UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[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
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- ---------------
Commission File No. 1-6697
Mirage Resorts, Incorporated
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(Exact name of Registrant as specified in its charter)
Nevada 88-0058016
- ---------------------------- ------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
3400 Las Vegas Boulevard South, Las Vegas, Nevada 89109
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(Address of principal executive offices - Zip Code)
(702) 791-7111
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the Registrant (1) has 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
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common stock, $0.004 par value, 178,811,461 shares outstanding as
of August 13, 1997.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited condensed consolidated financial information as of
June 30, 1997 and for the three-month and six-month periods ended
June 30, 1997 and 1996 included in this report was reviewed by
Arthur Andersen LLP, independent public accountants, in
accordance with the professional standards and procedures
established for such reviews by the American Institute of
Certified Public Accountants.
<PAGE>
REVIEW REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------------
To the Directors and Stockholders
of Mirage Resorts, Incorporated
We have reviewed the accompanying condensed consolidated balance
sheet of Mirage Resorts, Incorporated (a Nevada corporation) and
subsidiaries (the "Company") as of June 30, 1997, and the
related condensed consolidated statements of income for the
three-month and six-month periods ended June 30, 1997 and 1996
and the related condensed consolidated statements of cash flows
for the six-month periods ended June 30, 1997 and 1996. These
condensed consolidated financial statements are the
responsibility of the Company's management.
We conducted our reviews in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material
modifications that should be made to the financial statements
referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Mirage
Resorts, Incorporated and subsidiaries as of December 31, 1996,
and the related consolidated statements of income, stockholders'
equity and cash flows for the year then ended (not presented
herein), and, in our report dated March 7, 1997, we expressed an
unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet of Mirage Resorts,
Incorporated and subsidiaries as of December 31, 1996, is fairly
stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
August 11, 1997
2
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED MIRAGE RESORTS, INCORPORATED
BALANCE SHEETS
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At June 30, At December 31,
1997 1996
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(In thousands) (Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 88,268 $ 81,908
Receivables, net of allowance for doubtful accounts
of $43,684 and $38,674 67,526 70,196
Inventories 26,668 27,554
Prepaid expenses and other 49,962 56,625
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Total current assets 232,424 236,283
Property and equipment, net of accumulated depreciation
of $594,623 and $551,955 2,026,246 1,685,689
Other assets, net 324,884 221,518
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$2,583,554 $2,143,490
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 103,169 $ 120,294
Accrued expenses 90,399 97,718
Current maturities of long-term debt 160 453
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Total current liabilities 193,728 218,465
Long-term debt, net of current maturities 823,544 468,140
Other liabilities, including deferred income taxes of
$152,960 and $155,076 165,288 166,002
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Total liabilities 1,182,560 852,607
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Commitments and contingencies
Stockholders' equity
Common stock: 178,773 and 178,336 shares outstanding 940 940
Additional paid-in capital 730,534 725,240
Retained earnings 959,580 856,215
Treasury stock, at cost: 56,375 and 56,812 shares (290,060) (291,512)
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Total stockholders' equity 1,400,994 1,290,883
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$2,583,554 $2,143,490
=============================================================================================
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED MIRAGE RESORTS, INCORPORATED
STATEMENTS OF INCOME (UNAUDITED)
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Three Months Six Months
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For the periods ended June 30 1997 1996 1997 1996
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(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Gross revenues $373,757 $343,183 $768,156 $751,851
Less - promotional allowances (29,396) (30,531) (61,756) (64,991)
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344,361 312,652 706,400 686,860
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Costs and expenses
Casino-hotel operations 198,847 187,548 401,765 395,800
General and administrative 39,956 37,484 78,372 75,474
Depreciation and amortization 22,018 22,223 43,374 44,366
Corporate expense 6,703 6,079 15,315 13,778
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267,524 253,334 538,826 529,418
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Operating income 76,837 59,318 167,574 157,442
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Other income (expense)
Interest cost (14,477) (6,501) (27,203) (13,221)
Interest capitalized 11,934 5,905 21,499 9,929
Other, including interest income 1,364 4,341 1,508 11,418
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(1,179) 3,745 (4,196) 8,126
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Income before income taxes and
extraordinary item 75,658 63,063 163,378 165,568
Provision for income taxes 26,757 22,464 57,788 60,382
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Income before extraordinary item 48,901 40,599 105,590 105,186
Extraordinary item - loss on early
retirement of debt, net of applicable
income tax benefit - - (2,225) -
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Net income $ 48,901 $ 40,599 $103,365 $105,186
=============================================================================================
Income per share of common stock
Income before extraordinary item $ 0.26 $ 0.21 $ 0.55 $ 0.54
Extraordinary item - loss on early
retirement of debt, net of applicable
income tax benefit - - (0.01) -
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Net income per share of common stock $ 0.26 $ 0.21 $ 0.54 $ 0.54
=============================================================================================
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED MIRAGE RESORTS, INCORPORATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
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Six months ended June 30 1997 1996
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(In thousands)
<S> <C> <C>
Cash flows from operating activities
Net income $ 103,365 $ 105,186
Adjustments to reconcile net income to net cash provided
by operating activities
Provision for losses on receivables 7,284 9,860
Depreciation and amortization of property and equipment,
including amounts reported as corporate expense 47,312 47,291
Equity in (undistributed earnings) loss of Monte Carlo (16,160) 5,168
Gain on sale of investment in Casino Iguazu - (8,006)
Amortization of debt discount and issuance costs 7,289 7,070
Loss on early retirement of debt 3,422 -
Changes in working capital pertaining to operating activities
(Increase) decrease in receivables and other current assets 4,681 (4,940)
Decrease in trade accounts payable and accrued expenses (43,962) (31,234)
Other (5,563) 301
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Net cash provided by operating activities 107,668 130,696
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Cash flows from investing activities
Capital expenditures (391,731) (113,607)
Increase in construction payables 19,518 8,440
Joint venture and other equity investments (526) (23,513)
Proceeds from sale of investment in Casino Iguazu - 12,500
Proceeds from sale of other equity investments - 18,127
Acquisition of fine art inventory (69,671) -
Other (11,774) (4,235)
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Net cash used for investing activities (454,184) (102,288)
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Cash flows from financing activities
Net increase (decrease) in bank credit facility and commercial
paper borrowings 348,915 (41,882)
Exercise of common stock options, including related income
tax benefit 5,546 14,227
Other (1,585) (329)
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Net cash provided by (used for) financing activities 352,876 (27,984)
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Cash and cash equivalents
Increase for the period 6,360 424
Balance, beginning of period 81,908 48,026
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Balance, end of period $ 88,268 $ 48,450
=================================================================================================
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED MIRAGE RESORTS, INCORPORATED
FINANCIAL STATEMENTS (UNAUDITED)
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NOTE 1 - COMPANY DESCRIPTION AND BASIS OF PRESENTATION
Mirage Resorts, Incorporated (the "Company"), through wholly
owned subsidiaries, owns and operates some of the most success-
ful casino-based entertainment resorts in the world. These
resorts include The Mirage and Treasure Island on the Las Vegas
Strip, the Golden Nugget in downtown Las Vegas and the Golden
Nugget-Laughlin in Laughlin, Nevada. The Company is also a 50%
partner in a joint venture that owns and operates the Monte
Carlo Resort & Casino ("Monte Carlo"), which opened June 21,
1996 on the Las Vegas Strip.
The Company is currently constructing two additional wholly owned
hotel-casino resorts. Bellagio, an elegant 3,005-guest room
luxury resort, is being constructed on approximately 118 acres
adjacent to Monte Carlo on the Las Vegas Strip. Beau Rivage, a
luxurious 1,780-guest room beachfront resort, is being
constructed on approximately 21 acres in Biloxi, Mississippi.
Both resorts are scheduled to be completed in 1998 - Bellagio in
the third quarter and Beau Rivage in the fourth quarter.
The accompanying condensed consolidated financial statements have
been prepared in accordance with the accounting policies
described in the Company's 1996 Annual Report on Form 10-K (the
"1996 Annual Report") and should be read in conjunction with
the Notes to Consolidated Financial Statements which appear in
that report. The Condensed Consolidated Balance Sheet at
December 31, 1996 contained herein was derived from audited
financial statements, but does not include all disclosures
included in the 1996 Annual Report and applicable under generally
accepted accounting principles.
In the opinion of management, all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation
of the results for the interim periods have been included. The
results for the 1997 interim periods are not necessarily
indicative of expected results for the full year.
Certain amounts in the 1996 condensed consolidated financial
statements have been reclassified to conform with the 1997
presentation. These reclassifications had no effect on the
Company's net income.
NOTE 2 - BANK CREDIT FACILITY AMENDMENT
On March 7, 1997, the Company's $1 billion revolving bank credit
facility was amended to increase the total availability to $1.75
billion and extend the maturity date from May 1999 to March 2002.
Under certain circumstances, the facility can be further
increased to $2 billion. The amendment also reduced the
Company's borrowing cost and eliminated or relaxed many of the
bank facility's financial covenants.
6
<PAGE>
In many respects, the amended bank facility is tantamount to a
new facility. As a result, the Company wrote off the unamortized
up-front costs and fees associated with the original $1 billion
facility, resulting in an extraordinary charge of $2.2 million,
net of applicable income tax benefit of $1.2 million.
NOTE 3 - ISSUANCE OF LONG-TERM DEBT
On August 5, 1997, the Company issued $200 million principal
amount of 6 3/4% unsecured notes due August 1, 2007 and $100
million principal amount of 7 1/4% unsecured debentures due
August 1, 2017. The net proceeds from the offering of approx-
imately $296.2 million are expected to be used to repay a portion
of the Company's outstanding bank credit facility and commercial
paper borrowings.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
COMPARISON OF OPERATING RESULTS FOR THE THREE-MONTH PERIODS ENDED
JUNE 30, 1997 AND 1996
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Three months ended June 30 1997 1996
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(Dollars in thousands, except per share and room rate amounts)
<S> <C> <C>
Gross revenues
The Mirage $202,159 $178,381
Treasure Island 97,890 100,379
Golden Nugget 49,801 54,628
Golden Nugget-Laughlin 15,155 14,963
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365,005 348,351
Equity in earnings (loss) of Monte Carlo 8,752 (5,168)
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$373,757 $343,183
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Net revenues
The Mirage $185,750 $161,195
Treasure Island 90,999 93,202
Golden Nugget 45,372 49,978
Golden Nugget-Laughlin 13,488 13,445
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335,609 317,820
Equity in earnings (loss) of Monte Carlo 8,752 (5,168)
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$344,361 $312,652
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Operating profit
The Mirage $ 47,116 $ 35,442
Treasure Island 19,670 22,510
Golden Nugget 6,545 11,100
Golden Nugget-Laughlin 1,457 1,513
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74,788 70,565
Equity in earnings (loss) of Monte Carlo 8,752 (5,168)
Corporate expense (6,703) (6,079)
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$ 76,837 $ 59,318
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Operating margin (operating profit/net revenues)
The Mirage 25.4% 22.0%
Treasure Island 21.6% 24.2%
Golden Nugget 14.4% 22.2%
Golden Nugget-Laughlin 10.8% 11.3%
Company-wide (before Monte Carlo and corporate expense) 22.3% 22.2%
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Net income $ 48,901 $ 40,599
Net income per share $ 0.26 $ 0.21
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Other information (excluding Monte Carlo)
Company-wide table games win percentage 20.1% 16.0%
Company-wide occupancy of standard guest rooms 99.0% 99.6%
Average standard guest room rate (a) $ 95 $ 92
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(a) Cash rate (i.e., excluding complimentary accommodations) at the Company's
Las Vegas hotels.
</TABLE>
8
<PAGE>
The Company reported 1997 second quarter net income of $48.9
million, or $0.26 per share, a 20% increase over the $40.6
million, or $0.21 per share, reported in the second quarter of
1996. The Company has now achieved year-over-year earnings
increases in 13 of the past 14 quarters. Revenues, net of
promotional allowances, totaled $344.4 million, an increase of
10% over the $312.7 million reported in the 1996 second quarter.
Operating income grew by 30% to $76.8 million, versus $59.3
million in the prior-year period.
The Company-wide table games win percentage during the 1997
second quarter was a relatively normal 20.1%, versus the
unusually low 16.0% recorded in the prior-year period. The 1996
second quarter benefited from a $4.5 million gain on the sale of
investment securities, but was impacted by a $5.6 million charge
reflecting the Company's share of Monte Carlo's preopening costs.
There were no such non-recurring items in the 1997 quarter.
The 1997 second quarter results were achieved against the
backdrop of increased competition in the Las Vegas market.
According to the Las Vegas Convention and Visitors Authority,
during the period January through May 1997, the number of Las
Vegas visitors rose by approximately 5% over the same 1996
period. Meanwhile, the number of available guest rooms in Las
Vegas increased by almost 12%. As a result, city-wide hotel room
occupancy rates declined. Management believes that this trend
continued during June.
The Company, however, focuses on operating superior, "must see"
properties and has been less affected by the city-wide trend. In
the 1997 second quarter, Company-wide standard guest room
occupancy remained very high (99.0%, versus 99.6% in the 1996
second quarter) and the average standard room rate at the
Company's Las Vegas hotels rose to $95, compared to $92 in the
prior-year period.
The earnings improvement during the 1997 second quarter was led
by the Company's flagship resort, The Mirage, which achieved a
$24.6 million, or 15%, increase in net revenues and an $11.7
million, or 33%, increase in operating income. Casino revenues
at The Mirage increased by 24%, as a result of higher activity
levels and an increase in the table games win percentage. The
Mirage's net non-casino revenues rose by 6%, reflecting stable
hotel room occupancy, higher average room rates and the continued
success of Siegfried & Roy.
Treasure Island performed well during the quarter, amidst
competitive market conditions and ongoing construction of a new
hotel lobby and other amenities. Its net revenues of $91.0
million and operating income of $19.7 million during the 1997
second quarter nearly equaled the strong $93.2 million and $22.5
million reported in the 1996 second quarter. The ongoing
construction has temporarily reduced the number of slot machines
offered at Treasure Island, with an average of approximately 6%
9
<PAGE>
fewer slot machines available for play compared with the 1996
period. This contributed to a 7% decline in casino revenues. Net
non-casino revenues were up slightly over the 1996 second
quarter, primarily resulting from an increase in the average
ticket price for Mystere. Room revenues also showed a small
improvement, reflecting stable occupancy and a higher average
room rate. The new hotel lobby opened in early August and is
scheduled to be followed by a new Italian restaurant and other
new features in the third and fourth quarters.
The downtown Las Vegas market has been particularly impacted by
the additional competition on the Las Vegas Strip. Net revenues
and operating income at the Golden Nugget were each down by
approximately $4.6 million versus the 1996 second quarter. The
Golden Nugget has also been impacted during 1997 by the
refurbishment of its 1,382-room south hotel tower, which was
completed in late April.
During the 1997 second quarter, Monte Carlo produced net revenues
of $63.6 million and operating income of $19.3 million. Monte
Carlo's 1997 second quarter operating income represents its
highest quarterly operating income since opening on June 21,
1996. After deducting net interest expense, this 50%-owned joint
venture resort contributed $8.8 million to the Company's pretax
income during the 1997 quarter.
The Company's interest cost rose to $14.5 million in the quarter,
reflecting the ongoing construction of Bellagio and Beau Rivage,
as well as borrowings for share repurchases completed principally
in the second half of 1996. The Company capitalized $11.9
million of such interest cost during the quarter relating to
the construction in progress.
10
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THE SIX-MONTH PERIODS ENDED
JUNE 30, 1997 AND 1996
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six months ended June 30 1997 1996
- -------------------------------------------------------------------------------------
(Dollars in thousands, except per share and room rate amounts)
<S> <C> <C>
Gross revenues
The Mirage $419,161 $405,619
Treasure Island 199,204 205,388
Golden Nugget 102,578 114,309
Golden Nugget-Laughlin 31,053 31,703
- -------------------------------------------------------------------------------------
751,996 757,019
Equity in earnings (loss) of Monte Carlo 16,160 (5,168)
- -------------------------------------------------------------------------------------
$768,156 $751,851
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Net revenues
The Mirage $384,424 $368,682
Treasure Island 185,019 190,161
Golden Nugget 93,120 104,646
Golden Nugget-Laughlin 27,677 28,539
- -------------------------------------------------------------------------------------
690,240 692,028
Equity in earnings (loss) of Monte Carlo 16,160 (5,168)
- -------------------------------------------------------------------------------------
$706,400 $686,860
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Operating profit
The Mirage $106,252 $ 98,254
Treasure Island 42,199 48,394
Golden Nugget 14,814 25,561
Golden Nugget-Laughlin 3,464 4,179
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166,729 176,388
Equity in earnings (loss) of Monte Carlo 16,160 (5,168)
Corporate expense (15,315) (13,778)
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$167,574 $157,442
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Operating margin (operating profit/net revenues)
The Mirage 27.6% 26.7%
Treasure Island 22.8% 25.4%
Golden Nugget 15.9% 24.4%
Golden Nugget-Laughlin 12.5% 14.6%
Company-wide (before Monte Carlo and corporate expense) 24.2% 25.5%
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Income before extraordinary item $105,590 $105,186
Net income $103,365 $105,186
- -------------------------------------------------------------------------------------
Income per share before extraordinary item $ 0.55 $ 0.54
Net income per share $ 0.54 $ 0.54
- -------------------------------------------------------------------------------------
Other information (excluding Monte Carlo)
Company-wide table games win percentage 20.0% 19.0%
Company-wide occupancy of standard guest rooms 99.2% 99.5%
Average standard guest room rate (a) $ 94 $ 92
- -------------------------------------------------------------------------------------
(a) Cash rate (i.e., excluding complimentary accommodations) at the Company's
Las Vegas hotels.
</TABLE>
11
<PAGE>
The Company's income before extraordinary item increased slightly
over the first half of 1996 to $105.6 million, or $0.55 per
share, versus $105.2 million, or $0.54 per share. After deducting
an extraordinary charge of $2.2 million, or $0.01 per share,
associated with amending and increasing the Company's bank credit
facility, net income in the 1997 period was $103.4 million, or
$0.54 per share. There were no extraordinary items recorded in
the prior-year period. Earnings in the 1996 period did, however,
include a non-recurring gain of $8.0 million ($5.2 million, or
$0.03 per share, after tax) associated with the sale of the
Company's interest in a small casino located near Iguazu Falls,
Argentina. The 1997 period also included a non-recurring gain of
$3.6 million ($2.4 million, or $0.01 per share, after tax)
related to the sale and exchange of land in Las Vegas.
The average standard room rate at the Company's wholly owned Las
Vegas hotels increased over the 1996 six-month period and average
occupancy remained above 99%. This is particularly notable given
the increase in city-wide room inventory. The Company-wide table
games win percentage during the first half of 1997 was up
slightly over the prior-year period, 20.0% versus 19.0%.
The 1997 period benefited from an entire six months of operations
of Monte Carlo. For the first six months of 1997, Monte Carlo
generated net revenues of $126.6 million and operating income of
$37.8 million. After deducting net interest expense and the
joint venture partner's 50% share, Monte Carlo contributed $16.2
million to the Company's pretax income during the first half of
1997. Monte Carlo was open for only 10 days during the 1996
period, and the write-off of the facility's preopening costs
resulted in a $5.2 million charge to the Company's pretax income.
The Mirage achieved strong earnings improvement during the first
six months of 1997. Net revenues grew by $15.7 million, or 4%,
and operating income increased by $8.0 million, or 8%. The
improvement in revenues was broadly distributed. Casino revenues
grew by $7.1 million, or 3%, principally due to an increase in
the table games win percentage. Entertainment revenues increased
by 8% over the 1996 period, reflecting additional performances by
Siegfried & Roy as well as an increase in the average ticket
price for the show. Food and beverage and room revenues also
increased over the prior-year period.
The construction disruptions and additional competition discussed
previously impacted operations at Treasure Island and the Golden
Nugget throughout the first six months of 1997. The decrease in
net revenues and operating income at Treasure Island principally
reflects a 10% decline in slot revenues. Treasure Island's net
non-casino revenues increased slightly over the prior-year
period, primarily reflecting a 7% increase in entertainment
revenues resulting from an increase in the average ticket price
for Mystere. Room revenues at Treasure Island also showed a
small improvement, reflecting stable occupancy at a higher
average daily room rate. Standard guest room occupancy was in
excess of 99% during both six-month periods.
12
<PAGE>
Most of the additional competition in the Las Vegas market
reflects additional capacity on the Strip. This includes the
early 1997 first quarter opening of a major new resort as well as
significant room additions by a number of large Strip
competitors. The Golden Nugget, as mentioned, was also impacted
by the refurbishment of its south tower guest rooms, which
resulted in a 9% decline in the number of available room nights
in the first half of 1997. As a result, casino and net non-casino
revenues at the Golden Nugget were down 12% and 10%,
respectively, versus the 1996 six-month period.
The Laughlin market has been impacted in recent years by
additional competition from new casinos on Arizona and California
Indian reservations, as well as the new resorts in Las Vegas.
Operating comparisons at the Company's small Golden Nugget-
Laughlin property, however, improved in the second quarter as
compared to previous quarterly comparisons. Net revenues and
operating income were nearly equal to those of the 1996 period.
By comparison, net revenues and operating income during the first
quarter were down 6% and 25%, respectively, versus the first
quarter of 1996.
The factors discussed previously in comparing the three-month
periods had a similar effect on the Company's net interest
expense when comparing the six-month periods.
CAPITAL SPENDING, CAPITAL RESOURCES AND LIQUIDITY
The Company's capital spending has increased significantly with
the ongoing construction of Bellagio and Beau Rivage. Capital
expenditures during the first half of 1997 totaled $391.7
million, versus $113.6 million during the first six months of
1996. Including land, capitalized interest and preopening costs,
Bellagio is expected to cost approximately $1.5 billion and Beau
Rivage is expected to cost approximately $550 million. Of such
amounts, the Company had incurred approximately $582 million
associated with Bellagio and approximately $140 million
associated with Beau Rivage at June 30, 1997. During the 1997
six-month period, the Company also acquired $69.7 million of
additional fine art for display and resale at Bellagio.
The Company's capital spending will increase further should it
proceed with its planned development of a casino-based
destination resort in Atlantic City, New Jersey. The Company and
the City of Atlantic City have entered into a redevelopment
agreement providing for the City to convey 150 acres located in
the Marina area of Atlantic City to the Company in exchange for
the Company agreeing to develop a casino-based destination resort
on the site and undertaking certain other obligations. Closing
under the agreement requires the satisfaction of a number of
conditions. One such condition is the construction of certain
major road improvements designed to improve access to the Marina
area. The Company has entered into a road development agreement
with the New Jersey Department of Transportation and South Jersey
13
<PAGE>
Transportation Authority with respect to the construction and
joint funding of the road improvements, although details of the
funding have not been finalized. Selection of a contractor to
design and build the road improvements is being determined by
public bidding. On July 8, 1997, bids were submitted and the
apparent low bid was within the budget provided in the road
development agreement. On May 2, 1997, the Company filed
applications for various permits necessary for development of a
2,000-room hotel-casino that would occupy a portion of the 150-
acre site.
The required permits for the hotel-casino and the road
improvement project have not yet been received. The Company also
has not yet submitted its plans for the hotel-casino to potential
contractors. Furthermore, an existing Atlantic City hotel-casino
operator and others have filed various lawsuits which seek to
prevent construction of the road improvements and closing under
the redevelopment agreement, thereby preventing the Company from
developing a hotel-casino on the Marina site. As a result of the
foregoing factors, there can be no assurance as to the timing,
cost or certainty of construction by the Company in Atlantic
City.
In addition to operating cash flow, the Company is funding its
growing capital expenditure requirements utilizing bank credit
facility and commercial paper borrowings. On March 7, 1997, the
availability under the Company's $1 billion bank credit facility
was increased to $1.75 billion and the maturity date was extended
from May 1999 to March 2002. On July 24, 1997, the Company also
increased the size of its commercial paper program from $350
million to $500 million. During the first half of 1997, the
excess of capital expenditure requirements over the Company's
operating cash flow was funded by net bank credit facility and
commercial paper borrowings of $348.9 million, leaving
approximately $1.4 billion available.
In response to recent declines in interest rates and to further
manage the mix of its fixed and variable rate debt instruments
and lengthen the term of its debt structure, on August 5, 1997,
the Company issued $200 million principal amount of 6 3/4%
unsecured notes due August 1, 2007 and $100 million principal
amount of 7 1/4% unsecured debentures due August 1, 2017. These
securities represent the lowest cost fixed-rate debt ever issued
by the Company. The net proceeds from the offering of
approximately $296.2 million are expected to be used to repay a
portion of the Company's outstanding bank credit facility and
commercial paper borrowings.
Management believes that existing cash balances, operating cash
flow and available borrowings under the bank credit facility will
provide the Company with sufficient resources to meet its
existing debt obligations and foreseeable capital expenditure
requirements, including those relating to the development of
Bellagio and Beau Rivage and potential development in Atlantic
City.
14
<PAGE>
RECENTLY ISSUED ACCOUNTING STATEMENT
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 - Earnings
Per Share ("SFAS 128"). SFAS 128 is effective for periods
ending after December 15, 1997 and replaces currently reported
earnings per share with "basic," or undiluted, earnings per
share and "diluted" earnings per share. Undiluted earnings
per share is computed by dividing reported earnings by the
weighted-average number of common shares outstanding during the
period. Diluted earnings per share reflects the additional
dilution for all potentially dilutive securities such as stock
options. Diluted earnings per share is similar to earnings per
share currently reported by the Company, but includes the
potential dilution for stock options that become exercisable more
than five years from the date of the financial statements.
The Company will adopt the provisions of SFAS 128 in its 1997
annual financial statements and all previously reported earnings
per share amounts will be restated. The following table
discloses the Company's pro forma earnings per share for the
three- and six-month periods ended June 30, 1997 and 1996 as
determined in accordance with SFAS 128.
<TABLE>
<CAPTION>
Three Months Six Months
--------------- ---------------
For the periods ended June 30 1997 1996 1997 1996
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income per share before extraordinary item
As reported $0.26 $0.21 $0.55 $0.54
Pro forma
Undiluted 0.27 0.22 0.59 0.57
Diluted 0.25 0.20 0.55 0.53
- -------------------------------------------------------------------------------------
Net income per share
As reported $0.26 $0.21 $0.54 $0.54
Pro forma
Undiluted 0.27 0.22 0.58 0.57
Diluted 0.25 0.20 0.54 0.53
- -------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
CERTAIN FORWARD-LOOKING STATEMENTS
Certain information included in this Form 10-Q and other
materials filed or to be filed by the Company with the Securities
and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the
Company) contains forward-looking statements, within the meaning
of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
Such statements include information relating to plans for future
expansion and other business development activities as well as
other capital spending, financing sources and the effects of
regulation (including gaming and tax regulation) and competition.
Such forward-looking information involves important risks and
uncertainties that could significantly affect anticipated results
in the future and, accordingly, such results may differ from
those expressed in any forward-looking statements made by or on
behalf of the Company. These risks and uncertainties include,
but are not limited to, those relating to development and
construction activities, dependence on existing management,
leverage and debt service (including sensitivity to fluctuations
in interest rates), domestic or global economic conditions,
pending litigation, changes in federal or state tax laws or the
administration of such laws and changes in gaming laws or
regulations (including the legalization of gaming in certain
jurisdictions).
16
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Registrant's 1997 Annual Meeting of Stockholders
(the "Meeting") was held on May 29, 1997.
(c) At the Meeting, Melvin B. Wolzinger, Daniel B. Wayson
and George J. Mason were re-elected to serve three-
year terms as members of the Board of Directors.
The results of the voting were as follows: Mr.
Wolzinger-159,022,437 shares for and 1,129,775 shares
withheld; Mr. Wayson-159,024,317 shares for and
1,127,895 shares withheld; Mr. Mason-159,023,277
shares for and 1,128,935 shares withheld.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
4.1 Indenture, dated as of August 1, 1997, between the
Registrant and First Security Bank, National Associa-
tion, as trustee (the "1997 Shelf Indenture").
4.2 Supplemental Indenture, dated as of August 1, 1997, to
the 1997 Shelf Indenture, with respect to the
Registrant's 6.75% Notes Due August 1, 2007 and 7.25%
Debentures Due August 1, 2017.
10.1 Amendment No. 6, dated as of April 2, 1997, to
Reducing Revolving Loan Agreement, dated as of
December 21, 1994, among Victoria Partners, each Bank
party thereto, The Long-Term Credit Bank of Japan,
Ltd., Los Angeles Agency and Societe Generale, as Co-
Agents, and Bank of America National Trust and Savings
Association, as Administrative Agent (without sched-
ule). Incorporated by reference to Exhibit 10(ccc) to
the Annual Report on Form 10-K of Circus Circus Enter-
prises, Inc. (Commission File No. 1-8570) for the
fiscal year ended January 31, 1997.
10.2 Global Express Aircraft Purchase Agreement, dated June
24, 1997, between Golden Nugget Aviation Corp. and
Bombardier Inc. (without schedules or exhibits).
11 Mirage Resorts, Incorporated - Computation of Net
Income Per Share of Common Stock for the three-month
and six-month periods ended June 30, 1997 and 1996.
15 Letter from independent public accountants acknowledg-
ing awareness of the use of their report dated August
11, 1997 in the Registrant's registration statements.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
The Registrant filed no reports on Form 8-K during
the three-month period ended June 30, 1997.
17
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
Mirage Resorts, Incorporated
August 14, 1997 by: DANIEL R. LEE
- --------------- --------------------------------
Date Daniel R. Lee
Senior Vice President - Finance
and Development, Chief Financial
Officer and Treasurer (Principal
Financial Officer)
18
MIRAGE RESORTS, INCORPORATED, as Issuer,
____________________
INDENTURE
Dated as of
August 1, 1997
FIRST SECURITY BANK, NATIONAL ASSOCIATION
Trustee
Exhibit 4.1
<PAGE>
CROSS-REFERENCE TABLE*
---------------------
Trust Indenture
Act Section Indenture Section
--------------- -----------------
<TABLE>
<CAPTION>
<S> <C>
310(a)(1)..................................... 7.10
(a)(2)..................................... 7.10
(a)(3)..................................... N.A.
(a)(4)..................................... N.A.
(b)........................................ 7.08; 7.10; 10.02
(c)........................................ N.A.
311(a)........................................ 7.11
(b)........................................ 7.11
(c)........................................ N.A.
312(a)........................................ 2.07
(b)........................................ 10.03
(c)........................................ 10.03
313(a)........................................ 7.06
(b)(1)..................................... N.A.
(b)(2)..................................... 7.06
(c)........................................ 7.06; 10.02
(d)........................................ 7.06
314(a)........................................ 4.02; 10.02
(b)........................................ N.A.
(c)(1)..................................... 10.04
(c)(2)..................................... 10.04
(c)(3)..................................... N.A.
(d)........................................ N.A.
(e)........................................ 10.05
(f)........................................ N.A.
315(a)........................................ 7.01(b)
(b)........................................ 7.05; 10.02
(c)........................................ 7.01(a)
(d)........................................ 7.01(c)
(e)........................................ 6.11
316(a) (last sentence)........................ 2.11
(a)(1)(A).................................. 6.05
(a)(1)(B).................................. 6.04
(a)(2)..................................... N.A.
(b)........................................ 6.07
317(a)(1)..................................... 6.08
(a)(2)..................................... 6.09
(b)........................................ 2.06
318(a)........................................ 10.01
</TABLE>
N.A. means not applicable.
_______________
* This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.................................. 1
Section 1.01. Definitions....................................................... 1
Section 1.02. Other Definitions................................................. 6
Section 1.03. Incorporation by Reference of Trust Indenture Act................. 7
Section 1.04. Rules of Construction............................................. 7
ARTICLE 2 THE SECURITIES.............................................................. 8
Section 2.01. Forms Generally................................................... 8
Section 2.02. Form of Trustee's Certificate of Authentication................... 8
Section 2.03. Amount Unlimited, Issuable in Series.............................. 9
Section 2.04. Execution and Authentication; Denominations; Delivery and Dating.. 12
Section 2.05. Registrar and Paying Agent........................................ 12
Section 2.06. Paying Agent to Hold Money in Trust............................... 14
Section 2.07. Securityholder Lists.............................................. 14
Section 2.08. Transfer and Exchange............................................. 14
Section 2.09. Replacement Securities............................................ 18
Section 2.10. Outstanding Securities............................................ 18
Section 2.11. Treasury Securities............................................... 18
Section 2.12. Temporary Securities.............................................. 19
Section 2.13. Cancellation...................................................... 19
Section 2.14. Defaulted Interest................................................ 19
ARTICLE 3 REDEMPTION AND OFFER TO REPURCHASE.......................................... 19
Section 3.01. Notices to Trustee................................................ 19
Section 3.02. Selection of Securities to Be Redeemed............................ 20
Section 3.03. Notice of Redemption.............................................. 20
Section 3.04. Effect of Notice of Redemption.................................... 21
Section 3.05. Deposit of Redemption Price....................................... 21
Section 3.06. Securities Redeemed in Part....................................... 21
Section 3.07. Redemption Pursuant to Gaming Laws................................ 21
ARTICLE 4 COVENANTS................................................................... 22
Section 4.01. Payment of Securities............................................. 22
Section 4.02. SEC Reports, Financial Reports.................................... 22
Section 4.03. Compliance Certificate............................................ 23
Section 4.04. Stay, Extension and Usury Laws.................................... 23
Section 4.05. Corporate Existence............................................... 24
Section 4.06. Taxes............................................................. 24
Section 4.07. Change in Control................................................. 24
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 5 SUCCESSORS................................................................. 26
Section 5.01. When the Company May Merge, etc................................... 26
Section 5.02. Successor Corporation Substituted................................. 26
ARTICLE 6 DEFAULTS AND REMEDIES...................................................... 27
Section 6.01. Events of Default................................................. 27
Section 6.02. Acceleration...................................................... 29
Section 6.03. Other Remedies.................................................... 29
Section 6.04. Waiver of Past Defaults........................................... 30
Section 6.05. Control by Majority............................................... 30
Section 6.06. Limitation on Suits............................................... 30
Section 6.07. Rights of Holders to Receive Payment.............................. 31
Section 6.08. Collection Suit by Trustee........................................ 31
Section 6.09. Trustee May File Proofs of Claim.................................. 31
Section 6.10. Priorities........................................................ 31
Section 6.11. Undertaking for Costs............................................. 32
ARTICLE 7 TRUSTEE.................................................................... 32
Section 7.01. Duties of Trustee................................................. 32
Section 7.02. Rights of Trustee................................................. 33
Section 7.03. Individual Rights of Trustee...................................... 33
Section 7.04. Trustee's Disclaimer.............................................. 34
Section 7.05. Notice of Defaults................................................ 34
Section 7.06. Reports by Trustee to Holders..................................... 34
Section 7.07. Compensation and Indemnity........................................ 34
Section 7.08. Replacement of Trustee............................................ 35
Section 7.09. Successor Trustee by Merger, etc.................................. 37
Section 7.10. Eligibility; Disqualification..................................... 37
Section 7.11. Preferential Collection of Claims Against the Company............. 37
ARTICLE 8 DISCHARGE OF INDENTURE..................................................... 37
Section 8.01. Discharge of Liability on Securities.............................. 37
Section 8.02. Repayment to the Company.......................................... 38
Section 8.03. Option to Effect Defeasance or Covenant Defeasance................ 38
Section 8.04. Defeasance and Discharge.......................................... 38
Section 8.05. Covenant Defeasance............................................... 39
Section 8.06. Conditions to Defeasance or Covenant Defeasance................... 39
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 9 AMENDMENTS................................................................ 40
Section 9.01. Without Consent of Holders....................................... 40
Section 9.02. With Consent of Holders.......................................... 41
Section 9.03. Compliance with Trust Indenture Act.............................. 42
Section 9.04. Revocation and Effect of Consents................................ 42
Section 9.05. Notation on or Exchange of Securities............................ 43
Section 9.06. Trustee Protected................................................ 43
ARTICLE 10 MEETINGS OF SECURITYHOLDERS.............................................. 43
Section 10.01. Purposes for Which Meetings May be Called........................ 43
Section 10.02. Manner of Calling Meetings....................................... 44
Section 10.03. Call of Meetings by Company or Holders........................... 44
Section 10.04. Who May Attend or Vote at Meetings............................... 44
Section 10.05. Regulations by Trustee; Conduct of Meeting; Voting Rights;
Adjournment...................................................... 45
Section 10.06. Voting at the Meeting and Record to be Kept...................... 45
Section 10.07. Exercise of Rights of Trustee or Securityholders Not Hindered
or Delayed by Call of Meeting.................................... 46
ARTICLE 11 MISCELLANEOUS............................................................ 46
Section 11.01. Trust Indenture Act Controls..................................... 46
Section 11.02. Notices.......................................................... 46
Section 11.03. Communication by Holders with Other Holders...................... 47
Section 11.04. Certificate and Opinion as to Conditions Precedent............... 47
Section 11.05. Statements Required in Certificate or Opinion.................... 47
Section 11.06. Rules by Trustee and Agents...................................... 48
Section 11.07. Legal Holidays................................................... 48
Section 11.08. No Recourse Against Others....................................... 48
Section 11.09. Counterparts..................................................... 48
Section 11.10. Governing Law.................................................... 49
Section 11.11. No Adverse Interpretation of Other Agreements.................... 49
Section 11.12. Successors....................................................... 49
Section 11.13. Severability..................................................... 49
Section 11.14. Qualification of Indenture....................................... 49
Section 11.15. Table of Contents, Headings, etc................................. 49
SIGNATURES........................................................................... 50
</TABLE>
iii
<PAGE>
INDENTURE dated as of August 1, 1997 between MIRAGE RESORTS,
INCORPORATED, a Nevada corporation (the "Company"), and FIRST SECURITY BANK,
NATIONAL ASSOCIATION, as trustee (the "Trustee").
-------
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its bonds,
debentures, notes and/or other evidences of indebtedness (herein called the
"Securities"), which may be senior secured, senior unsecured, senior
subordinated or subordinated, to be issued in one or more series as in this
Indenture provided.
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
ratable benefit of the Holders of the Securities or of each series thereof as
follows:
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
- ------------- ------------
"AFFILIATE" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlled by" and
-------------
"under common control with"), as used with respect to any person, shall mean the
- --------------------------
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person, whether through the
ownership of voting securities or by agreement or otherwise.
"AGENT" means any Registrar or Paying Agent.
"ASSETS" means any assets, rights or property of any person.
"AUTHORIZED NEWSPAPER" means a newspaper in the English language or,
at the option of the Company, in an official language of the country of
publication, customarily published on each Business Day, whether or not
published on Saturdays, Sundays or holidays, and of general circulation in the
place in connection with which the term is used or in the financial community of
such place. Where successive publications are required to be made in Authorized
Newspapers, the successive publications may be made in the same or in different
Authorized Newspapers meeting the foregoing requirements and in each case on any
Business Day.
"BUSINESS DAY" means, except as otherwise specified as contemplated by
Section 2.03, with respect to any Place of Payment or any other particular
location referred to in this Indenture or in the Securities, each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in that Place of Payment or other location are authorized or
obligated by law or executive order to close.
<PAGE>
"BOARD OF DIRECTORS" or "BOARD" means the Board of Directors or any
authorized committee of the Board of Directors of the Company, or a Consolidated
Subsidiary thereof, as the context may indicate.
"BOARD RESOLUTION" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification and delivered to the Trustee.
"CAPITAL STOCK" of any person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock and
any and all forms of partnership interests or other equity interests in a
person, including but not limited to any type of preference stock which for
other purposes may not be treated as equity.
"CHANGE IN CONTROL" means (i) the time the Company first determines
that any person or group, within the meaning of Section 14(d)(2) of the Exchange
Act (other than any person who was at the date hereof an officer or director of
the Company or a group consisting of persons who were at the date hereof
officers or directors of the Company) have acquired direct or indirect
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of 35% or more of the outstanding voting Capital Stock of the Company, unless a
majority of the Continuing Directors approves the acquisition not later than 10
business days after the Company makes the determination, or (ii) the first day
on which a majority of the members of the Board of Directors of the Company are
not Continuing Directors.
"COMPANY REQUEST" OR "COMPANY ORDER" means a written request or order
(i) signed in the name of the Company by its Chairman of the Board, a Vice
Chairman, its President or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary, an Assistant Secretary or any other employee of the
Company named in an Officers' Certificate delivered to the Trustee, and (ii)
delivered to the Trustee.
"CONSOLIDATED SUBSIDIARY" of any specific person means any subsidiary,
all of whose voting Capital Stock (other than the minimum required number of
directors' qualifying shares) are owned by such person and/or by another
Consolidated Subsidiary of such person, and the accounts of which are, or under
generally accepted accounting principles are required to be, consolidated with
the accounts of such person.
"CONTINUING DIRECTORS" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of that
Board of Directors on the date hereof, (ii) had been a member of that Board of
Directors for the two years immediately preceding such date of determination or
(iii) was nominated for election or elected to that Board of Directors with the
affirmative vote of the greater of (x) a majority of Continuing Directors who
were members of that Board at the time of such nomination or election or (y) at
least three Continuing Directors.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the
Trustee specified in Section 11.02 or such other address of which the Trustee
may give notice to the Company.
2
<PAGE>
"CORPORATION" includes corporations, associations, companies and
business trusts.
"DEFAULT" means any event which is, or after notice or passage of time
would be, an Event of Default.
"DEFINITIVE SECURITIES" means any Security in the form established
pursuant to Section 2.01 which is registered on the books of the Registrar.
"DEPOSITARY" means, with respect to the Securities of any series
issuable or issued in whole or in part in global form, the person specified as
contemplated in Section 2.03 as the Depositary with respect to such series of
Securities, 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.
"EQUITY INTERESTS" means Capital Stock or warrants, options or other
rights to acquire Capital Stock (but excluding any debt security which is
convertible into, or exchangeable for, Capital Stock).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXISTING PROPERTIES" means The Mirage, Treasure Island, the Golden
Nugget and the Golden Nugget-Laughlin.
"GAMING AUTHORITY" means any Governmental Authority that holds
regulatory, licensing or permit authority over any gaming or gaming related
activities conducted or proposed to be conducted by the Company or any of its
subsidiaries or any joint venture or other entity in which the Company or any of
its subsidiaries owns an interest, including without limitation the Nevada
Gaming Commission, the Nevada State Gaming Control Board and the Clark County
Liquor and Gaming Licensing Board.
"GAMING LAWS" means, collectively, all international, foreign,
federal, state and local statutes, treaties, rules, regulations, ordinances,
codes and administrative or judicial precedents pursuant to which any Gaming
Authority possesses regulatory, licensing, or permit authority over gaming or
gaming related activities, including without limitation, the Nevada Gaming
Control Act.
"GAMING LICENSE" means every license, franchise or other authorization
on the date of this Indenture or thereafter required to own, lease, operate or
otherwise conduct gaming or gaming related activities at any property owned or
operated by the Company or any of its subsidiaries or any joint venture or other
entity in which the Company or any of its subsidiaries owns an interest.
"GLOBAL SECURITY" means a Security issued to evidence all or a part of
any series of Securities that is executed by the Company and authenticated and
delivered by the Trustee to a Depositary or pursuant to such Depositary's
instructions, all in accordance with this Indenture
3
<PAGE>
and pursuant to an Officers' Certificate, which shall be registered as to
Principal and interest in the name of such Depositary or its nominee.
"GOLDEN NUGGET" means the real and personal property comprising the
Golden Nugget hotel-casino owned and operated by a wholly-owned subsidiary of
the Company and located at 129 East Fremont Street in Las Vegas, Nevada.
"GOLDEN NUGGET-LAUGHLIN" means the real and personal property
comprising the Golden Nugget hotel-casino owned and operated by a wholly-owned
subsidiary of the Company and located at 2300 South Casino Drive in Laughlin,
Nevada.
"GOVERNMENTAL AUTHORITY" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
any federal or state government or any city, county or other political
subdivision thereof or otherwise and whether now or hereafter in existence, or
any officer or official thereof acting in an official capacity, including,
without limitation, any Gaming Authority.
"HOLDER" or "SECURITYHOLDER" means a person in whose name a Security
is registered.
"INDEBTEDNESS" of any person means any indebtedness, contingent or
otherwise, but exclusive of deferred taxes, in respect of borrowed money
(whether or not the recourse of the lender is to the whole of the assets of such
person or only a portion thereof), or evidenced by bonds, notes, debentures or
similar instruments or reimbursement obligations with respect to letters of
credit, or representing the balance deferred and unpaid of the purchase price of
any property or interest therein (including pursuant to capitalized leases),
except any such balance that constitutes a trade payable, if and to the extent
such indebtedness would appear as a liability upon a balance sheet of such
person prepared on a consolidated basis in accordance with generally accepted
accounting principles, and also includes, to the extent not otherwise included,
the guaranty of any Indebtedness (other than the guaranty of completion of
construction).
"INDENTURE" means this Indenture as amended or supplemented from time
to time.
"MATERIAL SUBSIDIARY" of any person means (i) any subsidiary of such
person which is a "significant subsidiary" within the meaning of Rule 1-02(v) of
Regulation S-X under the Securities Act of 1933, as amended, and the Exchange
Act (as such Regulation is in effect on the date hereof), or (ii) any other
subsidiary of such person which is material to the business, earnings,
prospects, assets or condition, financial or otherwise, of such person and its
subsidiaries taken as a whole.
"THE MIRAGE" means the real and personal property comprising The
Mirage hotel-casino owned and operated by a wholly-owned subsidiary of the
Company and located at 3400 Las Vegas Boulevard South in Las Vegas, Nevada.
4
<PAGE>
"OFFICER" means the Chairman of the Board, any Vice Chairman, the
President, any Vice President, the Chief Financial Officer, the Treasurer, the
Secretary, the Director of Finance, any Assistant Treasurer or any Assistant
Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed by any two
Officers, one of whom must be the Chairman of the Board, a Vice Chairman, the
President, the Chief Financial Officer, the Treasurer or a Vice President of the
Company.
"OPINION OF COUNSEL" means a written opinion from legal counsel. The
counsel may be an employee of or counsel to the Company or the Trustee.
"ORIGINAL ISSUE DISCOUNT SECURITY" means any Security which provides
that an amount less than its Principal Amount is due and payable upon
acceleration after an Event of Default.
"PLACE OF PAYMENT," when used with respect to the Securities of any
series, means the place or places where the Principal of and any interest on the
Securities of that series are payable as specified as contemplated by Section
2.03.
"PREDECESSOR SECURITIES" of any Security means every previous Security
evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 2.09 in lieu of a lost, destroyed or
stolen Security shall be deemed to evidence the same debt as the lost, destroyed
or stolen Security.
"PRINCIPAL" or "PRINCIPAL AMOUNT" of a Security means the principal of
the Security plus the premium, if any, on the Security.
"SEC" means the Securities and Exchange Commission.
"SECURITIES" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.
"SECURITIES CUSTODIAN" means the Trustee in its capacity as custodian
with respect to the Securities in global form, or any successor entity thereto
in such capacity.
"STATED MATURITY," when used with respect to any Security or any
installment of Principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which an amount equal to the Principal of
such Security or an installment of Principal thereof or interest thereon is due
and payable.
"SUBSIDIARY" of any specified person means (i) a corporation, a
majority of whose Capital Stock with voting power under ordinary circumstances
to elect directors is at the time, directly or indirectly, owned by such person
or by such person and a subsidiary or subsidiaries of such person or by a
subsidiary or subsidiaries of such person or (ii) any other person (other than a
corporation) in which such person or such person and a subsidiary or
subsidiaries of such person or a subsidiary or
5
<PAGE>
subsidiaries of such person directly or indirectly, at the date of determination
thereof, has at least a majority ownership interest.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the date on which this Indenture is first
qualified under the TIA, except as provided in Section 9.03.
"TREASURE ISLAND" means the real and personal property comprising the
Treasure Island hotel-casino owned and operated by a wholly-owned subsidiary of
the Company and located at 3300 Las Vegas Boulevard South in Las Vegas, Nevada.
"TRUSTEE" means the person named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means (i) during any period when a successor Trustee is serving as
Trustee with respect to all of the Securities, such successor Trustee, and (ii)
during any period when a successor Trustee is serving as Trustee with respect to
one or more (but not all) series of Securities, as to each series the successor
serving as Trustee with respect thereto.
"TRUST OFFICER" means the Chairman of the Board, the President or any
other officer of the Trustee assigned by the Trustee to administer its corporate
trust matters.
<TABLE>
<CAPTION>
Section 1.02. Other Definitions.
- ------------- ------------------
Defined in
Term Section
---- ---------
<S> <C>
"Bankruptcy Law"..................... 6.01
"Change in Control Date"............. 4.07
"Custodian".......................... 6.01
"Defeased Securities"................ 8.03
"Event of Default"................... 6.01
"Legal Holiday"...................... 11.07
"Paying Agent"....................... 2.05
"Qualified Government Obligations"... 8.06
"Registrar".......................... 2.05
"Repurchase Date".................... 4.07
"Repurchase Offer"................... 4.07
"Repurchase Price"................... 4.07
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
- ------------- --------------------------------------------------
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
6
<PAGE>
"INDENTURE SECURITIES" means the Securities;
"INDENTURE SECURITY HOLDER" means a Securityholder;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
"OBLIGOR" on the Securities means the Company and any other obligor
upon the Securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
Section 1.04. Rules of Construction
- ------------- ---------------------
Unless the context otherwise requires:
(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 generally accepted accounting principles;
(3) references to "generally accepted accounting principles"
shall mean generally accepted accounting principles in effect in the United
States of America as of the time when and for the period as to which such
accounting principles are to be applied;
(4) "or" is not exclusive;
(5) words in the singular include the plural, and in the plural
include the singular; and
(6) provisions apply to successive events and transactions.
ARTICLE 2
THE SECURITIES
Section 2.01. Forms Generally.
- ------------- ----------------
The Securities of each series shall be in such form (including global
form) as shall be established by or pursuant to a Board Resolution or in one or
more indentures supplemental hereto, in each case with such appropriate
provisions as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required by any Gaming Authority or as may
be
7
<PAGE>
required to comply with the rules of any securities exchange or Depositary
therefor or as may, consistent herewith, be determined appropriate by the
Officers executing such Securities, as evidenced by their execution thereof. If
the form of any series of Securities is established by action taken pursuant to
a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or any Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of a Company Order signed
by two Officers of the Company for the authentication and delivery of such
Securities.
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, provided that
such method is permitted by the rules of any securities exchange on which such
Securities may be listed, all as determined by the Officers executing such
Securities, as evidenced by their execution of such Securities.
The terms and provisions in the Securities shall constitute, and are
hereby expressly made, a part of this Indenture.
Section 2.02. Form of Trustee's Certificate of Authentication.
- ------------- ------------------------------------------------
The Trustee's certificate of authentication shall be in substantially
the following form:
This is one of the Securities of the series designated herein referred
to in the within- mentioned Indenture.
___________________________________
As Trustee
By_________________________________
Authorized Signatory
8
<PAGE>
Section 2.03 Amount Unlimited, Issuable in Series.
- ------------ -------------------------------------
The aggregate Principal Amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 2.04,
set forth, or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the issuance
of any series of Securities:
(1) the title of the Securities of the series (which shall distinguish
the Securities of the series from Securities of any other series);
(2) any limit upon the aggregate Principal Amount of the Securities of
the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 2.08, 2.09, 2.12 or 9.05 and except for any
Securities which, pursuant to Section 2.04, are deemed never to have been
authenticated and delivered hereunder);
(3) the person to whom any interest on a Security of the series shall
be payable, if other than the person in whose name that Security (or one or
more Predecessor Securities) is registered at the close of business on the
record date for such interest;
(4) the date or dates on which the Principal of any Securities of the
series is payable or the method of determination thereof;
(5) the rate or rates (which may be fixed or variable) at which any
Securities of the series shall bear interest, if any, the date or dates
from which any such interest shall accrue, the dates on which any such
interest shall be payable and the record date for any such interest payable
on any such payment date;
(6) any terms applicable to original issue discount, if any (as that
term is defined in the Internal Revenue Code of 1986, as amended, and the
regulations thereunder), including the rate or rates at which such original
issue discount, if any, shall accrue;
(7) the place or places where the Principal of and interest on any
Securities of the series shall be payable;
(8) the period or periods within which, the price or prices at which
and the terms and conditions upon which any Securities of the series may be
redeemed, in whole or in part, at the option of the Company and, if other
than by a Board Resolution, the manner in which any election by the Company
to redeem the Securities shall be evidenced;
9
<PAGE>
(9) the obligation, if any, of the Company to redeem or purchase any
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of the Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which any Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;
(10) the terms and conditions, if any, upon which the Securities of
the series may or must be converted into other securities of the Company or
exchanged for other securities of the Company or another enterprise;
(11) if other than denomination of $1,000 and any integral multiple
thereof, the denominations in which any Securities of the series shall be
issuable;
(12) if the amount of Principal of or interest on any Securities of
the series is to be determined with reference to an index, pursuant to a
formula or by another method, the manner in which such amounts shall be
determined and the calculation agent, if any, with respect thereto;
(13) if other than the currency of the United States of America, the
currency, currencies or currency units in which the Principal of or
interest on any Securities of the series shall be payable and the manner of
determining the equivalent thereof in the currency of the United States of
America for any purpose;
(14) if the Principal of or interest on any Securities of the series
is to be payable, at the election of the Company or the Holder thereof, in
one or more currencies or currency units other than that or those in which
such Securities are stated to be payable, the currency, currencies or
currency units in which the Principal of or interest on such Securities as
to which such election is made shall be payable, the periods within which
and the terms and conditions upon which such election is to be made and the
amount so payable (or the manner in which such amount shall be determined);
(15) if other than the entire Principal Amount thereof, the portion of
the Principal Amount of any Securities of the series which shall be payable
upon declaration of acceleration of the maturity thereof pursuant to
Section 6.02;
(16) if the Principal Amount payable at the maturity of any Securities
of the series will not be determinable as of any one or more dates prior to
maturity, the amount which shall be deemed to be the Principal Amount of
such Securities as of any such date for any purpose thereunder or
hereunder, including the Principal Amount thereof which shall be due and
payable upon any maturity date other than the Stated Maturity or which
shall be deemed to be outstanding as of any date prior to the Stated
Maturity (or, in any such case, the manner in which such amount deemed to
be the Principal Amount shall be determined);
(17) if applicable, that the Securities of the series, in whole or any
specified part, shall be defeasible pursuant to Article 8, and, if other
than by a Board Resolution, the manner in which any election by the Company
to defease such Securities shall be evidenced;
10
<PAGE>
(18) any addition to or change in the Events of Default which applies
to any Securities of the series and any change in the right of the Trustee
or the requisite Holders of such Securities to declare the Principal Amount
thereof due and payable pursuant to Section 6.02;
(19) if applicable, any provisions for securing all or any portion of
the Indebtedness evidenced by the Securities of the series;
(20) if applicable, any provisions relating to the seniority or
subordination of all or any portion of the Indebtedness evidenced by the
Securities of the series to other Indebtedness of the Company, including,
as applicable, other Indebtedness evidenced by Securities;
(21) any addition to or change in the covenants set forth in Article 4
which applies to Securities of the series;
(22) whether the Securities of the series shall be issued in whole or
in part in temporary or permanent form of a Global Security or Securities
and, if so, the initial Depositary with respect to any such temporary or
permanent Global Security or Securities, and if other than as provided in
Section 2.08, whether and the circumstances under which beneficial owners
of interests in any such temporary or permanent Global Security or
Securities may exchange such interests for Securities of such series and of
like tenor of any authorized form and denomination; and
(23) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture, but which may modify or
delete any provision of this Indenture with respect to such series,
provided that no such term may modify or delete any provision hereof if
imposed by the TIA, and provided further that any modification or deletion
of the rights, duties or immunities of the Trustee hereunder shall have
been consented to in writing by the Trustee).
If any of the foregoing terms are not available at the time such Board
Resolution is adopted, or such Officers' Certificate or any supplemental
indenture is executed, such resolution, Officers' Certificate or supplemental
indenture may reference the document or documents to be created in which such
terms will be set forth prior to the issuance of such Securities.
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to the Board Resolution referred to above and (subject to Section 2.04) set
forth, or determined in the manner provided, in the Officers' Certificate
referred to above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company
and delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
11
<PAGE>
Section 2.04. Execution and Authentication; Denominations; Delivery and Dating.
- ------------- -----------------------------------------------------------------
Two Officers shall sign the Securities for the Company by manual or
facsimile signature. The Company's seal shall be reproduced on the Securities.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
A Security shall not be valid until the Trustee manually signs the
certificate of authentication on the Security. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
Upon a written order of the Company signed by two Officers of the
Company, the Trustee shall authenticate the Securities.
The Securities shall be issuable only in registered form without
coupons and only in minimum denominations of $1,000 and in integral multiples
thereof.
The Company and the Trustee, by their execution and authentication,
respectively, of the Securities, expressly agree to the terms and conditions
stated therein and to be bound thereby.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate.
Section 2.05. Registrar and Paying Agent.
- ------------- ---------------------------
The Company shall maintain in the county where the principal corporate
office of the Trustee is located and in such other locations as it shall
determine (i) an office or agency where Securities of a series may be presented
for registration of transfer or for exchange ("Registrar") and (ii) an office or
---------
agency where Securities of that series may be presented for payment ("Paying
------
Agent"). The Registrar for each series of Securities shall keep a register of
- -----
the Securities of that series and of their transfer and exchange. The Company
may appoint one or more co-registrars and one or more additional paying agents
for each series of Securities. The term "Paying Agent" includes any additional
paying agent. The term "Registrar" includes any co-registrar. The Company may
change any Paying Agent or Registrar upon thirty (30) days' notice to the
Trustee. The Company shall notify the Trustee of the name and address of any
Agent not a party to this Indenture. If the Company fails to appoint or
maintain another entity as Registrar or Paying Agent for any series of
Securities, the Trustee shall act as such. The Company or any of its
subsidiaries may act as Paying Agent or Registrar for any series of Securities.
12
<PAGE>
The Company initially appoints the Trustee to act as Securities
Custodian with respect to the Global Securities.
The Company initially appoints the Trustee as Paying Agent, Registrar
and authenticating agent.
The Company shall, if the Securities of any series are listed on the
New York Stock Exchange, designate as authenticating agent, Registrar and Paying
Agent with respect to the Securities of such series a bank or trust company in
good standing, organized under the laws of the United States of America or any
State, doing business in or having a correspondent relationship with a bank or
trust company doing business in the Borough of Manhattan, City of New York,
State of New York, and having a capital and surplus (including subordinated
capital notes and earned surplus) aggregating at least $10,000,000 (except with
respect to Article 8, in which case the Paying Agent (if other than the Trustee)
shall have a capital and surplus (including subordinated capital notes and
earned surplus) aggregating at least $100,000,000). Whenever, pursuant to this
Indenture, the Trustee is obligated, empowered or authorized to perform any act
with respect to the authentication and issuance of the Securities of any series,
or their transfer, other than the authentication and issuance of Securities of
such series upon original issue or in cases of Securities of such series
mutilated, destroyed, lost or stolen, such act may be performed by the
authenticating agent and Registrar for such series, notwithstanding anything in
this Indenture to the contrary. Whenever, pursuant to this Indenture, the
Trustee is obligated, empowered or authorized to perform any act with respect to
payment of the Principal of or interest on the Securities of any series, such
acts may be performed by the Paying Agent for such series, notwithstanding
anything in this Indenture to the contrary.
The Company covenants that whenever necessary to avoid or fill a
vacancy in the office of authenticating agent, Registrar or Paying Agent for any
series of Securities, the Company will appoint a successor authenticating agent,
Registrar or Paying Agent, as the case may be, so that there shall, at all times
that the Securities of such series are listed on the New York Stock Exchange, be
one or more offices or agencies in the Borough of Manhattan, City of New York,
State of New York, acceptable to the New York Stock Exchange, where Securities
of such series may be presented or surrendered for payment and where Securities
of such series may be surrendered for registration of transfer or exchange.
In case, at the time of the appointment of a successor to the
authenticating agent, any of the Securities of a series shall have been
authenticated but not delivered, any such successor may adopt the certificate of
authentication of the original authenticating agent or of any successor to it as
authenticating agent hereunder, and deliver such Securities so authenticated;
and in case at any time any of the Securities of a series shall not have been
authenticated, any successor to the authenticating agent by merger or
consolidation may authenticate such Securities either in the name of its
predecessor hereunder or in the name of the successor authenticating agent; and
in all such cases such certificate shall have the full force which it is
anywhere in the Securities of such series or in this Indenture provided that the
certificate of authentication shall have.
13
<PAGE>
Section 2.06. Paying Agent to Hold Money in Trust.
- ------------- ------------------------------------
Each Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all money held by the Paying Agent for the
payment of Principal of or interest on any series of Securities, and shall
notify the Trustee of any default by the Company in making any such payment.
While any such default continues, the Trustee may require a Paying Agent to pay
all money held by it to the Trustee. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee. Upon payment over to
the Trustee, the Paying Agent (if other than the Company or a subsidiary) shall
have no further liability for the money. If the Company or a subsidiary of the
Company acts as Paying Agent, it shall, on or before each due date of Principal
of or interest on that series of Securities, segregate and hold in a separate
trust fund for the benefit of the Holders of such series all money held by it as
Paying Agent for the benefit of the Holders of such series.
Section 2.07. Securityholder 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
Securityholders. If the Trustee is not the Registrar, the Company and any other
obligor shall furnish to the Trustee on or before each interest payment date and
at such other times as the Trustee may request in writing, but in any event at
least semi-annually, a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Securityholders.
Section 2.08. Transfer and Exchange.
- ------------- ----------------------
(a) Transfer and Exchange of Definitive Securities. When Definitive
Securities of any series are presented to the Registrar with the request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal amount
of Definitive Securities of such series of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, however, that the
Definitive Securities presented or surrendered for register of transfer or
exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by the Holder
thereof or by his attorney, duly authorized in writing.
(b) Restrictions on Transfer of a Definitive Security for a Beneficial
Interest in a Global Security. A Definitive Security of any series may not be
exchanged for a beneficial interest in a Global Security of such series except
upon satisfaction of the requirements set forth below. Upon receipt by the
Trustee of a Definitive Security of any series, duly endorsed or accompanied by
appropriate instruments of transfer, in form satisfactory to the Trustee,
together with written instructions directing the Trustee to make, or to direct
the Securities Custodian to make, an endorsement on the Global Security of such
series to reflect an increase in the aggregate Principal Amount of the
Securities of such series represented by such Global Security,
14
<PAGE>
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate Principal Amount of Securities of such series represented by the
Global Security of such series to be increased accordingly. If no Global
Securities of such series are then outstanding, the Company shall issue and the
Trustee shall authenticate a new Global Security of such series in the
appropriate Principal Amount.
(c) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities of any series or beneficial interests therein
shall be effected through the Depositary with respect to such series, in
accordance with this Indenture and the procedures of such Depositary.
(d) Transfer of a Beneficial Interest in a Global Security for a
Definitive Security.
(i) Any person having a beneficial interest in a Global Security
of any series may upon request exchange such beneficial
interest for a Definitive Security of such series. Upon
receipt by the Trustee of written instructions or such other
form of instructions as is customary for the Depositary for
such series from such Depositary or its nominee on behalf of
any person having a beneficial interest in a Global Security
of such series (all of which may be submitted by facsimile),
then the Trustee or the Securities Custodian, at the
direction of the Trustee, will cause, in accordance with the
standing instructions and procedures existing between such
Depositary and the Securities Custodian, the aggregate
Principal Amount of the Global Security of such series to be
reduced and, following such reduction, the Company will
execute and, upon receipt of an authentication order in the
form of an Officers' Certificate, the Trustee will
authenticate and deliver to the transferee a Definitive
Security of such series.
(ii) Definitive Securities of any series issued in exchange for a
beneficial interest in a Global Security of such series
pursuant to this Section 2.08(d) shall be registered in such
names and in such authorized denominations as the Depositary
for such series, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Definitive
Securities to the persons in whose names such Securities are
so registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.08), a Global Security
of any series may not be transferred as a whole except by the Depositary for
such series to a nominee of such Depositary or by a nominee of such Depositary
to such Depositary or another nominee of such Depositary or by such
15
<PAGE>
Depositary or any such nominee to a successor Depositary for such series or a
nominee of such successor Depositary.
(f) Authentication of Definitive Securities in Absence of Depositary.
If at any time:
(i) the Depositary for Securities of any series notifies the
Company that such Depositary is unwilling or unable to
continue as Depositary for the Global Securities of such
series and a successor Depositary for the Global Securities
of such series is not appointed by the Company within 90
days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive
Securities of such series under this Indenture,
then the Company will execute, and the Trustee, upon receipt of an
Officers' Certificate requesting the authentication and delivery of
Definitive Securities of such series, will authenticate and deliver
Definitive Securities of such series, in an aggregate Principal Amount
equal to the Principal Amount of the Global Securities of such series,
in exchange for such Global Securities.
(g) Cancellation and/or Adjustment of Global Security. At such time
as all beneficial interests in a Global Security of any series have either been
exchanged for Definitive Securities of such series, redeemed, repurchased or
canceled, such Global Security shall be returned to or retained and canceled by
the Trustee. At any time prior to such cancellation, if any beneficial interest
in a Global Security of any series is exchanged for Definitive Securities of
such series, redeemed, repurchased or canceled, the Principal Amount of
Securities of such series represented by such Global Security shall be reduced
and an endorsement shall be made on such Global Security, by the Trustee or the
Securities Custodian, at the direction of the Trustee, to reflect such
reduction.
(h) Obligations with Respect to Transfers and Exchanges of Definitive
Securities.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate
Definitive Securities and Global Securities of any series at
the request of the Registrar for such series.
(ii) No service charge shall be made to a Holder of any series of
Securities for any registration or transfer or exchange, but
the Company may require payment of a sum sufficient to cover
any transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer taxes or
similar governmental charge payable upon exchange or
transfer pursuant to Sections 2.12, 3.06, 4.07 and 9.05
hereof).
16
<PAGE>
(iii) The Registrar for a series of Securities shall not be
required to register the transfer or exchange of any
Definitive Security of such series selected for redemption
in whole or in part, except the unredeemed portion of any
Definitive Security of such series being redeemed in part.
(iv) All Definitive Securities and Global Securities of any
series issued upon any registration of transfer or exchange
of Definitive Securities or Global Securities of such series
shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under the
Indenture, as the Definitive Securities or Global Securities
of such series surrendered upon such registration of
transfer or exchange.
(v) The Company shall not be required
(A) to issue, register the transfer of or exchange
Securities of any series during a period beginning at
the opening of business 15 days before the day of any
selection of Securities of such series for redemption
under Section 3.02 and ending at the close of business
on the day of selection, or
(B) to register the transfer of any Security of such series
so selected for redemption in whole or in part, except
the unredeemed portion of any Security of such series
being redeemed in part.
(vi) Prior to due presentment for registration of transfer of any
Security of a series, the Trustee, any Agent and the Company
may deem and treat the person in whose name such Security is
registered as the absolute owner of such Security for the
purpose of receiving payment of Principal of and interest on
such Security and for all other purposes whatsoever, whether
or not such Security is overdue, and neither the Trustee,
any Agent nor the Company shall be affected by notice to the
contrary.
Section 2.09. Replacement Securities.
- ------------- -----------------------
If the Holder of a Security of any series claims that such Security
has been lost, destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Security of such series if the
Trustee's requirements are met. If required by the Trustee or the Company, an
indemnity bond must be provided which is sufficient in the judgment of both to
protect the Company, the Trustee, any Agent or any authenticating agent from any
loss which any of them may suffer if a Security of any series is replaced. The
Company may charge for its expenses in replacing a Security of any series.
17
<PAGE>
Every replacement Security of any series is an additional obligation
of the Company.
Section 2.10. Outstanding Securities.
- ------------- -----------------------
The Securities of any series outstanding at any time are all the
Securities of such series authenticated by the Trustee except for those
Securities of such series canceled by it, those Securities of such series
delivered to it for cancellation, those reductions in interest in a Global
Security of such series effected by the Trustee hereunder, and those described
in this Section as not outstanding.
If a Security of any series is replaced pursuant to Section 2.09, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Security is held by a bona fide purchaser.
A Security does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Security.
For each series of Original Issue Discount Securities, the Principal
Amount of such Securities that shall be deemed to be outstanding and used to
determine whether the necessary Holders have given any request, demand,
authorization, direction, notice, consent or waiver shall be the Principal
Amount of such Securities that could be declared to be due and payable upon
acceleration upon an Event of Default as of the date of such determination.
When requested by the Trustee, the Company will advise the Trustee in writing of
such amount, showing its computations in reasonable detail.
Section 2.11. Treasury Securities.
- ------------- --------------------
In determining whether the Holders of the required Principal Amount of
Securities of any series have concurred in any direction, waiver or consent,
Securities of such series owned by the Company or any other obligor or an
Affiliate of the Company or any other obligor shall be considered as though they
are not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Securities of such series which the Trustee knows are so owned shall be so
disregarded.
Section 2.12. Temporary Securities.
- ------------- ---------------------
Until Definitive Securities of any series are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities of
such series. Temporary Securities of any series shall be substantially in the
form of Definitive Securities of such series but may have variations that the
Company considers appropriate for temporary Securities of such series. Without
unreasonable delay, the Company shall prepare and the Trustee shall authenticate
Definitive Securities of any series in exchange for temporary Securities of such
series.
18
<PAGE>
Section 2.13. Cancellation.
- ------------- -------------
The Company at any time may deliver Securities of any series to the
Trustee for cancellation. The Registrar and Paying Agent for any series shall
forward to the Trustee any Securities of such series surrendered to them for
registration of transfer, exchange or payment. The Trustee shall cancel all
Securities of any series surrendered for registration of transfer, exchange,
payment, replacement or cancellation and shall dispose of canceled Securities as
the Company directs. The Company may not issue new Securities of any series to
replace Securities of such series that it has paid or that have been delivered
to the Trustee for cancellation.
Section 2.14. Defaulted Interest.
- ------------- -------------------
If the Company fails to make a payment of interest on the Securities
of any series, it shall pay such defaulted interest plus any interest payable on
the defaulted interest, if any, in any lawful manner. It may pay such defaulted
interest, plus any such interest payable on it, to the persons who are Holders
of such series on a subsequent special record date in each case at the rate
provided in the Securities of such series and Section 4.01 hereof. The Company
shall fix any such record date and payment date. At least 15 days before any
such record date, the Company shall mail to the Holders of the affected series a
notice that states the record date, payment date and amount of such interest to
be paid.
ARTICLE 3
REDEMPTION AND OFFER TO REPURCHASE
Section 3.01. Notices to Trustee.
- ------------- -------------------
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 2.03 for Securities of such
series) in accordance with this Article. If the Company elects to redeem
Securities of any series, it shall notify the Trustee in writing of the
redemption date and the Principal Amount of the Securities to be redeemed.
The Company shall give each notice provided for in this Section 3.01
at least 40 days before the redemption date (unless a shorter notice period
shall be satisfactory to the Trustee). The Trustee shall have no liability to
any Holder if it deems such shorter notice period satisfactory to it.
Section 3.02. Selection of Securities to Be Redeemed.
- ------------- ---------------------------------------
Except as provided below, if less than all of the Securities of a
series are to be redeemed, the Trustee shall select the Securities of such
series to be redeemed on a substantially pro rata basis or by lot among the
Holders of the Securities of such series in accordance with a method the Trustee
considers fair and appropriate (in such manner as complies with applicable legal
and stock exchange requirements, if any).
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The amount of Securities shall be calculated as the aggregate
Principal Amount of Securities of such series originally issued hereunder less
the aggregate Principal Amount of any Securities of such series previously
redeemed. The Trustee shall make the selection not more than 60 days and not
less than 30 days before the redemption date from outstanding Securities of such
series not previously called for redemption.
The Trustee shall promptly notify the Company of the Securities or
portions of Securities to be called for redemption. The Trustee may select for
redemption portions of the Principal of Securities that have denominations
larger than $1,000. Securities and portions of them it selects shall be in
amounts of $1,000 or integral multiples of $1,000. Provisions of this Indenture
that apply to Securities called for redemption also apply to portions of
Securities called for redemption.
Section 3.03. Notice of Redemption.
- ------------- ---------------------
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail by first class mail, postage prepaid a notice of
redemption to each Holder whose Securities are to be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) if any Security is being redeemed in part, the portion of the
Principal Amount of such Security to be redeemed and that, after the
redemption date, upon surrender of such Security, a new Security or
Securities of the same series in Principal Amount equal to the unredeemed
portion will be issued;
(4) the name and address of the Paying Agent for the Securities
being redeemed;
(5) that Securities called for redemption must be surrendered to
the Paying Agent for such Securities to collect the redemption price;
(6) that interest on Securities called for redemption ceases to
accrue on and after the redemption date; and
(7) the paragraph of the Securities pursuant to which the
Securities called for redemption are being redeemed.
At the Company's written request, the Trustee shall give the notice of
redemption in the Company's name and at its expense.
20
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Section 3.04. Effect of Notice of Redemption.
- ------------- -------------------------------
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the redemption date at the price set forth in the
Security.
Section 3.05. Deposit of Redemption Price.
- ------------- ----------------------------
Prior to or on the redemption date, the Company shall deposit with the
Paying Agent for the Securities being redeemed (or if the Company or a
subsidiary or an Affiliate of the Company is the Paying Agent for such
Securities, shall segregate and hold in trust) money sufficient to pay the
redemption price of and (except if the redemption date shall be an interest
payment date) accrued interest on, all Securities to be redeemed on that date
other than Securities or portions of Securities called for redemption which
prior thereto have been delivered by the Company to the Trustee for
cancellation. If such money is then held by the Company or a subsidiary or an
Affiliate of the Company in trust and is not required for such purpose, it shall
be discharged from such trust.
Section 3.06. Securities Redeemed in Part.
- ------------- ----------------------------
Upon surrender of a Security of any series that is redeemed in part,
the Company shall issue and the Trustee shall authenticate for the Holder at the
expense of the Company a new Security of the same series equal in Principal
Amount to the unredeemed portion of the Security surrendered.
Section 3.07. Redemption Pursuant to Gaming Laws.
- ------------- -----------------------------------
Notwithstanding any other provision of this Article 3, if any Gaming
Authority requires that a Holder or beneficial owner of Securities of a Holder
must be licensed, qualified or found suitable under any Gaming Law, such Holder
or such beneficial owner shall apply for a license, qualification or a finding
of suitability, as the case may be, within the required time period. If such
person fails to apply or become licensed or qualified or is not found suitable
(in each case, a "failure of compliance"), the Company shall have the right, at
its option, (i) to require such Holder or owner to dispose of such Holder's or
owner's Securities within 30 days of receipt of notice of the Company's election
or such earlier date as may be requested or prescribed by such Gaming Authority,
or (ii) to redeem within such 30-day or earlier period requested or prescribed
by such Gaming Authority the Securities of such Holder or owner at a redemption
price equal to the lesser of (A) 100% of the Principal Amount thereof or (B) the
price at which such Holder or owner acquired the Securities, together, in either
case, with accrued interest to the earlier of the redemption date or the date of
the failure of compliance, which may be less than 30 days following the notice
of redemption if so requested or prescribed by such Gaming Authority. The
Company shall notify the Trustee in writing of any such redemption as soon as
practicable. The Company shall not be responsible for any costs or expenses any
such Holder or owner may incur in connection with its application for a license,
qualification or finding of suitability.
21
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ARTICLE 4
COVENANTS
Section 4.01. Payment of Securities.
- ------------- ----------------------
The Company shall pay the Principal of and interest on the Securities
of each series on the dates and in the manner provided in the Securities of such
series. Principal and interest on any series of Securities shall be considered
paid on the date due if the Paying Agent for such series (other than the Company
or any subsidiary or Affiliate of the Company) holds on that date money in
immediately available funds designated for and sufficient to pay all Principal
and interest then due with respect to such series.
To the extent lawful, the Company shall pay interest (including post-
petition interest in any proceeding under any Bankruptcy Law) on (i) overdue
Principal at the rate borne by the Securities compounded semiannually; and (ii)
overdue installments of interest (without regard to any applicable grace period)
at the same rate, compounded semiannually.
Section 4.02. SEC Reports, Financial Reports.
- ------------- -------------------------------
The Company shall make available to all of the Holders, upon written
request, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the SEC may
by rules and regulations prescribe) which the Company is required to file with
the SEC pursuant to Section 13 or 15(d) of the Exchange Act.
If the Company is not subject to, or for any reason is not complying
with, the requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall make available to all of the Holders all quarterly and annual reports
which the Company would have been required to file with the SEC if it was
subject to the requirements of Section 13 or 15(d) of the Exchange Act,
including a "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and with respect to annual financial statements only, a
report thereon by the Company's independent accountants.
The Company also shall comply with the provisions of TIA Section
314(a). The Company shall timely (giving effect to applicable extensions)
comply with its reporting and filing obligations under applicable federal
securities laws.
Section 4.03. Compliance Certificate.
- ------------- -----------------------
(a) The Company shall deliver to the Trustee for each series of
Securities, within four months after the end of each fiscal year of the Company
(which currently is December 31), an Officers' Certificate stating that a review
of the activities of the Company and its subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Company has kept, observed, performed and
fulfilled its obligations under this Indenture
22
<PAGE>
applicable to such series, and further stating, as to each such Officer signing
such certificate, that to the best of his knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture applicable to such series and is not in default in the performance or
observance of any of the terms, provisions and conditions hereof applicable to
such series (or, if a Default or Event of Default applicable to such series
shall have occurred, describing all such Defaults or Events of Default of which
he may have knowledge) and that to the best of his 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 Securities of such series are
prohibited, or if such event has occurred, a description of the event. The first
certificate pursuant to this Section 4.03(a) shall be for the fiscal year ending
on December 31 of the calendar year in which Securities of such series are first
issued under this Indenture.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants or to a written policy
adopted by the Company's independent public accountants which has been
previously applied (a copy of which shall be delivered to the Trustee), the
annual financial statements delivered pursuant to Section 4.02 shall be
delivered to the Trustee for each series of Securities accompanied by a written
statement of the Company's independent public accountants (which shall be Arthur
Andersen LLP or another firm of established national reputation) that in making
the examination necessary for certification of such financial statements nothing
has come to their attention which would lead them to believe that the Company
has violated any provisions of Article 4 or 5 of this Indenture applicable to
such series or, if any such violation has occurred, specifying the nature and
period of existence thereof, it being understood that, for purposes hereof, such
accountants shall not be liable directly or indirectly to any person for any
failure to obtain knowledge of any such violation.
(c) The Company will, so long as any of the Securities are
outstanding, deliver to the Trustee for each series of Securities outstanding,
forthwith upon becoming aware of (i) any Default, Event of Default or default in
the performance of any covenant, agreement or condition contained in this
Indenture applicable to such series or (ii) any event of default under any other
mortgage, indenture or instrument as that term is used in Section 6.01(4), an
Officers' Certificate specifying such Default, Event of Default or default.
Section 4.04. Stay, Extension and Usury Laws.
- ------------- -------------------------------
The Company covenants to the Holders of Securities of each series (to
the extent that it may lawfully do so) that it will 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, which may affect the covenants or the performance of this Indenture
applicable to such series; and the Company (to the extent that it may lawfully
do so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee for such series, but
will suffer and permit the execution of every such power as though no such law
has been enacted.
Section 4.05. Corporate Existence.
- ------------- --------------------
Subject to Article 5 hereof, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership or other existence of each subsidiary
23
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of the Company, if any, in accordance with the respective organizational
documents of each such entity and the rights (charter and statutory), licenses
and franchises of the Company and its subsidiaries; provided, however, that
the Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any subsidiary,
if the Board of Directors of the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and its subsidiaries taken as a whole and that the loss thereof is not adverse
in any material respect to the Holders of any series of Securities.
Section 4.06. Taxes.
- ------------- ------
The Company shall, and shall cause each of its subsidiaries to, pay
prior to delinquency all taxes, assessments and governmental levies, except as
contested in good faith and by appropriate proceedings or where the failure to
pay would not have a material adverse effect on the Company and its respective
subsidiaries taken as a whole.
Section 4.07. Change in Control.
- ------------- ------------------
If there is a Change in Control (the time of a Change in Control being
referred to as the "Change in Control Date"), then the Company shall (a)
----------------------
commence, within five business days following the Change in Control Date, an
offer to repurchase (the "Repurchase Offer") all of the then outstanding
----------------
Securities at the Repurchase Price (as defined below) and (b) deposit with the
Paying Agent an amount equal to the aggregate Repurchase Price for all
Securities then outstanding so as to be available for payment to the Holders of
Securities who elect to require the Company to repurchase all or a portion of
their Securities.
The Repurchase Offer for the Securities shall be made at a price of
101% of the Principal Amount, plus accrued interest to the Repurchase Date (as
defined below) (the "Repurchase Price").
----------------
If the Repurchase Date (as defined below) is on or after an interest
payment record date and on or before the related interest payment date, any
accrued interest will be paid to the person in whose name a Security is
registered at the close of business on such record date, and no additional
interest will be payable to Holders who tender Securities pursuant to the
Repurchase Offer.
Notice of any Repurchase Offer shall be mailed by the Company to the
Trustee and the Holders of the Securities at their last registered addresses.
The Repurchase Offer shall remain open from the time of mailing until 10
Business Days thereafter, and no longer, unless a longer period is required by
law or stock exchange rule or unless a majority of the Continuing Directors of
the Company votes in favor of extending such period (the date on which the
Repurchase Offer closes being the "Repurchase Date"). The notice shall contain
---------------
all instructions and materials necessary to enable such Holders to tender
Securities pursuant to the Repurchase Offer. The notice, which shall govern the
terms of the Repurchase Offer, shall state:
24
<PAGE>
(1) that the Repurchase Offer is being made pursuant to this
Section 4.07 and that Securities will be accepted for payment either (A) in
whole or (B) in part in integral multiples of $1,000;
(2) the Repurchase Price and the Repurchase Date;
(3) that any Security not tendered will continue to accrue
interest;
(4) that any Security accepted for payment pursuant to the
Repurchase Offer shall cease to accrue interest from and after the
Repurchase Date;
(5) that Holders electing to have a Security of any series
purchased pursuant to the Repurchase Offer will be required to surrender
the Security, with such form, if any, as shall be specified in the notice
completed, to the Paying Agent for such series at the address specified in
the notice prior to the close of business on the Repurchase Date;
(6) that Holders of any series will be entitled to withdraw their
election if the Paying Agent for such series receives, not later than three
Business Days before the Repurchase Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the Principal
Amount of Securities the Holder delivered for purchase and a statement that
such Holder is withdrawing his election to have such Securities purchased;
and
(7) that Holders whose Securities of any series are purchased
only in part will be issued new Securities of the same series equal in
Principal Amount to the unpurchased portion of the Securities surrendered.
On the Repurchase Date, the Company shall, to the extent lawful, (i)
accept for payment Securities of each series or portions thereof tendered
pursuant to the Repurchase Offer and (ii) deliver to the Trustee for such series
the Securities of such series so tendered together with an Officers' Certificate
stating the Securities of such series or portions thereof accepted for payment
by the Company. The Paying Agent for each series of Securities shall promptly
mail or deliver to Holders of Securities of such series so accepted payment in
an amount equal to the Repurchase Price. The Trustee shall promptly
authenticate and mail or deliver to each Holder who tendered a Security of any
series a new Security or Securities of such series equal in Principal Amount to
any untendered portion of the Security surrendered. The Paying Agent for each
series of Securities shall invest funds deposited with it pursuant to this
Section 4.07 for the benefit of, and at the written direction of, the Company to
the Repurchase Date.
25
<PAGE>
ARTICLE 5
SUCCESSORS
Section 5.01. When the Company May Merge, etc.
- ------------- --------------------------------
The Company shall not consolidate or merge with or into, or sell,
lease, convey or otherwise dispose of all or substantially all of its Assets to,
any person unless:
(1) the person formed by or surviving any such consolidation or
merger (if other than the Company), or to which such disposition shall have
been made, is a corporation organized and existing under the laws of the
United States, any State thereof or the District of Columbia;
(2) the corporation formed by or surviving any such consolidation
or merger (if other than the Company), or to which such disposition shall
have been made, assumes by supplemental indenture all the obligations of
the Company under the Securities and this Indenture; and
(3) immediately after the transaction no Default or Event of
Default exists.
The Company shall deliver to the Trustee for each series of Securities
prior to the consummation of the proposed transaction an Officers' Certificate
to the foregoing effect and an Opinion of Counsel stating that the proposed
transaction and such supplemental indenture comply with the provisions of this
Indenture applicable to such series.
Section 5.02. Successor Corporation Substituted.
- ------------- ----------------------------------
Upon any consolidation or merger, or any sale, lease, conveyance or
other disposition of all or substantially all of the Assets of the Company in
accordance with Section 5.01, the successor corporation formed by such
consolidation or into or with which the Company is merged or to which such sale,
lease, conveyance or other disposition is made shall succeed to, and be
substituted for, and may exercise every right and power of the Company under
this Indenture with the same effect as if such successor person had been named
as the Company herein.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
- ------------- ------------------
Unless otherwise specified as contemplated by Section 2.03 with
respect to any series of Securities, an "Event of Default" occurs with respect
to each series of Securities individually, if:
26
<PAGE>
(1) the Company defaults in the payment of interest on any Security of
such series when the same becomes due and payable and the Default continues for
30 days after the date due and payable;
(2) the Company defaults in the payment of the Principal of any
Security of such series when the same becomes due and payable at maturity, upon
redemption or otherwise;
(3) the Company fails to comply with any of its other agreements or
covenants in such series of Securities or in this Indenture and applicable to
such series of Securities and the Default continues for the period and after the
notice specified below;
(4) an event of default occurs under any mortgage, indenture (other
than this Indenture) or instrument under which there may be issued or by which
there may be secured or evidenced any Indebtedness of the Company or any
subsidiary thereof (or the payment of which is guaranteed by the Company or any
subsidiary of the Company), whether such Indebtedness or guarantee now exists or
shall be created hereafter, if (a) such event of default results from the
failure to pay principal of or interest upon maturity on any such Indebtedness,
(b) the principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness in default for failure to pay principal or
interest thereon upon maturity, aggregates $50,000,000 or more and (c) the
Default continues for the period and after the notice specified below;
(5) a final judgment or final judgments, no longer subject to appeal,
for the payment of money are entered by a court or courts of competent
jurisdiction against the Company or any subsidiary thereof and such remains
undischarged for a period (during which such judgment remains undischarged,
unvacated or unstayed) of 60 days, provided that the aggregate of all such
judgments exceeds $50,000,000 and the Default continues for the period and after
the notice specified below;
(6) the Company, pursuant to or within the meaning of any Bankruptcy
Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in an
involuntary case,
(C) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
(D) makes a general assignment for the benefit of its creditors,
or
(E) admits in writing its inability generally to pay its debts as
the same become due;
(7) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
27
<PAGE>
(A) is for relief against the Company or any Material Subsidiary
of the Company in an involuntary case,
(B) appoints a Custodian of the Company for all or substantially
all of the property of the Company or any Material Subsidiary of the
Company, or
(C) orders the liquidation of the Company, and the order or
decree remains unstayed and in effect for 60 days; or
(8) there has occurred a revocation, suspension or involuntary loss of
any Gaming License by the Company or any subsidiary of the Company (after
the same shall have been obtained) which results in the cessation of
operation of the business at the Existing Properties for a period of more
than 90 consecutive days.
The term "Bankruptcy Law" means title 11, U.S. Code or any similar
--------------
federal or state law for the relief of debtors. The term "Custodian" means any
---------
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
A Default under clause (3) (other than a Default under Section 4.05,
4.07 or 5.01, each of which Default shall be an Event of Default without the
notice or passage of time specified in this paragraph) or (5) is not an Event of
Default with respect to a series of Securities until the Trustee or the Holders
of at least 25% in Principal Amount of such series of Securities then
outstanding notify the Company of the Default and the Company does not cure the
Default or cause the Default to be cured within 60 days after receipt of the
notice. The notice must specify the Default, demand that it be remedied and
state that the notice is a "Notice of Default."
A Default under clause (4) is not an Event of Default with respect to
a series of Securities until the Trustee with respect to such series or the
Holders of at least 25% in Principal Amount of such series then outstanding
notify the Company of the Default and the Company has not caused such Default to
be cured or waived or such acceleration to be rescinded or annulled within 10
days after receipt of the notice. The notice must specify the Default, demand
that it be rescinded or annulled and state that the notice is a "Notice of
Default."
In the case of any Event of Default pursuant to the provisions of this
Section 6.01 occurring with respect to a series of Securities by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium which the Company would
have had to pay if the Company then had elected optionally to redeem such series
of Securities, an equivalent premium (or, in the event that the Company would
not be permitted to redeem such series of Securities optionally on such date,
the premium payable on the first date thereafter on which such redemption would
be permissible) shall also become and be immediately due and payable with
respect to such series to the extent permitted by law, anything in this
Indenture applicable to such series or in the Securities of such series
contained to the contrary notwithstanding.
28
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Section 6.02. Acceleration.
- ------------- -------------
If an Event of Default relating to any series of Securities (other
than an Event of Default specified in clause (6) or (7) of Section 6.01) occurs
and is continuing, the Trustee with respect to such series by notice to the
Company (and if Senior Bank Debt (as defined in any indenture supplemental
hereto) is outstanding, to the representative of the Senior Bank Debt as
specified in such supplemental indenture), or the Holders of at least 25% in
Principal Amount of the then outstanding Securities of such series by notice to
the Company (and to such Trustee if given by the Holders of such series of
Securities), may declare the unpaid Principal (or, in the case of Original Issue
Discount Securities, such lesser amount as may be provided for in such
Securities) of and any accrued interest on all the Securities of such series to
be due and payable. Upon such declaration, the Principal of and interest on
such series shall be due and payable immediately; provided, however, that so
-------- -------
long as any Senior Credit Agreement (as defined in any indenture supplemental
hereto) shall be in force and effect, if an Event of Default with respect to any
series of Securities shall have occurred and be continuing (other than an Event
of Default pursuant to clause (6) or (7) of Section 6.01 with respect to the
Company or any Material Subsidiary), any acceleration pursuant to this Section
6.02 shall not be effective until the earlier of (a) three Business Days
following a notice of acceleration given to the representative of the Senior
Bank Debt (which notice shall be given only after an Event of Default has
occurred) unless such Event of Default is theretofore cured or (b) the
acceleration of any Indebtedness under the Senior Credit Agreement. If an Event
of Default specified in clause (6) or (7) of Section 6.01 occurs with respect to
any series of Securities, such an amount shall ipso facto become and be
---- -----
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder of such series. The Holders of a majority in
Principal Amount of any series of then outstanding Securities by notice to the
Trustee with respect to such series may rescind an acceleration with respect to
such series and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default with respect to such
series have been cured or waived, except non-payment of Principal of or interest
on such series that has become due solely because of the acceleration.
Section 6.03. Other Remedies.
- ------------- ---------------
If an Event of Default with respect to any series of Securities occurs
and is continuing, the Trustee with respect to such series may pursue any
available remedy to collect the payment of Principal of or interest on the
Securities of such series or to enforce the performance of any provision of the
Securities of such series or any provision of this Indenture applicable to such
series.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder of a series of Securities in
exercising any right or remedy accruing upon an Event of Default with respect to
such series shall not impair the right or remedy or constitute a waiver of or
acquiescence in such Event of Default. All remedies are cumulative to the
extent permitted by law.
29
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Section 6.04. Waiver of Past Defaults.
- ------------- ------------------------
Subject to Section 9.02, the Holders of a majority in Principal Amount
of any series of then outstanding Securities by notice to the Trustee may waive
an existing Default or Event of Default with respect to such series of
Securities and its consequences.
Section 6.05. Control by Majority.
- ------------- --------------------
The Holders of a majority in Principal Amount of any series of then
outstanding Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it with respect to any default under such series of
Securities. However, subject to Section 7.01, the Trustee may refuse to follow
any direction that conflicts with any rule of law or this Indenture, that is
unduly prejudicial to the rights of another Holder of such series of Securities,
or that would involve the Trustee in personal liability.
Section 6.06. Limitation on Suits.
- ------------- --------------------
A Holder of any series of Securities may not pursue a remedy with
respect to this Indenture or any series of Securities unless:
(1) the Holder gives to the Trustee written notice stating that
an Event of Default with respect to the Securities of that series is
continuing;
(2) the Holders of at least 25% in aggregate Principal Amount of
such series of Securities then outstanding make a written request to the
Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the notice, the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in
aggregate Principal Amount of such series of Securities then outstanding do
not give the Trustee a direction inconsistent with the request.
A Holder of any series of Securities may not use this Indenture to prejudice the
rights of another Holder of such series of Securities or to obtain a preference
or priority over another Holder.
Section 6.07. Rights of Holders to Receive Payment.
- ------------- -------------------------------------
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Security to receive payment of the Principal of and interest on
such Security, on or after the respective due dates expressed in the Security,
or to bring suit for the enforcement of any such
30
<PAGE>
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(1) or (2) with
respect to Securities of any series occurs and is continuing, the Trustee may
recover judgment as permitted under applicable law in its own name and as
trustee of an express trust against the Company or any other obligor on the
Securities for the whole amount of Principal (or such portion of the Principal
as may be specified as due upon acceleration at that time in the terms of that
series of Securities) and interest remaining unpaid with respect to such series
of Securities and interest on overdue Principal and interest and such further
amount as shall be sufficient to cover the costs and, to the extent lawful,
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 may 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 and the Securityholders allowed in any judicial proceedings relative to
the Company, its creditors or its property. Nothing contained herein shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Securityholder any plan of reorganization, arrangement, adjustment
or composition affecting the Securities or the rights of any Holder thereof, or
to authorize the Trustee to vote in respect of the claim of any Securityholder
in any such proceeding.
Section 6.10. Priorities.
- ------------- -----------
Subject to any applicable subordination provisions in any indenture
supplemental hereto, if the Trustee collects any money pursuant to this Article
with respect to any series of Securities, it shall pay out the money in the
following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Securityholders for amounts due and unpaid on such
series of Securities for Principal and interest,
ratably, without preference or priority of any kind,
according to the amounts due and payable on such series
of Securities for Principal and interest, respectively;
and
Third: to the Company or any other obligor on such series of
Securities, as their interests may appear, or as a
court of competent jurisdiction may direct.
The Trustee may fix a record date and payment date for any payment to
Holders of any series of Securities pursuant to this Section. The Trustee shall
notify the Company in writing reasonably in advance of any such record date and
payment date.
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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 Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07, or a suit by Holders of more than 10% in Principal
Amount of any series of Securities then outstanding.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
- ------------- ------------------
(a) If an Event of Default has occurred and is continuing with respect
to any series of Securities, the Trustee with respect to such series shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default with respect
to any series of Securities:
(1) the Trustee with respect to such series need perform only
those duties that are specifically set forth in this Indenture and no
others.
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section.
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts.
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(3) 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.
(d) 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) The Trustee may refuse to perform any duty or exercise any right
or power unless it receives indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held
in trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 7.02. Rights of Trustee.
- ------------- ------------------
(a) The Trustee may rely on 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.
(c) The Trustee may act through 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 which it believes to be authorized or within its rights or
powers.
Section 7.03. Individual Rights of Trustee.
- ------------- -----------------------------
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities of any series and may otherwise deal with the
Company or an Affiliate of the Company with the same rights it would have if it
were not Trustee. Any Agent may do the same with like rights. However, the
Trustee is subject to Sections 7.10 and 7.11.
Section 7.04. Trustee's Disclaimer.
- ------------- ---------------------
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in the Indenture or any statement in the Securities
other than its authentication.
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<PAGE>
Section 7.05. Notice of Defaults.
- ------------- -------------------
If a Default or Event of Default with respect to any series of
Securities occurs and is continuing and if it is known to the Trustee with
respect to such series, the Trustee shall mail to the Holders of such series a
notice of the Default or Event of Default within 90 days after it occurs.
Except in the case of a Default or Event of Default in payment on any series of
Securities (including any failure to make any mandatory redemption payment
required hereunder), the Trustee with respect to such series may withhold the
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of the Holders of
such series.
Section 7.06. Reports by Trustee to Holders.
- ------------- ------------------------------
Within 60 days after the reporting date stated below, the Trustee with
respect to each series of Securities shall mail, if required by TIA Section 313,
to the Holders of such series a brief report dated as of such reporting date
that complies with TIA Section 313(a). The Trustee with respect to each series
of Securities also shall comply with TIA Section 313(b)(1) and TIA Section
313(b)(2). The Trustee with respect to each series of Securities shall also
transmit by mail all reports as required by TIA Section 313(c).
Commencing at the time this Indenture is qualified under the TIA, a
copy of each report at the time of its mailing to Holders of any series of
Securities shall be filed with the SEC and each securities exchange on which the
Securities of such series are listed. The Company shall notify the Trustee with
respect to a series of Securities when the Securities of such series are listed
on any securities exchange.
The reporting date for this Section 7.06 is May 15 of each year. The
first reporting date is May 15 following the calendar year in which Securities
of such series are first issued under this Indenture.
Section 7.07. Compensation and Indemnity.
- ------------- ---------------------------
The Company shall pay to the Trustee from time to time reasonable
compensation for its services hereunder. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable out-of-
pocket expenses incurred by it. Such expenses shall include the reasonable
compensation and out-of-pocket expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss or liability
incurred by it except as set forth in the next paragraph. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnity. The
Company shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel, and the Company shall pay the reasonable
fees and expenses of such counsel. The Company need not pay for any settlement
made without its consent, which consent shall not be unreasonably withheld.
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The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee with respect to each series of Securities shall have a lien prior to the
Securities of such series on all money or property held or collected by the
Trustee, except that held in trust to pay Principal and interest on particular
Securities of such series.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.08. Replacement of Trustee.
- ------------- -----------------------
The Trustee with respect to any series of Securities may resign by so
notifying the Company; provided, however, no such resignation shall be effective
until a successor Trustee with respect to such series has accepted its
appointment pursuant to this Section 7.08. The Holders of a majority in
aggregate Principal Amount of the Securities of any series at the time
outstanding may remove the Trustee with respect to the Securities of such series
by so notifying the Trustee and may appoint a successor Trustee. The Company
shall remove the Trustee with respect to any series of Securities if:
(1) such Trustee fails to comply with Section 7.10;
(2) such Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of such Trustee or
its property; or
(4) such Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, with respect to the Securities of one or more
series, the Company shall promptly appoint, by resolution of its Board of
Directors, a successor Trustee with respect to the Securities of that or those
series (it being understood that any such successor Trustee may be appointed
with respect to the Securities of one or more or all of such series and that at
any time there shall be only one Trustee with respect to the Securities of any
series).
In the case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to the Company.
Thereupon, the resignation or removal of the retiring Trustee shall become
effective and the successor Trustee shall have all the rights, powers and duties
of the Trustee under this Indenture. The successor Trustee shall mail a notice
of its succession to the Holders of the Securities. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor Trustee,
subject to the lien provided for in Section 7.07.
35
<PAGE>
In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees as co-trustees of
the same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates, but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates, subject, nevertheless, to its lien, if any,
provided for in Section 7.07. Each successor Trustee shall mail a notice of its
succession to the Holders of Securities of the particular series with respect to
which such successor Trustee has been appointed.
If a successor Trustee with respect to the Securities of any series
does not take office within 30 days after the retiring Trustee resigns or is
removed, the retiring Trustee, the Company or the Holders of a majority in
aggregate Principal Amount of the Securities of such series at the time
outstanding may petition any court of competent jurisdiction for the appointment
of a successor Trustee with respect to the Securities of such series.
If the Trustee fails to comply with Section 7.10, any Holder of a
Security of any series for which such Trustee acts in such capacity may petition
any court of competent jurisdiction for the removal of such Trustee and the
appointment of a successor Trustee.
Section 7.09. Successor Trustee by Merger, etc.
- ------------- ---------------------------------
If the Trustee with respect to Securities of any series 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 with respect to the Securities of
such series.
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<PAGE>
Section 7.10. Eligibility; Disqualification.
- ------------- ------------------------------
This Indenture shall always have a Trustee with respect to each series
of Securities who satisfies the requirements of TIA Section 310(a)(1). The
Trustee with respect to each series of Securities shall always have a combined
capital and surplus (including subordinated capital notes and earned surplus) of
$25,000,000. The Trustee with respect to each series of Securities is subject
to TIA Section 310(b), including the optional provision permitted by the second
sentence of TIA Section 310(b)(9).
Section 7.11. Preferential Collection of Claims Against the Company.
- ------------- ------------------------------------------------------
The Trustee with respect to each series of Securities is subject to
TIA Section 311(a), excluding any creditor relationship listed in TIA Section
311(b). A Trustee who has resigned or been removed shall be subject to TIA
Section 311(a) to the extent indicated therein.
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.01. Discharge of Liability on Securities.
- ------------- -------------------------------------
Except as otherwise contemplated by Section 2.03, when (a) the Company
delivers to the Trustee all outstanding Securities or all outstanding Securities
of any series, as the case may be, theretofore authenticated and delivered
(other than (i) Securities or Securities of such series, as the case may be,
which have been destroyed, lost or stolen and which have been replaced or paid
as provided in Section 2.09, and (ii) Securities or Securities of such series,
as the case may be, for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust, as provided in Section 3.05) for
cancellation or (b) all outstanding Securities have become due and payable and
the Company deposits with the Trustee cash sufficient to pay at Stated Maturity
the amount of all Principal of and interest on outstanding Securities or all
outstanding Securities of such series (other than Securities replaced pursuant
to Section 2.09), and if in either case the Company pays all other sums payable
hereunder by the Company, then this Indenture shall, subject to Section 7.07,
cease to be of further effect as to all outstanding Securities or all
outstanding Securities of any series, as the case may be. The Trustee shall
join in the execution of a document prepared by the Company acknowledging
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and Opinion of Counsel, each containing
the applicable information specified in Sections 11.04 and 11.05, and at the
cost and expense of the Company.
Section 8.02. Repayment to the Company.
- ------------- -------------------------
The Trustee and the Paying Agent shall return to the Company on
Company Request any money held by them for the payment of any amount with
respect to the Securities that remains unclaimed for two years; provided,
however, that the Trustee or such Paying Agent,
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<PAGE>
before being required to make any such return, may at the expense and direction
of the Company cause to be published once in an Authorized Newspaper in each
Place of Payment of or mail to each such Holder 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 publication or mailing, any unclaimed money then
remaining will be returned to the Company. After return to the Company, Holders
entitled to the money must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another person.
Section 8.03. Option to Effect Defeasance or Covenant Defeasance.
- ------------- ---------------------------------------------------
Unless otherwise specified as contemplated by Section 2.03 with
respect to Securities of a particular series, the Company, may at its option, by
Board Resolution, at any time, with respect to any series of Securities, elect
to have either Section 8.04 or Section 8.05 be applied to all of the outstanding
Securities of any series (the "Defeased Securities"), upon compliance with the
-------------------
conditions set forth below in this Article 8.
Section 8.04. Defeasance and Discharge.
- ------------- -------------------------
Upon the Company's exercise under Section 8.03 of the option
applicable to this Section 8.04, the Company shall be deemed to have been
discharged from its obligations with respect to the Defeased Securities on the
date the conditions set forth below are satisfied (hereinafter "defeasance").
For this purpose, such defeasance means that the Company shall be deemed to have
paid and discharged the entire Indebtedness represented by the Defeased
Securities, which shall thereafter be deemed to be "outstanding" only for the
purposes of Sections 2.04, 2.05, 2.06, 2.09,2.12, 2.13, 4.01, 6.06, 6.07, 7.07,
7.08 and 8.02 of this Indenture and to have satisfied all its other obligations
under such series of Securities and this Indenture insofar as such series of
Securities are concerned (and the Trustee, at the expense of the Company, and,
upon written request, shall execute proper instruments acknowledging the same).
Subject to compliance with this Article 8, the Company may exercise its option
under this Section 8.04 notwithstanding the prior exercise of its option under
Section 8.05 with respect to a series of Securities.
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<PAGE>
Section 8.05. Covenant Defeasance.
- ------------- --------------------
Upon the Company's exercise under Section 8.03 of the option
applicable to this Section 8.05, the Company shall be released from its
obligations under Sections 4.02, 4.03, 4.06 and 4.07 and Article 5 and such
other provisions as may be provided as contemplated by Section 2.03 with respect
to Securities of a particular series and with respect to the Defeased Securities
on and after the date the conditions set forth below are satisfied (hereinafter
"covenant defeasance"), and the Defeased Securities shall thereafter be deemed
-------------------
to be not "outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences, if any, thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder. For this purpose, such covenant defeasance
means that, with respect to the Defeased Securities, the Company may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such Section or Article, whether directly or
indirectly, by reason of any reference elsewhere herein to any such Section or
Article or by reason of any reference in any such Section or Article to any
other provisions 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 but,
except as specified above, the remainder of this Indenture and such Defeased
Securities shall be unaffected thereby.
Section 8.06. Conditions to Defeasance or Covenant Defeasance.
- ------------- ------------------------------------------------
The following shall be the conditions to application of either Section
8.04 or Section 8.05 to a series of outstanding Securities.
(a) The Company shall have irrevocably deposited with the Trustee, in
trust, (i) sufficient funds in the currency or currency unit in which the
Securities of such series are denominated to pay the Principal of and
interest to Stated Maturity (or redemption) on, the Securities of such
series, or (ii) such amount of direct obligations of, or obligations the
principal of and interest on which are fully guaranteed by, the government
which issued the currency in which the Securities of such series are
denominated, and which are not subject to prepayment, redemption or call
("Qualified Government Obligations"), as will, together with the
----------------------------------
predetermined and certain income to accrue thereon without consideration of
any reinvestment thereof, be sufficient to pay when due the Principal of,
and interest to Stated Maturity (or redemption) on, the Securities of such
series, or (iii) any combination of funds in the currency or currency unit
specified in (i) and Qualified Government Obligations, as will, together
with the predetermined and certain income to accrue thereon without
consideration of any reinvestment thereof, be sufficient to pay when due
the Principal of, and interest to Stated Maturity (or redemption) on, the
Securities of such series;
(b) The Company shall (i) have delivered an Opinion of Counsel that
the Holders of the Securities of such series will not recognize income,
gain or loss for United States federal income tax purposes as a result of
such defeasance, and will be subject to tax in the same manner as if no
defeasance and discharge or covenant defeasance, as the case may be, had
occurred or (ii) in the case of an election under Section 8.04 the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that (A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date this Indenture was
39
<PAGE>
first executed, 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 outstanding Securities of
that particular series will not recognize income, gain or loss for federal
income tax purposes as a result of such defeasance; and
(c) If applicable, the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the funds deposited pursuant to
Section 8.06(a) will not be subject to the rights of the holders of "Senior
Indebtedness" as defined in any indenture supplemental hereto applicable to
the Securities of such series.
ARTICLE 9
AMENDMENTS
Section 9.01. Without Consent of Holders.
- ------------- ---------------------------
Without the consent of any Holder of Securities, the Company and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
(1) to evidence the succession of another corporation to the
Company and the assumption by any such successor of the covenants of the
Company herein and in the Securities; or
(2) to add to the covenants, agreements and obligations of the
Company for the benefit of the Holders of all of the Securities or any
series thereof, or to surrender any right or power herein conferred upon
the Company; or
(3) to establish the form and/or terms of Securities of any
series as permitted by Sections 2.01 and 2.03, respectively; or
(4) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 7.08; or
(5) to cure any ambiguity, defect or inconsistency; or
(6) to add to, change or eliminate any of the provisions of this
Indenture (which addition, change or elimination may apply to one or more
series of Securities), provided that any such addition, change or
elimination other than those permitted by all or any of clauses (1), (2),
(3), (4), (5), (7), (8), (9), (10) and (11) of this Section 9.01 shall
neither (a) apply to any Security of any series created prior to the
execution of such supplemental indenture and entitled to the benefit of
such provision nor (b) modify the rights of the Holder of any such Security
with respect to such provision; or
40
<PAGE>
(7) to comply with Article 5; or
(8) to comply with any requirements of the SEC in connection with
the qualification or requalification of this Indenture under the TIA; or
(9) to provide for uncertificated Securities in addition to
certificated Securities; or
(10) to secure the Securities; or
(11) to make any change that does not adversely affect the legal
rights hereunder of any Securityholder.
Section 9.02. With Consent of Holders.
- ------------- ------------------------
Subject to Section 6.07, the Company and the Trustee with respect to
any series of Securities may amend or supplement this Indenture or such series
of Securities without notice to any Securityholder but with the written consent
of the Holders of at least a majority in Principal Amount of the then
outstanding Securities of each series affected by such amendment or supplement,
with each such series voting as a separate class. The Holders of a majority in
Principal Amount of any series of Securities then outstanding may also waive
compliance in a particular instance by the Company with any provision of this
Indenture with respect to that series or the Securities of that series.
However, without the consent of each Securityholder affected, an
amendment, supplement or waiver under this Section, including a waiver pursuant
to Section 6.04, may not:
(1) reduce the amount of Securities whose Holders must consent to
an amendment, supplement or waiver;
(2) reduce the rate of or change the time for payment of interest
on any Security in a manner adverse to the Holders thereof;
(3) reduce the Principal of, or extend the Stated Maturity of any
Security or alter the redemption provisions of any Securities in a manner
adverse to the Holders thereof;
(4) make any Security payable in money other than that stated in
the Security;
(5) make any change in Section 6.04, 6.07 or 9.02 (this
sentence); or
(6) waive a default in the payment of the Principal of, or
interest on, any Security.
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To secure a consent of the Holders under this Section it shall not be
necessary for the Holders to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to Holders of Securities of each series
affected thereby a notice briefly describing the amendment, supplement or
waiver.
Section 9.03. Compliance with Trust Indenture Act.
- ------------- ------------------------------------
Every amendment to or supplement of this Indenture or the Securities
shall comply 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 such amendment, supplement or waiver by a Holder of a Security is a
continuing consent by the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same Indebtedness as the consenting
Holder's Security, even if notation of the consent is not made on any Security.
However, any such Holder or subsequent Holder may revoke the consent as to his
Security or portion of a Security if the Trustee receives notice of revocation
before the date on which the Trustee receives an Officers' Certificate
certifying that the Holders of the requisite Principal Amount of Securities of
each affected series have consented to the amendment, supplement or waiver (or
before such later date as may be required by law or stock exchange rule).
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver permitted by this Indenture. If a record date is fixed,
then notwithstanding the provisions of the immediately preceding paragraph,
those persons who were Holders at such record date (or their duly designated
proxies), and only those persons, shall be entitled to consent to such
amendment, supplement or waiver or to revoke any consent previously given,
whether or not such persons continue to be Holders after such record date. No
consent of a Holder of a series of Securities shall be valid or effective for
more than 90 days after such record date unless consents from Holders of the
Principal Amount of Securities of such series required hereunder for such
amendment, supplement or waiver to be effective shall have also been given and
not revoked within such 90-day period.
After an amendment, supplement or waiver becomes effective it shall
bind every Holder of Securities of an affected series, unless it is of the type
described in any of clauses (1) through (6) of Section 9.02. In such case, the
amendment, supplement or waiver shall bind each Holder of a Security who has
consented to it and every subsequent Holder of a Security or a portion of a
Security that evidences the same Indebtedness as the consenting Holder's
Security.
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Section 9.05. Notation on or Exchange of Securities.
- ------------- --------------------------------------
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
Section 9.06. Trustee Protected.
- ------------- ------------------
The Trustee shall sign any indenture supplemental hereto relating to
any amendment, supplement or waiver authorized pursuant to this Article if the
amendment, supplement or waiver does not adversely affects its rights. The
Trustee may request an Opinion of Counsel and an Officers' Certificate, each of
which complies with Sections 11.04 and 11.05, stating that such amendment,
supplement or waiver and the related supplemental indenture are permitted
hereunder and all conditions precedent have been complied with.
ARTICLE 10
MEETINGS OF SECURITYHOLDERS
Section 10.01. Purposes for Which Meetings May be Called.
- -------------- -----------------------------------------
A meeting of Holders of any series of Securities, either separately or
jointly, may be called at any time and from time to time pursuant to the
provisions of this Article 10 for any of the following purposes:
(a) to give any notice to the Company or to the Trustee, or to
give any directions to the Trustee, or to waive or consent to the waiving
of any Default or Event of Default hereunder and its consequences, or to
take any other action authorized to be taken by Securityholders pursuant to
any of the provisions of Article 6;
(b) to remove the Trustee or appoint a successor Trustee pursuant
to the provisions of Article 7;
(c) to consent to an amendment, supplement or waiver pursuant to
the provisions of Section 9.02; or
(d) to take any action (i) authorized to be taken by or on behalf
of the Holders of any specified aggregate Principal Amount of such series
of Securities under any other provision of this Indenture, or authorized or
permitted by law or (ii) which the Trustee deems necessary or appropriate
in connection with the administration of this Indenture;
in each case without prejudice to the rights of the Company or Holders of
Securities to take such action in writing in lieu of a meeting.
43
<PAGE>
Section 10.02. Manner of Calling Meetings.
- -------------- --------------------------
Trustee may at any time call a meeting of Holders of any series of
Securities to take any action specified in Section 10.01, to be held at such
time and at such place in the City of Las Vegas, Nevada, as the Trustee shall
determine. Notice of every meeting of Holders of any series of Securities,
setting forth the time and place of such meeting and in general terms the action
or actions proposed to be taken at such meeting, shall be mailed by the Trustee,
first-class postage prepaid, to the Company, and to the Holders of such series
of Securities at their last addresses as they shall appear on the registration
books of the Registrar, not less than 10 nor more than 60 days prior to the date
fixed for the meeting.
Any meeting of Holders of the Securities shall be valid without notice
if (i) with respect to a meeting of any series of Securities, all Holders of
such series of Securities then outstanding are present in person or by proxy, or
if notice is waived before or after the meeting by all Holders of such series of
Securities then outstanding who are not present and (ii) with respect to a
meeting of all Securityholders, all Holders of such Securities then outstanding
are present in person or by proxy or if notice is waived before or after the
meeting by all Holders of such Securities then outstanding who are not present,
and, in each case, if the Company and the Trustee are either present by duly
authorized representative or have, before or after the meeting, waived notice.
Section 10.03. Call of Meetings by Company or Holders.
- -------------- --------------------------------------
In case at any time the Company, pursuant to resolution of its Board
of Directors or the Holders of not less than 25% in aggregate Principal Amount
of any series of Securities then outstanding, shall have requested the Trustee
to call a meeting of Securityholders of such series, either separately or
jointly, to take any action specified in Section 10.01, by written request
setting forth in reasonable detail the action or actions proposed to be taken at
the meeting, and the Trustee shall not have mailed the notice of such meeting
within 20 days of receipt of such request, then the Company or the Holders of
such series of Securities in the amount above specified may determine the time
and place in the City of Las Vegas, Nevada, or in the Borough of Manhattan, City
of New York, for such meeting and may call such meeting for the purpose of
taking such action, by mailing or causing to be mailed notice thereof as
provided in Section 10.02, or by causing notice thereof to be published at least
once in each of two successive calendar weeks (on any day of the week) in a
newspaper or newspapers printed in the English language, customarily published
at least five days a week and of general circulation in the City of Las Vegas,
Nevada and in the Borough of Manhattan, City of New York, the first such
publication to be not less than 10 nor more than 60 days prior to the date fixed
for the meeting.
Section 10.04. Who May Attend or Vote at Meetings.
- -------------- ----------------------------------
To be entitled to vote at any meeting of Securityholders, a person
shall (a) be a registered Holder of one or more Securities (or, if the meeting
is of Holders of one or more (but not all) series of Securities, one or more
Securities of such Series), or (b) be a person appointed by an instrument in
writing as proxy for the registered Holder or Holders of Securities (or, if the
meeting is of Holders of one or more (but not all) series of Securities, one or
more Securities of such series). The only persons who shall be entitled to be
44
<PAGE>
present or to speak at any meeting of Securityholders shall be the persons
entitled to vote at such meeting and their counsel and any representative of the
Trustee and its counsel and any representatives of the Company and its counsel.
Section 10.05. Regulations by Trustee; Conduct of Meeting; Voting Rights;
- -------------- ----------------------------------------------------------
Adjournment.
- -----------
Notwithstanding any other provision of this Indenture, the Trustee may
make such reasonable regulations as it may deem advisable for any meeting of
Securityholders, in regard to proof of the holding of Securities and of the
appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, and submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall think appropriate. Such regulations may fix
a record date and time for determining the Holders of record of Securities
entitled to vote at such meeting, in which case those and only those persons who
are Holders of Securities at the record date and time so fixed, or their
proxies, shall be entitled to vote at such meeting whether or not they shall be
such Holders at the time of the meeting.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders as provided in Section 10.03, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Holders of a majority
in Principal Amount of the Securities represented at the meeting and entitled to
vote.
At any meeting each Securityholder or proxy shall be entitled to one
vote for each $1,000 Principal Amount of Securities held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
- -------- -------
respect of any Securities challenged as not outstanding and ruled by the
chairman of the meeting to be not outstanding. The chairman of the meeting
shall have no right to vote other than by virtue of Securities held by him or
instruments in writing as aforesaid duly designating him as the person to vote
on behalf of other Securityholders. At any meeting of Securityholders, the
presence of persons holding or representing any number of Securities shall be
sufficient for a quorum. Any meeting of Securityholders duly called pursuant to
the provisions of Section 10.02 or Section 10.03 may be adjourned from time to
time by vote of the Holders of a majority in aggregate Principal Amount of the
Securities represented at the meeting and entitled to vote, and the meeting may
be held as so adjourned without further notice.
Section 10.06. Voting at the Meeting and Record to be Kept.
- -------------- -------------------------------------------
The vote upon any resolution submitted to any meeting of
Securityholders shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy and
the Principal Amount of the Securities voted by the ballot. The permanent
chairman of the meeting shall appoint two inspectors of votes, who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Securityholders shall be prepared by
45
<PAGE>
the secretary of the meeting and there shall be attached to such record the
original reports of the inspectors of votes on any vote by ballot taken thereat
and affidavits by one or more persons having knowledge of the facts, setting
forth a copy of the notice of the meeting and showing that such notice was
mailed as provided in Section 10.02 or published as provided in Section 10.03.
The record shall be signed and verified by the affidavits of the permanent
chairman and the secretary of the meeting and one of the duplicates shall be
delivered to the Company and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 10.07. Exercise of Rights of Trustee or Security Holders not Hindered
- -------------- --------------------------------------------------------------
or Delayed by Call of Meeting.
------------------------------
Nothing in this Article 10 contained shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Securityholders or
any rights expressly or impliedly conferred hereunder to make such call, any
hindrance or delay in the exercise of any right or rights conferred upon or
reserved to the Trustee or to the Securityholders under any of the provisions of
this Indenture or of the Securities.
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
- -------------- ----------------------------
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control.
Section 11.02. Notices.
- -------------- --------
Any notice or communication by the Company or the Trustee to the other
is duly given if in writing and delivered in person or mailed by first-class
mail to the other's address:
The Company's address is:
Mirage Resorts, Incorporated
3400 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: General Counsel
The Trustee's address is:
First Security Bank, National Association
Corporate Trust Services
79 South Main Street
Salt Lake City, Utah 84111
46
<PAGE>
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication to a Securityholder shall be mailed by
first-class mail to his address shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Securityholder or any defect in
it shall not affect its sufficiency with respect to other Securityholders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given when mailed, whether or not the
addressee receives it.
If the Company mails a notice or communication to Securityholders, it
shall mail a copy to the Trustee and each Agent at the same time.
Section 11.03. Communication by Holders with Other Holders.
- -------------- --------------------------------------------
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
Section 11.04. Certificate and Opinion as to Conditions Precedent.
- -------------- ---------------------------------------------------
Upon any request or application by the Company or any other obligor to
the Trustee to take any action under this Indenture, the Company or any other
obligor, as the case may be, shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 11.05. Statements Required in Certificate or Opinion.
- -------------- ---------------------------------------------
Each Officers' Certificate or Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture shall
include:
(1) a statement that the person making such certificate or opinion has
read such covenant or condition;
(2) 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;
47
<PAGE>
(3) a statement that, in the opinion of such person, he 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
complied with; and
(4) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
Section 11.06. Rules by Trustee and Agents.
- -------------- ----------------------------
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
Section 11.07. Legal Holidays.
- -------------- ---------------
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
-------------
institutions in the State of Nevada or New York are not required to be open. 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 on such payment.
Section 11.08. No Recourse Against Others.
- -------------- ---------------------------
No past, present or future director, officer, employee, stockholder or
incorporator, as such, of the Company or any successor corporation shall have
any liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
Section 11.09. Counterparts.
- -------------- -------------
This Indenture 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.
Section 11.10. Governing Law.
- -------------- --------------
The internal laws of the State of Nevada shall govern this Indenture
and the Securities, without regard to the conflicts of laws provisions thereof.
Section 11.11. No Adverse Interpretation of Other Agreements.
- -------------- ----------------------------------------------
This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
48
<PAGE>
Section 11.12. Successors.
- -------------- -----------
All agreements of the Company in this Indenture and the Securities
shall bind its successors. All agreements of the Trustee in this Indenture
shall bind its successors.
Section 11.13. Severability.
- -------------- -------------
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.14. Qualification of Indenture.
- -------------- ---------------------------
The Company shall qualify this Indenture under the TIA and shall pay
all costs and expenses (including attorneys' fees for the Company and the
reasonable attorneys' fees for the Trustee) incurred in connection therewith,
including, but not limited to, costs and expenses of qualification of this
Indenture and the Securities and printing this Indenture and the Securities. In
connection with any such qualification of this Indenture under the TIA, the
Trustee shall be entitled to receive from the Company any such Officers'
Certificates, Opinions of Counsel or other documentation as it may reasonably
request.
Section 11.15. 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 hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
49
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be executed as of the day and year first above written.
SIGNATURES
Dated: As of August 1, 1997 MIRAGE RESORTS, INCORPORATED
By: STEPHEN A. WYNN
___________________________
Attest: Stephen A. Wynn
Chairman of the Board
BRUCE A. LEVIN
______________________________
Bruce A. Levin, Secretary (SEAL)
By: DANIEL R. LEE
___________________________
Daniel R. Lee
Chief Financial Officer
Dated: As of August 1, 1997 FIRST SECURITY BANK, NATIONAL ASSOCIATION
as Trustee
By: FRANCINE SCHARTZ
___________________________
Francine Schartz
Vice President
50
MIRAGE RESORTS, INCORPORATED, Issuer
AND
FIRST SECURITY BANK, NATIONAL ASSOCIATION, Trustee
$300,000,000
SUPPLEMENTAL INDENTURE
DATED AS OF
August 1, 1997
6.75% NOTES DUE AUGUST 1, 2007
7.25% DEBENTURES DUE AUGUST 1, 2017
Exhibit 4.2
<PAGE>
THIS SUPPLEMENTAL INDENTURE is dated and entered into as of August 1, 1997,
between Mirage Resorts, Incorporated, a Nevada corporation (hereinafter
sometimes referred to as the "Company"), and First Security Bank, National
Association, a corporation organized and existing as a national banking
association under the laws of the United States, as trustee (hereinafter
sometimes referred to as the "Trustee").
WITNESSETH THAT:
WHEREAS, the Company filed on June 28, 1996 a Registration Statement on
Form S-3 (the "Shelf Registration Statement") with the Securities and Exchange
Commission with respect to certain securities of the Company, and the Shelf
Registration Statement was declared effective on July 12, 1996;
WHEREAS, the form of Indenture attached as Exhibit 4 to the Shelf
Registration Statement (the "Indenture") sets forth certain terms and provisions
of certain debt securities of the Company;
WHEREAS, for its lawful corporate purposes, the Company desires to create
and authorize the series of 6.75% Notes Due August 1, 2007, in an aggregate
principal amount of $200,000,000 (the "Notes") and the series of 7.25%
Debentures Due August 1, 2017, in an aggregate principal amount of $100,000,000
(the "Debentures") and to provide the terms and conditions upon which the Notes
and Debentures are to be executed, registered, authenticated, issued and
delivered;
WHEREAS, the Company has duly authorized the execution and delivery of this
Supplemental Indenture;
WHEREAS, the Notes and the certificate of authentication to be borne by the
Notes are to be substantially in the forms attached hereto as Exhibit A, and the
---------
Debentures and the certificate of authentication to be borne by the Debentures
are to be substantially in the forms attached hereto as Exhibit B; and
---------
WHEREAS, all acts and things necessary to make the Notes and the
Debentures, when executed by the Company and authenticated and delivered by or
on behalf of the Trustee as in this Supplemental Indenture provided, the valid,
binding and legal obligations of the Company, and to constitute these presents a
valid indenture and agreement according to its terms, have been done and
performed;
NOW, THEREFORE, in order to declare the terms and conditions upon which the
Notes and the Debentures are executed, registered, authenticated, issued and
delivered, and in consideration of the premises, of the purchase and acceptance
of such Notes and such Debentures by the Holders thereof and of the sum of one
dollar to it duly paid by the Trustee at the execution of these presents, the
receipt whereof is hereby acknowledged, the Company covenants and agrees with
the Trustee, for the equal and proportionate benefit of the respective Holders
from time to time of the Notes and Debentures, as follows:
2
<PAGE>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
1. Capitalized Terms.
Capitalized terms used herein and not otherwise defined herein are
used with the respective meanings ascribed to such terms in the Indenture.
2. Effectiveness.
This Supplemental Indenture shall become effective, and shall bind the
parties hereto, upon its execution by the parties hereto.
3. Incorporation of Supplemental Indenture into Indenture.
This Supplemental Indenture is executed by the Company and the Trustee
pursuant to the provisions of Section 9.01 of the Indenture, and the terms and
conditions hereof shall be deemed to be part of the Indenture for all purposes
upon the effectiveness of this Supplemental Indenture. The Indenture, as
amended and supplemented by this Supplemental Indenture, is in all respects
hereby adopted, ratified and confirmed.
4. Effect of Headings.
The Article and Section headings herein are for convenience only and
shall not affect the construction hereof.
5. Governing Law.
The internal laws of the State of Nevada shall govern and be used to
construe this Supplemental Indenture, without regard to the conflicts of laws
provisions thereof.
6. Counterparts.
This Supplemental Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same instrument.
7. Recitals.
The recitals contained herein shall be taken as the statements of the
Company and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations as to the validity or sufficiency of this
Supplemental Indenture.
3
<PAGE>
ARTICLE TWO
CREATION AND AUTHORIZATION OF SERIES
1. Designation of Series of Security.
There is hereby created and authorized (i) the series of Securities
entitled the "6.75% Notes Due August 1, 2007," which shall be a closed series
limited to $200,000,000 aggregate Principal Amount (except for Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes of this series pursuant to Sections 2.08, 2.09,
2.12 and 3.06 of the Indenture) and (ii) the series of Securities entitled
"7.25% Debentures Due August 1, 2017," which shall be a closed series limited to
$100,000,000 aggregate Principal Amount (except for Debentures authenticated and
delivered upon registration of transfer of, or in exchange for, or in lieu of,
other Debentures of this series pursuant to Sections 2.08, 2.09, 2.12 and 3.06
of the Indenture). The Notes and Debentures shall be substantially in the forms
set forth in the fifth recital of this Supplemental Indenture.
ARTICLE THREE
AMENDMENTS TO PROVISIONS OF INDENTURE
1. Definitions.
Section 1.01 of the Indenture is hereby amended by adding the
following definitions in the appropriate alphabetical order:
"Adjusted Treasury Rate" means, with respect to any redemption date,
the rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, plus 0.20% with respect to the Notes
and 0.25% with respect to the Debentures.
"Attributable Value" in respect of any sale and leaseback transaction
means, as of the time of determination, the total obligation (discounted to
present value at the average interest rate of the Notes and Debentures (weighted
in proportion to the aggregate principal amount of the Notes and Debentures
originally issued) compounded semiannually) of the lessee for rental payments
(other than amounts required to be paid on account of property taxes as well as
maintenance, repairs, insurance, water rates and other items which do not
constitute payments for property rights) during the remaining portion of the
base term of the lease included in such sale and leaseback transaction.
"Comparable Treasury Issue" means, with respect to the Notes or the
Debentures, as the case may be, the United States Treasury security selected by
a Quotation Agent as having a maturity comparable to the remaining term of such
Notes or Debentures, as the case may be, to be redeemed that would be utilized,
at the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Notes or Debentures, as the case may be.
"Comparable Treasury Price" means, with respect to any redemption
date, (i) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third Business Day preceding such redemption date, as set forth in the
4
<PAGE>
daily statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations or
(B) if the Company obtains fewer than three such Reference Treasury Dealer
Quotations, the average of all such Quotations.
"Consolidated Net Tangible Assets" of the Company means the aggregate
amount of assets (less applicable reserves and other properly deductible items)
after deducting therefrom (a) all current liabilities (excluding any
Indebtedness for money borrowed having a maturity of less than 12 months from
the date of the most recent consolidated balance sheet of the Company but which
by its terms is renewable or extendable beyond 12 months from such date at the
option of the borrower) and (b) all goodwill, trade names, patents, unamortized
debt discount and expense and any other like intangibles, all as set forth on
the most recent consolidated balance sheet of the Company and computed in
accordance with generally accepted accounting principles.
"Lien" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, security interest, lien,
encumbrance or other security arrangement of any kind or nature whatsoever on or
with respect to such property or assets (including any conditional sale or other
title retention agreement having substantially the same economic effect as any
of the foregoing).
"Principal Property" means any real property of the Company or any of
its subsidiaries, and any equipment located at or comprising a part of any such
real property, having a net book value, as of the date of determination, in
excess of the greater of $25 million and 5% of Consolidated Net Tangible Assets
of the Company.
"Quotation Agent" means one of the Reference Treasury Dealers
appointed by the Company and certified to the Trustee by the Company.
"Reference Treasury Dealer" means each of Credit Suisse First Boston
Corporation, Goldman, Sachs & Co. and BancAmerica Securities, Inc. and their
respective successors; provided, however, that if any of the foregoing shall
cease to be a primary U.S. Government securities dealer in New York City (a
"Primary Treasury Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer and certify same to the Trustee; and any other Primary
Treasury Dealer selected by the Company and certified to the Trustee by the
Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Company and certified to the Trustee by the Company, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Company by such Reference
Treasury Dealer at 5:00 p.m. on the third Business Day preceding such redemption
date.
2. Redemption and Offer to Purchase.
Section 3.05 of the Indenture is hereby amended and restated in its
entirety as follows:
5
<PAGE>
Section 3.05. Deposit of Redemption Price.
- ------------ ---------------------------
(a) Prior to or on the redemption date, the Company shall deposit
with the Paying Agent for the Notes being redeemed (or if the Company or a
subsidiary or an Affiliate of the Company is the Paying Agent, shall segregate
and hold in trust) money sufficient to pay the redemption price of, and (except
if the redemption date shall be an interest payment date) accrued interest on,
all Notes to be redeemed on that date other than Notes or portions of Notes
called for redemption which prior thereto have been delivered by the Company to
the Trustee for cancellation. If such money is then held by the Company or a
subsidiary or an Affiliate of the Company in trust and is not required for such
purpose, it shall be discharged from such trust.
(b) Prior to or on the redemption date, the Company shall deposit
with the Paying Agent for the Debentures being redeemed (or if the Company or a
subsidiary or an Affiliate of the Company is the Paying Agent, shall segregate
and hold in trust) money sufficient to pay the redemption price of, and (except
if the redemption date shall be an interest payment date) accrued interest on,
all Debentures to be redeemed on that date other than Debentures or portions of
Debentures called for redemption which prior thereto have been delivered by the
Company to the Trustee for cancellation. If such money is then held by the
Company or a subsidiary or an Affiliate of the Company in trust and is not
required for such purpose, it shall be discharged from such trust.
3. Optional Redemption.
The Indenture is hereby amended by adding a new Section 3.08 as
follows:
Section 3.08. Optional Redemption.
- ------------ -------------------
(a) The Notes are redeemable, in whole or in part, at the option
of the Company at any time at a redemption price equal to the greater of (i)
100% of the Principal Amount of Notes so redeemed or (ii) as determined by a
Quotation Agent, the sum of the present values of the remaining scheduled
payments of Principal and interest thereon discounted to the redemption date on
a semiannual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Adjusted Treasury Rate, plus, in each case, accrued interest thereon to
the redemption date.
(b) The Debentures are redeemable, in whole or in part, at the
option of the Company at any time at a redemption price equal to the greater of
(i) 100% of the Principal Amount of Debentures so redeemed or (ii) as determined
by a Quotation Agent, the sum of the present values of the remaining scheduled
payments of Principal and interest thereon discounted to the redemption date on
a semiannual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Adjusted Treasury Rate, plus, in each case, accrued interest thereon to
the redemption date.
4. Limitation on Liens.
The Indenture is hereby amended by adding a new Section 4.08 as
follows:
Section 4.08. Limitation on Liens.
- ------------ -------------------
The Company will not, and will not permit any subsidiary to,
create, incur, issue, assume or guarantee any Indebtedness of the Company or any
subsidiary secured by a Lien upon any Principal Property, or upon shares of
capital stock or evidences of Indebtedness issued by any subsidiary which owns
or leases a Principal Property and which are owned by the Company or any
6
<PAGE>
subsidiary (whether such Principal Property, shares or evidences of Indebted-
ness are now owned or are hereafter acquired by the Company), without making
effective provision to secure all of the Notes and the Debentures then out-
standing by such Lien, equally and ratably with (or prior to) any and all
other Indebtedness thereby secured, so long as such Indebtedness shall be so
secured.
The foregoing restrictions shall not apply, however, to: (a)
Liens existing on the date of original issuance of the Notes and the Debentures;
(b) Liens affecting property of a corporation or other entity existing at the
time it becomes a subsidiary of the Company or at the time it is merged into or
consolidated with the Company or a subsidiary of the Company; (c) Liens on
property existing at the time of acquisition thereof or incurred to secure
payment of all or a part of the purchase price thereof or to secure Indebtedness
incurred prior to, at the time of, or within 24 months after the acquisition for
the purpose of financing all or part of the purchase price thereof; (d) Liens on
any property to secure all or part of the cost of improvements or construction
thereon or Indebtedness incurred to provide funds for such purpose in a
principal amount not exceeding the cost of such improvements or construction;
(e) Liens which secure Indebtedness owing by a subsidiary of the Company to the
Company or to another subsidiary of the Company; (f) purchase money security
Liens on personal property; (g) Liens to secure Indebtedness of joint ventures
in which the Company or a subsidiary has an interest, to the extent such Liens
are solely on property or assets of, or equity interests in, such joint
ventures; (h) Liens in favor of the United States of America or any State
thereof, or any department, agency or instrumentality or political subdivision
thereof, to secure partial, progress, advance or other payments; and (i) any
extension, renewal, replacement or refunding of any Lien referred to in the
foregoing clauses (a) through (h), provided, however, that the aggregate
principal amount of Indebtedness secured thereby and not otherwise authorized by
the foregoing clauses shall not exceed the aggregate principal amount of
Indebtedness, plus any premium or fee payable in connection with any such
extension, renewal, replacement or refunding, so secured at the time of such
extension, renewal, replacement or refunding.
Notwithstanding the foregoing, the Company and its subsidiaries
may create, incur, issue, assume or guarantee Indebtedness secured by Liens
without equally and ratably securing the Notes and the Debentures then
outstanding, provided, that at the time of such creation, incurrence, issuance,
assumption or guarantee, after giving effect thereto and to the retirement of
any Indebtedness which is concurrently being retired, the aggregate amount of
all outstanding Indebtedness secured by Liens so incurred (other than those
Liens permitted by the preceding paragraph), together with all outstanding
Attributable Value of all sale and leaseback transactions permitted by the last
paragraph of Section 4.09, does not exceed 15% of the Consolidated Net Tangible
Assets of the Company.
5. Limitation on Sale and Leaseback Transactions.
The Indenture is hereby amended by adding a new Section 4.09 as
follows:
Section 4.09. Limitation on Sale and Leaseback Transactions.
- ------------ ---------------------------------------------
The Company will not, and will not permit any subsidiary to,
enter into any sale and leaseback transaction involving any Principal Property
unless the Company or such subsidiary shall apply, or cause to be applied, to
the retirement of its secured debt within 120 days after the effective date of
the sale and leaseback transaction, an amount not less than the greater of (i)
the net proceeds of the sale of the Principal Property leased pursuant to such
arrangement or (ii) the fair market value of the Principal Property so leased.
This restriction will not apply to a sale and leaseback transaction involving
the taking back of a lease for a period of less than three years.
7
<PAGE>
Notwithstanding the foregoing, the Company or any subsidiary may
enter into a sale and leaseback transaction, provided, that at the time of such
transaction, after giving effect thereto, the Attributable Value thereof,
together with all Indebtedness secured by Liens permitted pursuant to Section
4.08 (other than those Liens permitted by the second paragraph of Section 4.08,
and other than the Attributable Value of the sale and leaseback transactions
permitted by the preceding paragraph) does not exceed 15% of the Consolidated
Net Tangible Assets of the Company.
6. Successor Corporation and Assignment.
Section 5.01 of the Indenture is hereby amended and restated in
its entirety as follows:
Section 5.01. When the Company May Merge, etc.
- ------------ --------------------------------
The Company shall not consolidate or merge with or into, or sell,
lease, convey or otherwise dispose of all or substantially all of its assets to,
another person unless:
(1) the person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such
disposition shall have been made, is a corporation organized and existing
under the laws of the United States or any State thereof or the District of
Columbia;
(2) the person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such
disposition shall have been made, assumes by supplemental indenture all of
the obligations of the Company under the Notes, the Debentures and this
Indenture;
(3) immediately after the transaction no Default or Event
of Default exists; and
(4) if, as a result of the transaction, property of the
Company would become subject to a Lien that would not be permitted under
the limitation on Liens contained in Section 4.08, the Company takes such
steps as shall be necessary to secure the Notes and the Debentures equally
and ratably with (or prior to) the Indebtedness secured by such Lien.
The Company shall deliver to the Trustee for the Notes and the Debentures prior
to the consummation of the proposed transaction an Officers' Certificate to the
foregoing effect and an Opinion of Counsel stating that the proposed transaction
and such supplemental indenture comply with the provisions of this Indenture
applicable to the Notes and the Debentures.
7. Events of Default.
Section 6.01 of the Indenture is hereby amended and restated in
its entirety as follows:
Section 6.01. Events of Default.
- ------------ -----------------
(a) An "Event of Default" occurs with respect to the Notes in the
event of any one of the following:
(1) failure of the Company to pay (whether or not prohibited by
applicable subordination provisions, if any), interest for 30 days on, or the
Principal when due of, any Notes;
8
<PAGE>
(2) failure of the Company to comply with any of its other
agreements or covenants contained in the Notes or in this Indenture and
applicable to the Notes, and continuance of such Default for the period and
after the notice specified below;
(3) failure to pay when due (after applicable grace periods as
provided in any applicable instrument governing such Indebtedness) the principal
of, or acceleration of, any Indebtedness for money borrowed by the Company
having an aggregate principal amount outstanding equal to at least $25,000,000,
if such Indebtedness is not discharged, or such acceleration is not annulled,
and the Default continues for the period and after the notice specified below;
(4) entry of final judgments against the Company or any
subsidiary or subsidiaries of the Company which remain undischarged for a period
of 60 days, provided that the aggregate of all such judgments exceeds
$25,000,000 and the Default continues for the period and after the notice
specified below;
(5) the Company, pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it
in an involuntary case,
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) admits in writing its inability generally to pay
its debts as the same become due;
(6) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Material
Subsidiary of the Company in an involuntary case,
(B) appoints a Custodian of the Company for all or
substantially all of the property of the Company or any Material Subsidiary
of the Company, or
(C) orders the liquidation of the Company, and the order or
decree remains unstayed and in effect for 60 days; or
(7) a revocation, suspension or involuntary loss of any Gaming
License by the Company or a subsidiary of the Company (after the same shall have
been obtained) which results in the cessation of operation of the business at a
Principal Property for a period of more than 90 consecutive days.
The term "Bankruptcy Law" means any Federal or State bankruptcy,
insolvency, reorganization or other similar law. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
9
<PAGE>
A Default under clause (2) (other than a Default under Section
4.05, 4.07 or 5.01, each of which Default shall be an Event of Default without
the notice or passage of time specified in this paragraph) is not an Event of
Default until the Trustee or the Holders of at least 25% in Principal Amount of
the Notes then outstanding notify the Company of the Default and the Company
does not cure the Default or cause the Default to be cured within 30 days after
receipt of the notice. The notice must specify the Default, demand that it be
remedied and state that the notice is a "Notice of Default."
A Default under clause (3) is not an Event of Default until the
Trustee or the Holders of at least 25% in Principal Amount of the Notes then
outstanding notify the Company of the Default and the Company has not caused
such Default to be cured or waived or such acceleration to be rescinded or
annulled within 30 days after receipt of the notice. The notice must specify the
Default, demand that it be rescinded or annulled and state that the notice is a
"Notice of Default."
A Default under clause (4) is not an Event of Default until the
Trustee or the Holders of at least 25% in Principal Amount of the Notes then
outstanding notify the Company of the Default and the Company does not cure the
Default or cause the Default to be cured within 60 days after receipt of the
notice. The notice must specify the Default, demand that it be remedied and
state that the notice is a "Notice of Default."
In the case of any Event of Default pursuant to the provisions of
this Section 6.01 occurring with respect to the Notes by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium which the Company would have
had to pay if the Company then had elected optionally to redeem the Notes, an
equivalent premium (or, in the event that the Company would not be permitted to
redeem the Notes optionally on such date, the premium payable on the first date
thereafter on which such redemption would be permissible) shall also become and
be immediately due and payable with respect to the Notes to the extent permitted
by law, anything in this Indenture, in the Notes contained to the contrary
notwithstanding.
(b) An "Event of Default" occurs with respect to the Debentures
in the event of any one of the following:
(1) failure of the Company to pay (whether or not prohibited by
applicable subordination provisions, if any), interest for 30 days on, or the
Principal when due of, any Debentures;
(2) failure of the Company to comply with any of its other
agreements or covenants contained in the Debentures or in this Indenture and
applicable to the Debentures, and continuance of such Default for the period and
after the notice specified below;
(3) failure to pay when due (after applicable grace periods as
provided in any applicable instrument governing such Indebtedness) the principal
of, or acceleration of, any Indebtedness for money borrowed by the Company
having an aggregate principal amount outstanding equal to at least $25,000,000,
if such Indebtedness is not discharged, or such acceleration is not annulled,
and the Default continues for the period and after the notice specified below;
(4) entry of final judgments against the Company or any
subsidiary or subsidiaries of the Company which remain undischarged for a
period of 60 days, provided that the aggregate of all such judgments exceeds
10
<PAGE>
$25,000,000 and the Default continues for the period and after the notice
specified below;
(5) the Company, pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it
in an involuntary case,
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) admits in writing its inability generally to pay its
debts as the same become due;
(6) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Material
Subsidiary of the Company in an involuntary case,
(B) appoints a Custodian of the Company for all or
substantially all of the property of the Company or any Material Subsidiary
of the Company, or
(C) orders the liquidation of the Company, and the order or
decree remains unstayed and in effect for 60 days; or
(7) a revocation, suspension or involuntary loss of any Gaming
License by the Company or a subsidiary of the Company (after the same shall have
been obtained) which results in the cessation of operation of the business at a
Principal Property for a period of more than 90 consecutive days.
The term "Bankruptcy Law" means any Federal or State bankruptcy,
insolvency, reorganization or other similar law. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
A Default under clause (2) (other than a Default under Section
4.05, 4.07 or 5.01, each of which Default shall be an Event of Default without
the notice or passage of time specified in this paragraph) is not an Event of
Default until the Trustee or the Holders of at least 25% in Principal Amount of
the Debentures then outstanding notify the Company of the Default and the
Company does not cure the Default or cause the Default to be cured within 30
days after receipt of the notice. The notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default."
A Default under clause (3) is not an Event of Default until the
Trustee or the Holders of at least 25% in Principal Amount of the Debentures
then outstanding notify the Company of the Default and the Company has not
caused such Default to be cured or waived or such acceleration
11
<PAGE>
to be rescinded or annulled within 30 days after receipt of the notice. The
notice must specify the Default, demand that it be rescinded or annulled and
state that the notice is a "Notice of Default."
A Default under clause (4) is not an Event of Default until the
Trustee or the Holders of at least 25% in Principal Amount of the Debentures
then outstanding notify the Company of the Default and the Company does not cure
the Default or cause the Default to be cured within 60 days after receipt
of the notice. The notice must specify the Default, demand that it be remedied
and state that the notice is a "Notice of Default."
In the case of any Event of Default pursuant to the provisions of
this Section 6.01 occurring with respect to the Debentures by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium which the Company would
have had to pay if the Company then had elected optionally to redeem the
Debentures, an equivalent premium (or, in the event that the Company would not
be permitted to redeem the Debentures optionally on such date, the premium
payable on the first date thereafter on which such redemption would be
permissible) shall also become and be immediately due and payable with respect
to the Debentures to the extent permitted by law, anything in this Indenture, in
the Debentures contained to the contrary notwithstanding.
[Signature page to follow]
12
<PAGE>
IN WITNESS WHEREOF, the Company and the Trustee have executed this
Supplemental Indenture and have caused their names to be signed hereto by their
respective officers thereunto duly authorized, all as of the day and year first
above written.
Dated: As of August 1, 1997 MIRAGE RESORTS, INCORPORATED
Attest: By: STEPHEN A. WYNN
------------------------------
Stephen A. Wynn
Chairman of the Board, President and
Chief Executive Officer
BRUCE A. LEVIN
- ---------------------------
Bruce A. Levin
Secretary By: DANIEL R. LEE
-------------------------------
Daniel R. Lee
Senior Vice President - Finance
and Development, Chief Financial
Officer and Treasurer
(SEAL)
Dated: As of August 1, 1997 FIRST SECURITY BANK,
NATIONAL ASSOCIATION
By: FRANCINE SCHARTZ
--------------------------------
Francine Schartz
Vice President
(SEAL)
S-1
<PAGE>
EXHIBIT A
CUSIP No. 60462EAD6
This Security is a Global Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee thereof. This Security may not be exchanged in whole or in part for a
Security registered, and no transfer of this Security in whole or in part may be
registered, in the name of any person other than such Depositary or a nominee
thereof, except in the limited circumstances described in the Indenture.
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Mirage
Resorts, Incorporated, or its agent for registration of transfer, exchange, or
payment, and any certificate issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is 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.
MIRAGE RESORTS, INCORPORATED
6.75% Note Due August 1, 2007
No. A-1 $________________
MIRAGE RESORTS, INCORPORATED, a corporation duly organized and
existing under the laws of the State of Nevada (herein called the "Company,"
which term includes any successor to the Company under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the Principal sum of ______________ Dollars
($______________) on August 1, 2007 and to pay interest thereon from August 5,
1997 or from the most recent interest payment date to which interest has been
paid or duly provided for, semiannually in arrears on February 1 and August 1 in
each year, commencing February 1, 1998, at the rate of 6.75% per annum, until
the Principal hereof is paid or made available for payment. The interest so
payable, and punctually paid or duly provided for, on any interest payment date
will, as provided in such Indenture, be paid to the person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on the regular record date for such interest, which shall be January 15
or July 15 (whether or not a Business Day), as the case may be, next preceding
such interest payment date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such regular
record date and may either be paid to the person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on a
special record date for the payment of such defaulted interest to be fixed by
the Trustee, notice whereof shall be mailed to Holders of the Securities not
less than 10 days prior to such special record date, or be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities of this series may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture. Interest on the Securities shall be computed on the basis of a 360-
day year of twelve 30-day months.
A-1
<PAGE>
Payment of the Principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose, 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; provided,
however, that at the option of the Company payment of interest may be made by
check mailed to the address of the person entitled thereto as such address shall
appear in the register for the Securities.
Reference is hereby made to the further provisions of this Security
set forth on pages A-4 to A-9 following the signature page hereof, which further
provisions shall for all purposes have the same effect as if set forth at this
place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the pages following the signature page hereof by
manual signature, this Security shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
[Signature Page to Follow]
A-2
<PAGE>
In Witness Whereof, the Company has caused this instrument to be duly
executed.
MIRAGE RESORTS, INCORPORATED
By
-----------------------------------
Stephen A. Wynn
Chairman of the Board, President and
Chief Executive Officer
By
-----------------------------------
Daniel R. Lee
Senior Vice President -
Finance and Development,
Chief Financial Officer and Treasurer
Attest:
- --------------------------
Bruce A. Levin
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
Dated: FIRST SECURITY BANK,
NATIONAL ASSOCIATION
As Trustee
By
------------------------
------------------------
Authorized Signatory
A-3
<PAGE>
This Security is one of a duly authorized series of securities of the
Company (herein called the "Securities"), issued under an Indenture, dated as of
August 1, 1997, as amended by a Supplemental Indenture, dated as of August 1,
1997 (as so amended, the "Indenture"), each between the Company and First
Security Bank, National Association, as Trustee (herein called the "Trustee,"
which term includes any successor trustee under the Indenture), and reference is
hereby made to the Indenture for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. The Securities are
subject to, and qualified by, all of the terms of the Indenture. This Security
is one of the series designated on the face hereof, limited in aggregate
Principal Amount to $200,000,000. The Securities are general obligations of the
Company.
The Securities are subject to redemption upon not less than 30 days'
nor more than 60 days' notice by first class mail, in whole or in part, at the
option of the Company at any time at a redemption price equal to the greater of
(i) 100% of the Principal Amount of the Securities so redeemed or (ii) as
determined by a Quotation Agent, the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate, plus, in each case, accrued
interest thereon to the redemption date.
"Adjusted Treasury Rate" means, with respect to any redemption date,
the rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, plus 0.20%.
"Comparable Treasury Issue" means the United States Treasury security
selected by a Quotation Agent as having a maturity comparable to the remaining
term of the Security to be redeemed that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of such Security.
"Comparable Treasury Price" means, with respect to any redemption
date, (i) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Company obtains fewer than three such Reference Treasury Dealer
Quotations, the average of all such Quotations.
"Quotation Agent" means one of the Reference Treasury Dealers
appointed by the Company and certified to the Trustee by the Company.
"Reference Treasury Dealer" means each of Credit Suisse First Boston
Corporation, Goldman, Sachs & Co., BancAmerica Securities, Inc. and their
respective successors; provided, however, that if any of the foregoing shall
cease to be a primary U.S. Government securities dealer in New York City (a
"Primary Treasury Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer and certify same to the Trustee; and any other Primary
Treasury Dealer selected by the Company and certified to the Trustee by the
Company.
A-4
<PAGE>
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Company and certified to the Trustee by the Company, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Company by such
Treasury Reference Dealer at 5:00 p.m. on the third Business Day preceding such
redemption date.
In the event of redemption of this Security in part only, a new
Security or Securities of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.
Notwithstanding any other provision of Article 3 of the Indenture, if
any Gaming Authority requires that a Holder or beneficial owner of Securities of
a Holder must be licensed, qualified or found suitable under any Gaming Law,
such Holder or such beneficial owner shall apply for a license, qualification or
a finding of suitability, as the case may be, within the required time period.
If such person fails to apply or become licensed or qualified or is not found
suitable (in each case, a "failure of compliance"), the Company shall have the
right, at its option, (i) to require such Holder or owner to dispose of such
Holder's or owner's Securities within 30 days of receipt of notice of the
Company's election or such earlier date as may be requested or prescribed by
such Gaming Authority, or (ii) to redeem within such 30-day or earlier period
requested or prescribed by such Gaming Authority the Securities of such Holder
or owner at a redemption price equal to the lesser of (A) 100% of the Principal
Amount thereof or (B) the price at which such Holder or owner acquired the
Securities, together, in either case, with accrued interest to the earlier of
the redemption date or the date of the failure of compliance, which may be less
than 30 days following the notice of redemption if so requested or prescribed by
such Gaming Authority. The Company shall notify the Trustee in writing of any
such redemption as soon as practicable. The Company shall not be responsible
for any costs or expenses any such Holder or owner may incur in connection with
its application for a license, qualification or finding of suitability.
If there is a Change in Control (the time of a Change in Control being
referred to as the "Change in Control Date"), then the Company shall (a)
commence, within five Business Days following the Change in Control Date, an
offer to repurchase (the "Repurchase Offer") all of the outstanding Securities
at a repurchase price (the "Repurchase Price") in cash equal to 101% of the
Principal Amount of the Securities plus accrued interest, if any, to the
Repurchase Date (as defined below) and (b) deposit with the Paying Agent an
amount equal to the aggregate Repurchase Price for all Securities then
outstanding so as to be available for payment to the Holders of Securities who
elect to require the Company to repurchase all or a portion of their Securities.
If the Repurchase Date is on or after an interest payment record date
and on or before the related interest payment date, any accrued interest will be
paid to the person in whose name a Security is registered at the close of
business on such record date, and no additional interest will be payable to
Holders who tender Securities pursuant to the Repurchase Offer.
Notice of any Repurchase Offer shall be mailed by the Company to the
Trustee and the Holders of the Securities at their last registered addresses.
The Repurchase Offer shall remain open from the time of mailing until 10
Business Days thereafter, and no longer, unless a longer period is required by
law or stock exchange rule or unless a majority of the Continuing Directors of
the Company votes in favor of extending such period (the date on which the
Repurchase Offer closes being the "Repurchase Date"). The notice shall contain
all instructions and materials necessary to enable such Holders to tender
Securities pursuant to the Repurchase Offer. The notice, which shall govern the
terms of the Repurchase Offer, shall state:
A-5
<PAGE>
(1) that the Repurchase Offer is being made pursuant to Section 4.07
of the Indenture and that Securities will be accepted for payment either (A) in
whole or (B) in part in integral multiples of $1,000;
(2) the Repurchase Price and the Repurchase Date;
(3) that any Security not tendered will continue to accrue interest;
(4) that any Security accepted for payment pursuant to the Repurchase
Offer shall cease to accrue interest from and after the Repurchase Date;
(5) that Holders electing to have a Security purchased pursuant to the
Repurchase Offer will be required to surrender the Security, with the form
entitled "Option to Elect Purchase" on the Security completed, to the Paying
Agent at the address specified in the notice prior to the close of business on
the Repurchase Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than three Business Days before the Repurchase
Date, a telegram, telex, facsimile transmission or letter setting forth the name
of the Holder, the Principal Amount of Securities the Holder delivered for
purchase and a statement that the Holder is withdrawing his election to have
such Securities purchased; and
(7) that Holders whose Securities are purchased only in part will be
issued new Securities equal in Principal Amount to the unpurchased portion of
the Securities surrendered.
On the Repurchase Date, the Company shall, to the extent lawful, (i)
accept for payment Securities or portions thereof tendered pursuant to the
Repurchase Offer; and (ii) deliver to the Trustee the Securities so tendered,
together with an Officers' Certificate identifying the Securities or portions
thereof so accepted for payment by the Company. The Paying Agent shall promptly
mail or deliver to Holders of the Securities so accepted payment in an amount
equal to the Repurchase Price. The Trustee shall promptly authenticate and mail
or deliver to each Holder who tendered a Security a new Security or Securities
equal in Principal Amount to any untendered portion of the Security surrendered.
The Paying Agent shall invest funds deposited with it pursuant to Section 4.07
of the Indenture for the benefit of, and at the written direction of, the
Company to the Repurchase Date.
"Board of Directors" or "Board" means the Board of Directors or any
authorized committee of the Board of Directors of the Company, or a Consolidated
Subsidiary thereof, as the context may indicate.
"Capital Stock" of any person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock and
any and all forms of partnership interests or other equity interests in a
person, including but not limited to any type of preference stock which for
other purposes may not be treated as equity.
"Change in Control" means (i) the time the Company first determines
that any person or group, within the meaning of Section 14(d)(2) of the Exchange
Act (other than any person who was at the date of the Indenture an officer or
director of the Company or a group consisting of persons who were at the date of
the Indenture officers or directors of the Company) have acquired direct or
indirect beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act) of 35% or more of the outstanding voting Capital Stock of the
Company, unless a majority of the Continuing Directors approves
A-6
<PAGE>
the acquisition not later than 10 business days after the Company makes the
determination, or (ii) the first day on which a majority of the members of the
Board of Directors of the Company are not Continuing Directors.
"Consolidated Subsidiary" of any specific person means any subsidiary,
all of whose voting Capital Stock (other than the minimum required number of
directors' qualifying shares) are owned by such person and/or by another
Consolidated Subsidiary of such person, and the accounts of which are, or under
generally accepted accounting principles are required to be, consolidated with
the accounts of such person.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of that
Board of Directors on the date of the Indenture, (ii) had been a member of that
Board of Directors for the two years immediately preceding such date of
determination or (iii) was nominated for election or elected to that Board of
Directors with the affirmative vote of the greater of (x) a majority of
Continuing Directors who were members of that Board at the time of such
nomination or election or (y) at least three Continuing Directors.
The Indenture contains provisions for defeasance of the entire
Indebtedness of this Security or certain restrictive covenants with respect to
this Security, in each case upon compliance with certain conditions set forth in
the Indenture.
If an Event of Default with respect to the Securities shall occur and
be continuing, the Principal of the Securities may be declared due and payable
in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in Principal Amount of the Securities at the time outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in Principal Amount of the Securities at the time outstanding, on
behalf of the Holders of all such Securities, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security. The right of any Holder (or such
Holder's duly designated proxy) to participate in any consent required or sought
pursuant to any provision of the Indenture (and the obligation of the Company to
obtain any such consent otherwise required from such Holder) may be subject to
the requirement that such Holder shall have been the Holder of record of
Securities as of a date set by the Company and identified by the Trustee in a
notice furnished to Holders in accordance with the terms of the Indenture.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities, the Holders of not less than 25% in Principal Amount of the
Securities at the time outstanding shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as Trustee
and offered the Trustee reasonable indemnity, and the Trustee shall not have
received from the Holders of a majority in Principal Amount of the Securities at
the time outstanding a direction inconsistent with
A-7
<PAGE>
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of Principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the Principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the register
for the Securities, upon surrender of this Security for transfer at the office
or agency of the Company in any place where the Principal of and any premium and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of like tenor,
of authorized denominations and for the same aggregate Principal Amount, will be
issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Securities
are exchangeable for a like aggregate Principal Amount of Securities of like
tenor of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such transfer or exchange, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Prior to due presentment of this Security for transfer, the Company,
the Trustee and any agent of the Company or the Trustee may treat the person in
whose name this Security is registered as the owner hereof for all purposes,
whether or not this Security be overdue, and neither the Company, the Trustee
nor any such agent shall be affected by notice to the contrary.
No past, present or future director, officer, employee, stockholder or
incorporator, as such, of the Company or any successor corporation shall have
any liability for any obligations of the Company under the Securities or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
All terms used in this Security without definition which are defined
in the Indenture shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA.
A-8
<PAGE>
Option to Elect Purchase
The undersigned registered Holder of this Security hereby irrevocably
exercises the option to require the Company to repurchase this Security or
portion thereof (which is $1,000 or an integral multiple thereof) below
designated on the Repurchase Date and in accordance with the terms set forth in
the notice of Repurchase Offer distributed by the Company in accordance with the
terms of this Security, and directs that payment be made to the registered
Holder hereof unless a different name has been indicated below. Any amount
required to be paid by the undersigned on account of interest accompanies this
Security.
Dated:
-------------------
Signature(s) must be Holder's Signature:
guaranteed if payment is to be
made other than to and in the name
of the registered Holder ---------------------------------
Signature Guarante Portion of Security to be repurchased
(in integral multiples of $1,000) if
- --------------------------------- other than the full Principal Amount
thereof:
Fill in for payment of Repurchase
Price if to be made otherwise than ----------------------------------
to the registered Holder
- ---------------------------------
Name
- ---------------------------------
Address
- ---------------------------------
Please print name and address
(including zip code)
SOCIAL SECURITY OR TAXPAYER
IDENTIFICATION NUMBER
- ---------------------------------
A-9
<PAGE>
EXHIBIT B
CUSIP No. 60462EAE4
This Security is a Global Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee thereof. This Security may not be exchanged in whole or in part for a
Security registered, and no transfer of this Security in whole or in part may be
registered, in the name of any person other than such Depositary or a nominee
thereof, except in the limited circumstances described in the Indenture.
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Mirage
Resorts, Incorporated, or its agent for registration of transfer, exchange, or
payment, and any certificate issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is 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.
MIRAGE RESORTS, INCORPORATED
7.25% Debenture Due August 1, 2017
No. B-1 $100,000,000
MIRAGE RESORTS, INCORPORATED, a corporation duly organized and
existing under the laws of the State of Nevada (herein called the "Company,"
which term includes any successor to the Company under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the Principal sum of One Hundred Million Dollars
($100,000,000) on August 1, 2017 and to pay interest thereon from August 5, 1997
or from the most recent interest payment date to which interest has been paid or
duly provided for, semiannually in arrears on February 1 and August 1 in each
year, commencing February 1, 1998, at the rate of 7.25% per annum, until the
Principal hereof is paid or made available for payment. The interest so payable,
and punctually paid or duly provided for, on any interest payment date will, as
provided in such Indenture, be paid to the person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the regular record date for such interest, which shall be January 15 or July
15 (whether or not a Business Day), as the case may be, next preceding such
interest payment date. Any such interest not so punctually paid or duly provided
for will forthwith cease to be payable to the Holder on such regular record date
and may either be paid to the person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a special
record date for the payment of such defaulted interest to be fixed by the
Trustee, notice whereof shall be mailed to Holders of the Securities not less
than 10 days prior to such special record date, or be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities of this series may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture. Interest on the Securities shall be computed on the basis of a 360-
day year of twelve 30-day months.
B-1
<PAGE>
Payment of the Principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for that
purpose, 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; provided,
however, that at the option of the Company payment of interest may be made by
check mailed to the address of the person entitled thereto as such address shall
appear in the register for the Securities.
Reference is hereby made to the further provisions of this Security
set forth on pages B-4 to B-9 following the signature page hereof, which further
provisions shall for all purposes have the same effect as if set forth at this
place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the pages following the signature page hereof by
manual signature, this Security shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
[Signature Page to Follow]
B-2
<PAGE>
In Witness Whereof, the Company has caused this instrument to be duly
executed.
MIRAGE RESORTS, INCORPORATED
By
---------------------------------------
Stephen A. Wynn
Chairman of the Board, President and
Chief Executive Officer
By
---------------------------------------
Daniel R. Lee
Senior Vice President -
Finance and Development,
Chief Financial Officer and Treasurer
Attest:
- --------------------------------
Bruce A. Levin
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
Dated: FIRST SECURITY BANK,
NATIONAL ASSOCIATION
As Trustee
By
---------------------------------------
Authorized Signatory
B-3
<PAGE>
This Security is one of a duly authorized series of securities of the
Company (herein called the "Securities"), issued under an Indenture, dated as of
August 1, 1997, as amended by a Supplemental Indenture, dated as of August 1,
1997 (as so amended, the "Indenture"), each between the Company and First
Security Bank, National Association, as Trustee (herein called the "Trustee,"
which term includes any successor trustee under the Indenture), and reference is
hereby made to the Indenture for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. The Securities are
subject to, and qualified by, all of the terms of the Indenture. This Security
is one of the series designated on the face hereof, limited in aggregate
Principal Amount to $100,000,000. The Securities are general obligations of the
Company.
The Securities are subject to redemption upon not less than 30 days'
nor more than 60 days' notice by first class mail, in whole or in part, at the
option of the Company at any time at a redemption price equal to the greater of
(i) 100% of the Principal Amount of the Securities so redeemed or (ii) as
determined by a Quotation Agent, the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate, plus, in each case, accrued
interest thereon to the redemption date.
"Adjusted Treasury Rate" means, with respect to any redemption date,
the rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, plus 0.25%.
"Comparable Treasury Issue" means the United States Treasury security
selected by a Quotation Agent as having a maturity comparable to the remaining
term of the Security to be redeemed that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of such Security.
"Comparable Treasury Price" means, with respect to any redemption
date, (i) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third Business Day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Company obtains fewer than three such Reference Treasury Dealer
Quotations, the average of all such Quotations.
"Quotation Agent" means one of the Reference Treasury Dealers
appointed by the Company and certified to the Trustee by the Company.
"Reference Treasury Dealer" means each of Credit Suisse First Boston
Corporation, Goldman, Sachs & Co., BancAmerica Securities, Inc. and their
respective successors; provided, however, that if any of the foregoing shall
cease to be a primary U.S. Government securities dealer in New York City (a
"Primary Treasury Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer and certify same to the Trustee; and any other Primary
Treasury Dealer selected by the Company and certified to the Trustee by the
Company.
B-4
<PAGE>
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Company and certified to the Trustee by the Company, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Company by such
Treasury Reference Dealer at 5:00 p.m. on the third Business Day preceding such
redemption date.
In the event of redemption of this Security in part only, a new
Security or Securities of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.
Notwithstanding any other provision of Article 3 of the Indenture, if
any Gaming Authority requires that a Holder or beneficial owner of Securities of
a Holder must be licensed, qualified or found suitable under any Gaming Law,
such Holder or such beneficial owner shall apply for a license, qualification or
a finding of suitability, as the case may be, within the required time period.
If such person fails to apply or become licensed or qualified or is not found
suitable (in each case, a "failure of compliance"), the Company shall have the
right, at its option, (i) to require such Holder or owner to dispose of such
Holder's or owner's Securities within 30 days of receipt of notice of the
Company's election or such earlier date as may be requested or prescribed by
such Gaming Authority, or (ii) to redeem within such 30-day or earlier period
requested or prescribed by such Gaming Authority the Securities of such Holder
or owner at a redemption price equal to the lesser of (A) 100% of the Principal
Amount thereof or (B) the price at which such Holder or owner acquired the
Securities, together, in either case, with accrued interest to the earlier of
the redemption date or the date of the failure of compliance, which may be less
than 30 days following the notice of redemption if so requested or prescribed by
such Gaming Authority. The Company shall notify the Trustee in writing of any
such redemption as soon as practicable. The Company shall not be responsible
for any costs or expenses any such Holder or owner may incur in connection with
its application for a license, qualification or finding of suitability.
If there is a Change in Control (the time of a Change in Control being
referred to as the "Change in Control Date"), then the Company shall (a)
commence, within five Business Days following the Change in Control Date, an
offer to repurchase (the "Repurchase Offer") all of the outstanding Securities
at a repurchase price (the "Repurchase Price") in cash equal to 101% of the
Principal Amount of the Securities plus accrued interest, if any, to the
Repurchase Date (as defined below) and (b) deposit with the Paying Agent an
amount equal to the aggregate Repurchase Price for all Securities then
outstanding so as to be available for payment to the Holders of Securities who
elect to require the Company to repurchase all or a portion of their Securities.
If the Repurchase Date is on or after an interest payment record date
and on or before the related interest payment date, any accrued interest will be
paid to the person in whose name a Security is registered at the close of
business on such record date, and no additional interest will be payable to
Holders who tender Securities pursuant to the Repurchase Offer.
Notice of any Repurchase Offer shall be mailed by the Company to the
Trustee and the Holders of the Securities at their last registered addresses.
The Repurchase Offer shall remain open from the time of mailing until 10
Business Days thereafter, and no longer, unless a longer period is required by
law or stock exchange rule or unless a majority of the Continuing Directors of
the Company votes in favor of extending such period (the date on which the
Repurchase Offer closes being the "Repurchase Date"). The notice shall contain
all instructions and materials necessary to enable such Holders to tender
Securities pursuant to the Repurchase Offer. The notice, which shall govern the
terms of the Repurchase Offer, shall state:
B-5
<PAGE>
(1) that the Repurchase Offer is being made pursuant to Section 4.07
of the Indenture and that Securities will be accepted for payment either (A) in
whole or (B) in part in integral multiples of $1,000;
(2) the Repurchase Price and the Repurchase Date;
(3) that any Security not tendered will continue to accrue interest;
(4) that any Security accepted for payment pursuant to the Repurchase
Offer shall cease to accrue interest from and after the Repurchase Date;
(5) that Holders electing to have a Security purchased pursuant to the
Repurchase Offer will be required to surrender the Security, with the form
entitled "Option to Elect Purchase" on the Security completed, to the Paying
Agent at the address specified in the notice prior to the close of business on
the Repurchase Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than three Business Days before the Repurchase
Date, a telegram, telex, facsimile transmission or letter setting forth the name
of the Holder, the Principal Amount of Securities the Holder delivered for
purchase and a statement that the Holder is withdrawing his election to have
such Securities purchased; and
(7) that Holders whose Securities are purchased only in part will be
issued new Securities equal in Principal Amount to the unpurchased portion of
the Securities surrendered.
On the Repurchase Date, the Company shall, to the extent lawful, (i)
accept for payment Securities or portions thereof tendered pursuant to the
Repurchase Offer; and (ii) deliver to the Trustee the Securities so tendered,
together with an Officers' Certificate identifying the Securities or portions
thereof so accepted for payment by the Company. The Paying Agent shall promptly
mail or deliver to Holders of the Securities so accepted payment in an amount
equal to the Repurchase Price. The Trustee shall promptly authenticate and mail
or deliver to each Holder who tendered a Security a new Security or Securities
equal in Principal Amount to any untendered portion of the Security surrendered.
The Paying Agent shall invest funds deposited with it pursuant to Section 4.07
of the Indenture for the benefit of, and at the written direction of, the
Company to the Repurchase Date.
"Board of Directors" or "Board" means the Board of Directors or any
authorized committee of the Board of Directors of the Company, or a Consolidated
Subsidiary thereof, as the context may indicate.
"Capital Stock" of any person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock and
any and all forms of partnership interests or other equity interests in a
person, including but not limited to any type of preference stock which for
other purposes may not be treated as equity.
"Change in Control" means (i) the time the Company first determines
that any person or group, within the meaning of Section 14(d)(2) of the Exchange
Act (other than any person who was at the date of the Indenture an officer or
director of the Company or a group consisting of persons who were at the date of
the Indenture officers or directors of the Company) have acquired direct or
indirect beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act) of 35% or more of the outstanding voting Capital Stock of the
Company, unless a majority of the Continuing Directors approves
B-6
<PAGE>
the acquisition not later than 10 business days after the Company makes the
determination, or (ii) the first day on which a majority of the members of the
Board of Directors of the Company are not Continuing Directors.
"Consolidated Subsidiary" of any specific person means any subsidiary,
all of whose voting Capital Stock (other than the minimum required number of
directors' qualifying shares) are owned by such person and/or by another
Consolidated Subsidiary of such person, and the accounts of which are, or under
generally accepted accounting principles are required to be, consolidated with
the accounts of such person.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of that
Board of Directors on the date of the Indenture, (ii) had been a member of that
Board of Directors for the two years immediately preceding such date of
determination or (iii) was nominated for election or elected to that Board of
Directors with the affirmative vote of the greater of (x) a majority of
Continuing Directors who were members of that Board at the time of such
nomination or election or (y) at least three Continuing Directors.
The Indenture contains provisions for defeasance of the entire
Indebtedness of this Security or certain restrictive covenants with respect to
this Security, in each case upon compliance with certain conditions set forth in
the Indenture.
If an Event of Default with respect to the Securities shall occur and
be continuing, the Principal of the Securities may be declared due and payable
in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in Principal Amount of the Securities at the time outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in Principal Amount of the Securities at the time outstanding, on
behalf of the Holders of all such Securities, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon the transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security. The right of any Holder (or such
Holder's duly designated proxy) to participate in any consent required or sought
pursuant to any provision of the Indenture (and the obligation of the Company to
obtain any such consent otherwise required from such Holder) may be subject to
the requirement that such Holder shall have been the Holder of record of
Securities as of a date set by the Company and identified by the Trustee in a
notice furnished to Holders in accordance with the terms of the Indenture.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities, the Holders of not less than 25% in Principal Amount of the
Securities at the time outstanding shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as Trustee
and offered the Trustee reasonable indemnity, and the Trustee shall not have
received from the Holders of a majority in Principal Amount of the Securities at
the time outstanding a direction inconsistent with
B-7
<PAGE>
such request, and shall have failed to institute any such proceeding, for 60
days after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of Principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the Principal of and any premium and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the register
for the Securities, upon surrender of this Security for transfer at the office
or agency of the Company in any place where the Principal of and any premium and
interest on this Security are payable, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities of like tenor,
of authorized denominations and for the same aggregate Principal Amount, will be
issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Securities
are exchangeable for a like aggregate Principal Amount of Securities of like
tenor of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such transfer or exchange, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Prior to due presentment of this Security for transfer, the Company,
the Trustee and any agent of the Company or the Trustee may treat the person in
whose name this Security is registered as the owner hereof for all purposes,
whether or not this Security be overdue, and neither the Company, the Trustee
nor any such agent shall be affected by notice to the contrary.
No past, present or future director, officer, employee, stockholder or
incorporator, as such, of the Company or any successor corporation shall have
any liability for any obligations of the Company under the Securities or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
All terms used in this Security without definition which are defined
in the Indenture shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA.
B-8
<PAGE>
Option to Elect Purchase
The undersigned registered Holder of this Security hereby irrevocably
exercises the option to require the Company to repurchase this Security or
portion thereof (which is $1,000 or an integral multiple thereof) below
designated on the Repurchase Date and in accordance with the terms set forth in
the notice of Repurchase Offer distributed by the Company in accordance with the
terms of this Security, and directs that payment be made to the registered
Holder hereof unless a different name has been indicated below. Any amount
required to be paid by the undersigned on account of interest accompanies this
Security.
Dated:
----------------
Signature(s) must be Holder's Signature:
guaranteed if payment is to be
made other than to and in the name
of the registered Holder
--------------------------------
- ------------------------------------ Portion of Security to be
Signature Guarantee repurchased (in integral multiples
of $1,000) if other than the full
Fill in for payment of Repurchase Principal Amount thereof:
Price if to be made otherwise than
to the registered Holder --------------------------------
- ------------------------------------
Name
- ------------------------------------
Address
- ------------------------------------
Please print name and address
(including zip code)
SOCIAL SECURITY OR TAXPAYER
IDENTIFICATION NUMBER
- ------------------------------------
B-9
GLOBAL EXPRESS AIRCRAFT PURCHASE AGREEMENT made on the
24 day of June 1997
BETWEEN: GOLDEN NUGGET AVIATION CORP.
Domicile Address: Mailing address:
3400 Las Vegas Boulevard South
Las Vegas, Nevada
USA 89109
facsimile: (702) 791-5787 facsimile:
telephone: (702) 791-7129 telephone
("Buyer")
AND BOMBARDIER INC., a Canadian corporation represented by
its BUSINESS AIRCRAFT DIVISION with its offices located
at 400 Cote Vertu Road, Dorval, Quebec, Canada H4S 1Y9
facsimile: (514) 855-7806 telephone: (514) 855-5000
("Seller")
ARTICLE 1 SUBJECT MATTER
1.1 Subject to the provisions of this Agreement, Seller
shall sell and deliver to Buyer, and Buyer shall take
delivery of and pay for, one Bombardier Global Express
Aircraft Model BD-700-1A10 (the "Aircraft"), as described in
Bombardier Type Specification No. RAD-700-100, Issue C-1
dated 16 Nov. 1995 which is attached hereto as Schedule "A"
and made part of this Agreement by reference. Schedule "A"
and any amendments and/or revisions thereof made in
accordance with this Agreement are collectively referred to
as the "Specification".
ARTICLE 2 DELIVERY
2.1 The Aircraft shall be ready for delivery to Buyer at
Seller's Plant in the City of Dorval, Province of Quebec,
Canada within 30 days of 30 June 1998.
2.2 Before the end of the period of Article 2.1, Seller
shall give Buyer reasonable notice of the date on which the
Aircraft will be ready for Buyer's inspection and/or flight
test and delivery to Buyer (the "Readiness Date") in
accordance with this Agreement. Buyer shall commence that
inspection and/or flight test within 10 days of the
Readiness Date, such 10 day period being the "Delivery
Period". If no Aircraft defect or discrepancy is revealed by
that inspection and/or flight test, Buyer shall accept
delivery of the Aircraft on or before the last day of the
Delivery Period (the time of the acceptance of delivery of
the Aircraft being the "Delivery Time"). Two
representatives of Buyer may participate in the foregoing
inspection and/or flight test. Such flight test shall not
exceed 4 hours duration.
Exhibit 10.2
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2.3 Any Aircraft defect or discrepancy revealed by Buyer's
inspection and/or flight test referred to in Article 2.2
shall be corrected by Seller before the delivery of the
Aircraft to Buyer which, in the case of this Article 2.3,
may occur during or after the Delivery Period depending on
the nature of the defect or discrepancy and time required
for correction. Such correction shall be made at no cost to
Buyer. If such correction requires an additional flight test
it will be conducted according to Article 2.2. When this
Article 2.3 applies, Buyer shall accept delivery of the
Aircraft within 3 days after the Aircraft defect or
discrepancy has been corrected.
2.4 If Buyer does not accept delivery of the Aircraft
according to Article 2.2 or 2.3, as applicable, Buyer shall
be deemed to be in default of the terms of this Agreement
and (i) the unpaid balance of the Purchase Price (as defined
in Article 3.1) shall immediately become due and payable,
(ii) the Aircraft shall thereafter be provided with suitable
outside storage at the expense of Buyer, and (iii) all risk
of loss or damage to the Aircraft shall pass to and be borne
by Buyer. Should Buyer not accept delivery of the Aircraft
within 30 days after the date for delivery as established
according to Article 2.2 or 2.3, as applicable, Seller, at
its election and upon giving 10 days written notice to
Buyer, may terminate this Agreement in accordance with
Article 14.
2.5 Buyer, by its acceptance of the Aircraft at Delivery
Time and signature of a receipt for the Aircraft in the form
of Schedule "B" attached hereto, shall be deemed to have
examined the Aircraft and found it in conformity with the
Specification and with the provisions of this Agreement.
2.6 If, at Delivery Time, the Aircraft is temporarily
equipped with any ferry equipment loaned by Seller to Buyer,
Buyer accepts all risk and responsibility for such ferry
equipment and Buyer agrees to return to Seller, at Seller's
expense, all such ferry equipment within 30 days after the
Aircraft leaves Seller's plant.
ARTICLE 3 MANUFACTURING PAYMENT SCHEDULE
3.1 Refer Addendum
3.2 Any reference in this Agreement to the payment of
interest will be at the U.S. prime interest rate as quoted
in The Wall Street Journal, Money Rates column, on the first
business day of the month for that month (and to the extent
applicable, on the first business day of each succeeding
month for such succeeding month), and such interest shall be
compounded annually.
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3.3 Seller shall remain exclusive owner of the Aircraft,
free and clear of all rights, prior claims, liens, charges
or encumbrances, until such time as all payments referred to
in Article 3.1 have been made.
3.4 Any overdue amounts payable hereunder will bear
interest as specified in Article 3.2.
3.5 All payments under this Article 3 shall be made in U.S.
dollars by wire transfer or by other method acceptable to
Seller at the address shown above. Any payment made by way
of wire transfer must be received in immediately available
funds deposited to Seller's account indicated above before
Seller can consider the payment to have been made.
ARTICLE 4 CERTIFICATION
4.1 Seller represents it will obtain a Department of
Transport (DOT) of Canada Type Approval, validated by a Type
Certificate issued in accordance with Part 25 of the Federal
Aviation Regulations of the Federal Aviation Administration
(FAA) of the United States for the Bombardier Global Express
BD-700-1A10 type aircraft. Seller shall provide Buyer a DOT
Certificate of Airworthiness for Export. That Certificate of
Airworthiness for Export will permit the Aircraft to qualify
for an FAA Certificate of Airworthiness. Seller shall not be
obligated to obtain any other certificates or approvals as
part of this Agreement.
4.2 Regulatory Changes - If any change to the Aircraft is
required because of any law or governmental regulation or
requirement or interpretation thereof by any governmental
agency ("Regulatory Change") which is effective after the
date of this Agreement, but before Delivery Time, which is
applicable to all aircraft in general or to all aircraft of
the same category as the Aircraft, such Regulatory Change
shall be made to the Aircraft before Delivery Time and Buyer
shall pay Seller's reasonable cost for such Regulatory
Change. If the incorporation of such Regulatory Change
delays the delivery of the Aircraft, that delay shall be an
Excusable Delay according to Article 13.
ARTICLE 5 LOSS OR DESTRUCTION OF AIRCRAFT
5.1 In the event of the loss, destruction or damage beyond
repair of the Aircraft prior to Delivery Time, Buyer shall
have the right to accept delivery of the next available
aircraft, as reasonably determined by Seller, at the
prevailing price for aircraft of that configuration or
specification, or to terminate this Agreement. In the case
of termination, Buyer's rights shall be governed by Article
14.4. Buyer shall notify Seller of its decision within 15
days from receipt by Buyer of written notice from Seller of
the loss, destruction or damage of the Aircraft and the
delivery date and price of the next available aircraft.
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ARTICLE 6 CHANGES
6.1 Seller may, prior to Delivery Time and without Buyer's
consent:
i) substitute the kind, type or source of any
material, part, accessory or equipment by any
other material, part, accessory or equipment of
like, equivalent or better kind or type; or
ii) make such change or modification to the Aircraft
or Specification as it deems appropriate to
improve the Aircraft, its maintainability or
appearance or to prevent delays in manufacture or
delivery;
provided that such substitution, change or modification
shall not adversely affect the Purchase Price or
performance. If delivery of the Aircraft is delayed in
accordance with this Article, such delay shall be an
Excusable Delay according to Article 13.
ARTICLE 7 SPARE PARTS
7.1 The term "Spare Parts" shall mean only such parts for
the Aircraft as are manufactured by Seller or to Seller's
detailed design and specification or over which Seller
exercises proprietary control. To provide a ready,
dependable source for Spare Parts, Seller, from Delivery
Time to a period of 10 years after delivery of the last BD-
700-1A10 aircraft manufactured by Seller shall:
i) maintain, or use its best efforts to cause its
vendors and subcontractors to maintain, a stock of
Spare Parts in reasonable quantities to meet
Buyer's normal operating requirements; and
ii) maintain, or cause to be maintained, tooling for
production of Spare Parts manufactured by Seller
and not so normally maintained in stock.
All sales of such Spare Parts are to be at Seller's
prevailing prices at the time of receipt of each order and
at the then current terms and conditions.
ARTICLE 8 TITLE AND RISK
8.1 At Delivery Time, Seller shall deliver to Buyer a bill
of sale and title to the Aircraft shall pass to Buyer free
and clear of all rights, liens, charges, prior claims and
encumbrances.
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At Delivery Time, risk of damage to or loss of the Aircraft
shall pass to Buyer. If, after Delivery Time, the Aircraft
remains in or is returned to the care, custody or control of
Seller or any of Seller's subsidiaries, affiliates or its
parent (collectively "Seller") for any purpose, Buyer shall
retain risk of damage to or loss of the Aircraft and, for
itself and on behalf of its insurer(s), hereby waives, and
releases Seller from, any claim whether direct, indirect or
by way of subrogation for damage to or loss of the Aircraft
arising out of such care, custody or control.
ARTICLE 9 TRAINING
9.1 Included in the sale of the Aircraft and incidental
thereto, Seller shall make available a ground and flight
training program for 4 qualified pilots, a ground
maintenance training program for 2 mechanics and training
for 2 cabin flight attendants at no additional cost to
Buyer. Buyer shall be responsible for all travel and living
expenses of Buyer's personnel. Seller strongly recommends
that all training be completed before placing the Aircraft
into service but, in any event, all training shall be
completed no later than 1 year from Delivery Time or Buyer's
rights to training at no additional cost under this Article
shall expire.
ARTICLE 10 WARRANTY
10.1 Seller warrants that at Delivery Time the Aircraft
shall conform to the Specification as defined herein and
shall be free from: i) defects in material, (ii) defects
in manufacture, and (iii) defects in design, having regard
to the state-of-the-art as of the time of design of the
Aircraft ("Warranty"). Any matters stated in this Agreement
or in the Specification as type characteristics, estimates,
approximations, objectives, design objectives or design
criteria are excluded from the Warranty.
10.2 As to each matter covered by the Warranty, Seller's
sole obligation and liability under the Warranty is (a)
expressly limited to correction, by repair, replacement or
rework of the item(s) by Seller at Seller's facilities, or
at such other facility as may be designated by Seller, of
any defect specified in clauses (i), (ii), or (iii) of
Article 10.1 and (b) is subject to Buyer delivering to
Seller a written description of the defect as soon as
practicable, but no later than 3 months after the defect
becomes apparent to Buyer. Any item(s) (excluding the
Aircraft) found defective shall be returned to Seller at
Seller's expense.
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10.3 The Warranty in respect to the Aircraft shall be for
5000 flight hours or for 5 years from the date Buyer accepts
delivery of the Aircraft from the completion center ("In-
Service Date"), whichever first occurs, but in no event
shall the Warranty exceed 68 months from Delivery Time.
10.4 Notwithstanding Article 10.3 above, the Warranty period
applicable to airframe metal structures covered in Sections
53 (Fuselage), 55 (Stabilizers) and 57 (Wings) of the
Specification shall be for 20,000 flight hours or for 20
years from Delivery Time, whichever first occurs; provided,
however, that such extended Warranty period as stated in
this Article 10.4 does not apply to doors, fairings, covers,
non-metallic structures and systems/equipment support
structure, for which specific items the Warranty period
shall be as stated in Article 10.3.
10.5 Seller shall be relieved of its obligations and
liability with respect to any claim under the Warranty if
such claim results from any of the following:
i) the Aircraft is not operated or maintained in
compliance with the governing or applicable
provisions of Seller's FAA or DOT, as applicable,
Approved Flight Manual, Maintenance Manual and
Service Bulletins, and as each thereof may be
amended from time to time by Seller;
ii) installation, repair, alteration or modification
to or of the Aircraft made by Buyer or third party
which is determined to be the cause or a
contributing cause of the defect;
iii) the Aircraft is subjected to misuse, abuse or
accident or is not properly stored and protected
against the elements when not in use;
iv) Buyer does not submit that the defect is covered
by the Warranty.
10.6 Notwithstanding any other provisions of this Article
10, the Warranty shall not apply to any Powerplants
("Powerplant" shall mean a complete propulsion system
consisting of the Engine, Nacelle, Controls and Accessories)
installed in the Aircraft. The Powerplant warranty shall be
provided directly by the Powerplant manufacturer (BMW Rolls-
Royce) to Buyer, shall be the sole responsibility of the
Powerplant manufacturer, and the rights of Buyer with
respect to the Powerplants shall be a matter as between
Buyer and the Powerplant manufacturer. Buyer agrees that
Seller shall have no liability or responsibility for any
Powerplant warranty including, without limitation, any lack
of performance, reliability or maintainability of the
Aircraft as a result of the Powerplants.
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10.7 Seller does not warrant, and is hereby relieved of any
obligation to warrant, any accessory, equipment or part
incorporated in the Aircraft which is not furnished
pursuant to this Agreement, or any amendment to this
Agreement, including, without limitation, any accessory,
equipment or part installed by anyone other than Seller.
10.8 Any repair, replacement or rework by Seller under the
Warranty shall also be covered by the Warranty covering
material and workmanship for the unexpired portion of the
Warranty periods set forth in this Article 10 remaining at
the time of repair, replacement or rework.
10.9 The Warranty shall run to Buyer, its successors and to
all persons to whom title to the Aircraft may be transferred
during the Warranty periods set forth in this Article 10,
provided that any such successor or owner shall remain
subject to the applicable provisions of this Agreement to
the same extent as Buyer.
10.10 Buyer shall not be entitled to the benefits of the
Warranty if Buyer does not maintain complete records of
operations and maintenance of the Aircraft and make such
records available to Seller. Buyer's failure to maintain
such records shall relieve Seller of its Warranty
obligations. Buyer shall notify any subsequent buyer, owner,
assignee, operator or transferee of the Aircraft of their
obligation to maintain such records and to make them
available for Seller's inspection. Whether notified or not,
if such person does not comply with the foregoing, that
person shall not be entitled to the benefits of the
Warranty.
10.11 THE WARRANTY, OBLIGATIONS AND LIABILITIES OF
SELLER AND THE RIGHTS AND REMEDIES OF BUYER SET FORTH IN
THIS ARTICLE 10 ARE EXCLUSIVE AND ARE IN LIEU OF AND BUYER
HEREBY WAIVES AND RELEASES ALL OTHER WARRANTIES,
OBLIGATIONS, REPRESENTATIONS OR LIABILITIES, EXPRESS OR
IMPLIED, ARISING BY LAW, IN CONTRACT, CIVIL LIABILITY OR IN
TORT, OR OTHERWISE, INCLUDING BUT NOT LIMITED TO ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS OR OF ANY IMPLIED
CONDITION, AND ANY OTHER OBLIGATION OR LIABILITY ON THE
PART OF SELLER TO ANYONE OF ANY NATURE WHATSOEVER BY REASON
OF THE DESIGN, MANUFACTURE, SALE, REPAIR, LEASE OR USE OF
THE AIRCRAFT OR RELATED PRODUCTS AND SERVICES DELIVERED OR
RENDERED HEREUNDER.
10.12 In the event that any of the provisions of this
Article 10 are for any reason declared unenforceable or
ineffective, the remainder of the Article shall remain in
full force and effect.
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ARTICLE 11 TECHNICAL DATA AND SERVICES
11.1 At Delivery Time, Seller shall deliver to Buyer
documentation and the technical publications described in
Schedule "D" attached hereto and made a part of this
Agreement by reference.
11.2 Commencing with Delivery Time, Seller will make
available to Buyer, at its last address made known by Buyer
to Seller, from time to time, service bulletins and general
information applicable to the Aircraft, as well as any
amendments to the documentation and technical publications
referred to in Article 11.1 applicable to Buyer's Aircraft,
for a period of 10 years after delivery of the last BD-700-
1A10 aircraft manufactured by Seller. Seller shall provide
this service at no additional cost to Buyer for a period of
5 years from Delivery Time.
11.3 It is understood that the documentation and
publications provided under this Article 11 and any other
data, drawings or information mentioned in the Specification
are proprietary to Seller and that all rights to copyright
belong to Seller and shall be kept confidential by Buyer.
Buyer agrees to use any data, drawings or other information
solely to maintain, operate or repair the Aircraft or to
make any installation or alteration thereto allowed by
Seller.
ARTICLE 12 TAXES AND DUTIES
12.1 The Purchase Price does not include any sales, use,
personal property, excise, consumption, goods and services,
value added, luxury or other similar taxes, duties, or
assessments ("Taxes") which may be levied, assessed or
imposed by any governmental authority or agency on or as a
result of this sales transaction, to the extent imposed by
law on Buyer or Seller, the Aircraft itself, other matters
or things covered hereunder (including services,
instructions or Seller-furnished data) or on the use,
delivery, storage or transfer of any of them. Seller shall
notify Buyer of any such Taxes, including interest and
penalties, that the governmental authority or agency is
seeking to collect from Seller, and Buyer agrees to
promptly, but in no event later than 10 days after receiving
such notices, pay same directly to said governmental
authority or agency, or to reimburse Seller for said Taxes,
including interest and penalties, or to assume the defense
against imposition thereof at its sole cost and expense and
to hold Seller harmless from any such imposition. If Buyer
does not make timely payment directly to said governmental
authority or agency or timely defense, Seller may pay the
asserted Taxes, including interest and penalties, and Buyer
shall thereupon reimburse Seller for any such payment and
all reasonable costs and expenses of Seller. Provided that
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Buyer is purchasing the Aircraft for immediate export from
Canada, Seller represents that according to current Canadian
law, there are no Canadian taxes payable with respect to the
Aircraft which Buyer would become obligated to pay
pursuant to this Article 12.
12.2 Upon Seller's request, Buyer shall execute and deliver
to Seller any documents that Seller deems necessary or
desirable in connection with any exemption or reduction of,
or the defense against, any imposition of the Taxes referred
to in Article 12.1 hereof.
ARTICLE 13 EXCUSABLE DELAY
13.1 In the event of delay on the part of Seller in the
performance of its obligations or responsibilities under the
provisions of this Agreement, due directly or indirectly to
force majeure, acts of God or any enemy, war, civil
commotion, insurrection, riot, embargo, fire, explosion,
earthquake, lightning, flood, drought, windstorm or other
action of the elements, or other catastrophe or accident,
epidemic or quarantine restrictions, or any legislation,
act, order, directive, or regulation of any government or
governmental body, delay or failure of carriers, strike,
lock-out, walk-out , slow-down, or other labor trouble, lack
or shortage or delay in delivery of supplies, materials,
accessories, equipment, tools or parts, delay or failure of
subcontractors or suppliers for any reason whatsoever
including mechanical breakdown, delay in obtaining any type
approval or any Airworthiness Certificates by reason of any
law or governmental order, directive or regulation or
interpretation thereof by a governmental agency, the
effective date of which is subsequent to the date of this
Agreement, requiring any modification in the Aircraft in
order to obtain the type approval, or any other cause
whatsoever, whether similar to those herein before mentioned
or of a different nature, beyond Seller's control or without
negligence of Seller, Seller shall not be responsible for
any such delay and the time fixed or required for the
performance of any obligation or responsibility in this
Agreement shall be extended for a period equal to the period
during which any such cause and the effects thereof persist.
13.2 In the event that the delivery of the Aircraft is
delayed by reason of any one or more of the causes to which
reference is made in this Article 13 for more than 12 months
beyond the last day of the month when delivery is otherwise
required, either Buyer or Seller may terminate this
Agreement upon notice in writing to the other party of such
termination, which notice shall be given within 15 days
immediately following such period of 12 months. In the event
of such termination, Seller's sole liability and
responsibility shall be limited to the obligation to return
to Buyer all amounts previously paid to Seller.
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Refer Addendum
ARTICLE 14 RESPECTIVE RIGHTS, RECOURSES AND OBLIGATIONS
14.1 If Buyer fails to make any of the payments provided for
in Article 3.1 on or before the stipulated date, Seller
shall have no further obligations to Buyer under this
Agreement, including no obligation to proceed further with
the manufacture of the Aircraft on behalf of the Buyer or
the sale and delivery of the Aircraft to Buyer. In such a
case, i) Buyer acknowledges that all rights (including
property rights and the right to sell the Aircraft to
another party) in and to the Aircraft remain vested with
Seller free and clear of any ownership or title rights,
liens, charges or encumbrances; and ii) Buyer shall have no
right to recover from Seller any of the amounts previously
paid to Seller. All such amounts shall be applied against
the costs and damages incurred by Seller as a result of
Buyer's default. Buyer hereby acknowledges and recognizes
that in any event, such costs and damages will aggregate not
less than the amounts previously paid to Seller. Seller
shall have the option of waiving such failure on the part of
Buyer, should Buyer, within 15 days of such default, make
arrangements satisfactory to Seller for such payment and all
future payments.
Refer Addendum
14.2 a) This Agreement may be terminated before Delivery
Time by either party by notice of termination to the other
party upon the occurrence of any of the following events:
i) the other party makes an assignment for the
benefit of creditors, or admits in writing its
inability to pay its debts;
ii) a receiver or trustee is appointed for the other
party or for substantially all of such party's
assets and, if appointed without such party's
consent, such appointment is not discharged or
stayed within 30 days;
iii) proceedings under any law relating to bankruptcy,
insolvency or the reorganization or relief of
debtors are instituted by or against the other
party and, if contested by such party, are not
dismissed or stayed within 30 days; or
iv) any writ of attachment or execution or any similar
process is issued or levied against the other
party or any significant part of its property and
is not released, stayed, bonded or vacated within
30 days after its issue or levy.
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b) In addition, Seller may terminate this Agreement
before Delivery Time (i) as provided in Article 2.4 hereof;
or (ii) if Buyer is in default or breach of any material
term or condition of this Agreement and does not cure such
default or breach promptly after receipt of notice from
Seller specifying such default or breach.
c) In addition, Buyer may terminate this Agreement
before Delivery Time if Seller is in default or breach of
any material term or condition of this Agreement.
14.3 In case of termination of this Agreement by Seller
pursuant to and in accordance with Article 14.2:
i) all rights (including property rights) which Buyer
may have or may have had in or to this Agreement
or the Aircraft shall be extinguished;
ii) all rights (including property rights and the
right to sell the Aircraft to another party) in
and to the Aircraft shall be vested with Seller
free and clear of any ownership or title rights,
prior claims, liens, charges or encumbrances; and
iii) all amounts previously paid to Seller shall be
retained by Seller and shall be applied against
the costs and damages incurred by Seller as a
result of the termination of this Agreement. Buyer
hereby acknowledges and recognizes that in any
event, such costs and damages will aggregate not
less than the amounts previously paid to Seller.
Refer Addendum
14.4 Upon termination of this Agreement by Buyer pursuant to
and in accordance with Article 14.2 or Article 5, Buyer's
sole right, remedy and recourse against Seller and Seller's
obligation to Buyer shall be limited to the following: Buyer
shall be entitled to recover from Seller only those amounts
previously paid to Seller.
ARTICLE 15 INDEMNITY AGAINST PATENT INFRINGEMENT
15.1 Subject to the provisions hereinafter set out in this
Article 15, Seller agrees to indemnify, protect, and save
harmless Buyer against any liability, losses, damages or
expenses (excluding any liability, losses, damages and
expenses in respect of or resulting from any lack or loss of
use of the Aircraft) resulting solely from any actual or
alleged infringement of a Canadian or United States patent
by the Aircraft. The foregoing shall not apply to the
Powerplants or any accessory, equipment or part which was
not manufactured by Seller or is not manufactured
exclusively pursuant to Seller's detailed design, or which
was incorporated in the Aircraft at Buyer's request instead
of or in addition to any accessory, equipment or part
furnished by Seller.
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15.2 Seller shall not be liable with respect to any actual
or alleged patent infringement to which this Article 15
would apply unless:
i) Suit is commenced against Buyer for infringement
or Buyer receives a written claim alleging
infringement and notice is given in writing to
Seller by Buyer within 20 working days after the
receipt by Buyer of the suit or written claim;
ii) Buyer uses diligent efforts, in full cooperation
with Seller, to reduce or mitigate any such
expenses, damages, costs and royalties involved;
iii) Buyer furnishes promptly to Seller all data,
papers and records within its possession and any
other information or material within Buyer's
knowledge or control necessary or useful to resist
and defend against such claim or suit; and
iv) Buyer refrains from making any payment and from
assuming any obligations, liabilities, expenses,
damages, costs and royalties for which Seller may
be held liable, without approval of Seller, and is
diligent to reduce or mitigate any such expenses,
damages, costs and royalties.
15.3 Seller shall have the option at any time or from time
to time to conduct negotiations, in its own name, or in the
name of Buyer, and to enter into a settlement or settlements
with the party or parties involved in the actual or alleged
patent infringement and to intervene in any suit or claim.
Should Seller intervene in any such suit or claim, it shall
be entitled at any stage of negotiations or proceedings to
assume, conduct or control the defense thereof. If Seller
assumes such defense and Buyer, in its interest, elects to
participate therein, it shall do so at its sole cost and
expense.
15.4 THE OBLIGATIONS ON THE PART OF SELLER IN THIS ARTICLE
15 ARE UNDERTAKEN BY SELLER AND ACCEPTED BY BUYER IN LIEU OF
ANY AND ALL OTHER OBLIGATIONS EXPRESS OR IMPLIED, ARISING IN
LAW OR OTHERWISE, TO WHICH SELLER MIGHT OTHERWISE BE LIABLE
IN RESPECT OF ANY ACTUAL OR ALLEGED PATENT INFRINGEMENT BY
THE AIRCRAFT OR UNDER ANY PATENT RIGHT OR RIGHT TO PATENT,
AND SUCH OBLIGATIONS SHALL NOT BE EXTENDED, ALTERED OR
VARIED EXCEPT IN WRITING SIGNED BY SELLER AND BUYER UNDER
THE HANDS OF THEIR RESPECTIVE DULY AUTHORIZED
REPRESENTATIVES.
ARTICLE 16 LIMITATION OF LIABILITY
16.1 SELLER SHALL NOT BE LIABLE FOR ANY INDIRECT,
CONSEQUENTIAL, SPECIAL, INCIDENTAL AND/OR PUNITIVE DAMAGES
OF ANY KIND OR NATURE UNDER ANY CIRCUMSTANCES, OR FOR ANY
LOSSES OR DAMAGES FOR OR ARISING OUT OF ANY LACK OR LOSS OF
USE OF ANY AIRCRAFT, ANY EQUIPMENT OR ANY SPARE PARTS FOR
ANY REASON.
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ARTICLE 17 MISCELLANEOUS
17.1 Assignment - Neither this Agreement nor any of the
rights of Buyer hereunder shall be assignable by Buyer in
whole or in part without Seller's written consent which
shall not be unreasonably withheld. Notwithstanding the
foregoing, this Agreement shall be assignable by Buyer in
whole or in part to a wholly-owned subsidiary or affiliate
of Buyer or any financial institution which is providing
financing to Buyer in connection with Buyer's acquisition of
the Aircraft provided that Buyer shall remain solidarily
liable with the assignee for the fulfillment of all the
terms and conditions of this Agreement. Buyer hereby
acknowledges receipt of due notice (i) that a portion of the
interest of the Seller in this Agreement and the Purchase
Price payable hereunder could be assigned in favour of LR
Jet Corporation under a certain Receivables Purchase
Agreement dated as of March 27, 1995 and (ii) of the
hypothecation and creation of a security interest in favour
of State Street Bank and Trust Company under the terms of a
Trust Indenture and Security Agreement dated as of March 27,
1995. For greater certainty, Buyer hereby acquiesces to the
hypothec and the assignment created under the said Trust
Indenture. Notwithstanding any of the above-mentioned
assignment, security interest or hypothec, Seller shall
remain the sole party responsible to Buyer for all of
Seller's obligations as Seller hereunder.
17.2 Notices - All communications between the parties
hereto, including any notice to be given hereunder, shall be
in writing and shall be deemed sufficiently given if sent by
registered or certified mail, commercial courier or
facsimile to the party to which said notice is to be given
at its address as shown on page 1 hereof unless such address
is changed by a notice given to the other party. Notices so
sent shall be deemed to be received upon actual receipt by
the receiving party.
17.3 Successors - This Agreement shall inure to the benefit
of and be binding upon each of Seller and Buyer and their
respective successors.
17.4 Compensation - Buyer shall not be entitled to any
abatement, reduction, set-off, compensation, withholding or
counterclaim against any of the payments due under this
Agreement by reason of any past, present or future right or
claim against Seller under this Agreement or any other
obligation, whether or not contractual and whether or not
related to this Agreement.
13
<PAGE>
17.5 Laws - THE RELATIONSHIP BETWEEN THE PARTIES, INCLUDING
THEIR RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT, SHALL BE
GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE PROVINCE OF QUEBEC, CANADA. Seller and Buyer,
which have acceded to this Agreement, have required and
agreed that it and any related documents including those
required under Article 11 be drawn up in the English
language only; le Vendeur et l'Acheteur, parties aux
presentes, ont expressement requis et conviennent que ce
contrat en tout document connexe incluant ceux requis par
l'Article 11 soient rediges dans la langue anglaise
seulement.
17.6 Agreement
17.6.1 This Agreement and the matters referred to herein
constitute the entire Agreement between Seller and Buyer and
supersede and cancel all prior representations, alleged
warranties, statements, negotiations, undertakings, letters,
acceptances, agreements, understandings, contracts and
communications, whether verbal or written, between Seller
and Buyer or their respective agents, with respect to or in
connection with the subject matter of this Agreement and no
agreement or understanding varying the terms and conditions
hereof shall be binding on either Seller or Buyer unless in
writing and duly signed by their respective authorized
representatives. In the event of any inconsistencies between
this Agreement, any addendum clauses and any of the annexes,
Specification or other documents referred to herein, the
provisions of first the addendum clauses and then this
Agreement shall prevail, followed by the Specification.
17.6.2 If any of the provisions of this Agreement are for
any reason declared by judgement of a court of competent
jurisdiction to be unenforceable or ineffective, those
provisions shall be deemed severable from the other
provisions of this Agreement and the remainder of this
Agreement shall remain in full force and effect.
17.6.3 This Agreement shall only be considered as
executed by Seller when signed in duplicate originals on its
behalf at its registered office.
17.6.4 The obligations and liabilities of Seller,
including the Warranty contained in Article 10 and the
Limitation of Liability contained in Article 16 of this
Agreement, have been expressed, discussed, understood and
agreed to between Buyer and Seller in consideration of the
Purchase Price of the Aircraft and other provisions of this
Agreement.
14
<PAGE>
ARTICLE 18 CONFIDENTIALITY
18.1 Seller and Buyer hereby agree to keep this Agreement
and its contents confidential and each party hereto agrees
that it shall not disclose, or permit to be disclosed, the
same to any person or entity, except:
i) to assignees or transferees of a party or to their
counsel, accountants, auditors, other agents or
third parties, on a "need to know" basis, all of
whom shall agree to keep the same confidential;
ii) to a party's counsel, accountant, auditor or other
agents who agree to keep such information
confidential;
iii) as may be required by statute, court or
administrative order or decree or governmental
ruling or regulation of the United States or
Canada or other applicable jurisdiction, or
iv) to the extent that such information is published
as publicly available.
Neither any party to this Agreement nor any of its agents
shall make any press release or other similar public
announcement disclosing the terms of this transaction or
this document or the identity of any party to this Agreement
without the prior written consent of the other party.
ARTICLE 19 REFER ADDENDUM
BUYER: SELLER:
GOLDEN NUGGET AVIATION CORP. BOMBARDIER INC., BUSINESS
AIRCRAFT DIVISION
Per: Bruce A. Levin Per: Keith B. Garner
Title: Assistant Secretary Title: Executive Vice President
15
<PAGE>
ADDENDUM TO GLOBAL EXPRESS AIRCRAFT PURCHASE
AGREEMENT BETWEEN GOLDEN NUGGET AVIATION CORP.
AND BOMBARDIER INC. DATED 24 JUNE 1997
ARTICLE 3 MANUFACTURING PAYMENT SCHEDULE
3.1 Delete this Article in its entirety and
replace with the following:
"In consideration of Seller's obligation to
proceed with the manufacture, delivery and sale
of the Aircraft, Buyer undertakes to make the
following payments to Seller for a total amount
of $29,500,000 U.S. dollars (the "Purchase
Price") which is subject to an escalation
adjustment in accordance with Schedule "C"
attached hereto.
i) A first payment of US $7,375,000 being an
amount equal to 25 percent of the Purchase
Price, shall be paid at the time of
contract execution of this Agreement.
ii) The balance of the Purchase Price,
$22,125,000 plus any adjustment required in
accordance with Schedule "C" shall be paid
at Delivery Time.
Each of such payments, except the last,
shall be on account of the manufacture, delivery
and sale of the Aircraft."
ARTICLE 9 TRAINING
9.1 On the second line replace "4" with "6".
ARTICLE 13 EXCUSABLE DELAY
13.2 On the third line replace "12" with "6".
On the seventh line replace "12" with "6".
ARTICLE 14 RESPECTIVE RIGHTS, RECOURSES AND OBLIGATIONS
14.1 Replace clause ii) of the second sentence,
and the third sentence, with the following:
<PAGE>
"ii) Seller shall be entitled to retain
U.S. $7,375,000 of the amount paid to Seller on
account of the Purchase Price as Seller's sole
and exclusive remedy for any costs and damages
incurred by Seller as a result of the
termination of this Agreement; such amount does
not constitute an abusive penalty but includes,
without limitation, loss of profit on the sale
contemplated by this Agreement, direct and
indirect costs incurred as a result of
disruption in production, and selling expenses
to resell the Aircraft. The parties have agreed
upon the foregoing amount of liquidated damages
as a reasonable forecast of the anticipated or
actual loss Seller will suffer as a result of
the termination of this Agreement. Seller shall
promptly return to Buyer any amount in excess of
U.S. $7,375,000 paid to Seller on account of the
Purchase Price.".
14.3 iii) Replace this sub-Article with the
following:
"Seller shall be entitled to retain U.S.
$7,375,000 of the amount paid to Seller on
account of the Purchase Price as Seller's sole
and exclusive remedy for any costs and damages
incurred by Seller as a result of the
termination of this Agreement; such amount does
not constitute an abusive penalty but includes,
without limitation, loss of profit on the sale
contemplated by this Agreement, direct and
indirect costs incurred as a result of
disruption in production, and selling expenses
to resell the Aircraft. The parties have agreed
upon the foregoing amount of liquidated damages
as a reasonable forecast of the anticipated or
actual loss Seller will suffer as a result of
the termination of this Agreement. Seller shall
promptly return to Buyer any amount in excess of
U.S. $7,375,000 paid to Seller on account of the
Purchase Price.".
ARTICLE 19 PERFORMANCE GUARANTEES
19.1 Notwithstanding the provisions of the
Specification (but subject to the performance
conditions contained in Specification Section 04-
32-00 except as herein modified), the Aircraft
performance guarantees shall be as per
Attachment "A" attached hereto based on Maximum
Ramp Weight of 93,750 lb., Maximum Take-Off
Weight of 93,500 lb., Operating Weight Empty of
48,800 lb., and Maximum Fuel of 43,350 lb. In
addition, the performance guarantees shall
include the following:
2
<PAGE>
1. At Mach .85, minimum range guarantee of 6400
n. mi. with NBAA IFR reserve fuel, ISA, zero
wind, eight (8) passengers and crew of four
(4).
2. At Mach .80, minimum range guarantee of 6700
n. mi. with reserve fuel of 2,000 lb., ISA,
zero wind, eight (8) passengers and crew of
four (4).
3. Cruise altitude shall be guaranteed at a
minimum of 45,000 ft.
19.2 Should the Aircraft i) fail to meet the
above mentioned performance guarantees at
Delivery Time, or ii) not be delivered within 30
days of 30 June 1998 for reasons other than
Excusable Delay, then Buyer shall have the right
to terminate this Agreement. In the event of
such termination, Seller's sole liability and
responsibility shall be limited to the
obligation to return to Buyer all amounts
previously paid to Seller plus interest.
3
<TABLE>
<CAPTION>
EXHIBIT 11
COMPUTATION OF NET INCOME PER SHARE MIRAGE RESORTS, INCORPORATED
OF COMMON STOCK
- ---------------------------------------------------------------------------------------------------------------
Three Months Six Months
-------------------------- --------------------------
For the periods ended June 30 1997 1996 1997 1996
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Weighted-average shares outstanding 178,667,717 184,414,321 178,560,758 184,109,909
Common stock equivalents 11,723,362 13,019,616 11,900,615 12,453,962
- ---------------------------------------------------------------------------------------------------------------
Weighted-average shares outstanding and
common stock equivalents used in the
computation of primary earnings per share 190,391,079 197,433,937 190,461,373 196,563,871
Additional common stock equivalents for
fully diluted calculation 2,337,805 1,937,663 2,160,552 2,503,317
- ---------------------------------------------------------------------------------------------------------------
Total shares outstanding assuming full dilution 192,728,884 199,371,600 192,621,925 199,067,188
===============================================================================================================
Net income $ 48,901,000 $ 40,599,000 $103,365,000 $105,186,000
Primary earnings per share $ 0.26 $ 0.21 $ 0.54 $ 0.54
Fully diluted earnings per share $ 0.25 $ 0.20 $ 0.54 $ 0.53
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
EXHIBIT 15
August 11, 1997
To Mirage Resorts, Incorporated
We are aware that Mirage Resorts, Incorporated has incorporated by
reference in its Registration Statements on Form S-8 (File No. 33-16037),
on Form S-8 (File No. 33-48394), on Form S-8 (File No. 33-63804), on Form
S-8 (File No. 33-60183), on Form S-3 (File No. 33-65317), on Form S-3
(File No. 333-07261) and on Form S-3 (File No. 333-07370) its Form 10-Q
for the quarter ended June 30, 1997, which includes our report dated August
11, 1997 covering the unaudited interim financial information contained
therein. Pursuant to Regulation C of the Securities Act of 1933, that
report is not considered a part of these registration statements or a
report prepared or certified by our firm within the meaning of Sections 7
and 11 of the Act.
Very truly yours,
ARTHUR ANDERSEN LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 AND
THE RELATED CONDENSED CONSOLIDATED STATEMENT OF INCOME AND CASH FLOWS FOR
THE SIX MONTHS ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 88,268
<SECURITIES> 0
<RECEIVABLES> 111,210
<ALLOWANCES> 43,684
<INVENTORY> 26,668
<CURRENT-ASSETS> 232,424
<PP&E> 2,620,869
<DEPRECIATION> 594,623
<TOTAL-ASSETS> 2,583,554
<CURRENT-LIABILITIES> 193,728
<BONDS> 823,544
0
0
<COMMON> 940
<OTHER-SE> 1,400,054
<TOTAL-LIABILITY-AND-EQUITY> 2,583,554
<SALES> 0
<TOTAL-REVENUES> 706,400
<CGS> 0
<TOTAL-COSTS> 394,481
<OTHER-EXPENSES> 43,374
<LOSS-PROVISION> 7,284
<INTEREST-EXPENSE> 5,704
<INCOME-PRETAX> 163,378
<INCOME-TAX> 57,788
<INCOME-CONTINUING> 105,590
<DISCONTINUED> 0
<EXTRAORDINARY> (2,225)
<CHANGES> 0
<NET-INCOME> 103,365
<EPS-PRIMARY> 0.54
<EPS-DILUTED> 0
</TABLE>
