuers
--------------------------------------
and the Guarantors agrees (A) not to effect any public or private sale or
distribution (including, with out limitation, a sale pursuant to
Regulation D under the Securities Act) of any securities Fungible with
those covered by a Shelf Registration filed pursuant to Section 3 hereof,
or any securities convertible into or exchangeable or exercisable for such
securities, during the 10 days prior to or the 60-day period commencing on
the commencement of an underwritten public distribution of Registrable
Notes, if the managing underwriter or underwriters so requests; (B) to
include in any agreements entered into by either Issuer or any Guarantor on
or after the date of this Agreement (other than any underwriting agreement
relating to a public offering registered under the Securities Act) pursuant
to which such Issuer or Guarantor issues or agrees to issue securities
Fungible with the Notes a provision that each holder of such securities
that are Fungible with Notes issued at any time on or after the date of
this Agreement agrees not to effect any public or private sale or
distribution, or request or demand the registration, of any such securities
(or any securities convertible into or exchangeable or exercisable for such
securities) during the period referred to in clause (A) of this Section
3(d)(ii), including any sale pursuant to Rule 144 or Rule 144A; and (C) not
to grant or agree to grant any "piggy back registration" or other similar
rights to any holder of either Issuer's securities issued on or after the
date of this Agreement with respect to any Registration Statement.
4. Liquidated Damages
(a) Registration Defaults; Liquidated Damages. The Issuers and the
-----------------------------------------
Initial Purchasers acknowledge that the Holders will suffer damages if the
Issuers fail to fulfill their obligations under Section 2 or Section 3 hereof
and that it would not be feasible to ascertain the extent of such damages with
precision. Accordingly, the Issuers agree to pay, as liquidated damages,
additional interest on the Notes ("Liquidated Damages") under the circumstances
and to the extent set forth below (any such event, a "Registration Default"):
If (A) the Exchange Registration Statement has not been filed prior to
or on the Filing Date or (B) notwithstanding the consummation of an Exchange
Offer by the Issuers, the Issuers are required to file a Shelf Registration and
such Shelf Registration has not been filed prior to or on the 30th day following
the delivery to the Holders and the Trustee of a Shelf Notice or (C) if the
Issuers are unable to file an Exchange Registration Statement and are required
to file an Initial Shelf Registration, but have failed to do so prior to or on
the 30th day following the delivery to the
-10-
<PAGE>
Holders and the Trustee of a Shelf Notice; or (D) the Issuers have not issued
Exchanged Notes in exchange for all Notes validly tendered in accordance with
the terms of the Exchange Offer on or prior to the 150th day following the
Filing Date or (E) if applicable, the Shelf Registration has been declared
effective and such Shelf Registration ceases to be effective at any time during
the Effectiveness Period, then, in any case described in clauses (A) through (E)
above, Liquidated Damages shall accrue on the principal amount of the Notes in
an amount equal to one-half of one percent (0.50%) per annum for each $1,000 in
principal amount of Notes for the first 90 days commencing on the occurrence of
the first Registration Default, such Liquidated Damages increasing by an
additional one-quarter of one percent (0.25%) per annum for each $1,000 in
principal amount of affected Notes at the beginning of each such subsequent 90-
day period up to a maximum additional interest rate attributable to Liquidated
Damages equal to two percent (2.0%) per annum for each $1,000 in principal
amount of affected Notes, until all Registration Defaults have been cured;
provided, however, that upon the cure of all Registration Defaults hereunder
- -------- -------
Liquidated Damages shall cease to accrue unless and until another Registration
Default occurs.
(b) The Issuers shall notify the Trustee within one business day after
each and every date on which an event occurs in respect of which Liquidated
Damages are required to be paid (an "Event Date"). Any amounts of Liquidated
Damages due pursuant to (a) of this Section 4 will be payable in cash semi-
annually in arrears on each February 1 and August 1 (to the Holders of record on
the January 15 and July 15 immediately preceding such dates), commencing with
the first such date occurring after any such Liquidated Damages commences to
accrue. The amount of Liquidated Damages will be determined by first
multiplying the applicable Liquidated Damages rate first by the principal amount
of the Notes directly affected by the Registration Default (and, to the extent
permitted by applicable law without creating a new class of securities, only the
Notes directly affected by the Registration Default), and then multiplying the
result thereof by a fraction, the numerator of which is the number of days such
Liquidated Damages rate was applicable during such period (determined on the
basis of a 360-day year comprised of twelve 30-day months and, in the case of a
partial month, the actual number of days elapsed), and the denominator of which
is 360. By way of example, if the Exchange Registration Statement is filed and
the Exchange Offer is consummated within the specified time periods, but the
Issuers are nevertheless obligated to effect the Shelf Registration, and the
Shelf Registration Statement is not filed within the specified time period or is
not declared effective by the specified time, the Issuers and the Guarantors
shall, to the extent permitted by applicable law without creating a new class of
securities, only be obligated to pay Liquidated Damages with respect to the
Notes which the Issuers and the Guarantors were obligated to include in the
Shelf Registration Statement. Conversely, if there exists no Registration
Default with respect to the Shelf Registration Statement, but a Registration
Default occurs regarding the Exchange Offer, Liquidated Damages will, to the
extent permitted by applicable law without creating a new class of securities,
only accrue on those Notes eligible to participate in the Exchange Offer and
which were directly affected by the Registration Default.
-11-
<PAGE>
5. Registration Procedures
In connection with the filing of any Registration Statement pursuant
to Sections 2 or 3 hereof, the Issuers shall effect such registrations to permit
the sale of the securities covered thereby in accordance with the intended
method or methods of disposition thereof, and pursuant thereto and in connection
with any Registration Statement filed by the Issuers hereunder the Issuers and,
as applicable, the Guarantors shall:
(a) Prepare and file with the SEC prior to the Filing Date, a
Registration Statement or Registration Statements as prescribed by the
applicable provisions of Sections 2 and 3 hereof, and use their diligent best
efforts to cause each such Registration Statement to become effective and remain
effective as provided herein; provided, however, that, if (1) such filing is
-------- -------
pursuant to Section 3 hereof, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section 2 hereof is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Notes during the Applicable Period, before filing any
Registration Statement or Prospectus or any amendments or supplements thereto,
the Issuers shall furnish to the Holders of the Registrable Notes covered by
such Registration Statement or each such Participating Broker-Dealer, as the
case may be, their counsel and the managing underwriters, if any, copies of all
such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed (in each case
at least five Business Days prior to such filing, or such later date as is
reasonable under the circumstances). Neither the Issuers nor the Guarantors
shall file any Registration Statement or Prospectus or any amendments or
supplements thereto if any of (i) the Holders of a majority in aggregate
principal amount of the Registrable Notes covered by such Registration
Statement, (i) any such Participating Broker-Dealer, (iii) any managing
underwriters or (iv) counsel to any of the foregoing, shall reasonably object.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Shelf Registration or Exchange Registration Statement, as the
case may be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period or the Applicable Period, as
the case may be; cause the related Prospectus to be supplemented by any
Prospectus supplement required by applicable law, and as so supplemented to be
filed pursu ant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; and comply with all of the provisions of
the Securities Act and the Exchange Act applicable to them with respect to the
disposition of the securities covered by such Registration Statement as so
amended or in such Prospectus as so supplemented and with respect to the
subsequent resale of any securities being sold by a Participating Broker-Dealer
covered by any such Prospectus. The Issuers and Guarantors shall be deemed not
to have used their diligent best efforts to keep a Registration Statement
effective during the Applicable Period if any of the Issuers or Guarantors
voluntarily takes any action, as a result of which Holders of the Registrable
Notes covered thereby or Participating Broker-Dealers seeking to sell Exchange
Notes would be unable to sell such Registrable Notes or such Exchange Notes
during that period unless (i) such action is required by applicable law or (ii)
such action is taken by any such Issuer or Guarantor in good faith and for valid
business reasons (not including avoidance of the Issuer's obligations
hereunder), including suspension of the
-12-
<PAGE>
Registration Statement or other actions taken in connection with or in
anticipation of the acquisition or divestiture of assets, material financings or
other transactions effected in good faith for valid business reasons.
(c) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, notify the selling Holders of Registrable Notes, or each
such Participating Broker-Dealer, as the case may be, their respective counsel
and the managing underwriters, if any, promptly (but in any event within two
Business Days), and confirm such notice in writing, (i) when a Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
Effective Date therefor has occurred (including in such notice a written
statement that any Holder may, upon request, obtain, at the sole expense of the
Issuers, one conformed copy of such Registration Statement or post-effective
amendment including financial statements and schedules, documents incorporated
or deemed to be incorporated by reference and exhibits), (ii) of the issuance by
the SEC of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus or the initiation of any proceedings for that purpose, (iii) if at
any time when a Prospectus is required by the Securities Act to be delivered in
connection with sales of the Registrable Notes or resales of Exchange Notes by
Participating Broker-Dealers the representations and warranties of the Issuers
contained in any agree ment (including any underwriting agreement),
contemplated by Section 5(m) hereof cease to be true, complete and correct in
all material respects, (iv) of the receipt by the Issuers of any notification
with respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable Notes or the
Exchange Notes to be sold by any Participating Broker-Dealer for offer or sale
in any jurisdiction, or the initiation or threatening of any proceeding for such
purpose, (v) of the occurrence of any event, or the availability of any
information, which could render any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue or misleading in any material respect
or that requires the making of any changes in or amendments or supplements to
such Registration Statement, Prospectus or other documents so that, in the case
of the Registration Statement, it will not contain any untrue or misleading
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the Prospectus, it will not contain any untrue or misleading
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (vi) of any
determination by the Issuers that a post-effective amendment to a Registration
Statement would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, use their diligent best efforts during the Applicable
Period to prevent the issuance of any order suspending the effectiveness of a
Registration
-13-
<PAGE>
Statement or of any order preventing or suspending the use of a Prospectus or
suspending the qualification (or exemption from qualification) of any of the
Registrable Notes or the Exchange Notes to be sold by any Participating Broker-
Dealer, for sale in any jurisdiction, and, if any such order is issued, to use
their diligent best efforts during the Applicable Period to obtain the
withdrawal of any such order at the earliest possible time.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriter or underwriters (if any), the Holders of a
majority in aggregate principal amount of the Registrable Notes being sold in
connection with an underwritten offering or any Participating Broker-Dealer, (i)
promptly incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriters (if any), such Holders, any
Participating Broker-Dealer or counsel for any of them determine is reasonably
necessary to be included therein, (ii) make all required filings of such
prospectus supplement or such post-effective amendment as soon as practicable
after the Issuers have received notification of the matters to be incorporated
in such prospectus supplement or post-effective amendment, and (iii) supplement
or make appropriate amendments to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, furnish to each selling Holder of Registrable Notes and
to each such Participating Broker-Dealer who so requests and to counsel and each
man aging underwriter, if any, at the sole expense of the Issuers, one
conformed copy of the Registration Statement or Registration Statements and each
post-effective amendment thereto, including financial statements and schedules,
and, if requested, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, deliver to each selling Holder of Registrable Notes, or
each such Participating Broker-Dealer, as the case may be, their respective
counsel, and the underwriters, if any, at the sole expense of the Issuers, as
many copies of the Prospectus or Prospectuses (including each form of
preliminary prospectus) and each amendment or supplement thereto and any
documents incorporated by reference therein as such Persons may reasonably
request; and, subject to the last paragraph of this Section 5, the Issuers
hereby consent to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, and the underwriters or agents,
if any, and dealers, if any, in connection with the offering and sale of the
Registrable Notes covered by, or the sale by Participating Broker-Dealers of the
Exchange Notes pursuant to, such Prospectus and any amendment or supplement
thereto.
(h) Prior to any public offering of Registrable Notes or any delivery
of a Prospectus contained in the Exchange Registration Statement by any
Participating Broker-Dealer
-14-
<PAGE>
who seeks to sell Exchange Notes during the Applicable Period, use their best
efforts to register or qualify, and to cooperate with the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the case may be,
the managing underwriters, if any, and their respective counsel in connection
with the registration or qualification (or exemption from such registration or
qualifica tion) of such Registrable Notes for offer and sale under the
securities or Blue Sky laws of such juris dictions within the United States as
any selling Holder, Participating Broker-Dealer, or the managing underwriter or
underwriters reasonably request; provided, however, that if Exchange Notes held
-------- -------
by Participating Broker-Dealers or Registrable Notes are offered other than
through an underwritten offering, the Issuers agree to cause the Issuers'
counsel to perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h); keep each
such registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Exchange Notes held by Participating
Broker-Dealers or the Registrable Notes covered by the applicable Registration
State ment in accordance with applicable law; provided, however, that neither
-------- -------
Issuer shall be required (A) to qualify generally to do business in any
jurisdiction wherein it is not then so qualified, (B) to take any action that
would subject it to general service of process in any such jurisdiction wherein
it is not then so subject or (C) to subject itself to taxation in excess of a
nominal dollar amount in any such jurisdiction wherein it is not then so
subject.
(i) If a Shelf Registration is filed pursuant to Section 3 hereof,
cooperate with the selling Holders of Registrable Notes and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Notes to be sold, which certificates shall
not bear any restrictive legends and shall be in a form eligible for deposit
with The Depository Trust Company; and enable such Registrable Notes to be in
such denominations and registered in such names as the managing underwriters, if
any, or Holders may request.
(j) Use their diligent best efforts to cause the Registrable Notes
covered by the Registration Statement to be registered with or approved by such
other governmental agencies or authorities, including Gaming Authorities, as may
be reasonably necessary to enable the seller or sellers thereof or the
underwriters, if any, to consummate the disposition of such Registrable Notes,
except as may be required solely as a consequence of the nature of such selling
Holder's business, in which case the Issuers will cooperate in all reasonable
respects with the filing of such Registration Statement and the granting of such
approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, upon the occurrence of any event contemplated by
paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly as practicable prepare and
(subject to Section 5(a) hereof) file with the SEC, at the sole expense of the
Issuers, a supplement or post-effective amendment to the Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Notes being
-15-
<PAGE>
sold thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any such
Prospectus will not contain an untrue or misleading statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(l) Prior to the Effective Date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with certificates for
the Registrable Notes in a form eligible for deposit with The Depository Trust
Company and (ii) provide one or more CUSIP numbers, as applicable, for the
Registrable Notes.
(m) In connection with any underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement customary
for underwritten offerings of debt securities similar to the Notes and take all
such other actions as are reasonably requested by the managing underwriter or
underwriters in order to expedite or facilitate the registration or the disposi
tion of such Registrable Notes and, in such connection, (i) make such
representations and warranties to, and covenants with, the underwriters with
respect to the business of the Obligors as then operated and the Registration
Statement, Prospectus and documents, if any, incorporated or deemed to be
incorporated by reference therein, in each case, as are customarily made by
issuers and guarantors to underwriters of underwritten offerings of debt
securities similar to the Notes, and confirm the same in writing if and when
requested; (ii) obtain the written opinions of counsel to the Obligors and
written updates thereof in form, scope and substance reasonably satisfactory to
the managing underwriter or underwriters, addressed to the underwriters covering
the matters customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by the managing
underwriter or underwriters; (iii) obtain "cold comfort" letters and updates
thereof in form, scope and substance reasonably satisfactory to the managing
underwriter or underwriters from the independent certified public accountants of
the Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by any
Obligor which has become a Restricted Subsidiary under the terms of the
Indenture, for which financial statements and financial data are, or are
required to be, included or incorporated by reference in the Registration
Statement), addressed to each of the underwriters, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings and such other
matters as reasonably requested by the managing underwriter or underwriters as
permitted by the Statement on Auditing Standards No. 72; and (iv) if an
underwriting agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable than those set forth in Section 7
hereof (or such other reasonable provisions and procedures acceptable to Holders
of a majority in aggregate principal amount of Registrable Notes covered by such
Registration Statement and the managing underwriter or underwriters or agents)
with respect to all parties to be indemnified pursuant thereto. The above shall
be done at each closing under such underwriting agreement, or as and to the
extent required thereunder.
(n) If (1) a Shelf Registration is filed pursuant to Section 3 hereof,
or (2) a Prospectus contained in an Exchange Registration Statement filed
pursuant to Section 2 hereof is
-16-
<PAGE>
required to be delivered under the Securities Act by any Participating Broker-
Dealer who seeks to sell Exchange Notes during the Applicable Period, make
available for inspection by any selling Holder of such Registrable Notes being
sold, or each such Participating Broker-Dealer, as the case may be, any
underwriter participating in any such disposition of Registrable Notes and any
attorney, accountant or other agent retained by any such selling Holder or each
such Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent cor porate
documents and instruments of the Issuers and the Guarantors (collectively, the
"Records") as shall be reasonably necessary to enable the Inspectors to exercise
any applicable due diligence responsibilities, and cause the officers, directors
and employees of the Issuers and the Guarantors to supply all information
reasonably requested by any such Inspector in connection with such Registration
Statement. If the Issuers determine, in good faith, that any Records are
confidential and so notify the Inspectors, such Records shall not be disclosed
by the Inspectors unless (i) the dis closure of such Records is necessary or
advisable to avoid or correct a misstatement or omission in such Registration
Statement; provided, however, that prior notice thereof is given to the Issuers,
-------- -------
and the Issuers' legal counsel and such Holder's legal counsel concur that
disclosure is required, (ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court of competent jurisdiction or otherwise by
compulsion of legal process, (iii) disclosure of such Records is necessary or
advisable in connection with any action, claim, suit or proceeding, directly or
indirectly, involving or potentially involving any Inspector and arising out of,
based upon, relating to, or involving the Offering Memorandum, this Agreement,
the Purchase Agreement or the Notes, or any transactions contemplated hereby or
thereby or arising hereunder or thereunder; provided, however, that prior notice
-------- -------
shall be provided as soon as practicable to the Issuers of the potential
disclosure of any such Records by such Inspector pursuant to clauses (ii) or
(iii) of this sentence to permit the Issuers to obtain a protective order (or
waive the provisions of this paragraph (n)) and that such Inspector shall keep
all such information and records confidential or (iv) the information in such
Records has been made generally available to the public or has been provided to
third parties on a non-confidential basis provided that without limiting the
--------
foregoing, no such records, information or documents shall be used by any person
or entity obtaining access thereto in connection with any market transactions in
securities of the Issuers and the Guarantors in violation of law; and provided
--------
further that the Issuers and the Guarantors shall not be required to provide any
- -------
information to the Holders or the underwriters that the Issuers and the
Guarantors are prohibited by law from disclosing;
(o) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Exchange Indenture to be
qualified under the TIA not later than the Effective Date of the first
Registration Statement relating to the Registrable Notes; and in connection
therewith, cooperate with the trustee under the Exchange Indenture and the
Holders of the Registrable Notes, to effect such changes to such 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 best efforts to cause such trustee
to execute, all documents as may be required to effect such changes, and all
other forms and documents required to be filed with the SEC to enable such
indenture to be so qualified in a timely manner.
-17-
<PAGE>
(p) Comply with all applicable rules and regulations of the SEC and
make generally available to their security holders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 45 days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) (i) commencing at the end
of any fiscal quarter in which Registrable Notes are sold to underwriters in a
firm commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Issuers after the effective date of a Registration
Statement, which statements shall cover such 12-month periods.
(q) Upon consummation of an Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Issuers, in a form customary for comparable
underwritten transactions, addressed to the Trustee for the benefit of all
Holders of Registrable Notes participating in the Exchange Offer or the Private
Exchange, as the case may be, that the Exchange Notes or Private Exchange Notes,
as the case may be, and the related indenture constitute legal, valid and
binding obligations of the Issuers, enforceable against the Issuers in
accordance with their respective terms, subject to customary exceptions and
qualifications.
(r) If an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Notes by Holders to the Issuers (or to such
other Person as directed by the Issuers) in exchange for the Exchange Notes or
the Private Exchange Notes, as the case may be, the Issuers shall mark, or cause
to be marked, on such Registrable Notes that such Registrable Notes are being
canceled in exchange for the Exchange Notes or the Private Exchange Notes, as
the case may be; in no event shall such Registrable Notes be marked as paid or
otherwise satisfied.
(s) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in connection
with any filings required to be made with the National Association of Securities
Dealers, Inc. (the "NASD").
(t) Use their diligent best efforts to take all other steps necessary
or advisable to effect the registration of the Exchange Notes and/or Registrable
Notes covered by a Registration Statement contemplated hereby.
The Issuers may require each seller of Registrable Notes as to which
any registration is being effected to furnish to the Issuers such information
regarding such seller and the distribution of such Registrable Notes as the
Issuers may, from time to time, reasonably request. The Issuers may exclude
from such registration the Registrable Notes of any seller so long as such
seller fails to furnish such information within a reasonable time (and in any
event within ten Business Days) after receiving such request. Each seller of
Registrable Notes as to which any Shelf Registration is being effected agrees to
furnish promptly to the Issuers all information required to be disclosed in
order to make the information previously furnished to the Issuers by such seller
not materially misleading. No Holder shall be entitled to Liquidated Damages
pursuant to Section 4 hereof if such Holder fails
-18-
<PAGE>
timely to provide all such reasonably requested information to the extent that
such failure, together with such failures of other Holders, is the sole reason
for assessment of Liquidated Damages.
If any such Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Issuers, then such Holder shall
have the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such Holder, to the effect that the holding
by such Holder of such securities is not to be construed as a recommendation by
such Holder of the investment quality of the Issuers' securities covered thereby
and that such holding does not imply that such Holder will assist in meeting any
future financial requirements of the Issuers, or (ii) in the event that such
reference to such Holder by name or otherwise is not required by the Securities
Act or any similar federal statute then in force, the deletion of the reference
to such Holder in any amendment or supplement to the Registration Statement
filed or prepared subsequent to the time that such reference ceases to be
required.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or, as the case may be, Exchange
Notes to be sold by such Participating Broker-Dealer, that, upon actual receipt
of any notice from the Issuers of the happening of any event of the kind
described in Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof, such
Holder or Participating Broker-Dealer will forthwith discontinue disposition of
such Registrable Notes covered by such Registration Statement or Prospectus or
Exchange Notes to be sold by such Holder or Participating Broker-Dealer, as the
case may be, until such Holder's or Participating Broker-Dealer's receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 5(k)
hereof, or until it is advised in writing (the "Advice") by the Issuers that the
use of the applicable Prospectus may be resumed, and has received copies of any
amendments or supplements thereto. In the event that the Issuers give any such
notice, and subsequently deliver to each Holder or Broker-Dealer copies of such
supplemented or amended Prospectus. then each Holder or Broker-Dealer will
either destroy or return to the Issuers all copies (other than permanent file
copies then in such Holder's or Broker-Dealer's possession) of any Prospectus
that, as a result of such occurrence leading to such notice, is no longer
accurate. In the event that the Issuers shall give any such notice, each of the
Effectiveness Period and the Applicable Period shall be extended by the number
of days during such periods from and including the date of the giving of such
notice to and including the date when each seller of Registrable Notes covered
by such Registration Statement or Exchange Notes to be sold by such
Participating Broker-Dealer, as the case may be, shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 5(k)
hereof or (y) the Advice.
6. Registration Expenses
All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuers shall be borne by the Issuers whether or not
the Exchange Offer or a Shelf Registration is filed or becomes effective,
including, without limitation, (i) all registration and filing fees (including,
without limitation, (A) fees with respect to filings required to be made with
the NASD in connection with an underwritten offering and (B) fees and expenses
of compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel in connection with Blue
Sky qualifications of the Registrable Notes or Exchange Notes and
-19-
<PAGE>
determination of the eligibility of the Registrable Notes or Exchange Notes for
investment under the laws of such jurisdictions (x) where the holders of
Registrable Notes are located, in the case of the Exchange Notes, or (y) as
provided in Section 5(h) hereof, in the case of Registrable Notes or Exchange
Notes to be sold by a Participating Broker-Dealer during the Applicable
Period)), (ii) printing expenses, including, without limitation, expenses of
printing certificates for Registrable Notes or Exchange Notes in a form eligible
for deposit with The Depository Trust Company and of printing prospectuses if
the printing of prospectuses is requested by the managing underwriters, if any,
by the Holders of a majority in aggregate principal amount of the Registrable
Notes included in any Registration Statement or in respect of Registrable Notes
or Exchange Notes to be sold by any Participating Broker-Dealer during the
Applicable Period, as the case may be, (iii) messenger, telephone and delivery
expenses, (iv) fees and disbursements of counsel for the Issuers and fees and
disbursements of one special counsel for all of the sellers of Registrable
Notes, (v) fees and disbursements of all independent certified public
accountants referred to in Section 5(m)(iii) hereof (including, without
limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (vi) Securities Act liability
insurance, if the Issuers desire such insurance, (vii) fees and expenses of all
other Persons retained by the Issuers, (viii) internal expenses of the Issuers
(including, without limitation, all salaries and expenses of officers and
employees of the Issuers performing legal or accounting duties), (ix) the
expense of any annual audit, (x) the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities exchange,
if applicable, and (xi) the expenses relating to printing, word processing and
distributing all Registration Statements, underwriting agreements, indentures
and any other documents necessary in order to comply with this Agreement.
7. Indemnification
(a) In the event of a Shelf Registration or in connection with any
delivery by any Participating Broker-Dealer who seeks to sell Exchange Notes
during the Applicable Period, the Obligors agree, jointly and severally, to
indemnify and hold harmless each Holder of Registrable Notes and each
Participating Broker-Dealer selling Exchange Notes during the Applicable Period,
the officers and directors of each such Person, and each Person, if any, who
controls any such Person within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act (each, a "Participant"), from
and against any and all losses, claims, damages and liabilities (including,
without limitation, the reasonable legal fees and other expenses actually
incurred in connection with any suit, action or proceeding or any claim
asserted) caused by, arising out of or based upon any untrue or misleading
statement or alleged untrue or misleading statement of a material fact contained
in any Registration Statement (or any amendment thereto) or Prospectus (as
amended or supplemented if the Issuer shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by, arising out of
or based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the case of the Prospectus in light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
furnished to the Issuers in writing by any Participant expressly for use
therein; provided, however, that the Obligors will not be liable if such untrue
-------- -------
or misleading
-20-
<PAGE>
statement or omission or alleged untrue or misleading statement or omission was
contained or made in any preliminary prospectus and corrected in the Prospectus
or any amendment or supplement thereto, or made in the Prospectus and corrected
in a supplement or amendment thereto, and the Prospectus as amended and
supplemented does not contain any other untrue or misleading statement or
omission or alleged untrue or misleading statement or omission of a material
fact that was the sub ject matter of the related proceeding and any such loss,
liability, claim, damage or expense suffered or incurred by the Participants
resulted from any action, claim or suit by any Person who purchased Registrable
Notes or Exchange Notes which are the subject thereof from such Participant and
it is established in the related proceeding that such Participant failed to
deliver or provide a copy of the Prospectus (as amended or supplemented) to such
Person with or prior to the confirmation of the sale of such Registrable Notes
or Exchange Notes sold to such Person if required by applicable law, unless such
failure to deliver or provide a copy of the Prospectus (as amended or
supplemented) was a result of noncompliance by the Issuers with Section 5 of
this Agreement.
(b) Each Participant agrees, severally and not jointly, to indemnify
and hold harmless the Issuers, their directors, their officers who sign the
Registration Statement and each Person who controls the Issuers within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Issuers to each Participant,
but only with reference to information relating to such Participant furnished to
the Issuers in writing by such Participant expressly for use in any Registration
Statement or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the proceeds received by such Participant from sales of Registrable
Notes or Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such Person (the "Indemnified Person") shall promptly
notify the Person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to repre sent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; provided, however, that the failure to so notify the
-------- -------
Indemnifying Person shall not relieve it of any obligation or liability which it
may have hereunder or otherwise. In any such proceeding, any Indemnified Person
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary, (ii) the Indemnifying Person shall have failed within a reasonable
period of time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person or any affiliate and representation of both parties by the same counsel
would be inappropriate under standards of professional conduct due to actual or
potential differing interests between them, in which case the reasonable fees
and expenses of separate counsel shall be borne by the Indemnifying Party. It
is understood that the Indemnifying Person shall not, in connection with any one
such
-21-
<PAGE>
proceeding or separate but substantially similar related proceeding in the
same jurisdiction arising out of the same general allegations, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such reasonable fees and
expenses shall be reimbursed promptly as they are incurred. Any such separate
firm for the Participants and such control Persons of Participants shall be
designated in writing by Participants who sold a majority in interest of
Registrable Notes and Exchange Notes sold by all such Participants and
reasonably acceptable to the Issuers and any such separate firm for the Issuers,
its directors, its officers and such control Persons of the Issuers shall be
designated in writing by the Issuers and reasonably acceptable to the Holders.
The Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its prior written consent (which consent shall not be
unreasonably withheld or delayed), but if settled with such consent or if there
should be a final judgment for the plaintiff for which the Indemnified Person is
entitled to indemnification pursuant to this Agreement, the Indemnifying Person
agrees to indemnify and hold harmless each Indemnified Person from and against
any loss or liability by reason of such settlement or judgment. No Indemnifying
Person shall, without the prior written consent of the Indemnified Persons
(which consent shall not be unreasonably withheld), effect any settlement or
compromise of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party, or indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement includes an
unconditional written release of such Indemnified Person, in form and substance
reasonably satisfactory to such Indemnified Person, from all liability on claims
that are the subject matter of such proceeding.
(d) If the indemnification provided for in the first and second
paragraphs of this Section 7 is for any reason unavailable to, or insufficient
to hold harmless, an Indemnified Person in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying Person under
such paragraphs, in lieu of indemnifying such Indemnified Person thereunder and
in order to provide for just and equitable contribution, shall contribute to the
amount paid or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to reflect
(i) the relative benefits received by the Indemnifying Person or Persons on the
one hand and the Indemnified Person or Persons on the other from the offering of
the Notes or (ii) if the allocation provided by the foregoing clause (i) is not
permitted by applicable law, not only such relative benefits but also the
relative fault of the Indemnifying Person or Persons on the one hand and the
Indemnified Person or Persons on the other in connection with the statements or
omis sions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof) as well as any
other relevant equitable considerations. The relative benefits received by the
Obligors on the one hand and any Participant on the other shall be deemed to be
in the same proportion as the total proceeds from the offering (net of discounts
and commissions but before deducting expenses) of the Notes received by the
Issuers bears to the total proceeds received by such Participant from the sale
of Registrable Notes or Exchange Notes, as the case may be. The relative fault
of the parties shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Issuer on the one hand or such Participant or such other Indemnified Person, as
the case may be, on the other, the parties' relative intent, knowledge,
-22-
<PAGE>
access to information and opportunity to correct or prevent such statement or
omission, and any other equitable considerations appropriate in the
circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
--- ----
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and lia bilities referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth above, any
reasonable legal or other expenses actually incurred by such Indemnified Person
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to con tribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceed the amount of any damages that such
Participant has otherwise been required to pay or has paid by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses for which an
Indemnified Person is entitled to indemnification or contribution under this
Section 7 shall be paid by the Indemnifying Person to the Indemnified Person as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Obligors set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any of the Initial Purchasers or any
person who controls an Initial Purchaser, the Obligors, their respective
directors or officers or any person controlling the Obligors, and (ii) any
termination of this Agreement.
(g) The indemnity and contribution agreements contained in this
Section 7 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
The Issuers covenant that they will file the reports required to be
filed by them under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder in a timely manner in accordance with
the requirements of the Securities Act and the Exchange Act and, if at any time
the Issuers are not required to file such reports, they will, upon the request
of any Holder or beneficial owner of Registrable Notes, make available such
information necessary to permit sales pursuant to Rule 144A under the Securities
Act. The Issuers further covenant that they will take such further action as
any Holder of Registrable Notes may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Notes
without registration under the Securities Act within the limitation of the
exemptions provided by (a)
-23-
<PAGE>
Rule 144(k) and Rule 144A under the Securities Act, as such Rules may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the SEC (it being expressly understood that the foregoing shall not create any
obligation on the part of the Issuers to file periodic reports or other reports
under the Exchange Act at any time that they are not then required to file such
reports pursuant to the Exchange Act).
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and reasonably acceptable to the Issuers.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
10. Miscellaneous
(a) No Inconsistent Agreements. The Issuers have not, as of the date
--------------------------
hereof, and the Issuers shall not, after the date of this Agreement, enter into
any agreement with respect to any of their respective securities that is
inconsistent with the rights granted to the Holders of Registrable Notes in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of any of the Issuers' other
issued and outstanding securities under any such agreements.
(b) Adjustments Affecting Registrable Notes. The Issuers shall not,
---------------------------------------
directly or indirectly, take any action with respect to the Registrable Notes as
a class that would adversely affect the ability of the Holders of Registrable
Notes to include such Registrable Notes in a registration undertaken pursuant to
this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may not
----------------------
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of (i) the Issuers and (ii)(A) the Holders of not less than a majority
in aggregate principal amount of the then outstanding Registrable Notes and (B)
in circumstances that would adversely affect the Initial Purchasers or the
Participating Broker-Dealers, the Initial Purchasers or, as the case may be, the
Participating Broker-Dealers holding not less than a majority in aggregate
principal amount of the Notes, or, as the case may be, Exchange Notes held by
all Participating Broker-Dealers; provided, however, that Section 7 and this
-------- -------
Section 10(c) may not be amended, modified or supplemented without the prior
written consent of each Holder and each Participating Broker-Dealer (including
any person who was
-24-
<PAGE>
a Holder or Participating Broker-Dealer of Registrable Notes or Exchange Notes,
as the case may be, disposed of pursuant to any Registration Statement) affected
by any such amendment, modification or supplement. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Registrable
Notes whose securities are being sold pursuant to a Registration Statement and
that does not directly or indirectly affect, impair, limit or compromise the
rights of other Holders of Registrable Notes may be given by Holders of at least
a majority in aggregate principal amount of the Registrable Notes being sold by
such Holders pursuant to such Registration Statement.
(d) Notices. All notices and other communications (including without
-------
limitation any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing and delivered by hand-delivery,
registered first-class mail, next-day air courier or facsimile:
1. if to a Holder of the Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or Participating
Broker-Dealer, as the case may be, set forth on the records of the
registrar under the Indenture, with a copy in like manner to the Initial
Purchasers as follows:
Oppenheimer & Co., Inc.
One World Financial Center
New York, New York 10281
Facsimile: (212) 667-8148
Attention: Corporate Finance Department
BT Securities Corporation
One Bankers Trust Plaza
New York, New York 10006
Facsimile: (212) 669-0021
Attention: Corporate Finance Department
BancAmerica Securities Corp.
231 S. LaSalle Street, 17th Floor
Chicago, Illinois 60697
Facsimile: (312) 974-0140
Attention: High Yield Origination
with copies to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Facsimile: (415) 493-6811
Attention: Meredith S. Jackson, Esq.
-25-
<PAGE>
2. if to the Initial Purchasers, at the respective addresses
specified in Section 10(d)(1);
3. if to the Issuers, at the address as follows:
Hollywood Park, Inc.
Hollywood Park Operating Company
1050 South Prairie Avenue
Inglewood, California 90301
Facsimile: (310) 673-2582
Attention: Investor Relations
with a copy to:
Irell & Manella
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067
Facsimile: (310) 203-7199
Attention: Alvin G. Segel, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if sent by facsimile.
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 and in the manner specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the respective successors and assigns of each of the
parties hereto, the Holders and the Participating Broker-Dealers; provided,
--------
however, that this Agreement shall not inure to the benefit of or be binding
- -------
upon a successor or assign of a Holder unless and to the extent such successor
or assign holds Registrable Notes.
(f) 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.
(g) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW; JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED BY
---------------------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
-26-
<PAGE>
STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE
STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW, SUBJECT TO
THE REQUIREMENTS OF APPLICABLE GAMING LAWS.
(i) Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipu lated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(j) Securities Held by the Issuer or Its Affiliates. Whenever the
-----------------------------------------------
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, any Registrable Notes held by the Issuers or their
affiliates (as such term is defined in Rule 405 under the Securities Act) shall
not be counted in determining whether such consent or approval was given by the
Holders of such required percentage.
(k) Third Party Beneficiaries. Holders of Registrable Notes and
-------------------------
Participating Broker-Dealers are intended third party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons with the same
effect as though they were parties hereto.
(l) Entire Agreement. This Agreement, together with the Purchase
----------------
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, warranties, contracts, understandings,
correspondence, conversations and memoranda between the Initial Purchasers on
the one hand and the Issuer on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
-27-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ISSUERS
-------
HOLLYWOOD PARK, INC.
By:_______________________________
Name:
Title:
HOLLYWOOD PARK OPERATING COMPANY
By:_______________________________
Name:
Title:
GUARANTORS
----------
HOLLYWOOD PARK FOOD SERVICES,
INC.
By:_______________________________
Name:
Title:
HOLLYWOOD PARK FALL OPERATING
COMPANY
By:_______________________________
Name:
Title:
-28-
<PAGE>
TURF PARADISE, INC.
By:_______________________________
Name:
Title:
HP/COMPTON, INC.
By:_______________________________
Name:
Title:
CRYSTAL PARK HOTEL AND
CASINO DEVELOPMENT COMPANY, LLC
By its Managing Member
HP/COMPTON, INC.
By:_______________________________
Name:
Title:
HP YAKAMA, INC.
By:_______________________________
Name:
Title:
BOOMTOWN, INC.
By:_______________________________
Name:
Title:
-29-
<PAGE>
BOOMTOWN HOTEL & CASINO, INC.
By:_______________________________
Name:
Title:
LOUISIANA GAMING ENTERPRISES, INC.
By:_______________________________
Name:
Title:
LOUISIANA-I GAMING, A LOUISIANA
PARTNERSHIP IN COMMENDAM
By its General Partner
LOUISIANA GAMING ENTERPRISES, INC.
By:_______________________________
Name:
Title:
BAYVIEW YACHT CLUB, INC.
By:_______________________________
Name:
Title:
-30-
<PAGE>
MISSISSIPPI-I GAMING, L.P.
By its General Partner
BAYVIEW YACHT CLUB, INC.
By:_______________________________
Name:
Title:
INITIAL PURCHASERS
------------------
OPPENHEIMER & CO., INC.
By:_______________________________
Name:
Title:
BT SECURITIES CORPORATION
By:_______________________________
Name:
Title:
BANCAMERICA SECURITIES, INC.
By:_______________________________
Name:
Title:
-31-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 38,409,000
<SECURITIES> 1,275,000
<RECEIVABLES> 20,129,000
<ALLOWANCES> 780,000
<INVENTORY> 0
<CURRENT-ASSETS> 89,718,000
<PP&E> 407,808,000
<DEPRECIATION> 130,724,000
<TOTAL-ASSETS> 426,098,000
<CURRENT-LIABILITIES> 80,654,000
<BONDS> 122,618,000
0
28,000
<COMMON> 2,380,000
<OTHER-SE> 214,199,000
<TOTAL-LIABILITY-AND-EQUITY> 426,098,000
<SALES> 6,860,000
<TOTAL-REVENUES> 73,139,000
<CGS> 8,819,000
<TOTAL-COSTS> 59,359,000
<OTHER-EXPENSES> 5,843,000
<LOSS-PROVISION> 75,000
<INTEREST-EXPENSE> 129,000
<INCOME-PRETAX> 7,808,000
<INCOME-TAX> 3,100,000
<INCOME-CONTINUING> 4,708,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,708,000
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
</TABLE>
