SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 4, 1997
RIO HOTEL & CASINO, INC.
(Exact name of Registrant as specified in charter)
Nevada
(State or other jurisdiction of incorporation)
0-13760 95-3671082
(Commission File Number) (IRS Employee Identification No.)
3700 West Flamingo Road, Las Vegas, Nevada 89103
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (702) 252-7733
Not Applicable
(Former name or former address, if changed since last report)
THIS DOCUMENT CONSISTS OF 194 PAGES. THE EXHIBIT INDEX IS ON PAGE 6.
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Item 5. OTHER EVENTS.
On February 4, 1997, Rio Hotel & Casino, Inc. (the
"Company"), and its wholly owned subsidiary, Rio
Properties, Inc. (the "Guarantor"), entered into an
agreement with Salomon Brothers Inc and BancAmerica
Securities, Inc. (the "Initial Purchasers") for the sale
by the Company of $125 million in principal amount of the
Company's 9 1/2% Senior Subordinated Notes Due 2007 (the
"Notes"). The Notes were purchased by the Initial
Purchasers for resale to qualified institutional buyers
and institutional accredited investors. The net proceeds
from the sale of the Notes (estimated to be approximately
$121.3 million after the deduction of discounts and
commissions of 2.75% and estimated offering expenses of
$250,000) will be used to reduce amounts outstanding under
the Guarantor's $200 million revolving credit facility.
The Notes were issued under an indenture (the "Indenture")
dated February 11, 1997 among the Company, the Guarantor
and IBJ Schroder Bank & Trust Company, as trustee. The
following summary of certain provisions of the Indenture
does not purport to be complete and is subject to the
provisions of the Indenture and the Notes. Capitalized
terms not otherwise defined have the same meanings
assigned to them in the Indenture.
Notes $125 million in aggregate principal
amount of 9 1/2% Senior Subordinated
Notes Due 2007.
Maturity Date April 15, 2007.
Interest Payment Dates April 15 and October 15, commencing
April 15, 1996.
Rio Guarantee The Notes are unconditionally
guaranteed (the "Rio Guarantee") on a
senior subordinated basis by the
Guarantor, the Company's principal
operating subsidiary.
Subordination of Notes The Notes are subordinated in right of
payment to all existing and future
Senior Indebtedness of the Company and
are structurally subordinated to all
existing and future indebtedness and
other liabilities (including trade
payables) of the Company's
subsidiaries.
Subordination of Rio
Guarantee The Rio Guarantee is subordinated in
right of payment to all existing and
future Senior Indebtedness of Guarantor
and is structurally subordinated to all
existing and future indebtedness and
other liabilities (including trade
payables) of the Guarantor's
subsidiaries.
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Optional Redemption The Notes may be redeemed at the option
of the Company, in whole or in part, at
any time on or after April 15, 2002, at
the redemption prices set forth in the
Indenture, plus accrued and unpaid
interest, if any, through the
redemption date.
Regulatory Redemption If any holder or beneficial owner of
Notes is required to be found suitable
and is not found suitable by the Nevada
Gaming Commission (the "Nevada
Commission"), (i) the holder shall,
upon request of the Company, dispose of
such holder's Notes within 30 days or
within the time prescribed by the
Nevada Commission, whichever is
earlier, or (ii) the Company may, at
its option, redeem the holder's Notes
at the lesser of (x) the principal
amount thereof, (y) the Current Market
Price, or (z) the price at which the
Notes were acquired by the holder,
without, in any case, accrued and
unpaid interest to the date of the
finding of unsuitability by the Nevada
Commission, unless payment of such
interest is permitted by the Nevada
Commission.
Change of Covenants Upon a Change of Control, each holder
of Notes will have the right to require
the Company to repurchase all or part
of such holder's Notes at a price equal
to 101% of the aggregate principal
amount thereof, plus accrued and unpaid
interest, if any, to the date of
repurchase. The Company's obligation
to repurchase the Notes is guaranteed
on a senior subordinated basis by the
Guarantor.
Principal Covenants The Indenture contains certain
covenants that, among other things,
limit the ability of the Company and
its Restricted Subsidiaries to incur
additional indebtedness, pay dividends
or make other distributions, make
investments, repurchase subordinated
obligations or capital stock, create
certain liens (except, among others,
liens securing Senior Indebtedness),
enter into certain transactions with
affiliates, sell assets of the Company
or its subsidiaries, issue or sell
subsidiary stock, create or permit to
exist restrictions on distributions
from subsidiaries, or enter into
certain mergers and consolidations.
Exchange Offer;
Registration Rights Pursuant to a registration agreement
between the Company and the Initial
Purchasers, the Company will commence
an exchange offer pursuant to an
effective registration statement or
cause the Notes to be registered under
the Securities Act of 1933 (the
"Securities Act") pursuant to a resale
shelf registration statement. If an
exchange offer registration
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statement is not (i) filed within 60
days after the date of original issuance
of the Notes or (ii) declared effective
within 150 days after the date of
original issuance of the Notes, special
interest will accrue and be payable
semiannually until such time as an
exchange offer registration statement
is filed or becomes effective, as the
case may be. In addition, if an exchange
offer is not consummated or a resale
shelf registration statement is not
declared within 180 days after the date
of original issuance of the Notes,
special interest will accrue and be
payable semiannually until such time
as an exchange offer is consummated or
a resale shelf registration is declared
effective, as the case may be.
Transfer Restrictions The Notes have not been registered
under the Securities Act or under any
state securities laws and are subject
to certain restrictions on transfer.
The Exchange Notes registered pursuant
to an effective registration statement
generally will be freely transferable.
PORTAL Listing The Notes to be sold to qualified
institutional buyers are expected to be
eligible for trading in the PORTAL
market.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
EXHIBIT
NUMBER DESCRIPTION
4.1 Purchase Agreement dated February 4, 1997 by Rio Hotel &
Casino, Inc. and Rio Properties, Inc. and confirmed and
accepted by Salomon Brothers Inc for itself and on
behalf of BancAmerica Securities, Inc.
4.2 Registration Agreement dated February 4, 1997 by Rio
Hotel & Casino, Inc., and Rio Properties, Inc. and
accepted February 4, 1997 by Salomon Brothers Inc and
BancAmerica Securities, Inc.
4.3 Indenture dated as of February 11, 1997, among Rio Hotel
& Casino, Inc., Rio Properties, Inc. and IBJ Schroder
Bank & Trust Company.
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SIGNATURE
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 hereunto duly authorized.
RIO HOTEL & CASINO, INC.
(Registrant)
Date: February 21, 1997 By:/s/ Ronald J. Radcliffe
Ronald J. Radcliffe
Vice President, Treasurer and
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
4.1 Purchase Agreement dated February 4, 1997 by Rio Hotel
& Casino, Inc. and Rio Properties, Inc. and confirmed
and accepted by Salomon Brothers Inc for itself and on
behalf of BancAmerica Securities, Inc.
4.2 Registration Agreement dated February 4, 1997 by Rio
Hotel & Casino, Inc., and Rio Properties, Inc. and
accepted February 4, 1997 by Salomon Brothers Inc and
BancAmerica Securities, Inc.
4.3 Indenture dated as of February 11, 1997, among Rio
Hotel & Casino, Inc., Rio Properties, Inc. and IBJ
Schroder Bank & Trust Company.
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EXHIBIT 4.1
<PAGE>
EXECUTION COPY
RIO HOTEL & CASINO, INC.
9 1/2% Senior Subordinated Notes Due 2007
PURCHASE AGREEMENT
To: SALOMON BROTHERS INC New York, New York
BANCAMERICA SECURITIES, INC. February 4, 1997
In care of:
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Rio Hotel & Casino, Inc., a Nevada corporation (the
"Company"), proposes to issue and sell to you (the "Purchasers")
$125,000,000 principal amount of its 9 1/2% Senior
Subordinated Notes Due 2007 (the "Securities") to be guaranteed
on a senior subordinated and unsecured basis by Rio Properties,
Inc., a Nevada corporation (the "Guarantor" or the "Subsidiary"),
and to be issued under an indenture (the "Indenture") to be dated
as of February 11, 1997, between the Company, the Guarantor and
IBJ Schroder Bank and Trust Company, as trustee (the "Trustee").
The sale of the Securities to you will be made without
registration of the Securities under the Securities Act of 1933,
as amended (the "Act"), in reliance upon the exemption from the
registration requirements of the Act provided by Section 4(2)
thereof. You have advised the Company that you will make an
offering of the Securities purchased by you hereunder in
accordance with Section 4 hereof on the terms set forth in the
Final Memorandum (as defined below), as soon as you deem
advisable after this Agreement has been executed and delivered.
In connection with the sale of the Securities, the
Company has prepared a final offering memorandum, dated
February 4, 1997 (the "Final Memorandum"). The Final Memorandum
sets forth certain information concerning the Company, the
Guarantor and the Securities. The Company and the Guarantor,
jointly and severally, hereby confirm that they have authorized
the use of the Final Memorandum in connection with the offering
and resale by the Purchasers of the Securities. Any references
herein to the Final Memorandum shall be deemed to include all
exhibits thereto and all documents incorporated by reference
therein which were filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), on or before the Execution
Time (as defined below); and any reference herein to the terms
"amend", "amendment" or "supplement" with respect to the Final
Memorandum shall be deemed to refer to and include the filing of
any document under the Exchange Act after the Execution Time
which is incorporated by reference therein.
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The holders of the Securities will be entitled to the
benefits of the Registration Agreement dated the date hereof,
among the Company, the Guarantor and the Purchasers (the
"Registration Agreement").
Capitalized terms used herein without definitions have
the respective meanings assigned to them in the Final Memorandum.
1. REPRESENTATIONS AND WARRANTIES. The company and
the guarantor jointly and severally represent and warrant to, and
agree with, the purchasers as set forth below in this Section 1.
(a) The Final Memorandum as of its date did not, and
the Final Memorandum (as the same may have been amended or
supplemented) as of the Closing Date will not, contain any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that the Company and Guarantor make no
representations or warranties as to the information contained in
or omitted from the Final Memorandum in reliance upon and in
conformity with information furnished in writing to the Company
or Guarantor by the Purchasers specifically for inclusion in the
Final Memorandum (and any amendment or supplement thereof or
thereto). All documents incorporated by reference in the Final
Memorandum which were filed under the Exchange Act on or before
the Execution Time complied, and all such documents which are
filed under the Exchange Act after the Execution Time and on or
before the Closing Date will comply, in all material respects
with the applicable requirements of the Exchange Act and the
rules thereunder.
(b) Neither the Company nor the Guarantor has taken,
nor will it take, directly or indirectly, any action prohibited
by Rule l0b-6 under the Exchange Act or, from and after the
effective date thereof, Regulation M under the Exchange Act in
connection with any offering of the Securities.
(c) None of the Company, the Guarantor, any of their
respective affiliates (as defined in Rule 501(b) of Regulation D
under the Act ("Regulation D")) nor any person acting on its or
their behalf has directly, or through any agent, (i) sold,
offered for sale, solicited offers to buy or otherwise negotiated
in respect of, any security (as defined in the Act) which is or
will be integrated with the sale of the Securities in a manner
that would require the registration of the Securities under the
Act or (ii) engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D) in
connection with the offering of the Securities.
(d) It is not necessary in connection with the offer,
sale and delivery of the Securities in the manner contemplated by
this Agreement and the Final Memorandum to register the
Securities under the Act or to qualify the Indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act").
(e) None of the Company, the Guarantor, any of
their respective affiliates, nor any person acting on its or
their behalf has engaged in any directed selling efforts
(as that term is defined in Regulation S under the Act
("Regulation S")) with respect to the Securities, and the
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Company, the Guarantor and their respective affiliates and any
person acting on its or their behalf have complied with the
offering restrictions requirement of Regulation S.
(f) The Company is subject to and in full compliance
with the reporting requirements of Section 13 or Section 15(d) of
the Exchange Act.
(g) The Securities satisfy the requirements set forth
in Rule 144A(d)(3) under the Act. The Company and the Guarantor
hereby agree to permit the Securities to be designated PORTAL
eligible securities, subject to the payment by the Purchasers of
the requisite fees related thereto, and have been advised by the
National Association of Securities Dealers, Inc. PORTAL Market
that the Securities have or will be designated PORTAL eligible
securities in accordance with the rules and regulations of the
National Association of Securities Dealers, Inc.
(h) Each of the Company and the Guarantor has full
corporate power and authority to enter into this Agreement, the
Registration Agreement, the Indenture and the Securities and to
perform the transactions contemplated hereby and thereby. This
Agreement has been duly authorized, executed and delivered by the
Company and the Guarantor and constitutes a valid and binding
obligation of the Company and the Guarantor enforceable in
accordance with its terms and the execution and delivery of the
Registration Agreement and the Securities have been duly
authorized by the Company and the Guarantor and, when duly
executed and delivered by the parties thereto, will constitute
valid and binding obligations of the Company and the Guarantor,
enforceable against the Company and the Guarantor in accordance
with their respective terms, except in each case as
enforceability may be limited by general equitable principles,
bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and except as to those
provisions relating to indemnity or contribution for liabilities
arising under federal and state securities laws. The execution,
delivery and performance of this Agreement, the Registration
Agreement and the Securities by the Company and the Guarantor and
the consummation of the transactions contemplated hereby and
thereby (i) will not violate any provisions of the Articles of
Incorporation, Bylaws or other organizational documents of the
Company or any of its subsidiaries, and (ii) will not conflict
with, result in a material breach or violation of, or constitute,
either by itself or upon notice or the passage of time or both, a
material default under (A) any agreement, mortgage, deed of
trust, lease, franchise, license, indenture (including, without
limitation, the indenture governing the Company's outstanding
10 5/8% Senior Subordinated Notes Due 2005), permit or other
instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or any
of its respective properties may be bound or affected, or (B) any
statute or any authorization, judgment, decree, order, rule or
regulation of any court or any regulatory body, administrative
agency or other governmental body applicable to the Company or
any of its subsidiaries or any of their respective properties.
No consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body
which has not already been obtained is required for the execution
and delivery of this Agreement, the Registration Agreement, the
Indenture, the Securities or the consummation of the transactions
contemplated hereby or thereby, except for compliance with the
Act, the blue sky or securities laws of any jurisdiction in
connection with the purchase and sale of the Securities by the
Purchasers, and the Nevada Gaming Control Act and rules and
regulations thereunder (the "Gaming Act").
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(i) Except as disclosed in the Final Memorandum, there
are no legal or governmental actions, suits or proceedings
pending or, to the best of the Company's and the Guarantor's
knowledge, threatened to which the Company or any of its
subsidiaries is or is threatened to be made a party or of which
property owned or leased by the Company or any of its
subsidiaries is or is threatened to be made the subject, which
actions, suits or proceedings could, individually or in the
aggregate, prevent or adversely affect the transactions
contemplated by this Agreement or result in a material adverse
change in the condition (financial or otherwise), properties,
business, results of operations or prospects of the Company or
its subsidiaries or materially and adversely affect the ability
of the Company or the Guarantor to perform its obligations under
this Agreement, the Registration Agreement, the Indenture, the
Securities or the transactions contemplated hereby or thereby;
and no labor disturbance by the employees of the Company or any
of its subsidiaries exists or is imminent which could materially
adversely affect such condition, properties, business, results of
operations or prospects. Neither the Company nor any of its
subsidiaries is a party or subject to the provisions of any
material injunction, judgment, decree or order of any court,
regulatory body, administrative agency or other governmental
body. Neither the Company nor the Guarantor has any reason to
believe that the Nevada Gaming Commission, the Nevada State
Gaming Control Board or the Clark County Liquor and Gaming
Licensing Board or any other governmental agencies are
investigating the Company, the Guarantor or any related parties,
other than in ordinary course administrative reviews or in any
ordinary course review of the transactions contemplated hereby.
(j) Except as disclosed in or specifically
contemplated by the Final Memorandum, the Company and its
subsidiaries have sufficient trademarks, trade names, patent
rights, copyrights, licenses, approvals and governmental
authorizations (including, without limitation, all authorizations
from Nevada gaming and liquor authorities) to conduct their
businesses as now conducted; the Company's and its subsidiaries'
controlling persons, key employees and stockholders have all
necessary permits, licenses and other authorizations required by
applicable law for the Company and its subsidiaries to conduct
their businesses as now conducted; the expiration of any
trademarks, trade names, patent rights, copyrights, licenses,
approvals or governmental authorizations would not have a
material adverse effect on the condition (financial or
otherwise), business, results of operations or prospects of the
Company or its subsidiaries; the Company has no knowledge that
any of its stockholders is unsuitable or may be deemed unsuitable
by the Nevada Gaming Commission or the Nevada State Gaming
Control Board.
(k) The Company and its subsidiaries are conducting
business in compliance with all applicable laws, rules and
regulations of the jurisdictions in which they are conducting
business, including, without limitation, all applicable local,
state and federal gaming, liquor and environmental laws and
regulations, except where the failure to be so in compliance
would not materially adversely affect the condition (financial or
otherwise), business, results of operations or prospects of the
Company and its subsidiaries, taken as a whole.
(l) Neither the Company nor the Guarantor is an
"investment company" within the meaning of the Investment Company
Act of 1940, as amended, without taking account of any exemption
arising out of the number of holders of the Company's or the
Guarantor's securities.
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(m) Neither the Company nor the Guarantor has paid or
agreed to pay to any person any compensation for soliciting
another to purchase any securities of the Company or the
Guarantor (except as contemplated by this Agreement).
(n) The information provided by the Company pursuant
to Section 5(h) hereof will not, at the date thereof, contain any
untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
2. PURCHASE AND SALE. Subject to the terms and
conditions and in reliance upon the representations and
warranties herein set forth, the Company agrees to sell to the
Purchasers, and the Purchasers agree to purchase from the
Company, at a purchase price of 97.25% of the principal amount
thereof, plus accrued interest, if any, from February 11, 1997,
to the Closing Date, the principal amount of the Securities set
forth opposite each Purchaser's name in Schedule I hereto.
3. DELIVERY AND PAYMENT. Delivery of and payment for
the Securities shall be made at 10:00 a.m., New York City time,
on February 11, 1997, or such later date as the Purchasers may
agree or as provided in Section 9 hereof (such date and time of
delivery and payment for the Securities being herein called the
"Closing Date"). Delivery of the Securities shall be made to the
Purchasers against payment by the Purchasers of the purchase
price thereof to or upon the order of the Company by certified or
official bank check or checks drawn on or by a New York clearing
house bank and payable in next day funds or wire transfer in
federal (same-day) funds to a U.S. dollar account designated by
the Company and agreed to by the Purchasers not less than two
business days prior to the Closing Date. Delivery of the
Securities shall be made at such location as the Purchasers shall
reasonably designate at least one business day in advance of the
Closing Date and payment for the Securities shall be made at the
offices of Cravath, Swaine & Moore, 825 Eighth Avenue, New York,
New York. Certificates for the Securities shall be registered in
such names and in such denominations as the Purchasers may
request not less than three full business days in advance of the
Closing Date.
The Company agrees to have the certificates for the
Securities available for inspection, checking and packaging by
the Purchasers in New York, New York, not later than 1:00 p.m. on
the business day prior to the Closing Date.
4. OFFERING OF SECURITIES; RESTRICTIONS ON TRANSFER.
(a) The Purchasers represent and warrant to and agree with the
Company that (i) they have not solicited and will not solicit any
offer to buy or offer to sell the Securities by means of any form
of general solicitation or general advertising (within the
meaning of Regulation D) or in any manner involving a public
offering within the meaning of Section 4(2) of the Act or, with
respect to Securities sold in reliance on Regulation S, by means
of any directed selling efforts and (ii) they have solicited and
will solicit offers to buy the Securities only from, and have
offered and will offer, sell or deliver the Securities only
to, (A) persons who they reasonably believe to be
qualified institutional buyers (as defined in Rule 144A
under the Act) or, if any such person is buying for
one or more institutional accounts for which such person
is acting as fiduciary or agent, only when such person
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has represented to them that each such account is a qualified
institutional buyer, to whom notice has been given that such sale
or delivery is being made in reliance on Rule 144A, and, in each
case, in transactions under Rule 144A, (B) persons who they
reasonably believe to be institutional "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D), and
who provide to them a letter in the form of Exhibit A hereto or
(C) persons to whom, and under circumstances which, they
reasonably believe offers and sales of Securities may be made
without registration of the Securities under the Act in reliance
upon Regulation S thereunder. The Purchasers also represent and
warrant and agree that they have offered and will offer to sell
the Securities only to, and have solicited and will solicit
offers to buy the Securities only from, persons that in
purchasing such Securities will be deemed to have represented and
agreed as provided under "Investor Representations and
Restrictions on Resale" in Exhibit B hereto.
(b) The Purchasers represent and warrant that (i) they
have not offered or sold, and will not offer or sell, in the
United Kingdom, by means of any document, any Securities other
than to persons whose ordinary business it is to buy or sell
shares or debentures, whether as principal or agent, or in
circumstances which do not constitute an offer to the public
within the meaning of the United Kingdom Companies Act 1985,
(ii) they have complied and will comply with all applicable
provisions of the Financial Services Act 1986 of the United
Kingdom with respect to anything done by them in relation to the
Securities in, from or otherwise involving the United Kingdom and
(iii) they have only issued or passed on, and will only issue or
pass on, in the United Kingdom any document received by them in
connection with the issue of the Securities to a person who is of
the kind described in Article 9(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1988 or is a
person to whom the document may otherwise lawfully be issued or
passed on.
5. AGREEMENTS. The Company and the Guarantor jointly
and severally agree with the Purchasers that:
(a) The Company and the Guarantor will furnish to the
Purchasers, without charge, 500 copies of the Final Memorandum
and any supplements and amendments thereof or thereto. The
Company and the Guarantor will pay 50% of the expenses of
printing or other production of all documents relating to the
offering, not to exceed $5,000.
(b) The Company will not amend or supplement the Final
Memorandum, other than by filing documents under the Exchange Act
which are incorporated by reference therein, without prior
consent of the Purchasers (which consent shall not be
unreasonably or untimely withheld). Prior to the completion of
the sale of the Securities by the Purchasers, the Company will
not file any document under the Exchange Act which is
incorporated by reference in the Final Memorandum unless the
Company has furnished you a copy for your review prior to filing
and will not file any such document to which you reasonably and
timely object.
(c) The Company will promptly advise the Purchasers
when, prior to the completion of the sale of the Securities by
the Purchasers, any document filed under the Exchange Act which
is incorporated by reference in the Final Memorandum shall have
been filed with the Securities and Exchange Commission (the
"Commission").
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(d) If at any time prior to the completion of the sale
of the Securities by the Purchasers, any event occurs as a result
of which the Final Memorandum as then amended or supplemented
would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein
in the light of the circumstances under which they were made not
misleading, or if it shall be necessary to amend or supplement
the Final Memorandum (including any document incorporated by
reference therein which was filed under the Exchange Act) to
comply with the Exchange Act or the rules thereunder or other
applicable law, the Company and the Guarantor promptly will
notify the Purchasers of the same and will prepare and provide to
the Purchasers an amendment or supplement which will correct such
statement or omission or effect such compliance and, in the case
of such an amendment or supplement which is to be filed under the
Exchange Act and which is incorporated by reference in the Final
Memorandum, will file such amendment or supplement with the
Commission.
(e) The Company will arrange for the qualification of
the Securities for sale by the Purchasers under the laws of such
jurisdictions as the Purchasers may reasonably designate, will
maintain such qualifications in effect so long as reasonably
required for the sale of the Securities and will arrange for the
determination of the legality of the Securities for purchase by
institutional investors. Each of the Company and the Guarantor
will promptly advise the Purchasers of the receipt by it of any
notification with respect to the suspension of the qualification
of the Securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose.
(f) Neither the Company nor any affiliate (as defined
in Rule 501(b) of Regulation D) of the Company will solicit any
offer to buy or offer or sell the Securities by means of any form
of general solicitation or general advertising (within the
meaning of Regulation D).
(g) None of the Company, its affiliates nor any person
acting on behalf of the Company or its affiliates will engage in
any directed selling efforts with respect to the Securities
within the meaning of Regulation S, and the Company, its
affiliates and each such person acting on its or their behalf
will comply with the offering restrictions requirement of
Regulation S.
(h) The Company and the Guarantor shall, during any
period in the three years after the Closing Date in which it is
not subject to Section 13 or 15(d) of the Exchange Act, make
available, upon request, to any holder of such Securities in
connection with any sale thereof and any prospective purchaser
(as designated by such holder) of Securities from such holder the
information ("Rule 144A Information") specified in
Rule 144A(d)(4) under the Act. This covenant is intended to be
for the benefit of the holders, and the prospective purchasers
designated by such holders, from time to time of such Securities.
(i) The Company and the Guarantor will not, and will
not permit any of their respective affiliates (as defined in
Rule 501(b) of Regulation D) to, resell any Securities which
constitute "restricted securities" under Rule 144 that have been
acquired by any of them.
(j) None of the Company, the Guarantor nor any of
their respective affiliates (as defined in Rule 501(b)
of Regulation D) will sell, offer for sale or solicit offers
to buy or otherwise negotiate in respect of any security
(as defined in the Act) the offering of which security
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will be integrated with the sale of the Securities in a manner
which would require the registration of the Securities under the
Act.
(k) The Company shall include information
substantially in the form set forth in Exhibit B in each Final
Memorandum.
(l) The Company and the Guarantor shall use their best
efforts in cooperation with the Purchasers to permit the
Securities to be eligible for clearance and settlement through
The Depository Trust Company.
(m) The Company will not, for a period of 90 days
following the Execution Time without prior written consent of
Salomon Brothers Inc ("Salomon") (which consent will not be
unreasonably or untimely withheld), offer, sell or contract to
sell, or otherwise dispose of, directly or indirectly, or
announce the offering of, any debt securities issued or
guaranteed by the Company or the Guarantor (other than the
Securities). Neither the Company nor the Guarantor will at any
time offer, sell, contract to sell or otherwise dispose of,
directly or indirectly, any securities under circumstances where
such offer, sale, contract or disposition would cause the
exemption afforded by Section 4(2) of the Securities Act or the
safe harbor of Regulation S thereunder to cease to be applicable
to the offer and sale of the Securities as contemplated by this
Agreement and the Final Offering Memorandum.
(n) The Company will apply the net proceeds from the
sale of the Securities sold by it substantially in accordance
with its statements under the caption "Use of Proceeds" in the
Final Memorandum.
(o) As soon as practicable following receipt by the
Company of a written request from Salomon, the Company and the
Guarantor shall support the participation of Salomon in the next
increase in the borrowing limit or in the refinancing of the
Guarantor's outstanding $200 million secured revolving credit
facility, and shall take all reasonable actions within their
power to cause the appointment of Salomon as documentation agent
or syndication agent, subject to the participation of Salomon in
such facility at a level which is reasonable and customary for
such appointment.
(p) The Company agrees to make the following personnel
available to the Purchasers, at a time specified by the
Purchasers, for participation in a telephonic conference call
with potential purchasers of the Securities from the purchasers:
Anthony A. Marnell II, Chairman of the Board and Chief Executive
Officer of the Company and James A. Barrett, Jr., President and
Director of the Company.
6. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS.
The obligations of the Purchasers to purchase the Securities
shall be subject to the accuracy of the representations and
warranties on the part of the Company contained herein as of the
date and time that this Agreement is executed and delivered by
the parties hereto (the "Execution Time") and the Closing Date,
to the accuracy of the statements of the Company and the
Guarantor made in any certificates pursuant to the provisions
hereof, to the performance by the Company and the Guarantor of
their respective obligations hereunder and to the following
additional conditions:
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(a) At the Closing Date, you shall have received
evidence in form and substance satisfactory to you that the
offering of the Securities complies (whether as a result of the
receipt of appropriate waivers or otherwise) with applicable
gaming laws.
(b) The Company shall have furnished to the Purchasers
the opinion of Kummer Kaempfer Bonner & Renshaw, counsel for the
Company, dated the Closing Date, to the effect that:
(i) each of the Company and the Guarantor has
been duly incorporated and is validly existing as a
corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized,
with full corporate power and authority to own its
properties and conduct its business as described in the
Final Memorandum, and is duly qualified to do business
as a foreign corporation and is in good standing under
the laws of each jurisdiction which requires such
qualification wherein it owns or leases material
properties or conducts material business;
(ii) all the outstanding shares of capital stock
of the Guarantor have been duly and validly authorized
and issued and are fully paid and nonassessable, and
all outstanding shares of capital stock of the
Guarantor are owned by the Company directly free and
clear of any perfected security interest (except for a
pledge thereof securing the Rio Bank Loan) and, to the
knowledge of such counsel, after due inquiry, any other
security interests, claims, liens or encumbrances;
(iii) the Company's authorized equity
capitalization is as set forth in the Final Memorandum;
and the Securities conform to the description thereof
contained in the Final Memorandum;
(iv) the Indenture has been duly authorized,
executed and delivered by the Company and the
Guarantor, and constitutes a legal, valid and binding
instrument enforceable in accordance with its terms
(subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or
other laws affecting creditors' rights generally from
time to time in effect); the Securities are in the form
contemplated by the Indenture and have been duly
authorized and, when executed and authenticated in
accordance with the provisions of the Indenture and
delivered to and paid for by the Purchasers pursuant to
this Agreement, will constitute legal, valid and
binding obligations entitled to the benefits of the
Indenture and enforceable in accordance with their
terms (in rendering the opinion in this paragraph, such
counsel may assume that New York law is identical to
Nevada law on such applicable parts of the opinion
governed by New York law);
(v) the statements in the Final
Memorandum under the headings: "Business--
Regulation and Licensing", "Business--Legal
Proceedings", "Description of Notes--Mandatory
Disposition or Redemption Pursuant to Gaming
9
<PAGE>
Laws", and "Certain U.S. Federal Tax Consequences"
fairly summarize the matters therein described;
(vi) such counsel has no reason to believe that as
of the Execution Time the Final Memorandum contained
any untrue statement of a material fact or omitted to
state any material fact required to be stated therein
or necessary to make the statements therein not
misleading or that the Final Memorandum includes any
untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein,
in the light of the circumstances under which they were
made, not misleading;
(vii) this Agreement has been duly authorized,
executed and delivered by the Company and the
Guarantor;
(viii) no consent, approval, authorization or
order of any court or governmental agency or body is
required for the consummation of the transactions
contemplated herein, except such as may be required
under the blue sky or securities laws of any
jurisdiction in connection with the purchase and
distribution of the Securities by the Purchasers and
such other approvals (specified in such opinion) as
have been obtained;
(ix) the issue and sale of the Securities, the
execution and delivery of this Agreement, the
Registration Agreement, the Securities and the
Indenture by the Company and the Guarantor, the
consummation of any other of the transactions herein or
therein contemplated or the fulfillment of the terms
hereof or thereof will not conflict with, result in a
breach or violation of, or constitute a default under
any law or the charter or by-laws of the Company or the
Guarantor or the terms of any indenture (including,
without limitation, the indenture governing the
Company's outstanding 10 5/8% Senior Subordinated Notes
Due 2005) or other agreement or instrument known to
such counsel and to which the Company or any of its
subsidiaries is a party or bound or any judgment, order
or decree known to such counsel to be applicable to the
Company or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental
body or arbitrator having jurisdiction over the Company
or any of its subsidiaries;
(x) each of the Company and the Guarantor has
full corporate power and authority to enter into this
Agreement, the Registration Agreement, the Indenture
and the Securities and to sell and deliver the
Securities to be sold by it to the Purchasers; this
Agreement, the Registration Agreement, the Indenture
and the Securities have been duly and validly
authorized by all necessary corporate action by the
Company and the Guarantor, have been duly and
validly executed and delivered by and on behalf
of the Company and the Guarantor, and are
valid and binding agreements of the Company and
the Guarantor enforceable in accordance with
their terms, except as enforceability may be
limited by general equitable principles,
bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally
and except as to those provisions relating to
10
<PAGE>
indemnity or contribution for liabilities arising under
federal and state securities laws (as to which no
opinion need be expressed); and to the best of such
counsel's knowledge after due inquiry no approval,
authorization, order, consent, registration, filing,
qualification, license or permit of or with any court,
regulatory, administrative or other governmental body
is required for the execution and delivery of this
Agreement, the Registration Agreement, the Indenture or
the Securities by the Company or the Guarantor or the
consummation of the transactions contemplated hereby or
thereby, except such as have been obtained and are in
full force and effect under the Act or applicable
gaming laws and such as may be required under
applicable state securities or blue sky laws in
connection with the purchase and distribution of the
Securities by the Purchasers and the clearance of such
offering with the NASD;
(xi) it is not necessary in connection with the
offer, sale and delivery by the Purchasers of the
Securities in the manner contemplated by this Agreement
to register the Securities under the Act or to qualify
the Indenture under the Trust Indenture Act;
(xii) no approval of the Nevada gaming
authorities is required with respect to the issuance of
Securities or the transactions contemplated by this
Agreement and the Indenture, except as has already been
obtained;
(xiii) to the best of such counsel's knowledge,
there are no legal or governmental actions, suits or
proceedings pending or threatened to which the Company
or any of its subsidiaries is or is threatened to be
made a party or of which property owned or leased by
the Company or any of its subsidiaries is or is
threatened to be made the subject, which actions, suits
or proceedings could, individually or in the aggregate,
prevent or adversely affect the transactions
contemplated by this Agreement, the Registration
Agreement, the Indenture or the Securities or result in
a material adverse change in the condition (financial
or otherwise), properties, business, results of
operations or prospects of the Company and its
subsidiaries; and neither the Company nor any of its
subsidiaries is a party or subject to the provisions of
any injunction, judgment, decree or order of any court,
regulatory body, administrative agency or other
governmental body which could materially adversely
affect the condition (financial or otherwise),
business, results of operations or prospects of the
Company and its subsidiaries, taken as a whole; and
neither the Company nor any related party is being
investigated by the Nevada Gaming Commission, the
Nevada State Gaming Control Board or any federal, state
or local liquor or gaming regulatory body or any other
governmental agency, other than in ordinary course
administrative reviews or in any ordinary course review
of the transactions contemplated by this Agreement; and
(xiv) neither the Company nor the Guarantor
is, or upon the closing of the offering
contemplated by this Agreement, will be, an
"investment company" within the meaning of the
Investment Company Act of 1940, as amended, without
11
<PAGE>
taking account of any exemption therefrom arising out
of the number of holders of the Company's or the
Guarantor's securities.
In rendering such opinion, such counsel may rely
(A) as to matters involving the application of laws of any
jurisdiction other than the State of Nevada or the United States,
to the extent they deem proper and specified in such opinion,
upon the opinion of other counsel of good standing whom they
believe to be reliable and who are satisfactory to counsel for
the Purchasers and (B) as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the
Company and public officials. References to the Final Memorandum
in this paragraph (b) include any amendments or supplements
thereof or thereto at the Closing Date.
(c) The Purchasers shall have received from Cravath,
Swaine & Moore, counsel for the Purchasers, such opinion or
opinions, dated the Closing Date, with respect to the issuance
and sale of the Securities, the Indenture, the Final Memorandum
(together with any amendment or supplement thereof or thereto)
and other related matters as the Purchasers may reasonably
require, and the Company shall have furnished to such counsel
such documents as they request for the purpose of enabling them
to pass upon such matters.
(d) The Company shall have furnished to the Purchasers
a certificate of the Company, signed by the Chairman of the Board
or the President and the principal financial or accounting
officer of the Company, dated the Closing Date, to the effect
that the signers of such certificate have carefully examined the
Final Memorandum, any amendment or supplement to the Final
Memorandum and this Agreement and that:
(i) the representations and warranties of the
Company and the Guarantor in this Agreement are true
and correct in all material respects on and as of the
Closing Date with the same effect as if made on the
Closing Date and the Company and the Guarantor have
complied with all the agreements and satisfied all the
conditions on their part to be performed or satisfied
at or prior to the Closing Date; and
(ii) since the date of the most recent financial
statements included in the Final Memorandum (exclusive
of any amendment or supplement thereof or thereto),
there has been no material adverse change in the
condition (financial or other), earnings, business or
properties of the Company and its subsidiaries, whether
or not arising from transactions in the ordinary course
of business, except as set forth in or contemplated in
the Final Memorandum (exclusive of any amendment or
supplement thereof or thereto).
(e) At the Execution Time and at the Closing Date,
Arthur Andersen LLP shall have furnished to the Purchasers a
letter or letters, dated respectively as of the Execution Time
and as of the Closing Date, in form and substance satisfactory to
the Purchasers, confirming that they are independent certified
public accountants under Rule 101 of the AICPA's Code of
Professional Conduct and its interpretations and rulings and
stating in effect that:
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<PAGE>
(i) with respect to the nine-month periods ended
September 30, 1996 and 1995, they have:
(a) read the unaudited consolidated balance
sheet as of September 30, 1996, and the
unaudited statements of income, retained
earnings, and cash flows of the Company
for the nine-month periods, ended
September 30, 1996 and 1995, included in
the Final Memorandum, and agreed the
amounts contained therein to the
Company's accounting records and
(b) inquired of certain officials of the
Company who have responsibility for
financial and accounting matters whether
the unaudited consolidated financial
statements referred to in (a) above are
in conformity with generally accepted
accounting principles applied on a basis
substantially consistent with that of
the audited consolidated financial
statements included in the Final
Memorandum and that such officials have
stated that the unaudited consolidated
financial statements referred to in (a)
above are in conformity with generally
accepted accounting principles applied
on a basis substantially consistent with
that of the audited consolidated
financial statements included in the
Final Memorandum.
(ii) with respect to the period from October 1,
1996 to December 31, 1996 they have:
(a) read the unaudited consolidated
financial statements of the Company for
the year ended December 31, 1996,
furnished them by the Company, and
agreed the amounts contained therein to
the Company's accounting records and
(b) made inquiry of certain officials of the
Company who have responsibility for
financial and accounting matters
regarding whether (1) the unaudited
consolidated financial statements
referred to in (a) above are stated on a
basis substantially consistent with that
of the audited consolidated financial
statements included in the Final
Memorandum, (2) at December 31, 1996,
there was any change in the capital
stock, increase in long-term debt or any
decrease in consolidated net current
assets or stockholders' equity of the
consolidated companies as compared with
amounts shown in the September 30, 1996,
unaudited consolidated balance sheet
included in the Final Memorandum,
and (3) for the period from October 1,
1996, to December 31, 1996, there
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<PAGE>
were any decreases, as compared with the
corresponding period in the preceding
year, in consolidated net sales or in
the total or per-share amounts of net
income and that such officials stated
that (x) the unaudited consolidated
financial statements referred to in (a)
above are stated on a basis
substantially consistent with that of
the audited consolidated financial
statements included in the Final
Memorandum, (y) at December 31, 1996,
there was no change in the capital
stock, no increase in long-term debt,
and no decrease in consolidated net
current assets or stockholders' equity
of the consolidated companies as
compared with amounts shown in the
September 30, 1996, unaudited
consolidated balance sheet included in
the Final Memorandum and (z) there were
no decreases for the period from
October 1, 1996, to December 31, 1996,
as compared with the corresponding
period in the preceding year, in
consolidated net sales or in the total
or per-share amounts of net income.
(iii) they have made inquiries of certain
officials of the Company who have responsibility for
financial and accounting matters regarding whether
(a) there was any change at a specified date not more
than five days prior to the date of the letter, in the
capital stock or long-term debt of the Company or any
decreases in stockholders' equity or consolidated net
current assets as compared with amounts shown on the
December 31, 1996, unaudited consolidated balance
sheet, included in the Final Memorandum or (b) for the
period from January 1, 1997 to such specified date,
there were any decreases, as compared with the
corresponding period in the preceding year, in
consolidated net sales or in the total per share
amounts of net income and that such officials stated
that there were no such changes or decreases and that
the Company has prepared no financial statements as of
any date or for any period subsequent to December 31,
1996.
(iv) they have performed certain other specified
procedures as a result of which they determined that
certain information of an accounting, financial or
statistical nature (which is limited to accounting,
financial or statistical information derived from the
general accounting records of the Company and its
subsidiaries) set forth in the Final Memorandum,
including the information set forth under the caption
"Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Final
Memorandum, complies with certain information provided
in the past.
References to the Final Memorandum in this
paragraph (e) include any amendment or supplement thereof or
thereto at the date of the letter.
(f) Subsequent to the Execution Time or, if
earlier, the dates as of which information is given
in the Final Memorandum (exclusive of any amendment or
supplement thereof or thereto), there shall not have been
(i) any change or decrease specified in the letter or
14
<PAGE>
letters referred to in paragraph (e) of this Section 6 or
(ii) any change, or any development involving a prospective
change, in or affecting the business or properties of the Company
and its subsidiaries the effect of which, in any case referred to
in clause (i) or (ii) above, is, in the judgment of the
Purchasers, so material and adverse as to make it impractical or
inadvisable to market the Securities as contemplated by the Final
Memorandum (exclusive of any amendment or supplement thereof or
thereto).
(g) Subsequent to the Execution Time, there shall not
have been any decrease in the rating of the Securities or any of
the Company's or the Guarantor's debt securities by any
"nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act) or any notice
given of any intended or potential decrease in any such rating or
of a possible change in any such rating that does not indicate
the direction of the possible change.
(h) On or prior to the Closing Date, the Company and
the Guarantor shall have furnished to the Purchasers such further
information, certificates and documents as the Purchasers may
reasonably request.
(i) On or prior to the Closing Date the Registration
Agreement shall have been executed substantially in the form
hereto delivered to you and shall have been delivered to you and
the Trustee.
(j) On the Closing Date, the Company (i) shall have
received from Arthur Andersen LLP a letter dated as of the
Closing Date, in form and substance satisfactory to the
Purchasers, stating, among other things, the results of their
review of the interim financial information of the Company as
described in Statement of Auditing Standards No. 71 and
(ii) shall furnish a copy of such letter to the Purchasers.
If any of the conditions specified in this Section 6
shall not have been fulfilled in all material respects when and
as provided in this Agreement, or if any of the opinions and
certificates mentioned above or elsewhere in this Agreement shall
not be in all material respects reasonably satisfactory in form
and substance to the Purchasers and counsel for the Purchasers,
this Agreement and all obligations of the Purchasers hereunder
may be canceled at, or at any time prior to, the Closing Date by
the Purchasers. Notice of such cancellation shall be given to
the Company in writing or telegraph confirmed in writing.
The documents required to be delivered by this
Section 6 shall be delivered at the office of Cravath, Swaine &
Moore, counsel for the Purchasers, at Worldwide Plaza, 825 Eighth
Avenue, New York, New York, on the Closing Date.
7. REIMBURSEMENT OF PURCHASER'S EXPENSES. If the sale
of the Securities provided for herein is not consummated because
any condition to the obligations of the Purchasers set forth in
Section 6 hereof is not satisfied, because of any termination
pursuant to Section 10 hereof or because of any refusal,
inability or failure on the part of the Company or the Guarantor
to perform any agreement herein or comply with any provision
hereof other than by reason of a default by the Purchasers in
payment for the Securities on the Closing Date, the Company and
the Guarantor jointly and severally will reimburse the Purchasers
severally upon
15
<PAGE>
demand for all reasonable out-of-pocket expenses (including
reasonable fees and reasonable disbursements of counsel) that
shall have been incurred by them in connection with the proposed
purchase and sale of the Securities.
8. INDEMNIFICATION AND CONTRIBUTION. (a) The
Company and the Guarantor jointly and severally agree to
indemnify and hold harmless each Purchaser, the directors,
officers, employees and agents of each Purchaser and each person
who controls any Purchaser within the meaning of either the Act
or the Exchange Act against any and all losses, claims, damages
or liabilities, joint or several, to which they or any of them
may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material
fact contained in the Final Memorandum or any Rule 144A
Information provided by the Company to any holder or prospective
purchaser of Securities pursuant to Section 5(h), or in any
amendment thereof or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that neither the Company
nor the Guarantor will be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or
is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made in the Final
Memorandum, or in any amendment thereof or supplement thereto, in
reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Purchaser
specifically for inclusion therein. This indemnity agreement
will be in addition to any liability which the Company and the
Guarantor may otherwise have.
(b) Each Purchaser severally and not jointly agrees to
indemnify and hold harmless each of the Company and the
Guarantor, their respective directors, officers, and each person
who controls the Company or the Guarantor within the meaning of
either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Company and the Guarantor to the
Purchasers, but only with reference to written information
relating to the Purchasers furnished to the Company by or on
behalf of the Purchasers specifically for inclusion in the Final
Memorandum, or in any amendment thereof or supplement thereto.
This indemnity agreement will be in addition to any liability
which the Purchasers may otherwise have.
(c) Promptly after receipt by an indemnified party
under this Section 8 of notice of the commencement of any action,
such indemnified party will, if a claim in respect thereof is to
be made against the indemnifying party under this Section 8,
notify the indemnifying party in writing of the commencement
thereof; but the failure so to notify the indemnifying party
(i) will not relieve it from liability under paragraph (a) or (b)
above unless and to the extent it did not otherwise learn of such
action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and
(ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party
other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party
shall be entitled to appoint counsel of the indemnifying party's
choice at the indemnifying party's expense to represent the
16
<PAGE>
indemnified party in any action for which indemnification is
sought (in which case the indemnifying party shall not thereafter
be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth
below); PROVIDED, HOWEVER, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel
chosen by the indemnifying party to represent the indemnified
party would present such counsel with a conflict of interest,
(ii) the actual or potential defendants in, or targets of, any
such action include both the indemnified party and the
indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available
to it and/or other indemnified parties which are different from
or additional to those available to the indemnifying party,
(iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the
institution of such action or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim
or action) unless such settlement, compromise or consent includes
an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in
paragraph (a) or (b) of this Section 8 is unavailable to or
insufficient to hold harmless an indemnified party for any
reason, the Company and the Guarantor on the one hand and the
Purchasers on the other hand agree to contribute to the aggregate
losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which the Company and
the Guarantor or the Purchasers, as applicable, may be subject in
such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantor or the
Purchasers, as applicable, from the offering of the Securities;
PROVIDED, HOWEVER, that in no case shall any Purchaser be
responsible for any amount in excess of the purchase discount or
commission applicable to the Securities purchased by such
Purchaser hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the
Company and the Guarantor on the one hand and the Purchasers on
the other hand shall contribute in such proportion as is
appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Guarantor or the
Purchasers, as applicable, in connection with the statements or
omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the
Company and the Guarantor shall be deemed to be equal to the
total net proceeds from the offering (before deducting expenses),
and benefits received by the Purchasers shall be deemed to be
equal to the total purchase discounts and commissions received by
the Purchasers from the Company in connection with the purchase
of the Securities hereunder. Relative fault shall be determined
by reference to whether any alleged untrue statement or
omission relates to information provided by the Company,
the Guarantor or the Purchasers. The Company, the Guarantor
and the Purchasers agree that it would not be just
17
<PAGE>
and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take
account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person
guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person
who controls a Purchaser within the meaning of either the Act or
the Exchange Act and each director, officer, employee and agent
of a Purchaser shall have the same rights to contribution as such
Purchaser, and each person who controls the Company or the
Guarantor within the meaning of either the Act or the Exchange
Act and each officer and director of the Company or the Guarantor
shall have the same rights to contribution as the Company and the
Guarantor, subject in each case to the applicable terms and
conditions of this paragraph (d).
9. DEFAULT BY A PURCHASER. If any Purchaser shall
fail to purchase and pay for any of the Securities agreed to be
purchased by such Purchaser hereunder and such failure to
purchase shall constitute a default in the performance of its
obligations under this Agreement, the remaining Purchaser shall
be obligated severally to take up and pay for the Securities
which the defaulting Purchaser agreed but failed to purchase;
PROVIDED, HOWEVER, that in the event that the aggregate principal
amount of Securities which the defaulting Purchaser agreed but
failed to purchase shall exceed 10% of the aggregate principal
amount of Securities set forth in Schedule I hereto, the
remaining Purchaser shall have the right to purchase all, but
shall not be under any obligation to purchase any, of the
Securities, and if such nondefaulting Purchaser does not purchase
all the Securities, this Agreement will terminate without
liability to any nondefaulting Purchaser, the Company or the
Guarantor. In the event of a default by any Purchaser as set
forth in this Section 9, the Closing Date shall be postponed for
such period, not exceeding seven days, as the nondefaulting
Purchaser shall determine in order that the required changes in
the Final Memorandum or in any other documents or arrangements
may be effected. Nothing contained in this Agreement shall
relieve any defaulting Purchaser of its liability, if any, to the
Company or any nondefaulting Purchaser for damages occasioned by
its default hereunder.
10. TERMINATION. This Agreement shall be subject
to termination in the absolute discretion of the Purchasers, by
notice given to the Company prior to delivery of and payment for
the Securities, if prior to such time (i) trading in the
Company's Common Stock shall have been suspended by the
Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange or the
National Association of Securities Dealers Automated
Quotation National Market System shall have been suspended
or limited or minimum prices shall have been established
on either of such Exchange or Market System, (ii) a banking
moratorium shall have been declared either by Federal or New York
State authorities or (iii) there shall have occurred any outbreak
or escalation of hostilities, declaration by the United States
of a national emergency or war or other calamity or
crisis the effect of which on financial markets
is such as to make it, in the judgment of the
Purchasers, impracticable or inadvisable to proceed
with the offering or delivery of the Securities
as contemplated by the Final Memorandum (exclusive of
any amendment or supplement thereof or thereto).
18
<PAGE>
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The
respective agreements, representations, warranties, indemnities
and other statements of the Company or its officers and of the
Purchasers set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any investigation
made by or on behalf of the Purchasers or the Company or any of
the officers, directors or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for
the Securities. The provisions of Sections 7 and 8 hereof shall
survive the termination or cancellation of this Agreement.
12. NOTICES. All communications hereunder will be in
writing and effective only on receipt, and, if sent to the
Purchasers, will be mailed, delivered or telegraphed and
confirmed to them, care of Salomon Brothers Inc, at Seven World
Trade Center, New York, New York 10048; or, if sent to the
Company, will be mailed, delivered or telegraphed and confirmed
to it at 3700 West Flamingo Road, Las Vegas, Nevada 89103,
attention of Susan Johnson.
13. SUCCESSORS. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their
respective successors and the officers and directors and
controlling persons referred to in Section 8 hereof, and, except
as expressly set forth in Section 5(h) hereof, no other person
will have any right or obligation hereunder.
19
<PAGE>
14. APPLICABLE LAW. This Agreement will be governed
by and construed in accordance with the laws of the State of New
York.
If the foregoing is in accordance with your
understanding of our agreement, please sign and return to us the
enclosed duplicate hereof, whereupon this Agreement and your
acceptance shall represent a binding agreement between the
Company, the Guarantor and the Purchasers.
Very truly yours,
RIO HOTEL & CASINO, INC.
By: /s/ Ronald J. Radcliffe
Name: Ronald J. Radcliffe
Title: Treasurer
GUARANTOR:
RIO PROPERTIES, INC.
By: /s/ Ronald J. Radcliffe
Name: Ronald J. Radcliffe
Title: Treasurer
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
Salomon Brothers Inc
for itself and on behalf of
BancAmerica Securities, Inc.
By: /s/ Wendell M. Brooks
Name: Wendell M. Brooks
Title: Vice President
20
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
Principal Amount
of Securities to
PURCHASERS BE PURCHASED
<S> <C>
Salomon Brothers Inc $106,250,000
BancAmerica Securities, Inc. 18,750,000
Total $125,000,000
</TABLE>
<PAGE>
EXHIBIT A
FORM OF INVESTMENT LETTER
FOR INSTITUTIONAL ACCREDITED INVESTORS
Rio Hotel & Casino, Inc.
c/o IBJ Schroder Bank and Trust Company, as Trustee
One State Street
New York, NY 10004
Dear Sirs:
In connection with our proposed purchase of
$ aggregate principal amount of 9 1/2% Senior
Subordinated Notes Due 2007 (the "Notes") of Rio Hotel & Casino,
Inc., a Nevada corporation (the "Company"), we confirm that:
1. We understand that the Notes have not been
registered under the Securities Act of 1933 (the "Securities
Act"), and may not be sold except as permitted in the following
sentence. We understand and agree, on our own behalf and on
behalf of any accounts for which we are acting as hereinafter
stated, (x) that such Notes are being offered only in a
transaction not involving any public offering within the meaning
of the Securities Act, (y) that if we decide to resell, pledge or
otherwise transfer such Notes within three years after the date
of the original issuance of the Notes or if within three months
after we cease to be an affiliate (within the meaning of Rule 144
under the Securities Act) of the Company, such Notes may be
resold, pledged or transferred only (i) to the Company, (ii) so
long as the Notes are eligible for resale pursuant to Rule 144A
under the Securities Act ("Rule 144A"), to a person whom we
reasonably believe is a "qualified institutional buyer" (as
defined in Rule 144A) ("QIB") that purchases for its own account
or for the account of a QIB to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A
(as indicated by the box checked by the transferor on the
Certificate of Transfer on the reverse of the certificate for the
Notes), (iii) in an offshore transaction in accordance with
Regulation S under the Securities Act (as indicated by the box
checked by the transferor on the Certificate of Transfer on the
reverse of the certificate for the Notes), (iv) to an institution
that is an "accredited investor" as defined in Rule 501(a)(1),
(2), (3) or (7) under the Securities Act (as indicated by the box
checked by the transferor on the Certificate of Transfer on the
reverse of the certificate for the Notes) which has certified to
the Company and the Trustee that it is such an accredited
investor and is acquiring the Notes for investment purposes and
not for distribution, (v) pursuant to an exemption from
registration under the Securities Act provided by Rule 144 (if
applicable) under the Securities Act, or (vi) pursuant to an
effective registration statement under the Securities Act, in
each case in accordance with any applicable securities laws of
any of the United States, and we will notify any purchaser of the
Notes from us of the above resale restriction,
if then applicable. We further understand that in
connection with any transfer of the Notes by us that
the Company and the Trustee may request, and if so
requested we will furnish, such certificates, legal opinions and
<PAGE>
A-2
other information as they may reasonably require to confirm that
any such transfer complies with the foregoing restrictions.
2. We are able to fend for ourselves in the
transactions contemplated by this Offering Memorandum, we have
knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment
in the Notes, and we and any accounts for which we are acting are
each able to bear the economic risk of our or its investment and
can afford the complete loss of such investment.
3. We understand that the minimum principal amount of
Notes that may be purchased by an institutional accredited
investor is $100,000.
4. We understand that the Company, Salomon Brothers
Inc and BancAmerica Securities, Inc., as the initial purchasers
of the Notes ("Initial Purchasers"), and others will rely upon
the truth and accuracy of the foregoing acknowledgments,
representations and agreements, and we agree that if any of the
acknowledgments, representations and warranties deemed to have
been made by us by our purchase of Notes, for our own account or
of one or more accounts as to each of which we exercise sole
investment discretion, are no longer accurate, we shall promptly
notify the Company and the Initial Purchasers.
5. We are acquiring the Notes purchased by us for
investment purposes and not for distribution of our own account
or for one or more accounts as to each of which we exercise sole
investment discretion and we are or such account is an
institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the
Securities Act).
6. You are entitled to rely upon this letter and you
are irrevocably authorized to produce this letter or a copy
hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters
covered hereby.
Very truly yours,
___________________________________
(Name of Purchaser)
By: _____________________________
Date: _____________________________
<PAGE>
EXHIBIT B
NOTICE TO INVESTORS
OFFERS AND SALES BY THE INITIAL PURCHASERS
The Notes have not been registered under the Securities
Act and may not be offered or sold in the United States or to, or
for the account or benefit of, U.S. persons except in accordance
with an applicable exemption from the registration requirements
thereof. Accordingly, the Notes are being offered and sold only
(1) in the United States to qualified institutional buyers
("Qualified Institutional Buyers") under Rule 144A under the
Securities Act and other institutional "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) ("Institutional Accredited Investors") in a private sale
exempt from the registration requirements of the Securities Act,
and (2) outside the United States to non-U.S. persons ("foreign
purchasers") in reliance upon Regulation S under the Securities
Act. Each Institutional Accredited Investor that is a purchaser
of Notes from an Initial Purchaser will be required to sign a
certificate in the form provided by an Initial Purchaser. The
only Notes that will be eligible to be deposited with The
Depository Trust Company are Notes held by Qualified
Institutional Buyers and Institutional Accredited Investors.
INVESTOR REPRESENTATIONS AND RESTRICTIONS ON RESALE
Each purchaser of the Notes will be deemed to have
represented and agreed as follows:
(1) it is acquiring the Notes for its own account or
for an account with respect to which it exercises sole investment
discretion, and that it or such account is a Qualified
Institutional Buyer, an Institutional Accredited Investor
acquiring the Notes for investment purposes and not for
distribution or a foreign purchaser outside the United States;
(2) it acknowledges that the Notes have not been
registered under the Securities Act and may not be sold except as
permitted below;
(3) it understands and agrees (x) that such Notes are
being offered only in a transaction not involving any public
offering within the meaning of the Securities Act, and (y) that
(A) if within three years after the date of original issuance of
the Notes or if it was during the three months preceding such
date of transfer an affiliate of the Company, it decides to
resell, pledge or otherwise transfer such Notes on which the
legend set forth below appears, such Notes may be resold, pledged
or transferred only (i) to the Company, (ii) so long as such
Security is eligible for resale pursuant to Rule 144A, to a
person whom the seller reasonably believes is a Qualified
Institutional Buyer that purchases for its own account or for the
account of a Qualified Institutional Buyer to whom notice is
given that the resale, pledge or transfer is being made in
reliance on Rule 144A (as indicated by the box checked by the
transferor on the Certificate of Transfer on the reverse
of the Note), (iii) in an offshore transaction
in accordance with Regulation S (as indicated by the
box checked by the transferor on the Certificate of
Transfer on the reverse of the Note) but, if such
transfer is being effected by an Initial Foreign Purchaser or
<PAGE>
B-2
any foreign purchaser who has purchased Notes from an Initial
Foreign Purchaser or from any person other than a QIB or an
Institutional Accredited Investor pursuant to this clause (iii)
prior to the expiration of the 40 day restricted period (within
the meaning of Rule 903(c)(3) of Regulation S under the
Securities Act), the transferee shall have certified to the
Company and the Trustee for the Notes that such transferee is a
non-U.S. Person (within the meaning of Regulation S) and that
such transferee is acquiring the Notes in an offshore
transaction, (iv) to an Institutional Accredited Investor (as
indicated by the box checked by the transferor on the Certificate
of Transfer on the reverse of the Note if such Note is not in
book-entry form) who has certified to the Company and the Trustee
for the Notes that such transferee is an Institutional Accredited
Investor and is acquiring the Notes for investment purposes and
not for distribution (provided that no Initial Foreign Purchaser
or any foreign purchaser who has purchased Notes from an Initial
Foreign Purchaser or from any person other than a QIB or an
Institutional Accredited Investor pursuant to clause (iii) shall
be permitted to transfer any Notes purchased by it to an
Institutional Accredited Investor pursuant to this clause (iv)
prior to the expiration of the "40 day restricted period" (within
the meaning of Rule 903(c)(3) of Regulation S under the
Securities Act)), (v) pursuant to an exemption from registration
under the Securities Act provided by Rule 144 (if applicable)
under the Securities Act, or (vi) pursuant to an effective
registration statement under the Securities Act, in each case in
accordance with any applicable securities laws of any state of
the United States, (B) the purchaser will, and each subsequent
holder is required to, notify any purchaser of Notes from it of
the resale restrictions referred to in (A) above, if then
applicable, and (C) with respect to any transfer of Notes by an
Institutional Accredited Investor, such holder will deliver to
the Company and the Trustee such certificates and other
information as they may reasonably require to confirm that the
transfer by it complies with the foregoing restrictions;
(4) it understands that the notification requirement
referred to in (3) above will be satisfied in the case only of
transfer by physical delivery of certificated Notes other than a
global certificate by virtue of the fact that the following
legend will be placed on the Notes unless otherwise agreed by the
Company:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT
OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR
TO THE THIRD ANNIVERSARY OF THE ISSUANCE HEREOF
(OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY
HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY
TIME DURING THE THREE MONTHS PRECEDING THE DATE OF
SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO
THE COMPANY, (2) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER
THE SECURITIES ACT ("RULE 144A"), TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES
IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A, PURCHASING
<PAGE>
B-3
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED
BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (3) IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH REGULATION S UNDER THE SECURITIES
ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE
REVERSE OF THIS SECURITY), (4) TO AN INSTITUTION
THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN
RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY
THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING
THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION, AND A CERTIFICATE IN THE FORM
ATTACHED TO THIS SECURITY IS DELIVERED BY THE
TRANSFEREE TO THE COMPANY AND THE TRUSTEE,
(5) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT OR
(6) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES. AN
INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS
SECURITY AGREES THAT IT WILL FURNISH TO THE
COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND
OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE
TO CONFIRM THAT ANY TRANSFER BY IT OF THIS
SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS.
THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE
COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR"
AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER
THE SECURITIES ACT AND THAT IS HOLDING THIS
SECURITY FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION OR (3) A NON-.U.S. PERSON OUTSIDE
THE UNITED STATES WITHIN THE MEANING OF (OR AN
ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH
(0)(2) OF RULE 902 UNDER) REGULATION S UNDER THE
SECURITIES ACT";
<PAGE>
B-4
(5) it (i) is able to fend for itself in the
transactions contemplated by this Offering Memorandum; (ii) has
such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of its
prospective investment in the Notes; and (iii) has the ability to
bear the economic risks of its prospective investment and can
afford the complete loss of such investment; and
(6) it understands that the Company, the Initial
Purchasers and others will rely upon the truth and accuracy of
the foregoing acknowledgments, representations and agreements and
agrees that if any of the acknowledgments, representations and
warranties deemed to have been made by it by its purchase of
Notes are no longer accurate, it shall promptly notify the
Company and the Initial Purchaser. If it is acquiring the Notes
as a fiduciary or agent for one or more investor accounts, it
represents that it has sole investment discretion with respect to
each such account and it has full power to make the foregoing
acknowledgments, representations and agreements on behalf of such
account.
<PAGE>
EXHIBIT 4.2
<PAGE>
RIO HOTEL & CASINO, INC.
9 1/2% Senior Subordinated Notes Due 2007
REGISTRATION AGREEMENT
New York, New York
February 4, 1997
To: SALOMON BROTHERS INC
BANCAMERICA SECURITIES, INC.
In care of:
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
Rio Hotel & Casino, Inc., a Nevada corporation (the
"Company"), proposes to issue and sell to certain purchasers (the
"Purchasers"), upon the terms set forth in a purchase agreement
of even date herewith (the "Purchase Agreement"), its 9 1/2%
Senior Subordinated Notes Due 2007 (the "Securities") (the
"Initial Placement"), which Securities are to be unconditionally
guaranteed on a senior subordinated and unsecured basis by Rio
Properties, Inc. (the "Guarantor"). As an inducement to the
Purchasers to enter into the Purchase Agreement and in
satisfaction of a condition to your obligations thereunder, the
Company and the Guarantor jointly and severally agree with you,
(i) for your benefit and the benefit of the other Purchasers and
(ii) for the benefit of the holders from time to time of the
Securities (including you and the other Purchasers) (each of the
foregoing a "Holder" and together the "Holders"), as follows:
1. Definitions. Capitalized terms used herein
without definition shall have their respective meanings set forth
in the purchase agreement. As used in this agreement, the
following capitalized defined terms shall have the following
meanings:
"Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated
thereunder.
<PAGE>
2
"Affiliate" of any specified person means any
other person which directly or indirectly, is in control of, is
controlled by, or is under common control with, such specified
person. For purposes of this definition, control of a person
means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether
by contract or otherwise; and the terms "controlling" and
"controlled "have meanings correlative to the foregoing.
"Closing Date" has the meaning set forth in the
Purchase Agreement.
"Commission" means the Securities and Exchange
Commission.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission
promulgated thereunder.
"Exchange Offer Registration Period" means the 1 year
period following the consummation of the Registered Exchange
Offer, exclusive of any period during which any stop order shall
be in effect suspending the effectiveness of the Exchange Offer
Registration Statement.
"Exchange Offer Registration Statement" means a
registration statement of the Company on an appropriate form
under the Act with respect to the Registered Exchange Offer, all
amendments and supplements to such registration statement,
including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Exchanging Dealer" means any Holder (which may include
the Purchasers) which is a broker-dealer, electing to exchange
Securities acquired for its own account as a result of market-
making activities or other trading activities, for New
Securities.
"Final Memorandum" has the meaning set forth in the
Purchase Agreement.
"Holder" has the meaning set forth in the preamble
hereto.
"Indenture" means the Indenture relating to the
Securities and the New Securities dated as of February 11, 1997,
between the Company, the Guarantor and IBJ Schroder Bank and
Trust Company, as trustee, as the same may be amended from time
to time in accordance with the terms thereof.
"Initial Placement" has the meaning set forth in the
preamble hereto.
"Majority Holders" means the Holders of a majority of
the aggregate principal amount of securities registered under a
Registration Statement.
"Managing Underwriters" means the investment banker or
investment bankers and manager or managers that shall administer
an underwritten offering.
"New Securities" means debt securities of the Company
unconditionally guaranteed on a senior subordinated basis by the
Guarantor and identical in all material respects to
<PAGE>
3
the Securities (except that the cash interest and
interest rate step-up provisions and the transfer restrictions
will be modified or eliminated, as appropriate), to be issued
under the Indenture.
"Prospectus" means the prospectus included in any
Registration Statement (including, without limitation, a
prospectus that discloses information previously omitted from a
prospectus filed as part of an effective registration statement
in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Securities or the New
Securities, covered by such Registration Statement, and all
amendments and supplements to the Prospectus, including post-
effective amendments.
"Registered Exchange Offer" means the proposed offer to
the Holders to issue and deliver to such Holders, in exchange for
the Securities, a like principal amount of the New Securities.
"Registrable Securities" has the meaning set forth in
Section 3(a).
"Registration Statement" means any Exchange Offer
Registration Statement or Shelf Registration Statement that
covers any of the Securities or the New Securities pursuant to
the provisions of this Agreement, amendments and supplements to
such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference
therein.
"Securities" has the meaning set forth in the preamble
hereto.
"Shelf Registration" means a registration effected
pursuant to Section 3 hereof.
"Shelf Registration Period" has the meaning set forth
in Section 3(b) hereof.
"Shelf Registration Statement" means a "shelf"
registration statement of the Company pursuant to the provisions
of Section 3 hereof which covers some or all of the Securities or
New Securities, as applicable, on an appropriate form under
Rule 415 under the Act, or any similar rule that may be adopted
by the Commission, amendments and supplements to such
registration statement, including post-effective amendments, in
each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference
therein.
"Trustee" means the trustee with respect to the
Securities and the New Securities under the Indenture.
"underwriter" means any underwriter of Securities in
connection with an offering thereof under a Shelf Registration
Statement.
2. Registered Exchange Offer; Resales of New
Securities by Exchanging Dealers; Private Exchange. (a) The
Company and the Guarantor shall prepare and, not later than
60 days following the Closing Date, shall file with the
Commission the Exchange Offer Registration Statement with respect
to the Registered Exchange Offer. The Company and the
<PAGE>
4
Guarantor shall cause the Exchange Offer Registration Statement
to become effective under the Act within 150 days of the
Closing Date.
(b) Upon the effectiveness of the Exchange Offer
Registration Statement, the Company and the Guarantor shall
promptly commence the Registered Exchange Offer, it being the
objective of such Registered Exchange Offer to enable each Holder
electing to exchange Securities for New Securities (assuming that
such Holder is not an affiliate of the Company or the Guarantor
within the meaning of the Act, acquires the New Securities in the
ordinary course of such Holder's business and has no arrangements
with any person to participate in the distribution of the New
Securities) to trade such New Securities from and after their
receipt without any limitations or restrictions under the Act and
without material restrictions under the securities laws of a
substantial proportion of the several states of the United
States.
(c) In connection with the Registered Exchange Offer,
the Company and the Guarantor shall:
(i) mail to each Holder a copy of the Prospectus
forming part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal and related
documents;
(ii) keep the Registered Exchange Offer open for
not less than 30 days and not more than 45 days after the date
notice thereof is mailed to the Holders (or longer if required by
applicable law);
(iii) utilize the services of a depositary for the
Registered Exchange Offer with an address in the Borough of
Manhattan, The City of New York; and
(iv) comply in all respects with all applicable
laws.
(d) As soon as practicable after the close of the
Registered Exchange Offer, the Company and the Guarantor shall:
(i) accept for exchange all Securities validly
tendered and not validly withdrawn pursuant to the Registered
Exchange Offer;
(ii) deliver to the Trustee for cancellation all
Securities so accepted for exchange; and
(iii) cause the Trustee promptly to authenticate
and deliver to each Holder of Securities New Securities equal in
principal amount to the Securities of such Holder so accepted for
exchange.
(e) The Purchasers, the Company and the Guarantor
acknowledge that, pursuant to interpretations by the Commission's
staff of Section 5 of the Act, and in the absence of an
applicable exemption therefrom, each Exchanging Dealer is
required to deliver a Prospectus in connection with a sale of any
New Securities received by such Exchanging Dealer pursuant to the
Registered Exchange Offer in exchange for Securities acquired for
its own account as a result of
<PAGE>
5
market-making activities or other trading activities.
Accordingly, the Company and the Guarantor shall:
(i) include the information set forth in Annex A
hereto on the cover of the Exchange Offer Registration Statement,
in Annex B hereto in the forepart of the Exchange Offer
Registration Statement in a section setting forth details of the
Exchange Offer, and in Annex C hereto in the underwriting or plan
of distribution section of the Prospectus forming a part of the
Exchange Offer Registration Statement, and include the
information set forth in Annex D hereto in the Letter of
Transmittal delivered pursuant to the Registered Exchange Offer;
and
(ii) use their best efforts to keep the
Exchange Offer Registration Statement continuously effective
under the Act during the Exchange Offer Registration Period for
delivery by Exchanging Dealers in connection with sales of New
Securities received pursuant to the Registered Exchange Offer, as
contemplated by Section 4(h) below.
(f) In the event that any Purchaser determines that it
is not eligible to participate in the Registered Exchange Offer
with respect to the exchange of Securities constituting any
portion of an unsold allotment, at the request of such Purchaser,
the Company and the Guarantor shall issue and deliver to such
Purchaser or the party purchasing New Securities registered under
a Shelf Registration Statement as contemplated by Section 3
hereof from such Purchaser, in exchange for such Securities, a
like principal amount of New Securities. The Company and the
Guarantor shall seek to cause the CUSIP Service Bureau to issue
the same CUSIP number for such New Securities as for New
Securities issued pursuant to the Registered Exchange Offer.
3. Shelf Registration. If, (i) because of any change
in law or applicable interpretations thereof by the Commission's
staff, the Company and the Guarantor determine upon advice of
their outside counsel that it is not permitted to effect the
Registered Exchange Offer as contemplated by Section 2 hereof, or
(ii) if for any other reason the Registered Exchange Offer is not
declared effective within 150 days of the date hereof, or
(iii) if any Purchaser so requests with respect to Securities
held by it following consummation of the Registered Exchange
Offer, or (iv) if any Holder (other than an Exchanging Dealer) is
not eligible to participate in the Registered Exchange Offer or
(v) in the case of any Purchaser that participates in the
Registered Exchange Offer or acquires New Securities pursuant to
Section 2(f) hereof, such Purchaser does not receive freely
tradeable New Securities in exchange for Securities constituting
any portion of an unsold allotment (it being understood that, for
purposes of this Section 3, (x) the requirement that a Purchaser
deliver a Prospectus containing the information required by
Items 507 and/or 508 of Regulation S-K under the Act in
connection with sales of New Securities acquired in exchange for
such Securities shall result in such New Securities being not
"freely tradeable" but (y) the requirement that an Exchanging
Dealer deliver a Prospectus in connection with sales of New
Securities acquired in the Registered Exchange Offer in exchange
for Securities acquired as a result of market-making activities
or other trading activities shall not result in such New
Securities being not "freely tradeable"), the following
provisions shall apply:
<PAGE>
6
(a) The Company and the Guarantor shall as
promptly as practicable (but in no event more than 30 days after
so required or requested pursuant to this Section 3), file with
the Commission and thereafter shall cause to be declared
effective under the Act by the 150th day after the original
issuance of the Securities a Shelf Registration Statement
relating to the offer and sale of the Securities or the New
Securities, as applicable, by the Holders from time to time in
accordance with the methods of distribution elected by such
Holders and set forth in such Shelf Registration Statement (such
Securities or New Securities, as applicable, to be sold by
Holders under such Shelf Registration Statement being referred to
herein as "Registrable Securities"); provided, that with respect
to New Securities received by a Purchaser in exchange for
Securities, constituting any portion of an unsold allotment, the
Company and the Guarantor may, if permitted by current
interpretations by the Commission's staff, file a post-effective
amendment to the Exchange Offer Registration Statement containing
the information required by Regulation S-K Items 507 and/or 508,
as applicable, in satisfaction of its obligations under this
paragraph (a) with respect thereto, and any such Exchange Offer
Registration Statement, as so amended, shall be referred to
herein as, and governed by the provisions herein applicable to, a
Shelf Registration Statement.
(b) The Company and the Guarantor shall keep the Shelf
Registration Statement continuously effective in order to permit
the Prospectus forming part thereof to be usable by Holders for a
period of three years from the date the Shelf Registration
Statement is declared effective by the Commission or until one
year after such effective date if such Shelf Registration
Statement is filed at the request of a Purchaser (in any such
case, such period being called the "Shelf Registration Period").
The Company and the Guarantor shall be deemed not to have used
their best efforts to keep the Shelf Registration Statement
effective during the requisite period if any of them voluntarily
takes any action that would result in Holders of securities
covered thereby not being able to offer and sell such securities
during that period, unless (i) such action is required by
applicable law, or (ii) such action is taken by the Company or
the Guarantor in good faith and for valid business reasons (not
including avoidance of the Company's or the Guarantor's
obligations hereunder), including the acquisition or divestiture
of assets, so long as the Company or the Guarantor, as
applicable, promptly thereafter complies with the requirements of
Section 4(k) hereof, if applicable.
4. Registration Procedures. In connection with any
Shelf Registration Statement and, to the extent applicable, any
Exchange Offer Registration Statement, the following provisions
shall apply:
(a) The Company or the Guarantor shall furnish to you
and to each Holder, prior to the filing thereof with the
Commission, a copy of any Shelf Registration Statement and any
Exchange Offer Registration Statement, and each amendment thereof
and each amendment or supplement, if any, to the Prospectus
included therein and shall use their best efforts to reflect in
each such document, when so filed with the Commission, such
comments as you or any Holder reasonably may propose.
(b) The Company and the Guarantor shall ensure that
(i) any Registration Statement and any amendment thereto and any
Prospectus forming part thereof and any
<PAGE>
7
amendment or supplement thereto complies in all
material respects with the Act and the rules and regulations
thereunder, (ii) any Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and (iii) any Prospectus forming part of
any Registration Statement, and any amendment or supplement to
such Prospectus, does not include an untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements, in the light of the circumstances under
which they were made, not misleading.
(c) (1) The Company or the Guarantor shall advise you
and, in the case of a Shelf Registration Statement, the Holders
of securities covered thereby, and, if requested by you or any
such Holder, confirm such advice in writing:
(i) when a Registration Statement and any
amendment thereto has been filed with the Commission and when the
Registration Statement or any post-effective amendment thereto
has become effective; and
(ii) of any request by the Commission for
amendments or supplements to the Registration Statement or the
Prospectus included therein or for additional information.
(2) The Company or the Guarantor shall advise you
and, in the case of a Shelf Registration Statement, the Holders
of securities covered thereby, and, in the case of an Exchange
Offer Registration Statement, any Exchanging Dealer which has
provided in writing to the Company a telephone or facsimile
number and address for notices, and, if requested by you or any
such Holder or Exchanging Dealer, confirm such advice in writing:
(i) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement
or the initiation of any proceedings for that purpose;
(ii) of the receipt by the Company or the
Guarantor of any notification with respect to the suspension of
the qualification of the securities included therein for sale in
any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(iii) of the happening of any event that
requires the making of any changes in the Registration Statement
or the Prospectus so that, as of such date, the statements
therein are not misleading and do not omit to state a material
fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of
the circumstances under which they were made) not misleading
(which advice shall be accompanied by an instruction to suspend
the use of the Prospectus until the requisite changes have been
made).
<PAGE>
8
(d) The Company and the Guarantor shall use
their best efforts to obtain the withdrawal of any order
suspending the effectiveness of any Registration Statement
at the earliest possible time.
(e) The Company or the Guarantor shall furnish to
each Holder of securities included within the coverage of any
Shelf Registration Statement, without charge, at least one copy
of such Shelf Registration Statement and any post-effective
amendment thereto, including financial statements and schedules,
and, if the Holder so requests in writing, any documents
incorporated by reference therein and all exhibits (including
those incorporated by reference).
(f) The Company and the Guarantor shall, during
the Shelf Registration Period, deliver to each Holder of
securities included within the coverage of any Shelf Registration
Statement, without charge, as many copies of the Prospectus
(including each preliminary Prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as
such Holder may reasonably request; and the Company and the
Guarantor consent to the use of the Prospectus or any amendment
or supplement thereto by each of the selling Holders of
securities in connection with the offering and sale of the
securities covered by the Prospectus or any amendment or
supplement thereto.
(g) The Company and the Guarantor shall furnish
to each Exchanging Dealer which so requests, without charge, at
least one copy of the Exchange Offer Registration Statement and
any post-effective amendment thereto, including financial
statements and schedules, any documents incorporated by reference
therein, and, if the Exchanging Dealer so requests in writing any
documents incorporated by reference therein and all exhibits
(including those incorporated by reference).
(h) The Company and the Guarantor shall, during
the Exchange Offer Registration Period, promptly deliver to each
Exchanging Dealer, without charge, as many copies of the
Prospectus included in such Exchange Offer Registration Statement
and any amendment or supplement thereto as such Exchanging Dealer
may reasonably request for delivery by such Exchanging Dealer in
connection with a sale of New Securities received by it pursuant
to the Registered Exchange Offer; and the Company and the
Guarantor consent to the use of the Prospectus or any amendment
or supplement thereto by any such Exchanging Dealer, as
aforesaid.
(i) Prior to the Registered Exchange Offer or any
other offering of securities pursuant to any Registration
Statement, the Company and the Guarantor shall register or
qualify or cooperate with the Holders of securities included
therein and Holders' counsel in connection with the registration
or qualification of such securities for offer and sale under the
securities or blue sky laws of such jurisdictions as any such
Holder reasonably requests in writing and do any and all other
acts or things necessary or advisable to enable the offer and
sale in such jurisdictions of the securities covered by such
Registration Statement; provided, however, that neither the
Company nor the Guarantor will be required to qualify generally
to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general
service of process or to taxation in any such jurisdiction where
it is not then so subject.
<PAGE>
9
(j) The Company and the Guarantor shall
cooperate with the Holders of Securities to facilitate
the timely preparation and delivery of certificates representing
Securities to be sold pursuant to any Registration Statement free
of any restrictive legends and in such denominations and
registered in such names as Holders may request prior to sales
of securities pursuant to such Registration Statement.
(k) Upon the occurrence of any event contemplated
by paragraph (c)(2)(iii) above, the Company and the Guarantor
shall promptly prepare a post-effective amendment to any
Registration Statement or an amendment or supplement to the
related Prospectus or file any other required document so that,
as thereafter delivered to purchasers of the securities included
therein, the Prospectus will not include an untrue statement of a
material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(l) Not later than the effective date of any such
Registration Statement hereunder, the Company and the Guarantor
shall provide a CUSIP number for the Securities or New
Securities, as the case may be, registered under such
Registration Statement, and provide the applicable trustee with
printed certificates for such Securities or New Securities, in a
form eligible for deposit with The Depository Trust Company.
(m) The Company and the Guarantor shall use their
best efforts to comply with all applicable rules and regulations
of the Commission and shall make generally available to its
security holders as soon as practicable after the effective date
of the applicable Registration Statement an earnings statement
satisfying the provisions of Section 11(a) of the Act.
(n) The Company and the Guarantor shall cause the
Indenture to be qualified under the Trust Indenture Act in a
timely manner.
(o) The Company may require each Holder of
securities to be sold pursuant to any Shelf Registration
Statement to furnish to the Company such information regarding
the holder and the distribution of such securities as the Company
may from time to time reasonably require for inclusion in such
Registration Statement.
(p) The Company and the Guarantor shall, if
requested, promptly incorporate in a Prospectus supplement or
post-effective amendment to a Shelf Registration Statement, such
information as the Managing Underwriters and Majority Holders
reasonably agree should be included therein and shall make all
required filings of such Prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated
in such Prospectus supplement or post-effective amendment.
(q) In the case of any Shelf Registration
Statement, the Company and the Guarantor shall enter into such
agreements (including underwriting agreements) and take all other
appropriate actions in order to expedite or facilitate the
registration or the disposition of the Securities, and in
connection therewith, if an underwriting agreement is entered
into, cause the same to contain indemnification provisions and
procedures no less favorable than those set forth in Section 6
hereof (or such other provisions and procedures acceptable to the
Majority Holders
<PAGE>
10
and the Managing Underwriters, if any) with respect to
all parties to be indemnified pursuant to Section 6 hereof from
Holders of Securities to the Company and the Guarantor.
(r) In the case of any Shelf Registration
Statement, the Company and the Guarantor shall (i) make
reasonably available for inspection by the Holders of securities
to be registered thereunder, any underwriter participating in any
disposition pursuant to such Registration Statement, and any
attorney, accountant or other agent retained by the Holders or
any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Company and
its subsidiaries; (ii) cause the Company's and the Guarantor's
officers, directors and employees to supply all relevant
information reasonably requested by the Holders or any such
underwriter, attorney, accountant or agent in connection with
any such Registration Statement as is customary for similar
due diligence examinations; provided, however, that any
information that is designated in writing by the Company, in good
faith, as confidential at the time of delivery of such
information shall be kept confidential by the Holders or any such
underwriter, attorney, accountant or agent, unless such
disclosure is made in connection with a court proceeding or
required by law, or such information becomes available to the
public generally or through a third party without an accompanying
obligation of confidentiality; (iii) make such representations
and warranties to the Holders of securities registered thereunder
and the underwriters, if any, in form, substance and scope as are
customarily made by issuers to underwriters in primary
underwritten offerings and covering matters including, but not
limited to, those set forth in the Purchase Agreement;
(iv) obtain opinions of counsel to the Company and the Guarantor
and updates thereof (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to the Managing
Underwriters, if any) addressed to each selling Holder and the
underwriters, if any, covering such matters as are customarily
covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by such Holders and
underwriters; (v) obtain "cold comfort" letters and updates
thereof from the independent certified public accountants of the
Company and the Guarantor (and, if necessary, any other
independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which
financial statements and financial data are, or are required to
be, included in the Registration Statement), addressed to each
selling Holder of securities registered thereunder and the
underwriters, if any, in customary form and covering matters of
the type customarily covered in "cold comfort" letters in
connection with primary underwritten offerings; and (vi) deliver
such documents and certificates as may be reasonably requested by
the Majority Holders and the Managing Underwriters, if any,
including those to evidence compliance with Section 4(k) and with
any customary conditions contained in the underwriting agreement
or other agreement entered into by the Company and the Guarantor.
The foregoing actions set forth in clauses (iii), (iv), (v) and
(vi) of this Section 4(r) shall be performed at (A) the effective
date of such Registration Statement and each post-effective
amendment thereto and (B) each closing under any underwriting or
similar agreement as and to the extent required thereunder.
(s) In the case of any Exchange Offer
Registration Statement, the Company and the Guarantor shall
(i) make reasonably available for inspection by such Purchaser,
and any attorney, accountant or other agent retained by such
Purchaser, all relevant financial and other records, pertinent
corporate documents and properties of the Company and its
subsidiaries; (ii) cause the Company's and the Guarantor's
officers, directors and employees to supply all
<PAGE>
11
relevant information reasonably requested by such Purchaser or
any such attorney, accountant or agent in connection with
any such Registration Statement as is customary for similar due
diligence examinations; provided however, that any information
that is designated in writing by the Company, in good
faith, as confidential at the time of delivery of such
information shall be kept confidential by such Purchaser or
any such attorney, accountant or agent, unless such disclosure is
made in connection with a court proceeding or required by law,
or such information becomes available to the public generally or
through a third party without an accompanying obligation of
confidentiality; (iii) make such representations and warranties
to such Purchaser, in form, substance and scope as are
customarily made by issuers to underwriters in primary
underwritten offerings and covering matters including, but not
limited to, those set forth in the Purchase Agreement; (iv)
obtain opinions of counsel to the Company and the Guarantor
and updates thereof (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to such
Purchaser and its counsel, addressed to such Purchaser, covering
such matters as are customarily covered in opinions requested
in underwritten offerings and such other matters as may be
reasonably requested by such Purchaser or its counsel; (v)
obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company and the
Guarantor (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements
and financial data are, or are required to be, included in the
Registration Statement), addressed to such Purchaser, in
customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with primary
underwritten offerings, or if requested by such Purchaser or its
counsel in lieu of a "cold comfort" letter, an agreed-upon
procedures letter under Statement on Auditing Standards No. 35,
covering matters requested by such Purchaser or its counsel; and
(vi) deliver such documents and certificates as may be reasonably
requested by such Purchaser or its counsel, including those to
evidence compliance with Section 4(k) and with conditions
customarily contained in underwriting agreements. The foregoing
actions set forth in clauses (iii), (iv), (v), and (vi) of this
Section 4(s) shall be performed at the close of the
Registered Exchange Offer and the effective date of any
post-effective amendment to the Exchange Offer Registration
Statement.
5. Registration Expenses. The Company and the
Guarantor shall bear all expenses incurred in connection with the
performance of its obligations under Sections 2, 3 and 4 hereof
and, in the event of any Shelf Registration Statement, will
reimburse the Holders for the reasonable fees and disbursements
of one firm or counsel designated by the Majority Holders to act
as counsel for the Holders in connection therewith, and, in the
case of any Exchange Offer Registration Statement, will reimburse
the Purchasers for the reasonable fees and disbursements of
counsel acting in connection therewith.
6. Indemnification and Contribution. (a) In
connection with any Registration Statement, the Company and the
Guarantor, jointly and severally, agree to indemnify and hold
harmless each Holder of securities covered thereby (including
each Purchaser and, with respect to any Prospectus delivery as
contemplated in Section 4(h) hereof, each Exchanging Dealer), the
directors, officers, employees and agents of each such Holder and
each person who controls any such Holder within the meaning of
either the Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they
or any of them may become subject
<PAGE>
12
under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement as originally filed or in
any amendment thereof, or in any preliminary Prospectus or
Prospectus, or in any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and
agree to reimburse each such indemnified party, as incurred, for
any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that neither the
Company nor the Guarantor will be liable in any case to the
extent that any such loss, claim, damage or liability arises out
of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in
reliance upon and in conformity with written information
furnished to the Company by or on behalf of any such Holder
specifically for inclusion therein. This indemnity agreement
will be in addition to any liability which the Company or the
Guarantor may otherwise have.
The Company and the Guarantor also agree to indemnify
or contribute to Losses of, as provided in Section 6(d), any
underwriters of Securities registered under a Shelf Registration
Statement, their officers and directors and each person who
controls such underwriters on substantially the same basis as
that of the indemnification of the Purchasers and the selling
Holders provided in this Section 6(a) and shall, if requested by
any Holder, enter into an underwriting agreement reflecting such
agreement, as provided in Section 4(q) hereof.
(b) Each Holder of securities covered by a
Registration Statement (including each Purchaser and, with
respect to any Prospectus delivery as contemplated in
Section 4(h) hereof, each Exchanging Dealer) severally agrees to
indemnify and hold harmless (i) the Company and the Guarantor,
(ii) each of their directors, (iii) each of their respective
officers who signs such Registration Statement and (iv) each
person who controls the Company or the Guarantor within the
meaning of either the Act or the Exchange Act to the same extent
as the foregoing indemnity from the Company and the Guarantor to
each such Holder, but only with reference to written information
relating to such Holder furnished to the Company by or on behalf
of such Holder specifically for inclusion in the documents
referred to in the foregoing indemnity. This indemnity agreement
will be in addition to any liability which any such Holder may
otherwise have.
(c) Promptly after receipt by an indemnified party
under this Section 6 of notice of the commencement of any action,
such indemnified party will, if a claim in respect thereof is to
be made against the indemnifying party under this Section 6,
notify the indemnifying party in writing of the commencement
thereof; but the failure so to notify the indemnifying party
(i) will not relieve it from liability under paragraph (a) or (b)
above unless and to the extent it did not otherwise learn of such
action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and
(ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint as
counsel one firm of attorneys of the indemnifying party's choice
at the indemnifying party's expense to represent the indemnified
party (together with one local counsel in each jurisdiction)
in
<PAGE>
13
any action for which indemnification is sought (in
which case the indemnifying party shall not thereafter be
responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth
below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall have
the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel (and local counsel) if
(i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a
conflict of interest, (ii) the actual or potential defendants in,
or targets of, any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available
to it and/or other indemnified parties which are different from
or additional to those available to the indemnifying party,
(iii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the
institution of such action or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will
not, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim
or action) unless such settlement, compromise or consent includes
an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in
paragraph (a) or (b) of this Section 6 is unavailable to or
insufficient to hold harmless an indemnified party for any
reason, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and
several obligation to contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending
same) (collectively "Losses") to which such indemnified party may
be subject in such proportion as is appropriate to reflect the
relative benefits received by such indemnifying party, on the one
hand, and such indemnified party, on the other hand, from the
Initial Placement and the Registration Statement which resulted
in such Losses; provided, however, that in no case shall any
Purchaser or any subsequent Holder of any Security or New
Security be responsible, in the aggregate, for any amount in
excess of the purchase discount or commission applicable to such
Security, or in the case of a New Security, applicable to the
Security which was exchangeable into such New Security, nor shall
any underwriter be responsible for any amount in excess of the
underwriting discount or commission applicable to the securities
purchased by such underwriter under the Registration Statement
which resulted in such Losses. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the
indemnifying party and the indemnified party shall contribute in
such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of such
indemnifying party, on the one hand, and such indemnified party,
on the other hand, in connection with the statements or omissions
which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Company and
the Guarantor shall be deemed to be equal to the sum of (x) the
total net proceeds from the Initial Placement (before deducting
expenses) and (y) the total amount of
<PAGE>
14
additional interest which the Company and the Guarantor
were not required to pay as a result of registering the
securities covered by the Registration Statement which resulted
in such Losses. Benefits received by the Purchasers shall be
deemed to be equal to the total purchase discounts and
commissions, and benefits received by any other Holders shall be
deemed to be equal to the value of receiving Securities or New
Securities, as applicable, registered under the Act. Benefits
received by any underwriter shall be deemed to be equal to the
total underwriting discounts and commissions, as set forth on the
cover page of the Prospectus forming a part of the Registration
Statement which resulted in such Losses. Relative fault shall be
determined by reference to whether any alleged untrue statement
or omission relates to information provided by the indemnifying
party, on the one hand, or by the indemnified party, on the other
hand. The parties agree that it would not be just and equitable
if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of
this Section 6, each person who controls a Holder within the
meaning of either the Act or the Exchange Act and each director,
officer, employee and agent of such Holder shall have the same
rights to contribution as such Holder, and each person who
controls the Company or the Guarantor within the meaning of
either the Act or the Exchange Act, each officer of the Company
or the Guarantor who shall have signed the Registration Statement
and each director of the Company or the Guarantor shall have the
same rights to contribution as the Company and the Guarantor,
subject in each case to the applicable terms and conditions of
this paragraph (d).
(e) The provisions of this Section 6 will remain in
full force and effect, regardless of any investigation made by or
on behalf of any Holder, the Guarantor or the Company or any of
the officers, directors or controlling persons referred to in
Section 6 hereof, and will survive the sale by a Holder of
securities covered by a Registration Statement.
7. Miscellaneous.
(a) No Inconsistent Agreements. Neither the Company
nor the Guarantor has, as of the date hereof, entered into, nor
shall it, on or after the date hereof, enter into, any agreement
with respect to its securities that is inconsistent with the
rights granted to the Holders herein or otherwise conflicts with
the provisions hereof.
(b) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be
amended, qualified, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be
given, unless the Company has obtained the written consent of the
Holders of at least a majority of the then outstanding aggregate
principal amount of Securities (or, after the consummation of any
Exchange Offer in accordance with Section 2 hereof, of New
Securities); provided that, with respect to any matter that
directly or indirectly affects the rights of any Purchaser
hereunder, the Company shall obtain the written consent of each
such Purchaser against which such amendment, qualification,
supplement, waiver or consent is to be effective.
Notwithstanding the foregoing (except the foregoing proviso), a
waiver or consent to departure from the provisions hereof
with
<PAGE>
15
respect to a matter that relates exclusively to the
rights of Holders whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly
affect the rights of other Holders may be given by the Majority
Holders, determined on the basis of securities being sold rather
than registered under such Registration Statement.
(c) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, first-class mail, telex, telecopier, or air
courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given
by such Holder to the Company in accordance with the provisions
of this Section 7(c), which address initially is, with respect to
each Holder, the address of such Holder maintained by the
Registrar under the Indenture, with a copy in like manner to
Salomon Brothers Inc;
(2) if to you, initially at the respective addresses
set forth in the Purchase Agreement; and
(3) if to the Company or the Guarantor, initially at
its address set forth in the Purchase Agreement.
All such notices and communications shall be deemed to
have been duly given when received.
The Purchasers or the Company by notice to the other
may designate additional or different addresses for subsequent
notices or communications.
(d) Successor and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns
of each of the parties, including, without the need for an
express assignment or any consent by the Company or the Guarantor
thereto, subsequent Holders of Securities and/or New Securities.
The Company and the Guarantor hereby agree to extend the benefits
of this Agreement to any Holder of Securities and/or New
Securities and any such Holder may specifically enforce the
provisions of this Agreement as if an original party hereto.
(e) Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute
one and the same agreement.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
(g) Governing Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the
State of New York (without regard to the conflict of law
provisions thereof).
(h) Severability. In the event that any one of more
of the provisions contained herein, or the application thereof in
any circumstances, is held invalid, illegal or unenforceable
in
<PAGE>
16
any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and
of the remaining provisions hereof shall not be in any way
impaired or affected thereby, it being intended that all of the
rights and privileges of the parties shall be enforceable to the
fullest extent permitted by law.
(i) Securities Held by the Company, etc. Whenever the
consent or approval of Holders of a specified percentage of
principal amount of Securities or New Securities is required
hereunder, Securities or New Securities, as applicable, held by
the Company or its Affiliates (other than subsequent Holders of
Securities or New Securities if such subsequent Holders are
deemed to be Affiliates solely by reason of their holdings of
such Securities or New Securities) shall not be counted in
determining whether such consent or approval was given by the
Holders of such required percentage.
<PAGE>
17
Please confirm that the foregoing correctly sets
forth the agreement between the Company, the Guarantor and you.
Very truly yours,
RIO HOTEL & CASINO, INC.
By: /s/ Ronald J. Radcliffe
Name: Ronald J. Radcliffe
Title: Treasurer
GUARANTOR:
RIO PROPERTIES, INC.
By: /s/ Ronald J. Radcliffe
Name: Ronald J. Radcliffe
Title: Treasurer
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
SALOMON BROTHERS INC
BANCAMERICA SECURITIES, INC.
By: SALOMON BROTHERS INC
By: /s/ Wendell M. Brooks
Name: Wendell M. Brooks
Title: Vice President
<PAGE>
ANNEX A
Each broker-dealer that receives New Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New
Securities. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Securities
received in exchange for Securities where such New Securities were
acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed
that, starting on the Expiration Date (as defined herein) and
ending on the close of business on the 180th day following the
Expiration Date, it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
<PAGE>
ANNEX B
Each broker-dealer that receives New Securities for its own
account in exchange for Securities, where such Securities were
acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any resale of such
New Securities. See "Plan of Distribution."
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Securities for its
own account pursuant to the Exchange Offer must acknowledge that
it will deliver a prospectus in connection with any resale of
such New Securities. The Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Securities received in exchange
for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. Each of
the Company and the Guarantor has agreed that, starting on the
Expiration Date and ending on the close of business on the 180th
day following the Expiration Date, it will make this Prospectus,
as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until,
199 , all dealers effecting transactions in the
Exchange Securities may be required to deliver a prospectus.*/
Neither the Company nor the Guarantor will receive any
proceeds from any sale of New Securities by broker-dealers. New
Securities received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in
one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the
New Securities or a combination of such methods of resale, at
market prices prevailing at the time of resale, at prices related
to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchaser or to or through brokers
or dealers who may receive compensation in the form of
commissions or concessions from any such broker-dealer and/or the
purchasers of any such New Securities. Any broker-dealer that
resells New Securities that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer
that participates in a distribution of such New Securities may be
deemed to be an "underwriter" within the meaning of the
Securities Act and any profit of any such resale of New
Securities and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the
Company will promptly send additional copies of this Prospectus
and any amendment or supplement to this Prospectus to any broker-
dealer that requests such documents in the Letter of Transmittal.
The Company and the Guarantor have jointly and severally agreed
to pay all expenses incident to the Exchange Offer (including the
reasonable expenses of one counsel for the holders of the
Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the holders of the
________________________
*/In addition, the legend required by Item 502(e) of
Regulation S-K will appear on the back cover page of the Exchange
Offer prospectus.
<PAGE>
2
Securities (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
[If applicable, add information required by Regulation S-K Items
507 and/or 508.]
<PAGE>
ANNEX D
Rider A
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH
TO RECEIVE 10 ADDITIONAL COPIES OF THE
PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name:______________________________________
Address:___________________________________
___________________________________
Rider B
If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to
engage in, a distribution of New Securities. If the undersigned
is a broker-dealer that will receive New Securities for its own
account in exchange for Securities that were acquired as a result
of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with
any resale of such New Securities; however, by so acknowledging
and by delivering a prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
<PAGE>
EXHIBIT 4.3
<PAGE>
EXECUTION COPY
RIO HOTEL & CASINO, INC.,
Issuer
9-1/2% Senior Subordinated Notes Due April 15, 2007
RIO PROPERTIES, INC.,
Guarantor
_____________________
INDENTURE
Dated as of February 11, 1997
____________________
IBJ SCHRODER BANK & TRUST COMPANY,
Trustee
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions 1
SECTION 1.02. Other Definitions 21
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act 22
SECTION 1.04. Rules of Construction 23
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating 24
SECTION 2.02. Execution and Authentication 26
SECTION 2.03. Registrar and Paying Agent 27
SECTION 2.04. Paying Agent To Hold Money in Trust 28
SECTION 2.05. Securityholder Lists 28
SECTION 2.06. Transfer and Exchange 28
SECTION 2.07. Replacement Securities 34
SECTION 2.08. Outstanding Securities 35
SECTION 2.09. Temporary Securities 36
SECTION 2.10. Cancellation 37
SECTION 2.11. Defaulted Interest 37
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee 37
SECTION 3.02. Selection of Securities To Be Redeemed 38
SECTION 3.03. Notice of Redemption 38
SECTION 3.04. Effect of Notice of Redemption 39
SECTION 3.05. Deposit of Redemption Price 39
SECTION 3.06. Securities Redeemed in Part 39
<PAGE>
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities 39
SECTION 4.02. SEC Reports 40
SECTION 4.03. Limitation on Indebtedness 40
SECTION 4.04. Limitation on Restricted Payments 42
SECTION 4.05. Limitation on Restrictions on
Distributions from Restricted
Subsidiaries 44
SECTION 4.06. Limitation on Sales of Assets and
Subsidiary Stock 46
SECTION 4.07. Limitation Transactions with Affiliates 49
SECTION 4.08. Change of Control 50
SECTION 4.09. Limitation on Layered Indebtedness 52
SECTION 4.10. Compliance Certificate 52
SECTION 4.11. Further Instruments and Acts 52
SECTION 4.12. Limitation on Liens 52
SECTION 4.13. Limitation on Issuance and Sale of
Capital Stock of Restricted
Subsidiaries 52
SECTION 4.14. Ownership of Guarantor 53
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets 53
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default 54
SECTION 6.02. Acceleration 56
SECTION 6.03. Other Remedies 57
SECTION 6.04. Waiver of Past Defaults 57
SECTION 6.05. Control by Majority 57
SECTION 6.06. Limitation on Suits 57
SECTION 6.07. Rights of Holders to Receive Payment 58
SECTION 6.08. Collection Suit by Trustee 58
SECTION 6.09. Trustee May File Proofs of Claim 58
SECTION 6.10. Priorities 59
SECTION 6.11. Undertaking for Costs 59
SECTION 6.12. Waiver of Stay or Extension Laws 59
<PAGE>
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee 60
SECTION 7.02. Rights of Trustee 61
SECTION 7.03. Individual Rights of Trustee 62
SECTION 7.04. Trustee's Disclaimer 62
SECTION 7.05. Notice of Defaults 62
SECTION 7.06. Reports by Trustee to Holders 62
SECTION 7.07. Compensation and Indemnity 63
SECTION 7.08. Replacement of Trustee 63
SECTION 7.09. Successor Trustee by Merger 64
SECTION 7.10. Eligibility; Disqualification 65
SECTION 7.11. Preferential Collection of Claims Against
Company 65
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance 65
SECTION 8.02. Conditions to Defeasance 66
SECTION 8.03. Application of Trust Money 68
SECTION 8.04. Repayment to Company 68
SECTION 8.05. Indemnity for Government Obligations 68
SECTION 8.06. Reinstatement 68
ARTICLE 9
Amendments
SECTION 9.01 Without Consent of Holders 69
SECTION 9.02. With Consent of Holders 70
SECTION 9.03. Compliance with Trust Indenture Act 71
SECTION 9.04. Revocation and Effect of Consents and
Waivers 71
SECTION 9.05. Notation on or Exchange of Securities 72
SECTION 9.06. Trustee To Sign Amendments 72
SECTION 9.07. Payment for Consent 72
ARTICLE 10
Subordination
SECTION 10.01. Agreement To Subordinate 73
SECTION 10.02. Liquidation, Dissolution, Bankruptcy 73
SECTION 10.03. Default on Senior Indebtedness 73
<PAGE>
SECTION 10.04. Mandatory Redemption and Subordination 74
SECTION 10.05. Acceleration of Payment of Securities 74
SECTION 10.06. When Distribution Must Be Paid Over 74
SECTION 10.07. Subrogation 75
SECTION 10.08. Relative Rights 75
SECTION 10.09. Subordination May Not Be Impaired by
Company 75
SECTION 10.10. Rights of Trustee and Paying Agent 75
SECTION 10.11. Distribution or Notice to Representative 76
SECTION 10.12. Article 10 Not To Prevent Events of
Default or Limit Right To Accelerate 76
SECTION 10.13. Trust Moneys Not Subordinated 76
SECTION 10.14. Trustee Entitled To Rely 76
SECTION 10.15. Trustee To Effectuate Subordination 77
SECTION 10.16. Trustee Not Fiduciary for Holders of
Senior Indebtedness 77
SECTION 10.17. Reliance by Holders of Senior
Indebtedness on Subordination
Provisions 77
ARTICLE 11
Subsidiary Guaranties
SECTION 11.01. Rio Guarantee 77
SECTION 11.02. Agreement To Subordinate 79
SECTION 11.03. Liquidation, Dissolution, Bankruptcy 79
SECTION 11.04. Default on Senior Indebtedness 79
SECTION 11.05. Mandatory Redemption and Subordination 80
SECTION 11.06. Acceleration of Payment of Securities 80
SECTION 11.07. When Distribution Must Be Paid Over 81
SECTION 11.08. Subrogation 81
SECTION 11.09. Relative Rights 81
SECTION 11.10. Subordination May Not Be Impaired by the 81
Guarantor
SECTION 11.11. Rights of Trustee and Paying Agent 81
SECTION 11.12. Distribution or Notice to Representative 82
SECTION 11.13. Article 11 Not To Prevent Events of
Default or Limit Right To Accelerate 82
SECTION 11.14. Trust Moneys Not Subordinated 82
SECTION 11.15. Trustee Entitled To Rely 82
SECTION 11.16. Trustee To Effectuate Subordination 83
<PAGE>
SECTION 11.17. Trustee Not Fiduciary for Holders of
Senior Indebtedness of Guarantor 83
SECTION 11.18. Reliance by Holders of Senior
Indebtedness of Guarantor on
Subordination Provisions 83
ARTICLE 12
Miscellaneous
SECTION 12.01. Trust Indenture Act Controls 84
SECTION 12.02. Notices 84
SECTION 12.03. Communication by Holders with Other
Holders 85
SECTION 12.04. Certificate and Opinion as to Conditions
Precedent 85
SECTION 12.05. Statements Required in Certificate or
Opinion 86
SECTION 12.06. When Securities Disregarded 86
SECTION 12.07. Rules by Trustee, Paying Agent and
Registrar 86
SECTION 12.08. Legal Holidays 87
SECTION 12.09. Governing Law 87
SECTION 12.10. No Recourse Against Others 87
SECTION 12.11. Successors 87
SECTION 12.12. Multiple Originals 87
SECTION 12.13. Table of Contents; Headings 87
SECTION 12.14. Severability 87
Exhibit A Form of Initial Security
Exhibit B Form of Exchange Security
Exhibit C Form of Transfer Certificate for Transfer
from Restricted Global Security or
Restricted Security to Regulation S
Global Security
Exhibit D Form of Transfer Certificate for Transfer
from Regulation S Global Security or
Restricted Security to Restricted Global
Security
Exhibit E Form of Transfer Certificate for Transfer
from Global Security or Restricted
Security to Restricted Security
Exhibit F Form of Accredited Investor Transferee
Certificate
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310(a)(1) 7.10
(a)(2) 7.10
(a)(3) N.A.
(a)(4) N.A.
(b) 7.08; 7.10
(c) N.A.
311(a) 7.11
(b) 7.11
(c) N.A.
312(a) 2.05
(b) 12.03
(c) 12.03
313(a) 7.06
(b)(1) N.A.
(b)(2) 7.06
(c) 12.02
(d) 7.06
314(a) 4.02;
4.10; 4.11;
12.02
(b) N.A.
(c)(1) 12.04
(c)(2) 12.04
(c)(3) N.A.
(d) N.A.
(e) 12.05
(f) 4.11
315(a) 7.01
(b) 7.05; 12.02
(c) 7.01
(d) 7.01
(e) 6.11
316(a)(last sentence) 12.06
(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
<PAGE>
(b) 2.04
318(a) 12.01
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any
purpose, be deemed to be part of the Indenture.
<PAGE>
EXECUTION COPY
INDENTURE dated as of February
11, 1997, between RIO HOTEL & CASINO, INC., a
Nevada corporation (the "Company"), RIO
PROPERTIES, INC., a Nevada corporation (the
"Guarantor") and IBJ SCHRODER BANK & TRUST
COMPANY, a New York banking corporation (the
"Trustee").
Each party agrees as follows for the benefit of
the other party and for the equal and ratable benefit of the
Holders of the Company's 9-1/2% Senior Subordinated
Securities Due April 15, 2007 (the "Initial Notes") and if
and when issued in exchange for the Initial Notes, the
Company's 9-1/2% Senior Subordinated Securities Due April
15, 2007 (the "Exchange Notes" together with the Initial
Notes, the "Securities"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Additional Assets" means (i) any property or
assets (other than Indebtedness and Capital Stock) in a
Related Business; (ii) Capital Stock of a Person that
becomes a Restricted Subsidiary as a result of the
acquisition of such Capital Stock by the Company or another
Restricted Subsidiary; or (iii) Capital Stock constituting a
minority interest in any Person that at such time is a
Restricted Subsidiary, provided, however, that, in the case
of clauses (ii) and (iii), such Restricted Subsidiary is
primarily engaged in a Related Business.
"Affiliate" of any specified Person means (i) any
other Person, directly or indirectly, controlling or
controlled by or under direct or indirect common control
with such specified Person or (ii) any other Person who is a
director or officer (a) of such specified Person, (b) of any
subsidiary of such specified Person or (c) of any Person
described in clause (i) above. For the purposes of this
definition, "control" when used with respect to any Person
means the power to direct the management and policies of
such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings
correlative to the foregoing. For purposes of Section 4.07
only, "Affiliate" shall also mean any beneficial owner of
shares representing 10% or more of the total voting power of
the Voting Stock (on a fully diluted basis) of the Company
or of rights or warrants to purchase such Voting Stock
(whether or not currently exercisable) and any Person who
would be an Affiliate of any such beneficial owner pursuant
to the first sentence hereof.
<PAGE>
2
"Asset Disposition" means any direct or indirect
sale including a Sale/Leaseback Transaction, lease,
transfer, conveyance or other disposition (or series of
related sales, Sale/Leaseback Transactions, leases,
transfers, conveyances or dispositions) of shares of Capital
Stock of a Restricted Subsidiary (other than directors'
qualifying shares), property or other assets (each referred
to for the purposes of this definition as a "disposition")
by the Company or any of its Restricted Subsidiaries
(including any disposition by means of a merger,
consolidation or similar transaction) other than (i) a
disposition by a Restricted Subsidiary to the Company or by
the Company or a Restricted Subsidiary to a Wholly Owned
Subsidiary, (ii) a disposition of property or assets at Fair
Market Value in the ordinary course of business and
consistent with past practices of the Company or any of its
Restricted Subsidiaries, as applicable, (iii) a disposition
with a Fair Market Value and a sale price of less than
$10 million, and (iv) for purposes of Section 4.06 only, a
disposition subject to the limitations set forth under
Section 4.04.
"Attributable Indebtedness" means Indebtedness
deemed to be incurred in respect of a Sale/Leaseback
Transaction and shall be, at the date of determination, the
greater of (i) the fair market value of the property subject
to such Sale/Leaseback Transaction (as determined in good
faith by the Board of Directors) or (ii) the present value
(discounted at the actual rate of interest implicit in such
transaction, compounded annually) of the total obligations
of the lessee for rental payments during the remaining term
of the lease included in such Sale/Leaseback Transaction
(including any period for which such lease has been
extended).
"Average Life" means, as of the date of
determination, with respect to any Indebtedness or Preferred
Stock, the quotient obtained by dividing (i) the sum of the
products of the numbers of years from the date of
determination to the dates of each successive scheduled
principal payment of such Indebtedness or redemption or
similar payment with respect to such Preferred Stock
multiplied by the amount of such payment by (ii) the sum of
all such payments.
"Bank Indebtedness" means any and all amounts
payable under or in respect of the Credit Agreement, as
amended (or refinanced or replaced) from time to time,
including principal, premium (if any), interest (including
interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company or
the Guarantor whether or not a claim for post-filing
interest is allowed in such proceedings), fees, charges,
expenses, reimbursement obligations, guarantees and all
other amounts payable thereunder or in respect thereof.
"Banks" has the meaning specified in the Credit
Agreement.
<PAGE>
3
"Board of Directors" means the Board of Directors
of the Company or any committee thereof duty authorized to
act on behalf of such Board.
"Board Resolution" means a duly adopted resolution
of the Board of Directors in full force and effect at the
time of determination and certified as such by the Secretary
or an Assistant Secretary of the Company.
"Business Day" shall mean any Monday, Tuesday,
Wednesday, Thursday or Friday which is not a Legal Holiday.
"Capitalized Lease Obligations" means an
obligation that is required to be classified and accounted
for as a capitalized lease for financial reporting purposes
in accordance with GAAP; and the amount of Indebtedness
represented by such obligation shall be the capitalized
amount of such obligation determined in accordance with
GAAP; and the Stated Maturity thereof shall be the date of
the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.
"Capital Stock" of any Person means any and all
shares, interests, rights to purchase, warrants, options,
participations or other equivalents of or interests in
(however designated) equity of such Person, including any
Preferred Stock, but excluding any debt securities
convertible or exchangeable into such equity.
"Casino" means any gaming establishment and other
property or assets directly ancillary thereto or used in
connection therewith, including any building, restaurant,
hotel, theater, parking facilities, retail shops, land, golf
courses and other recreation and entertainment facilities,
vessel, barge, ship and equipment.
"Change of Control" means the occurrence of any of
the following events: (i) any "person" (as such term is used
in Sections 13(d) and 14(d) of the Exchange Act), other than
one or more Permitted Holders or an underwriter engaged in a
firm commitment underwriting in connection with a public
offering of the Voting Stock of the Company, is or becomes
the "beneficial owner" (as that term is used in Rules 13d-3
and 13d-5 under the Exchange Act, except that a person shall
be deemed to have "beneficial ownership" of all shares that
any such person has the right to acquire, whether such right
is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 40% of the total
voting power of the Voting Stock of the Company; (ii) during
any period of 12 consecutive months after the date of the
Indenture, individuals who at the beginning of such period
constituted the Board of Directors of the Company (together
with any new directors whose election by such Board of
Directors or whose nomination for election by the
stockholders of
<PAGE>
4
the Company was approved by a vote of a majority of
the directors of the Company then still in office who
were either directors at the beginning of such period or
whose election or nomination for election was previously
so approved) cease for any reason to constitute a
majority of the Board of Directors then in office; or
(iii) the Company consolidates or merges with or into, or,
directly or indirectly, sells all or substantially all of
its assets to any person, other than a Wholly Owned
Subsidiary or a Permitted Holder.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Company" means the party named as such in this
Indenture until a successor replaces it and, thereafter,
means the successor and, for purposes of any provision
contained herein and required by the TIA, each other obligor
on the indenture securities.
"Consolidated Coverage Ratio" as of any date of
determination means the ratio of (i) the aggregate amount of
EBITDA for the period of the most recent four consecutive
fiscal quarters ending at least 45 days (or at least 30 days
if the Company's Report on Form 10-Q or 10-K for the most
recent fiscal quarter or year, as the case may be, has been
filed with the SEC) prior to the date of such determination
to (ii) Consolidated Interest Expense for such four fiscal
quarters; provided, however, that (a) if the Company or any
Restricted Subsidiary has Incurred any Indebtedness since
the beginning of such period that remains outstanding or if
the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Incurrence of
Indebtedness, or both, Consolidated Interest Expense for
such period shall be calculated after giving effect on a pro
forma basis to such Indebtedness as if such Indebtedness had
been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased,
defeased or otherwise discharged with the proceeds of such
new Indebtedness as if such discharge had occurred on the
first day of such period, (b) if since the beginning of such
period the Company or any Restricted Subsidiary shall have
made any Asset Disposition or if the transaction giving rise
to the need to calculate the Consolidated Coverage Ratio is
an Asset Disposition, or both, the EBITDA for such period
shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets which are the
subject of such Asset Disposition for such period, or
increased by an amount equal to the EBITDA (if negative),
directly attributable thereto for such period as if such
Asset Disposition had occurred on the first day of such
period and Consolidated Interest Expense for such period
shall be reduced by an amount equal to the Consolidated
Interest Expense directly attributable to any Indebtedness
of the Company or any Restricted Subsidiary repaid,
repurchased, defeased or otherwise discharged with respect
to the Company and its continuing Restricted Subsidiaries in
connection with
<PAGE>
5
such Asset Dispositions for such period as if such Asset
Disposition had occurred on the first day of such period
(or, if the Capital Stock of any Restricted Subsidiary is
sold, the Consolidated Interest Expense for such period a
s if such Asset Disposition had occurred on the first day
of such period directly attributable to the Indebtedness
of such Restricted Subsidiary to the extent the Company and
its continuing Restricted Subsidiaries are no longer liable
for such Indebtedness after such sale), (c) if since the
beginning of such period the Company or any Restricted
Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person
which becomes a Restricted Subsidiary) or an acquisition
of assets, including any acquisition of assets occurring
in connection with a transaction causing a calculation to
be made hereunder, which constitutes all or substantially
all of an operating unit of a business, EBITDA and
Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto (including
the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period and
(d) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged
with or into the Company or any Restricted Subsidiary since
the beginning of such period) shall have made any Asset
Disposition or any Investment that would have required an
adjustment pursuant to clause (b) or (c) above if made by
the Company or a Restricted Subsidiary during such period,
EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto as
if such Asset Disposition or Investment occurred on the
first day of such period. For purposes of this definition,
whenever pro forma effect is to be given to an acquisition
of assets, the amount of income or earnings relating thereto
and the amount of Consolidated Interest Expense associated
with any Indebtedness Incurred in connection therewith, the
pro forma calculations shall be determined in good faith by
a responsible financial or accounting Officer of the Company
and as further contemplated by the definition of pro forma.
If any Indebtedness bears a floating rate of interest and is
being given pro forma effect, the interest expense on such
Indebtedness shall be calculated as if the rate in effect on
the date of determination had been the applicable rate for
the entire period (taking into account any Interest Rate
Protection Agreement applicable to such Indebtedness if such
Interest Rate Protection Agreement has a remaining term in
excess of 12 months).
"Consolidated Interest Expense" means, for any
period, the total interest expense of the Company and its
consolidated Subsidiaries, plus, to the extent not included
in such interest expense, (i) interest expense attributable
to capital leases, (ii) amortization of debt discount and
debt issuance cost, (iii) capitalized interest, (iv) non-
cash interest expense, (v) accrued interest,
(vi) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance
financing, (vii) interest actually paid by the Company or
any such Subsidiary under
<PAGE>
6
any Guarantee of Indebtedness or other obligation of any
other Person, (viii) net costs associated with Interest Rate
Protection Agreements (including amortization of fees),
(ix) the interest portion of any deferred obligation, (x)
Preferred Stock dividends in respect of all Preferred Stock
of Subsidiaries and Redeemable Stock of the Company held by
Persons other than the Company or a Wholly Owned Subsidiary,
(xi) fees payable in connection with financings to the extent
not included in (ii) above, including commitment, availability
and similar fees and (xii) the cash contributions to any
employee stock ownership plan or similar trust to the extent
such contributions are used by such plan or trust to pay
interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust;
provided, however, that there shall be excluded therefrom any
such interest expense of any Unrestricted Subsidiary to the
extent the related Indebtedness is not Guaranteed or paid by
the Company or any Restricted Subsidiary.
"Consolidated Net Income" means, for any period,
the net income (loss) of the Company and its Subsidiaries;
provided, however, that there shall not be included in such
Consolidated Net Income (i) any net income (loss) of any
Person if such Person is not a Restricted Subsidiary, except
that (a) subject to the limitations contained in (iv) below,
the Company's equity in the net income of any such Person
for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually
distributed by such Person during such period to the Company
or a Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other
distribution to a Restricted Subsidiary, to the limitations
contained in clause (iii) below) and (b) the Company's
equity in a net loss of any such Person (other than an
Unrestricted Subsidiary) for such period shall be included
in determining such Consolidated Net Income, (ii) any net
income (loss) of any person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any
period prior to the date of such acquisition, (iii) any net
income (loss) of any Restricted Subsidiary if such
Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of
distributions by such Restricted Subsidiary, directly or
indirectly, to the Company, except that (a) subject to the
limitations contained in (iv) below, the Company's equity in
the net income of any such Restricted Subsidiary for such
period shall he included in such Consolidated Net Income up
to the aggregate amount of cash that could have been
distributed by such Restricted Subsidiary during such period
to the Company or another Restricted Subsidiary as a
dividend (subject, in the case of a dividend to another
Restricted Subsidiary, to the limitation contained in this
clause) and (b) the Company's equity in a net loss of any
such Restricted Subsidiary for such period shall be included
in determining such Consolidated Net Income, (iv) any gain
(but not loss) realized upon the sale or other disposition
of any property, plant or equipment of the Company or its
consolidated Subsidiaries (including pursuant to any
Sale/Leaseback Transaction)
<PAGE>
7
which is not sold or otherwise disposed of in the ordinary
course of business and any gain (but not loss) realized
upon the sale or other disposition of any Capital Stock of
any Person, (v) any extraordinary gain or loss and (vi)
the cumulative effect of a change in accounting principles.
"Consolidated Net Worth" means the total of the
amounts shown on the balance sheet of the Company and its
consolidated Subsidiaries, determined on a consolidated
basis in accordance with GAAP, as of the end of the most
recent fiscal quarter of the Company ending at least 45 days
(or at least 30 days if the Company's Report on Form 10-Q or
10-K for the most recent fiscal quarter or year, as the case
may be, has been filed with the SEC) prior to the taking of
any action for the purpose of which the determination is
being made, as (i) the par or stated value of all
outstanding Capital Stock of the Company plus (ii) paid-in
capital or capital surplus relating to such Capital Stock
plus (iii) any retained earnings or earned surplus less
(a) any accumulated deficit and (b) any amounts attributable
to Disqualified Stock.
"Credit Agreement" means the $200 million
revolving credit agreement, as amended, between the Company
and a syndicate of banks, and any extensions, revisions,
refinancings or replacements thereof by a bank or a
syndicate of banks.
"Current Market Price" on any date means the
arithmetic mean of the Quoted Price of the Securities for
20 consecutive trading days commencing 30 days before such
date.
"Default" means any event which is, or after
notice or passage of time or both would be, an Event of
Default.
"Depositary" shall mean the Depository Trust
Company, its nominees and their respective successors.
"Designated Senior Indebtedness" means (i) the
Company's Guarantee of the Bank Indebtedness and (ii) any
other Senior Indebtedness which, at the date of
determination, has an aggregate principal amount outstanding
of, or under which, at the date of determination, the
holders thereof, are committed to lend up to, at least
$25 million and is specifically designated by the Company in
the instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" for
purposes of the Indenture and has been designated as
"Designated Senior Indebtedness" for purposes of the
Indenture in an Officers' Certificate received by the
Trustee.
<PAGE>
8
"Designated Senior Indebtedness of Guarantor"
means (i) the Bank Indebtedness and (ii) any other Senior
Indebtedness of Guarantor which, at the date of
determination, has an aggregate principal amount outstanding
of, or under which, at the date of determination, the
holders thereof are committed to lend up to, at least
$25 million and is specifically designated by the Guarantor
in the instrument evidencing or governing such Senior
Indebtedness of Guarantor as "Designated Senior Indebtedness
of Guarantor" for purposes of the Indenture and has been
designated as "Designated Senior Indebtedness of Guarantor"
for purposes of the Indenture in an Officers' Certificate
received by the Trustee.
"Disqualified Stock" of a Person means Redeemable
Stock of such Person as to which the maturity, mandatory
redemption, conversion or exchange or redemption at the
option of the holder thereof occurs, or may occur, on or
prior to the first anniversary of the Stated Maturity of the
Securities.
"EBITDA" for any period means the Consolidated Net
Income for such period, plus the following to the extent
deducted in calculating such Consolidated Net Income:
(i) income tax expense, (ii) Consolidated Interest Expense,
(iii) depreciation expense and (iv) amortization expense, in
each case for such period.
"Event of Loss" means, with respect to any
property or asset, any (i) loss, destruction or damage of
such property or asset; or (ii) any condemnation, seizure or
taking, by exercise of the power of eminent domain or
otherwise, of such property or asset, or confiscation or
requisition of the use of such property or asset.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Fair Market Value" means, with respect to any
asset or property, the price which could be negotiated in an
arms'-length free market transaction, for cash, between a
willing seller and a willing buyer, neither of whom is under
undue pressure or compulsion to complete the transaction.
"GAAP" means generally accepted accounting
principles in the United States of America as in effect as
of the date of the Indenture, including those set forth in
the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant
segment of the accounting profession. All ratios and
computations based on GAAP contained in the Indenture shall
be computed in conformity with GAAP consistently applied.
<PAGE>
9
"Gaming Authority" means the Nevada Gaming
Commission, the Nevada State Gaming Control Board or any
agency which has, or may at any time after the date of the
Indenture have, jurisdiction over the gaming activities of
the Company or any of its Subsidiaries or any successor to
such authority.
"Gaming Laws" means the gaming laws of a
jurisdiction or jurisdictions to which the Company or any of
its Subsidiaries is, or may at any time after the date of
the Indenture be, subject.
"Gaming License" means any license, permit,
franchise or other authorization from any governmental
authority required on the date of the Indenture or at any
time thereafter to own, lease, operate or otherwise conduct
the gaming business of the Company and its Subsidiaries,
including all licenses granted under Gaming Laws and other
Legal Requirements.
"Guarantee" means any obligation, contingent or
otherwise, of any Person directly or indirectly guaranteeing
any Indebtedness or other obligation of any other Person and
any obligation, direct or indirect, contingent or otherwise,
of such Person (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or
other obligation of such other Person (whether arising by
virtue of partnership arrangements, or by agreement to keep-
well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions
or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in
part); provided, however, that the term "Guarantee" shall
not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.
"Guarantor" means Rio Properties, Inc.
"Holder" or "Securityholder" means the Person in
whose name a Security is registered on the Registrar's
books.
"Incur" means issue, assume, Guarantee, incur or
otherwise become liable for; provided, however, that any
Indebtedness or Capital Stock of a Person existing at the
time such person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to
be incurred by such Subsidiary at the time it becomes a
Subsidiary. The terms "Incurred", "Incurrence" and
"Incurring" shall each have a correlative meaning.
<PAGE>
10
"Indebtedness" means, with respect to any Person
on any date of determination (without duplication),
(i) the principal of and premium (if any) in
respect of indebtedness of such Person for borrowed
money;
(ii) the principal of and premium (if any) in
respect of obligations of such Person evidenced by
bonds, debentures, Securities or other similar
instruments;
(iii) all Capitalized Lease Obligations and
Attributable Indebtedness of such Person;
(iv) all obligations of such Person to pay the
deferred and unpaid purchase price of property or
services (except Trade Payables), which purchase price
is due more that six months after the date of placing
such property in service or taking delivery and title
thereto or the completion of such services;
(v) all obligations of such Person in respect of
letters of credit, banker's acceptances or other
similar instruments or credit transactions (including
reimbursement obligations with respect thereto), other
than obligations with respect to letters of credit
securing obligations (other than obligations described
in (i) through (iv) above) entered into in the ordinary
course of business of such Person to the extent such
letters of credit are not drawn upon or, if and to the
extent drawn upon, such drawing is reimbursed no later
than the third Business Day following receipt by such
Person of a demand for reimbursement following payment
on the letter of credit;
(vi) the amount of all obligations of such Person
with respect to the redemption, repayment or other
repurchase of any Disqualified Stock or, with respect
to any Subsidiary, any Preferred Stock (but excluding,
in each case, any accrued dividends);
(vii) all Indebtedness of other Persons secured by
a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; provided,
however, that the amount of such Indebtedness shall be
the lesser of (a) the fair market value of such asset
at such date of determination and (b) the amount of
such Indebtedness of such other Persons;
<PAGE>
11
(viii) all Indebtedness of other Persons to the
extent Guaranteed by such Person; and
(ix) to the extent not otherwise included in this
definition, obligations in respect of Interest Rate
Protection Agreements.
The amount of Indebtedness of any Person at any date shall
be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability,
upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
"Indenture" means this instrument as originally
executed or as it may from time to time be supplemented or
amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such
supplemental indenture, the provisions of the TIA that are
deemed to be a part of and govern this instrument, and any
such supplemental indenture, respectively.
"Independent Director" means a director of the
Company other than a director who is a party, or who is a
director, officer, employee or Affiliate (or is related by
blood or marriage to any such person) of a party, to the
transaction in question, and who is, in fact, independent in
respect of such transaction.
"Interest Rate Protection Agreement" means, in
respect of a Person, any interest rate swap agreement,
interest rate option agreement, interest rate cap agreement,
interest rate collar agreement, interest rate floor
agreement or other similar agreement or arrangement.
"Investment" in any Person means any direct or
indirect advance, loan (other than advances to customers in
the ordinary course of business that are recorded as
accounts receivable on the balance sheet of such Person) or
other extension of credit (including by way of Guarantee or
similar arrangement) or capital contribution to (by means of
any transfer of cash or other property to others or any
payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such
Person. For purposes of the definition of "Unrestricted
Subsidiary" and the limitations set forth in Section 4.04,
(i) "Investment" shall include the portion (proportionate to
the Company's equity interest in such Subsidiary) of the
Fair Market Value of the net assets of any Subsidiary of the
Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary, provided, however, that upon a
redesignation of such Subsidiary as a Restricted Subsidiary,
the Company shall be deemed to continue to
<PAGE>
12
have a permanent "Investment" in an Unrestricted Subsidiary
in an amount (if positive) equal to (x) the Company's
"Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the
Company's equity interest in such Subsidiary) of the Fair
Market Value of the net assets of such Subsidiary at the
time that such Subsidiary is so re-designated a Restricted
Subsidiary; and (ii) any property transferred to or from
an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer. In determining
the amount of any Investment in respect of any property
or assets other than cash, such property or asset shall
be valued at its fair market value at the time of such
Investment (unless otherwise specified in this definition),
as determined in good faith by the Board of Directors,
whose determination shall be evidenced by a Board Resolution.
"Issue Date" means the date on which the
Securities are originally issued.
"Legal Requirements" means all laws, statutes and
ordinances and all rules, orders, rulings, regulations,
directives, decrees, injunctions and requirements of all
governmental authorities, that are now or may hereafter be
in existence, and that may be applicable to the Company or
any Subsidiary or Affiliate thereof or the Trustee
(including building codes, zoning and environmental laws,
regulations and ordinances and Gaming Laws), as modified by
any variances, special use permits, waivers, exceptions or
other exemptions which may from time to time be applicable.
"Lien" means any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind (including
any conditional sale or other title retention agreement or
lease in the nature thereof) or any Sale/Leaseback
Transaction.
"Net Available Cash" from an Asset Disposition or
Event of Loss means cash payments received (including any
cash payments received by way of deferred payment of
principal pursuant to a security or installment receivable
or otherwise, but only as and when received, but excluding
any other consideration received in the form of assumption
by the acquiring person of Indebtedness or other obligations
relating to such properties or assets or received in any
other noncash form) therefrom, in each case net of (i) all
legal, title and recording tax expenses, commissions and
other fees and expenses incurred, and all Federal, state,
provincial, foreign and local taxes required to be paid or
accrued as a liability under GAAP, as a consequence of such
Asset Disposition or Event of Loss, (ii) all payments made
on any Indebtedness which is secured by any assets subject
to such Asset Disposition, in accordance with the terms of
any Lien upon such assets, or which must by its terms, or in
order to obtain a necessary consent to such Asset
Disposition, or by applicable law be repaid out of the
proceeds from such Asset Disposition, (iii) all
distributions
<PAGE>
13
and other payments required to be made to minority interest
holders in Subsidiaries or joint ventures as a result of such
Asset Disposition or Event of Loss and (iv) the deduction of
appropriate amounts to be provided by the seller as a reserve,
in accordance with GAAP, against any liabilities associated
with the assets disposed of in such Asset Disposition and
retained by the Company or any Restricted Subsidiary after
such Asset Disposition.
"Net Cash Proceeds", with respect to any issuance
or sale of Capital Stock, means the cash proceeds of such
issuance or sale net of attorneys' fees, accountants' fees,
underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees
actually incurred in connection with such issuance or sale
and net of taxes paid or payable as a result thereof.
"Non-Recourse Indebtedness" means Indebtedness of
a Person to the extent that under the terms thereof or
pursuant to applicable law (i) no personal recourse shall be
had against such Person for the payment of the principal of
or interest or premium, if any, on such Indebtedness, and
(ii) enforcement of obligations on such Indebtedness is
limited only to recourse against interests in Property and
assets purchased with the proceeds of the Incurrence of such
Indebtedness and as to which neither the Company nor any of
its Restricted Subsidiaries provides any credit support or
is liable.
"Officer" means the Chairman of the Board, the
President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed
by two Officers at least one of whom shall be the principal
executive officer, principal accounting officer or principal
financial officer of the Company.
"Opinion of Counsel" means a written opinion from
legal counsel who is acceptable to the Trustee. The counsel
may be an employee of or counsel to the Company or the
Trustee.
"pari passu", as applied to the ranking of any
Indebtedness of a Person in relation to other Indebtedness
of such Person, means that each such Indebtedness either
(i) is not subordinate in right of payment to any
Indebtedness or (ii) is subordinate in right of payment to
the same Indebtedness as is the other, and is so subordinate
to the same extent, and is not subordinate in right of
payment to each other or to any Indebtedness as to which the
other is not so subordinate.
<PAGE>
14
"Permitted FF&E Financing" means Indebtedness
which is Non-Recourse Indebtedness to the Company or any of
its Restricted Subsidiaries or any of their properties that
is Incurred to finance the acquisition or lease after the
date of the Indenture of newly acquired or leased furniture,
fixtures or equipment ("FF&E") used directly in the
operation of any casino hotel owned or leased by the Company
or its Restricted Subsidiaries and secured by a Lien on such
FF&E (which Lien, subject to certain limitations, shall be
the only Permitted Lien with respect to such FF&E).
"Permitted Holders" means Anthony A. Marnell II,
James A. Barrett, Jr., their estates, spouses, ancestors,
and lineal descendants, the legal representatives of any of
the foregoing and the trustee of any bona fide trust of
which the foregoing are the sole beneficiaries or the
grantors, or any Person of which the foregoing "beneficially
owns" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act) voting securities representing at least
66 2/3% of the total voting power of all classes of Capital
Stock of such Person (exclusive of any matters as to which
class voting rights exist).
"Permitted Investment" means an Investment by the
Company or any Restricted Subsidiary in (i) the Company;
(ii) a Restricted Subsidiary or a Person which will, upon
the making of such Investment, become a Restricted
Subsidiary; provided, however, that the primary business of
such Restricted Subsidiary is a Related Business;
(iii) another Person if as a result of such Investment such
other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to,
the Company or a Restricted Subsidiary, provided, however,
that such Person's primary business is a Related Business;
(iv) Temporary Cash Investments; (v) receivables owing to
the Company or any Restricted Subsidiary, if created or
acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms;
provided, however, that such trade terms may include such
concessionary trade terms as the Company or any such
Restricted Subsidiary deems reasonable under the
circumstances; (vi) payroll, travel and similar advances to
cover matters that are expected at the time of such advances
ultimately to be treated as expenses for accounting purposes
and that are made in the ordinary course of business;
(vii) loans or advances to employees made in the ordinary
course of business consistent with past practices of the
Company or such Restricted Subsidiary, as the case may be;
and (viii) stock, obligations or securities received in
settlement of debts created in the ordinary course of
business and owing to the Company or any Restricted
Subsidiary or in satisfaction of judgments.
"Permitted Liens" means, with respect to any
Person, (a) pledges or deposits by such Person under
workmen's compensation laws, unemployment insurance laws or
similar legislation, or good faith deposits in connection
with bids,
<PAGE>
15
tenders, contracts (other than for the payment of Indebtedness)
or leases to which such Person is a party, or deposits to
secure public or statutory obligations of such Person or
deposits of cash or United States government bonds to secure
surety or appeal bonds to which such Person is a party, or
deposits as security for contested taxes or import duties or
for the payment of rent, in each case Incurred in the ordinary
course of business; (b) Liens imposed by law, such as
carriers', warehousemen's and mechanics' Liens, in each
case for sums not yet due or being contested in good faith
by appropriate proceedings, or other Liens arising out
of judgments or awards against such Person with respect to
which such Person shall then be prosecuting an appeal or
other proceedings for review; (c) Liens for property taxes
not yet due or payable or subject to penalties for non-
payment and which are being contested in good faith by
appropriate proceedings; (d) Liens in favor of issuers of
surety bonds or letters of credit issued pursuant to the
request of and for the account of such Person in the
ordinary course of its business; (e) minor survey
exceptions, minor encumbrances, easements or reservations
of, or rights of others for, licenses, rights-of-way,
sewers, electric lines, telegraph and telephone lines and
other similar purposes, or zoning or other restrictions as
to the use of real property or Liens incidental to the
conduct of the business of such Person or to the ownership
of its properties which were not Incurred in connection with
Indebtedness and which do not in the aggregate materially
adversely affect the value of said properties or materially
impair their use in the operation of the business of such
Person; (f) Liens existing on the date of the Indenture;
(g) Liens on property or shares of stock of a Person at the
time such Person becomes a Subsidiary; provided, however,
that any such Lien may not extend to any other property
owned by the Company or any Restricted Subsidiary; (h) Liens
on property at the time the Company or a Subsidiary acquired
the property, including any acquisition by means of a merger
or consolidation with or into the Company or any Restricted
Subsidiary; provided, however, that any such Lien may not
extend to any other property owned by the Company or any
Restricted Subsidiary; (i) Liens securing an Interest Rate
Protection Agreement so long as the related Indebtedness is
permitted to be incurred under the Indenture, (j) Liens to
secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancings, refundings,
extensions, renewals or replacements) as a whole, or in
part, of any Indebtedness secured by any Lien referred to in
the foregoing clauses (f), (g), (h) and (k); provided,
however, that (x) such new Lien shall be limited to all or
part of the same property that secured the original Lien
(plus improvements on such property) and (y) the
Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of (A) the
outstanding principal amount or, if greater, committed
amount of the Indebtedness described under clauses (f), (g),
(h) or (k) at the time the original Lien became a Permitted
Lien under the Indenture and (B) an amount necessary to pay
any fees and expenses, including premiums, related to such
<PAGE>
16
refinancing, refunding, extension, renewal or replacement
and (k) Liens securing Permitted FF&E Financings.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, government or
any agency or political subdivision thereof or any other
entity.
"Preferred Stock", as applied to the Capital Stock
of any corporation, means Capital Stock of any class or
classes (however designated) which is preferred as to the
payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution
of such corporation, over shares of Capital Stock of any
other class of such corporation.
"principal" of a Security means the principal of
the Security plus the premium, if any, payable on the
Security which is due or overdue or is to become due at the
relevant time.
"pro forma" means, with respect to any calculation
made or required to be made pursuant to the terms hereof, a
calculation in accordance with Article 11 of Regulation S-X
promulgated under the Securities Act (to the extent
applicable), as interpreted in good faith by the Board of
Directors after consultation with the independent certified
public accountants of the Company, or otherwise a
calculation made in good faith by the Board of Directors
after consultation with the independent certified public
accountants of the Company, as the case may be.
"Quoted Price" means for any day the last reported
sale price regular way or, in case no such reported sale
takes place on such day, the average of the closing bid and
asked prices regular way for such day, in either case on the
principal national securities exchange on which the
Securities are listed or admitted to trading, or if the
Securities are not so listed or admitted to trading, but are
traded in the over the counter market, the closing sale
price of the Securities or, in case no sale is publicly
reported, the average of the closing bid and asked prices,
as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time by the
Company for that purpose.
"Redeemable Stock" means, with respect to any
Person, any Capital Stock which by its terms (or by the
terms of any security into which it is convertible or for
which it is exchangeable) or upon the happening of any event
(i) matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise, (ii) is convertible or
exchangeable for Indebtedness (other than Preferred Stock)
or
<PAGE>
17
Disqualified Stock or (iii) is redeemable at the option
of the holder thereof, in whole or in part.
"Refinancing Indebtedness" means Indebtedness that
refunds, refinances, replaces, renews, repays or extends
(including pursuant to any defeasance or discharge
mechanism) (collectively, "refinances," and "refinanced"
shall have a correlative meaning) any Indebtedness existing
on the date of the Indenture or Incurred in compliance with
the Indenture (including Indebtedness of the Company that
refinances Indebtedness of any Restricted Subsidiary and
Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including
Indebtedness that refinances Refinancing Indebtedness;
provided, however, that (i) the Refinancing Indebtedness has
a Stated Maturity no earlier than the Stated Maturity of the
Indebtedness being refinanced, (ii) the Refinancing
Indebtedness has an Average Life at the time such
Refinancing Indebtedness is Incurred that is equal to or
greater than the Average Life of the Indebtedness being
refinanced, (iii) such Refinancing Indebtedness is Incurred
in an aggregate principal amount (or if issued with original
issue discount, an aggregate issue price) that is equal to
or less than the aggregate principal amount (or if issued
with original issue discount, the aggregate accreted value)
then outstanding of the Indebtedness being refinanced and
(iv) if the Indebtedness of the Company or a Restricted
Subsidiary being refinanced is subordinated to other
Indebtedness of the Company or a Restricted Subsidiary in
any respect, such Refinancing Indebtedness is subordinated
at least to the same extent, provided further, however, that
Refinancing Indebtedness shall not include (a) Indebtedness
of a Subsidiary that refinances Indebtedness of the Company
or (b) Indebtedness of the Company or a Restricted
Subsidiary that refinances Indebtedness of an Unrestricted
Subsidiary.
"Registered Exchange Offer" shall have the meaning
set forth in the Registration Agreement.
"Registration Agreement" means the Registration
Agreement dated February 4, 1997, between the Company and
the Initial Purchasers.
"Related Business" means the gaming business
conducted (or proposed to be conducted) by the Company and
its Subsidiaries as of the date of the Indenture and any and
all reasonably related businesses necessary for, in support
or anticipation of and ancillary to or in preparation for,
the gaming business including, without limitation, the
development, expansion or operation of any Casino (including
any land-based, dockside, riverboat or other type of
Casino), owned, or to be owned, by the Company or one of its
Subsidiaries.
<PAGE>
18
"Representative" means the trustee, agent or
representative (if any) for an issue of Senior Indebtedness
or Senior Indebtedness of Guarantor, as the case may be.
"Restricted Subsidiary" means (i) Rio Properties,
Inc. and (ii) any other Subsidiary of the Company that is
not an Unrestricted Subsidiary.
"Sale/Leaseback Transaction" means an arrangement
relating to property now owned or hereafter acquired whereby
the Company or a Restricted Subsidiary transfers such
property to a Person and the Company or a Restricted
Subsidiary leases it from such Person.
"SEC" means the Securities and Exchange
Commission.
"Senior Indebtedness" means (i) the Company's
Guarantee of the Bank Indebtedness and (ii) all other
Indebtedness of the Company including interest thereon,
whether outstanding on the date of the Indenture or
thereafter issued, unless in the instrument creating or
evidencing the same or pursuant to which the same is
outstanding it is provided that such obligations are not
superior in right of payment to the Securities; provided,
however, that Senior Indebtedness shall not include (a) any
obligation of the Company to any Subsidiary, (b) any
liability for Federal, state, local or other taxes owed or
owing by the Company, (c) any accounts payable or other
liability to trade creditors arising in the ordinary course
of business (including Guarantees thereof or instruments
evidencing such liabilities), (d) any Indebtedness,
Guarantee or obligation of the Company which is subordinate
or junior in any respect to any other Indebtedness,
Guarantee or obligation of the Company, including any Senior
Subordinated Indebtedness and any Subordinated Obligations,
(e) any obligations with respect to any Capital Stock or
(f) any Indebtedness Incurred in violation of the Indenture.
"Senior Indebtedness of Guarantor" means (i) the
Bank Indebtedness and (ii) all other Indebtedness of the
Guarantor including interest thereon, whether outstanding on
the date of the Indenture or thereafter issued, unless in
the instrument creating or evidencing the same or pursuant
to which the same is outstanding it is provided that such
Indebtedness shall not include (a) any obligation of the
Guarantor to any Subsidiary, (b) any liability for Federal,
state, local or other taxes owed or owing by the Guarantor,
(c) any accounts payable or other liability to trade
creditors arising in the ordinary course of business
(including Guarantees thereof or instruments evidencing such
liabilities), (d) any Indebtedness, Guarantee or obligation
of the Guarantor which is subordinate or junior in any
respect to any other Indebtedness, Guarantee or obligation
of the Guarantor, including Senior Subordinated Indebtedness
<PAGE>
19
of Guarantor and any Subordinated Obligations, (e) any
obligations with respect to any Capital Stock or (f) any
Indebtedness Incurred in violation of the Indenture.
"Senior Subordinated Indebtedness" means the
Securities, $100 million in aggregate principal amount of
the Company's outstanding 10 5/8% Senior Subordinated Notes
due 2005 (the "10 5/8% Notes") and any other Indebtedness of
the Company that specifically provides that such
Indebtedness is to rank pari passu with the Securities and
is not subordinated by its terms to any Indebtedness or
other obligation of the Company which is not Senior
Indebtedness.
"Senior Subordinated Indebtedness of Guarantor"
means the Rio Guarantee, the Guarantor's Guarantee of the 10
5/8% Notes and any other Indebtedness of the Guarantor that
specifically provides that such Indebtedness is to rank pari
passu with the Rio Guarantee and is not subordinated by its
terms to any Indebtedness or other obligation of the
Guarantor which is not Senior Indebtedness of Guarantor.
"Shelf Registration Statement" shall have the
meaning set forth in the Registration Agreement.
"Stated Maturity" means, with respect to any
security, the date specified in such security as the fixed
date on which the payment of principal of such security is
due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing
for the repurchase of such security at the option of the
holder thereof upon the happening of any contingency beyond
the control of the issuer unless such contingency has
occurred).
"Subordinated Obligation" means (i) any
Indebtedness of the Company (whether outstanding on the date
of the Indenture or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities
or (ii) any Indebtedness of the Guarantor (whether
outstanding on the date of the Indenture or thereafter
Incurred) which is subordinate or junior in right of payment
to the Rio Guarantee.
"Subsidiary" of any Person means any corporation,
association, partnership or other business entity of which
more than 50% of the total voting power of shares of Capital
Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled,
directly or indirectly, by (i) such Person, (ii) such Person
and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
<PAGE>
20
"Temporary Cash Investments" means any of the
following: (i) investments in U.S. Government Obligations
maturing within 90 days of the date of acquisition thereof,
(ii) investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 90 days of
the date of acquisition or any state thereof having capital,
surplus and undivided profits aggregating in excess of
$500,000,000 and whose long-term debt is rated "A-3" or "A-"
or higher according to Moody's Investors Service, Inc. or
Standard and Poor's Corporation (or such similar equivalent
rating by at least one "nationally recognized statistical
rating organization" (as defined in Rule 436 under the
Securities Act)), (iii) repurchase obligations with a term
of not more than 7 days for underlying securities of the
types described in clause (i) above entered into with a bank
meeting the qualifications described in clause (ii) above,
and (iv) investments in commercial paper, maturing not more
than 90 days after the date of acquisition, issued by a
corporation (other than an Affiliate of the Company)
organized and in existence under the laws of the United
States of America with a rating at the time as of which any
investment therein is made of "P-1" (or higher) according to
Moody's Investors Service, Inc. or " A- 1" (or higher)
according to Standard and Poor's Corporation.
" TIA" means the Trust Indenture Act of 1939
(15 U.S.C. Secs. 77aaa-77bbbb) as in effect on the date of
this Indenture, provided, however, that in the event the
Trust Indenture Act of 1939 is amended after such date, "TIA"
means, to the extent required by any such amendment, the
Trust Indenture Act of 1939, as may be amended from time to
time.
"Trade Payables" means, with respect to any
Person, any accounts payable or any indebtedness or monetary
obligation to trade creditors created, assumed or Guaranteed
by such Person arising in the ordinary course of business of
such Person in connection with the acquisition of goods or
services.
"Trustee" means the party named as such in the
Indenture until a successor replaces it in accordance with
the provisions of the Indenture and, thereafter, means the
successor.
"Trust Officer" means the Chairman of the Board,
the President or any, other officer or assistant officer of
the Trustee assigned by the Trustee to administer its
corporate trust matters.
"Uniform Commercial Code" means the New York
Uniform Commercial Code as in effect from time to time.
<PAGE>
21
"Unrestricted Subsidiary" means (i) any Subsidiary
of the Company that at the time of determination shall be
designated an Unrestricted Subsidiary by the Board of
Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Subsidiary of the Company
(including any newly acquired or newly formed Subsidiary of
the Company) to be an Unrestricted Subsidiary unless such
Subsidiary owns any Capital Stock or Indebtedness of, or
owns or holds any Lien on any property of, the Company or
any other Subsidiary of the Company that is not a Subsidiary
of the Subsidiary to be so designated; provided, however,
that either (a) the Subsidiary to be so designated has total
assets of $1,000 or less or (b) if such Subsidiary has
assets greater than $1,000, then such designation would be
permitted under Section 4.04 hereof as a "Restricted
Payment". The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary;
provided, however, that immediately after giving pro forma
effect to such designation (1) the Company could incur $1.00
of additional Indebtedness if it complies with the
Consolidated Coverage Ratio limitations in Section 4.03
hereof and (2) no Default shall have occurred and be
continuing. Any such designation by the Board of Directors
shall be evidenced to the Trustee by promptly filing with
the Trustee a copy of the Board Resolution giving effect to
such designation and an Officers' Certificate certifying
that such designation complies with the foregoing
provisions.
"U.S. Government Obligations" means direct
obligations (or certificates representing an ownership
interest in such obligations) of the United States of
America (including any agency or instrumentality thereof)
for the payment of which the full faith and credit of the
United States of America is pledged and which are not
callable or redeemable at the issuer's option.
"Voting Stock" of a corporation means all classes
of Capital Stock of such corporation then outstanding and
normally entitled to vote in the election of directors.
"Wholly Owned Subsidiary" means a Restricted
Subsidiary of the Company all the Capital Stock of which
(other than directors' qualifying shares) is owned by the
Company or another Wholly Owned Subsidiary.
SECTION 1.02. Other Definitions.
Term Defined in
Section
"Affiliate Transaction" 4.07
<PAGE>
22
"Agent Members" 2.01(b)
"Allocable Excess Proceeds" 4.06(b)
"Bankruptcy Law" 6.01
"Blockage Notice" 10.03
"CEDEL" 2.01(a)
"covenant defeasance option" 8.01(b)
"Custodian" 6.01
"Euroclear" 2.01(a)
"Event of Default" 6.01
"Excess Proceeds" 4.06(a)
"Global Securities" 2.01(b)
"Guarantor Blockage Notice" 11.04
"Guarantor Payment Blockage Period" 11.04
"Initial Purchasers" 2.01(a)
"legal defeasance option" 8.01(b)
"Legal Holiday" 12.08
"Non-Global Purchasers" 2.01(c)
"Offer" 4.06
"Offer Period" 4.06
"pay the Securities" 10.03
"Paying Agent" 2.03
"Payment Blockage Period" 10.03
"Purchase Agreement" 2.01(a)
"Purchase Date" 4.06
"Registrar" 2.03
"Regulation S" 2.01(a)
"Regulation S Global Securities" 2.01(a)
"Reports" 4.06
"Restricted Global Securities" 2.01(a)
"Restricted Payment" 4.04
"Restricted Securities" 2.01(c)
"Rio Guarantee" 11.01
"Rule 144A" 2.01(a)
"Successor Company" 5.01
"10 5/8% Notes" 1.01
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act. This Indenture is subject to the mandatory
provisions of the TIA which are incorporated by reference in
and made a part of this Indenture. The following TIA terms
have the following meanings:
<PAGE>
23
"Commission" means the SEC.
"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 indenture securities means the
Company and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that
are defined by the TIA, defined by TIA reference to another
statute or defined by SEC rule have the meanings assigned to
them by such definitions.
SECTION 1.04. Rules of Construction. Unless the
context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has
the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without
limitation;
(5) words in the singular include the plural and
words in the plural include the singular;
(6) unsecured Indebtedness shall not be deemed to
be subordinate or junior to Secured Indebtedness merely
by virtue of its nature as unsecured Indebtedness;
(7) the principal amount of any noninterest
bearing or other discount security at any date shall be
the principal amount thereof that would be shown on a
balance sheet of the issuer dated such date prepared in
accordance with GAAP and accretion of principal on such
security shall be deemed to be the Incurrence of
Indebtedness; and
<PAGE>
24
(8) the principal amount of any Preferred Stock
shall be the greater of (i) the maximum liquidation value
of such Preferred Stock or (ii) the maximum mandatory
redemption or mandatory repurchase price with respect
to such Preferred Stock.
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating. The Initial Notes
and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A, which is hereby
incorporated in and expressly made a part of this Indenture.
The Exchange Notes and the Trustee's certificate of
authentication shall be substantially in the form of
Exhibit B, which is hereby incorporated in and expressly
made a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject,
if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Company). The
Company shall furnish any such legend not contained in
Exhibit A and Exhibit B to the Trustee in writing. Each
Security shall be dated the date of its authentication. The
terms of the Securities set forth in Exhibit A are part of
the terms of this Indenture,
(a) Global Securities. The Initial Notes are
being offered and sold by the Company pursuant to a Purchase
Agreement, dated February 4, 1997, among the Company,
Salomon Brothers Inc and BancAmerica Securities, Inc. (the
"Initial Purchasers") (the "Purchase Agreement").
Initial Notes offered and sold in reliance on
Regulation S under the Securities Act ("Regulation S"), as
provided in the Purchase Agreement, shall be issued
initially in the form of a single, permanent global Security
in definitive, fully registered form without interest
coupons with the Global Securities Legend and Restricted
Securities Legend set forth in Exhibit A hereto (the
"Regulation S Global Security") which shall be deposited on
behalf of the purchasers of the Initial Notes represented
thereby with the Trustee, at its New York office, as
custodian, for the Depositary, and registered in the name of
the Depositary or the nominee of the Depositary for the
accounts of designated agents holding on behalf of the
Euroclear System ("Euroclear") or Centrale de Livraison de
Valeurs Mobileres S.A. ("CEDEL"), duly executed by the
Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Regulation
S Global Security may from time to time be increased or
decreased by adjustments made on the
<PAGE>
25
records of the Trustee and the Depositary or its nominee,
as the case may be, as hereinafter provided.
Initial Notes offered and sold to QIBs in reliance
on Rule 144A under the Securities Act ("Rule 144A") as
provided in the Purchase Agreement, shall be issued
initially in the form of a single, permanent global Security
in definitive, fully registered form without interest
coupons with the Global Securities Legend and Restricted
Securities Legend set forth in Exhibit A hereto (the
"Restricted Global Security"), which shall be deposited on
behalf of the purchasers of the Initial Notes represented
thereby with the Trustee, at its New York office, as
custodian for the Depositary, and registered in the name of
the Depositary or a nominee of the Depositary, duly executed
by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the
Restricted Global Security may from time to time be
increased or decreased by adjustments made on the records of
the Trustee and the Depositary or its nominee as hereinafter
provided.
(b) Book-Entry Provisions. This Section 2.01(b)
shall apply only to the Regulation S Global Security and the
Restricted Global Security (the "Global Securities")
deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall,
in accordance with this Section 2.01(b), authenticate and
deliver initially one or more Global Securities that
(a) shall be registered in the name of the Depositary for
such Global Security or Global Securities or the nominee of
such Depositary and (b) shall be delivered by the Trustee to
such Depositary or pursuant to such Depositary's
instructions or held by the Trustee as custodian for the
Depositary.
Members of, or participants in, the Depositary
("Agent Members") shall have no rights under this Indenture
with respect to any Global Security held on their behalf by
the Depositary or by the Trustee as the custodian of the
Depositary or under such Global Security, and the Depositary
may be treated by the Company, the Trustee and any agent of
the Company or the Trustee as the absolute owner of such
Global Security for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall (i) prevent the Company,
the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other
authorization furnished by the Depositary or (ii) impair,
as between the Depositary and its Agent Members, the operation
of customary practices of such Depositary governing the
exercise of the rights of a holder of a beneficial interest
in any Global Security.
(c) Certificated Securities. Except as provided
in Section 2.09, owners of beneficial interests in Global
Securities will not be entitled to receive physical
<PAGE>
26
delivery of certificated Securities. Purchasers of Initial
Notes who are not QIBs and did not purchase Initial Notes sold
in reliance on Regulation S under the Securities Act (referred
to herein as the "Non-Global Purchasers") will receive
certificated Initial Notes bearing the Restricted Securities
Legend set forth in Exhibit A hereto ("Restricted
Securities"); provided, however, that upon transfer of such
certificated Initial Notes to a QIB or in accordance with
Regulation S, such certificated Initial Notes will, unless
the relevant Global Security has previously been exchanged,
be exchanged for an interest in a Global Security pursuant
to the provisions of Section 2.06 hereof. Restricted
Securities will bear the Restricted Securities Legend set
forth on Exhibit A unless removed in accordance with
Section 2.06(b) hereof.
After a transfer of any Initial Notes during the
period of the effectiveness of a Shelf Registration Statement
with respect to the Initial Notes, all requirements pertaining
to legends on such Initial Note will cease to apply, the
requirements requiring any such Initial Note issued to
certain Holders be issued in global form will cease to apply,
and a certificated Initial Note without legends will be
available to the Holder of such Initial Notes. Upon the
consummation of a Registered Exchange Offer with respect
to the Initial Notes pursuant to which Holders of Initial
Notes are offered Exchange Notes in exchange for their
Initial Notes, all requirements that Initial Notes
issued to certain Holders be issued in global form will
cease to apply and (i) certificated Initial Notes with the
Restricted Securities Legend set forth in Exhibit A hereto
will be available to Holders of such Initial Notes that do
not exchange their Initial Notes, and (ii) Exchange Notes in
certificated form will be available to Holders that exchange
such Initial Notes in such Registered Exchange Offer.
SECTION 2.02. Execution and Authentication. Two
Officers shall sign the Securities for the Company by manual
or facsimile signature. The Company's seal shall be
impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
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 an authorized
signatory of the Trustee manually signs the certificate of
authentication on the Security. The signature shall be
conclusive evidence, and the only evidence, that the Security
has been authenticated under this Indenture.
<PAGE>
27
The Trustee shall authenticate and deliver
(1) Initial Notes for original issue in an aggregate
principal amount of $125,000,000, and (2) Exchange Notes for
issue only in a Registered Exchange Offer, pursuant to the
Registration Agreement, for Initial Notes for a like
principal amount of Initial Notes in each case, upon a
written order of the Company signed by two Officers. Such
order shall specify the amount of the Securities to be
authenticated, the date on which the original issue of
Securities is to be authenticated, whether the Securities
are to be Initial Notes or Exchange Notes and shall further
provide instructions concerning registration, amounts for
each Holder and delivery. The aggregate principal amount of
Securities outstanding at any time may not exceed that
amount except as provided in Section 2.07.
The Trustee may appoint an authenticating agent
reasonably acceptable to the Company to authenticate the
Securities. Unless limited by the terms of such
appointment, 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 any Registrar, Paying Agent or agent for
service of notices and demands.
SECTION 2.03. Registrar and Paying Agent. The
Company shall maintain an office or agency where Securities
may be presented for registration of transfer or for
exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying
Agent"). The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company
may have one or more co-registrars and one or more
additional paying agents. The term "Paying Agent" includes
any additional paying agent.
The Company shall enter into an appropriate agency
agreement with any Registrar, Paying Agent or co-registrar
not a party to this Indenture, which shall incorporate the
terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The
Company shall notify the Trustee of the name and address of
any such agent. If the Company fails to maintain a
Registrar or Paying Agent, the Trustee shall act as such and
shall be entitled to appropriate compensation therefor
pursuant to Section 7.07. The Company or any of its
domestically incorporated Wholly Owned Subsidiaries may act
as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as
Registrar and Paying Agent in connection with the
Securities.
<PAGE>
28
SECTION 2.04. Paying Agent To Hold Money in
Trust. At least one Business Day prior to each due date of
the principal and interest on any Security, the Company
shall deposit with the Paying Agent a sum sufficient to pay
such principal and interest when so becoming due. The
Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall
hold in trust for the benefit of Securityholders or the
Trustee all money held by the Paying Agent for the payment
of principal of or interest on the Securities and shall
notify the Trustee of any default by the Company in making
any such payment. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate the money held by it as
Paying Agent and hold it as a separate trust fund. The
Company at any time may require a Paying Agent to pay all
money held by it to the Trustee and to account for any funds
disbursed by the Paying Agent. Upon complying with this
Section, the Paying Agent shall have no further liability
for the money delivered to the Trustee.
SECTION 2.05. 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 shall furnish to the Trustee,
in writing at least five Business Days before each interest
payment date and at such other times as the Trustee may
request in writing, a list in such form and as of such date
as the Trustee may reasonably require of the names and
addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. The
Securities shall be issued in registered form and shall be
transferable only upon the surrender of a Security for
registration of transfer. When a Security is presented to
the Registrar or a co-registrar with a request to register a
transfer, the Registrar shall register the transfer as
requested if the requirements of Section 8-401(l) of the
Uniform Commercial Code are met. When Securities are
presented to the Registrar or a co-registrar with a request
to exchange them for an equal principal amount of Securities
of other denominations, the Registrar shall make the
exchange as requested if the same requirements are met. To
permit registration of transfers and exchanges, the Company
shall execute and, upon receipt of an Officer's Certificate,
the Trustee shall authenticate Securities at the Registrar's
or co-registrar's request. The Company may require that a
Securityholder requesting a transfer or exchange pay a sum
sufficient to pay all taxes, assessments or other
governmental charges in connection with any transfer or
exchange pursuant to this Section. The Company shall not be
required to make and the Registrar need not register
transfers or exchanges of Securities selected for redemption
(except, in the case of Securities to be redeemed in part,
the portion thereof not to be redeemed) or any Securities
for a period of 15 days before a selection of Securities to
be redeemed or 15 days before an interest payment date.
<PAGE>
29
Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the
Paying Agent, the Registrar or any co-registrar may deem and
treat the person in whose name a 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 none of the Company, the
Trustee, the Paying Agent, the Registrar or any co-registrar
shall be affected by notice to the contrary.
All Securities issued upon any transfer or
exchange pursuant to the terms of this Indenture will
evidence the same debt and will be entitled to the same
benefits under this Indenture as the Securities surrendered
upon such transfer or exchange.
(a) Notwithstanding any provision to the contrary
herein, so long as a Global Security remains outstanding and
is held by or on behalf of the Depositary, transfers of a
Global Security, in whole or in part, or of any beneficial
interest therein, shall only be made in accordance with
Section 2.01(b) and this Section 2.06(a); provided, however,
that beneficial interests in a Global Security may be
transferred to Persons who take delivery thereof in the form
of a beneficial interest in the same Global Security in
accordance with the transfer restrictions set forth in the
Restricted Securities Legend and under the heading "Notice
to Investors" in the Offering Memorandum dated February 4,
1997.
(i) Subject to clauses (ii) through (v) of this
Section 2.06(a), transfers of a Global Security shall
be limited to transfers of such Global Security in
whole, but not in part, to nominees of the Depositary
or to a successor of the Depositary or such successor's
nominee.
(ii) Restricted Global Security to Regulation S
Global Security. If a holder of a beneficial interest
in the Restricted Global Security deposited with the
Depositary or the Trustee as custodian for the
Depositary wishes at any time to exchange its interest
in such Restricted Global Security for an interest in
the Regulation S Global Security, or to transfer its
interest in such Restricted Global Security to a Person
who is required to take delivery thereof in the form of
an interest in the Regulation S Global Security, such
holder may, subject to the rules and procedures of the
Depositary, exchange or cause the exchange of such
interest for an equivalent beneficial interest in the
Regulation S Global Security. Upon receipt by the
Trustee, as Registrar, at its office in The City of New
York of (1) instructions given in accordance with the
Depositary's procedures from an Agent Member directing
the Trustee to credit or cause to be credited a
beneficial interest in the Regulation S Global
<PAGE>
30
Security in an amount equal to the beneficial interest
in the Restricted Global Security to be exchanged, (2)
a written order given in accordance with the Depositary's
procedures containing information regarding the participant
account of the Depositary and, in the case of a transfer
pursuant to and in accordance with Regulation S, the
Euroclear or CEDEL account to be credited with such increase,
(3) in the case of a transfer, a certificate in the form
of Exhibit C attached hereto given by the holder of such
beneficial interest stating that the transfer of such
interest has been made in compliance with the transfer
restrictions applicable to the Global Securities and
(A) pursuant to and in accordance with Regulation S,
(B) that the Security being transferred is not a "restricted
security" as defined in Rule 144 under the Securities
Act, or (C) stating that the Person transferring such
interest reasonably believes that the Person acquiring
such interest in the Regulation S Global Security is a
QIB and is obtaining such beneficial interest in a
transaction meeting the requirements of Rule 144A and
(4) such opinion of counsel as the Trustee may
reasonably request to ensure that the requested
transfer or exchange is being made pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, then
the Trustee, as Registrar, shall instruct the
Depositary to reduce or cause to be reduced the
principal amount of the Restricted Global Security and
to increase or cause to be increased the principal
amount of the Regulation S Global Security by the
aggregate principal amount of the beneficial interest
in the Restricted Global Security to be exchanged, to
credit or cause to be credited to the account of the
Person specified in such instructions a beneficial
interest in the Regulation S Global Security equal to
the reduction in the principal amount of the Restricted
Global Security, and to debit or cause to be debited
from the account of the Person making such exchange or
transfer the beneficial interest in the Restricted
Global Security that is being exchanged or transferred.
(iii) Regulation S Global Security to
Restricted Global Security. If a holder of a beneficial
interest in the Regulation S Global Security deposited
with the Depositary or with the Trustee as custodian for
the Depositary wishes at any time to transfer its
interest in such Regulation S Global Security to a
Person who is required to take delivery thereof in
the form of an interest in the Restricted Global
Security, such holder may, subject to the rules and
procedures of Euroclear or CEDEL, as the case may
be, and the Depositary, exchange or cause the exchange
of such interest for an equivalent beneficial interest
in the Restricted Global Security. Upon receipt by the
Trustee, as Registrar, at its office in The City of New
York of (1) instructions from Euroclear or CEDEL, if
applicable, and the Depositary, directing the Trustee,
as Registrar, to credit or cause to be credited a
beneficial interest in the
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31
Restricted Global Security equal to the beneficial
interest in the Regulation S Global Security to be
exchanged, such instructions to contain information
regarding the participant account with the Depositary
to be credited with such increase, (2) a written order
given in accordance with the Depositary's procedures
containing information regarding the participant
account of the Depositary, (3) a certificate in the
form of Exhibit D attached hereto given by the holder
of such beneficial interest and stating that the
Person transferring such interest in the Regulation S
Global Security reasonably believes that the Person
acquiring such interest in the Restricted Global
Security is a QIB and is obtaining such beneficial
interest in a transaction meeting the requirements
of Rule 144A and (4) such opinion of counsel as the
Trustee may reasonably request to ensure that the
requested transfer or exchange is being made pursuant
to an exemption from, or in a transaction not subject
to, the registration requirements of the Securities
Act, then Euroclear or CEDEL or the Trustee, as
Registrar, as the case may be, will instruct the
Depositary to reduce or cause to be reduced the
Regulation S Global Security and to increase or cause
to be increased the principal amount of the Restricted
Global Security by the aggregate principal amount of
the beneficial interest in the Regulation S Global
Security to be exchanged, and the Trustee, as
Registrar, shall instruct the Depositary, concurrently
with such reduction, to credit or cause to be credited
to the account of the Person specified in such
instructions a beneficial interest in the
Restricted lobal Security equal to the reduction in
the principal amount of the Regulation S Global Security
and to debit or cause to be debited from the account of
the Person making such transfer the beneficial interest
in the Regulation S Global Security that is being
transferred.
(iv) Global Security to Restricted Security. If a
holder of a beneficial interest in a Global Security
deposited with the Depositary or with the Trustee as
custodian for the Depositary wishes at any time to
transfer its interest in such Global Security to a
Person who is required to take delivery thereof in the
form of a Restricted Security, such holder may, subject
to the rules and procedures of Euroclear or CEDEL, if
applicable, and the Depositary, cause the exchange of
such interest for one or more Restricted Securities of
any authorized denomination or denominations and of the
same aggregate principal amount. Upon receipt by the
Trustee, as Registrar, at its office in The City of New
York of (1) instructions from Euroclear or CEDEL, if
applicable, and the Depositary directing the Trustee,
as Registrar, to authenticate and deliver one or more
Restricted Securities of the same aggregate principal
amount as the beneficial interest in the Global
Security to be exchanged, such instructions to contain
the name or names of the designated transferee or
ransferees, the authorized denomination or denominations
of the Restricted Securities to be so
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32
issued and appropriate delivery instructions, (2) a
certificate in the form of Exhibit E attached hereto
given by the holder of such beneficial interest and
stating that the Person transferring such interest in
such Global Security reasonably believes that the
Person acquiring the Restricted Securities for which
such interest is being exchanged is an institutional
"accredited investor" (as defined in Rule 501(a)(1),
(2), (3) or (7) of Regulation D under the Securities
Act) and is acquiring such Restricted Securities having
an aggregate principal amount of not less than $100,000
for its own account or for one or more accounts as to
which the transferee exercises sole investment discretion,
(3) a certificate in the form of Exhibit F attached hereto
given by the Person acquiring the Restricted Securities
for which such interest is being exchanged, to the effect
set forth therein, and (4) such other certifications,
legal opinions or other information as the Company or
the Trustee may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or
in a transaction not subject to, the registration
requirements of the Securities Act, then Euroclear or
CEDEL, if applicable, or the Trustee, as Registrar, as
the case may be, will instruct the Depositary to reduce
or cause to be reduced such Global Security by the
aggregate principal amount of the beneficial interest
therein to be exchanged and to debit or cause to be
debited from the account of the Person making such
transfer the beneficial interest in the Global Security
that is being transferred, and concurrently with such
reduction and debit the Company shall execute, and the
Trustee shall authenticate and deliver, one or more
Restricted Securities of the same aggregate principal
amount in accordance with the instructions referred to
above.
(v) Restricted Security to Global Security. If a
holder of a Restricted Security wishes at any time to
transfer such Restricted Security to a Person who is
required to take delivery thereof in the form of an
interest in a Global Security, such holder may, subject
to the rules and procedures of Euroclear or CEDEL, if
applicable, and the Depositary, cause the exchange of
such Restricted Security for an equivalent beneficial
interest in the appropriate Global Security. Upon
receipt by the Trustee, as Registrar, at its office in
The City of New York of (1) such Restricted Security,
duly endorsed as provided herein, (2) instructions from
such holder directing the Trustee, as Registrar, to
credit or cause to be credited a beneficial interest in
the applicable Global Security equal to the principal
amount of the Restricted Security to be exchanged, such
instructions to contain information regarding the
participant account with the Depositary to be credited
with such increase, (3) a certificate in the form of
Exhibit C attached hereto (in the event that the
applicable Global Security is the Regulation S Global
Security) or in the form of Exhibit D attached hereto
(in the event that the applicable Global Security is
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33
the Restricted Global Security), and (4) such opinion
of counsel as the Trustee may reasonably request to
ensure that the requested transfer or exchange is being
made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the
Securities Act then the Trustee, as Registrar, shall
cancel or cause to be cancelled such Restricted
Security and shall instruct the Depositary to increase
or cause to be increased such Global Security by the
aggregate principal amount of the beneficial interest
in the Restricted Security to be exchanged and to
credit or cause to be credited to the account of the
Person specified in such instructions a beneficial
interest in the applicable Global Security equal to the
principal amount of the Restricted Security so
cancelled.
(vi) Restricted Security to Restricted Security.
If a holder of a Restricted Security wishes at any time
to transfer such Restricted Security to a Person who is
required to take delivery thereof in the form of a
Restricted Security, such holder may, subject to the
restrictions on transfer set forth herein and in such
Restricted Security, cause the exchange of such
Restricted Security for one or more Restricted
Securities of any authorized denomination or
denominations and of the same aggregate principal
amount. Upon receipt by the Trustee, as Registrar, at
its office in The City of New York of (1) such
Restricted Security, duly endorsed as provided herein,
(2) instructions from such holder directing the
Trustee, as Registrar, to authenticate and deliver one
or more Restricted Securities of the same aggregate
principal amount as the Restricted Security to be
exchanged, such instructions to contain the name or
authorized denomination or denominations of the
Restricted Securities to be so issued and appropriate
delivery instructions, (3) a certificate from the
holder of the Restricted Security to be exchanged in
the form of Exhibit E attached hereto, (4) a
certificate in the form of Exhibit F attached hereto
given by the Person acquiring the Restricted Securities
for which such interest is being exchanged, to the
effect set forth therein, and (5) such other
certifications, legal opinions or other information as
the Company or the Trustee may reasonably require to
confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act, then
the Trustee, as Registrar, shall cancel or cause to be
cancelled such Restricted Security and concurrently
therewith, the Company shall execute, and the Trustee
shall authenticate and deliver, one or more Restricted
Securities of the same aggregate principal amount, in
accordance with the instructions referred to above.
(vii) Other Exchanges. In the event that a
Global Security is exchanged for Securities in definitive
registered form pursuant to Section 2.09,
<PAGE>
34
prior to the consummation of a Registered Exchange
Offer or the effectiveness of a Shelf Registration
Statement with respect to such Securities, such
Securities may be exchanged only in accordance with
such procedures as are substantially consistent with
the provisions of clauses (ii) through (v) above
(including the certification requirements intended
to ensure that such transfers comply with Rule 144A
or Regulation S under the Securities Act, as the case
may be) and such other procedures as may from time to
time be adopted by the Company.
(viii) Restricted Period. Prior to the
termination of the "restricted period" (as defined in
Regulation S under the Securities Act) with respect to
the issuance of the Initial Notes, transfers of
interests in the Regulation S Global Security to "U.S.
persons" (as defined in Regulation S under the
Securities Act) shall be limited to transfers made
pursuant to the provisions of Section 2.06(a)(iii). The
Company shall provide an Officer's Certificate advising
the Trustee as to the termination of the restricted
period and the Trustee may rely conclusively thereon.
(b) Except in connection with a Registered Exchange
Offer or a Shelf Registration Statement contemplated by and
in accordance with the terms of the Registration Agreement,
if Initial Notes are issued upon the transfer, exchange or
replacement of Initial Notes bearing the Restricted Securities
Legend set forth in Exhibit A hereto, or if a request is made
to remove such Restricted Securities Legend on Initial Notes,
the Initial Notes so issued shall bear the Restricted Securities
Legend, or the Restricted Securities Legend shall not be removed,
as the case may be, unless there is delivered to the Company or
the Trustee such satisfactory evidence, including an Opinion of
Counsel, as may be reasonably required by the Company or the
Trustee, that neither the legend nor the restrictions on transfer
set forth therein are required to ensure that transfers thereof
comply with the provisions of Rule 144A, Rule 144 or Regulation
S under the Securities Act or, with respect to Restricted
Securities, that such Securities are not "restricted" within the
meaning of Rule 144 under the Securities Act. Upon provision of
such satisfactory evidence, the Trustee, upon receipt of a written
order from the Company in accordance with Section 2.02, shall
authenticate and deliver Initial Notes that do not bear the legend.
(c) The Trustee shall have no responsibility for
any actions taken or not taken by the Depositary.
SECTION 2.07. Replacement Securities. If a mutilated
Security is surrendered to the Registrar or if the Holder of a
Security (including without limitation temporary securities issued
in accordance with Section 2.09, if any) claims
<PAGE>
35
that the Security has been lost, destroyed or wrongfully taken,
the Company shall issue and the Trustee, upon written order
of the Company signed by two Officers, shall authenticate a
replacement Security if the requirements of Section 8-405 of
the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee or the Company.
If required by the Trustee or the Company, such Holder shall
furnish an indemnity bond sufficient in the judgment of the
Company and the Trustee to protect the Company, the Trustee,
the Paying Agent, the Registrar and any co-registrar from any
loss which any of them may suffer if a Security is replaced.
The Company and the Trustee may charge the Holder for their
expenses in replacing a Security.
Every replacement Security is an additional obligation
of the Company.
SECTION 2.08. Outstanding Securities.
Securities outstanding at any time are all Securities
authenticated by the Trustee except for those canceled by
it, those delivered to it for cancellation and those described
in this Section as not outstanding. A Security does not cease
to be outstanding because the Company or an Affiliate of the
Company holds the Security.
If a Security is replaced pursuant to Section
2.07, it ceases to be outstanding unless the Trustee and the
Company receive proof satisfactory to them that the replaced
Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in
trust, in accordance with this Indenture, on a redemption date
or maturity date money sufficient to pay all principal and
interest payable on that date with respect to the Securities
(or portions thereof) to be redeemed or maturing, as the case
may be, and the Paying Agent is not prohibited from paying
such money to the Securityholders on that date pursuant to
the terms of this Indenture, then on and after that date
such Securities (or portions thereof) cease to be outstanding
and interest on them ceases to accrue.
In determining whether the Holders of the
required principal amount of Securities have concurred in any
direction or consent or any amendment, modification or other
change to the Indenture, Securities owned by the Company or
by an Affiliate of the Company shall be disregarded, except
that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver
or consent or any amendment, modification or other change to
the Indenture, only Securities which the Trustee knows are
so owned shall be so disregarded. Securities so owned which
have been pledged in good faith shall not be disregarded if
the pledgee establishes to the satisfaction of the Trustee
the pledgee's right so to act with
<PAGE>
36
respect to the Securities and that the pledgee is not the
Company or an Affiliate of the Company.
SECTION 2.09. Temporary Securities. (a)
Until definitive Securities are ready for delivery, the
Company may prepare and, upon receipt of a written order of the
Company signed by two Officers, the Trustee shall authenticate
temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for
temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate
definitive Securities and deliver them in exchange for
temporary Securities.
(b) A Global Security deposited with the
Depositary or with the Trustee as custodian for the Depositary
pursuant to Section 2.01 shall be transferred to the beneficial
owners thereof only if such transfer complies with Section
2.06 and (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such Global
Security or if at any time such Depositary ceases to be a
"clearing agency" registered under the Exchange Act and a
successor depositary is not appointed by the Company within
90 days of such notice, or (ii) an Event of Default has
occurred and is continuing.
(c) Any Global Security that is transferable
to the beneficial owners thereof pursuant to this Section shall
be surrendered by the Depositary to the Trustee located in the
Borough of Manhattan, The City of New York, to be so
transferred, in whole or from time to time in part, without
charge, and the Trustee shall authenticate and deliver, upon
such transfer of each portion of such Global Security, an
equal aggregate principal amount of Initial Notes of
authorized denominations. Any portion of a Global Security
transferred pursuant to this Section shall be executed,
authenticated and delivered only in denominations of $1,000
and any integral multiple thereof and registered in such
names as the Depositary shall direct. Any Initial Note
delivered in exchange for an interest in the Restricted
Global Security shall, except as otherwise provided by
Section 2.06(b) bear the Restricted Securities Legend set
forth in Exhibit A hereto. Any Initial Note delivered in
exchange for an interest in the Regulation S Global Security
shall, except as otherwise provided by Section 2.06(b), bear
the Restricted Securities Legend set forth in Exhibit A
hereto.
(d) Subject to the provisions of Section
2.09(c), the registered Holder of a Global Security may grant
proxies and otherwise authorize any Person, including Agent
Members and Persons that may hold interests through Agent
Members, to take any action which a Holder is entitled to
take under this Indenture or the Securities.
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37
(e) In the event of the occurrence of
either of the events specified in Section 2.09(b), the
Company will promptly make available to the Trustee a
reasonable supply of certificated Securities in definitive,
fully registered form without interest coupons.
SECTION 2.10. Cancellation. The Company at
any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall
forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee
and no one else shall cancel and destroy (subject to the
record retention requirements of the Exchange Act) all
Securities surrendered for registration of transfer, exchange,
payment or cancellation and deliver a certificate of such
destruction to the Company unless the Company directs the
Trustee to deliver canceled Securities to the Company. The
Company may not issue new Securities to replace Securities
it has redeemed, paid or delivered to the Trustee for
cancellation.
SECTION 2.11. Defaulted Interest. If the
Company defaults in a payment of interest on the Securities,
the Company shall pay defaulted interest (plus interest on
such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the
persons who are Securityholders on a subsequent special
record date. The Company shall fix or cause to be fixed any
such special record date and payment date to the reasonable
satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date,
the payment date and the amount of defaulted interest to be
paid.
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee. If the
Company elects or is required to redeem Securities pursuant
to paragraphs 6 or 7 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal
amount of Securities to be redeemed and the paragraph of the
Securities pursuant to which the redemption will occur.
The Company shall give each notice to the
Trustee provided for in this Section at least 60 days but
not more than 90 days prior to the redemption date unless
the Trustee consents to a shorter period. Such notice
shall be accompanied by an Officers' Certificate and an
Opinion of Counsel from the Company to the effect that
such redemption will comply with the conditions herein.
If fewer than all the Securities are to be redeemed, the
record date relating to such redemption shall be
<PAGE>
38
selected by the Company and given to the Trustee, which
record date shall be not less than 15 days after the
date of notice to the Trustee.
SECTION 3.02. Selection of Securities
To Be Redeemed. If fewer than all the Securities are to
be redeemed, the Trustee shall select the Securities to
be redeemed pro rata or by lot or by a method that complies
with applicable legal and securities exchange requirements,
if any, and that the Trustee considers fair and appropriate
and in accordance with methods generally used at the time of
selection by fiduciaries in similar circumstances. The
Trustee shall make the selection from outstanding Securities
not previously 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 the Trustee selects shall be
in amounts of $1,000 or a whole multiple of $1,000.
Provisions of this Indenture that apply to Securities called
for redemption also apply to portions of Securities called
for redemption. The Trustee shall notify the Company
promptly of the Securities or portions of Securities to be
redeemed.
SECTION 3.03. Notice of Redemption. At
least 30 days but not more than 60 days before a date for
redemption of Securities, the Company shall mail a notice of
redemption by first-class mail to each Holder of Securities
to be redeemed.
The notice shall identify the Securities to be
redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption
price;
(5) if fewer than all the outstanding Securities
are to be redeemed, the identification and principal amounts
of the particular Securities to be redeemed;
(6) that, unless the Company defaults in making
such redemption payment or the Paying Agent is prohibited
from making such payment pursuant to the terms of this
Indenture, interest on Securities (or portion thereof)
called for redemption ceases to accrue on and after the
redemption date;
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39
(7) the paragraph of the Securities pursuant
to which the Securities called for redemption are being
redeemed; and
(8) that no representation is made as to the
correctness or accuracy of the CUSIP number, if any, listed
in such notice or printed on the Securities.
At the Company's written request, the Trustee
shall give the notice of redemption in the Company's name
and at the Company's expense. In such event, the Company
shall provide the Trustee with the information required
by this Section at least 50 days prior to the redemption date.
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 and
at the redemption price stated in the notice. Upon surrender
to the Paying Agent, such Securities shall be paid at the
redemption price stated in the notice, plus accrued interest
to the redemption date. Failure to give notice or any defect
in the notice to any Holder shall not affect the validity
of the notice to any other Holder.
SECTION 3.05. Deposit of Redemption Price.
At least one Business Day prior to the redemption date, the
Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate
and hold in trust) money sufficient to pay the redemption
price of and accrued interest on all Securities to be
redeemed on that date other than Securities or portions
of Securities called for redemption which have been delivered
by the Company to the Trustee for cancellation.
SECTION 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the
Company shall execute and, upon receipt of a written order
of the Company signed by two Officers, the Trustee shall
authenticate for the Holder (at the Company's expense) a
new Security equal in principal amount to the unredeemed
portion of the Security surrendered.
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities. At
least one Business Day prior to any due date for the payment
of principal of and interest on the Securities the Company
shall deposit with the Paying Agent money sufficient to pay
all principal
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40
and interest on the Securities due on such due date.
Principal and interest shall be considered paid on
the date due if on such date the Trustee or the Paying Agent
holds in accordance with this Indenture money sufficient to
pay all principal and interest then due and the Trustee or
the Paying Agent, as the case may be, is not prohibited from
paying such money to the Securityholders on that date
pursuant to the terms of this Indenture.
The Company shall pay interest on overdue
principal at the rate specified therefor in the Securities,
and it shall pay interest on overdue installments of
interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. At the Company's
expense, the Company shall file with the Trustee and provide
Security holders at the Company's expense, within 15 days
after it files them with the SEC, copies of its annual
report and other reports which the Company is required to
file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act. Notwithstanding that the Company may not be
required to remain subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act, the Company
shall continue to file with the SEC and provide the Trustee
and Securityholders with the annual reports and other
reports which are specified in Sections 13 and 15(d) of
the Exchange Act. The Company also shall comply with the
other provisions of TIA Sec. 314(a).
SECTION 4.03. Limitation on Indebtedness.
(a) The Company shall not, and shall not permit any
Restricted Subsidiary to, Incur any Indebtedness; provided,
however, that the Company or any Restricted Subsidiary may
Incur Indebtedness if on the date thereof the Consolidated
Coverage Ratio would be greater than 2.00:1.00.
(b) Notwithstanding the foregoing
limitation, the Company and its Restricted Subsidiaries
may Incur the following Indebtedness:
(i) Indebtedness under the Credit Agreement in an
aggregate amount outstanding at any time not to exceed
$175 million (less the amount of any permanent
reductions in the amount of available borrowings);
(ii) Indebtedness outstanding under Permitted FF&E
Financings in an amount not to exceed 100% of the lower
of cost or fair market value of the FF&E so purchased
or leased;
<PAGE>
41
(iii) Indebtedness (other than Indebtedness
permitted by the immediately preceding paragraph or
elsewhere in this paragraph) in an aggregate principal
amount outstanding at any time not to exceed
$40 million;
(iv) Indebtedness of the Company owing to and held
by any Wholly Owned Subsidiary or Indebtedness of a
Restricted Subsidiary owing to and held by the Company
or any Wholly Owned Subsidiary; provided, however, that
any subsequent issuance or transfer of any Capital
Stock which results in any such Wholly Owned Subsidiary
ceasing to be a Wholly Owned Subsidiary or any
subsequent transfer of any such Indebtedness (except to
the Company or a Wholly Owned Subsidiary) shall be
deemed, in each case, to constitute the Incurrence of
such Indebtedness by the issuer thereof,
(v) Indebtedness represented by the Securities
and the Rio Guarantee and any Indebtedness (other than
the Indebtedness described in clauses (i) or (iv)
above) outstanding on the date of the Indenture;
(vi) Indebtedness under Interest Rate Protection
Agreements; provided, however, such Interest Rate
Protection Agreements do not increase the Indebtedness
of the Company outstanding at any time other than as a
result of fluctuations in the exchange rates or
interest rates or by reason of customary fees,
indemnities and compensation payable thereunder;
(vii) Indebtedness in connection with one or
more standby letters of credit issued in the ordinary
course of business or pursuant to self-insurance
obligations;
(viii) Indebtedness Incurred solely in respect
of performance bonds or completion guarantees, to the
extent that such Incurrence does not result in the
Incurrence by the Company or any Restricted Subsidiary
of any obligation for the payment of borrowed money to
others; and
(ix) Refinancing Indebtedness Incurred in respect
of Indebtedness Incurred pursuant to Section 4.03(a) or
clauses (ii) and (v) above.
(c) For purposes of determining the outstanding
principal amount of any particular Indebtedness Incurred
pursuant to this section 4.03, (i) Indebtedness permitted by
this section need not be permitted solely by reference to
one provision permitting such Indebtedness but may be
permitted in part by one such provision and in part by one
or more other provisions of this provision permitting such
Indebtedness and (ii) in the event that Indebtedness or any
portion thereof meets the criteria of
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42
more than one of the types of Indebtedness described
in this section, the Company, in its sole discretion,
shall classify such Indebtedness and only be required
to include the amount of such Indebtedness in one of
such clauses.
SECTION 4.04. Limitation on Restricted
Payments. (a) The Company shall not, and shall not
permit any Restricted Subsidiary to, directly or
indirectly, (i) declare or pay any dividend or make any
distribution on or in respect of its Capital Stock
(including any payment in connection with any merger or
consolidation involving the Company) except dividends or
distributions payable solely in its Capital Stock (other
than Disqualified Stock) or in options, warrants or other
rights to purchase such Capital Stock and except dividends
or distributions payable to the Company or a Restricted
Subsidiary (and, if such Restricted Subsidiary is not
wholly owned, to its other shareholders on a pro rata
basis), (ii) purchase, redeem, retire or otherwise acquire
for value any Capital Stock of the Company or any
Restricted Subsidiary held by Persons other than the
Company or a Restricted Subsidiary, (iii) purchase,
repurchase, redeem, defease or otherwise acquire or retire
for value, prior to scheduled maturity, scheduled repayment
or scheduled sinking fund payment any Subordinated
Obligations (other than the purchase, repurchase or other
acquisition of Subordinated Obligations purchased in
anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due
within one year of the date of acquisition) or (iv) make any
Investment (other than a Permitted Investment) in any Person
(any such dividend, distribution, purchase, redemption,
repurchase, defeasance, other acquisition, retirement or
Investment being herein referred to as a "Restricted
Payment") if at the time the Company or such Restricted
Subsidiary makes such Restricted Payment:
(A) a Default shall have occurred and be
continuing (or would result therefrom);
(B) the Company could not Incur at least $1.00 of
additional Indebtedness under the Consolidated Coverage
Ratio limitation set forth in Section 4.03 above; or
(C) the aggregate amount of such Restricted
Payment and all other Restricted Payments (the amount
so expended, if other than in cash, to be determined in
good faith by the Board of Directors, whose
determination shall be evidenced by a Board Resolution)
declared or made since June 30, 1995, would exceed,
without duplication, the sum of:
(1) 50% of the Consolidated Net Income
accrued during the period (treated as one
accounting period) from June 30, 1995, to the end
of
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43
the most recent fiscal quarter ending at least
45 days (or at least 30 days if the Company's
Report on Form 10-Q or 10-K for the most recent
fiscal quarter or year, as the case may be, has
been filed with the SEC) prior to the date of
such Restricted Payment (or, in case such
Consolidated Net Income shall be a deficit, minus
100% of such deficit) and minus 100% of the amount
of any write-downs, write-offs, other negative
revaluations and other negative extraordinary
charges not otherwise reflected in Consolidated
Net Income during such period;
(2) the aggregate Net Cash Proceeds received
by the Company from the issue or sale of its
Capital Stock (other than Disqualified Stock)
subsequent to June 30, 1995 (other than an
issuance or sale to a Subsidiary of the Company or
an employee stock ownership plan or other trust
established by the Company or any of its
Subsidiaries);
(3) the amount by which Indebtedness of the
Company or its Restricted Subsidiaries is reduced
on the Company's balance sheet upon the conversion
or exchange (other than by a Subsidiary)
subsequent to June 30, 1995, of any Indebtedness
of the Company or its Restricted Subsidiaries
convertible or exchangeable for Capital Stock
(other than Disqualified Stock) of the Company
(less the amount of any cash or other property
distributed by the Company or any Restricted
Subsidiary upon such conversion or exchange);
(4) the amount equal to the net reduction in
Investments resulting from (A) payments of
dividends, repayments of loans or advances or
other transfers of assets to the Company or any
Restricted Subsidiary or (B) the redesignation of
Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in
the definition of "Investment") not to exceed the
amount of Investments previously made by the
Company or any Restricted Subsidiary, which amount
was treated as a Restricted Payment, in each case
to the extent not included in Consolidated Net
Income; and
(5) $20 million.
(b) The provisions of Section 4.04(a) shall not
prohibit:
(i) any purchase or redemption of Capital Stock
of the Company or Subordinated Obligations made by
exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of the
Company (other than
<PAGE>
44
Disqualified Stock and other than Capital Stock issued
or sold to a Subsidiary or an employee stock ownership
plan or other trust established by the Company or any
of its Subsidiaries); provided, however, that (A) such
purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments and
(B) the Net Cash Proceeds from such sale shall be
excluded from clause (C)(2) of Section 4.04(a);
(ii) any purchase or redemption of Subordinated
Obligations made by exchange for, or out of the
proceeds of the substantially concurrent sale of,
Refinancing Indebtedness; provided, however, that such
purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments;
(iii) the Company or the Guarantor from
redeeming or repurchasing Capital Stock of the Company
or any Subordinated Obligation in the event that the
holder of such Capital Stock or Subordinated Obligation
has failed to qualify or to be found suitable or
otherwise eligible under a Gaming Law to remain a
holder of such Capital Stock or Subordinated
Obligation; provided, however, that the amount of such
redemption or repurchase shall be included in the
calculation of the amount of Restricted Payments;
(iv) dividends paid within 60 days after the date
of declaration thereof if at such date of declaration
such dividend would have complied with the preceding
paragraph; provided, however, that at the time of
payment of such dividend, no other Default shall have
occurred and be continuing (or result therefrom);
provided further, however, that such dividend shall be
included in the calculation of the amount of Restricted
Payments; or
(v) the Company from making Investments (other
than Investments in the Capital Stock of the Company)
the cost to the Company of which do not exceed
$30 million in the aggregate at any one time
outstanding for all such Investments made in reliance
upon this clause (v); provided further, however, that
such Investments shall be included in the calculation
of the amount of Restricted Payments.
SECTION 4.05. Limitation on Restrictions on
Distributions from Restricted Subsidiaries. The Company
shall not, and shall not permit any Restricted Subsidiary
to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary to (i) pay dividends or
make any other distributions on its Capital Stock or pay any
<PAGE>
45
Indebtedness owed to the Company, (ii) make any loans or
advances to the Company or (iii) transfer any of its
property or assets to the Company, except:
(a) any encumbrance or restriction pursuant to an
agreement in effect at or entered into on the date of
the Indenture;
(b) any encumbrance or restriction with respect to
a Restricted Subsidiary pursuant to an agreement
relating to any Indebtedness Incurred by such
Restricted Subsidiary prior to the date on which such
Restricted Subsidiary was acquired by the Company
(other than Indebtedness Incurred as consideration in,
or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or
series of related transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary or
was acquired by the Company) and outstanding on such
date;
(c) any encumbrance or restriction pursuant to an
agreement effecting a refinancing of Indebtedness
Incurred pursuant to an agreement referred to in
clause (a) or (b) of this provision or contained in any
amendment to an agreement referred to in clause (a) or
(b) of this provision; provided, however, that the
encumbrances and restrictions contained in any such
refinancing agreement or amendment are no less
favorable to the Securityholders than encumbrances and
restrictions contained in such agreements;
(d) in the case of clause (iii), any encumbrance
or restriction (1) that restricts in a customary manner
the subletting, assignment or transfer of any property
or asset that is a lease, license, conveyance or
contract or similar property or asset, (2) arising by
virtue of any transfer of, agreement to transfer,
option or right with respect to, or Lien on, any
property or assets of the Company or any Restricted
Subsidiary not otherwise prohibited by the Indenture,
or (3) arising or agreed to in the ordinary course of
business and that does not, individually or in the
aggregate, detract from the value of property or assets
of the Company or any Restricted Subsidiary in any
manner material to the Company or such Restricted
Subsidiary;
(e) any encumbrance or restriction pursuant to an
agreement relating to an acquisition of property, so
long as such encumbrance or restriction relate solely
to the property so acquired;
(f) any encumbrances or restrictions pursuant to
the Credit Agreement and any extensions or revisions
thereof; and
<PAGE>
46
(g) any encumbrance or restriction imposed by any
Gaming Authority.
SECTION 4.06. Limitation on Sales of Assets and
Subsidiary Stock. (a) The Company shall not, and shall not
permit any Restricted Subsidiary to, make any Asset
Disposition unless (i) the Company or such Restricted
Subsidiary receives consideration at the time of such Asset
Disposition at least equal to the Fair Market Value, as
determined in good faith by the Board of Directors, the
determination of which shall be evidenced by a Board
Resolution (including as to the value of all non-cash
consideration), of the shares and assets subject to such
Asset Disposition; (ii) at least 85% of the consideration
thereof received by the Company or such Restricted
Subsidiary is in the form of cash or cash equivalents;
(iii) the Company delivers an Officers' Certificate to the
Trustee certifying that such Asset Disposition complies with
clauses (i) and (ii); and (iv) an amount equal to 100% of
the Net Available Cash from such Asset Disposition is
applied by the Company (or such Restricted Subsidiary, as
the case may be) (A) first, to the extent the Company elects
(or is required by the terms of any Senior Indebtedness or
the 10 5/8% Notes), to prepay, repay or purchase Senior
Indebtedness or Indebtedness (including the 10 5/8% Notes
but other than any Preferred Stock) of a Wholly Owned
Subsidiary (in each case other than Indebtedness owed to the
Company or an Affiliate of the Company) within 270 days from
the later of the date of such Asset Disposition or the
receipt of such Net Available Cash; (B) second, to the
extent of the balance of Net Available Cash after
application in accordance with clause (A), to the extent the
Company or such Restricted Subsidiary elects, to reinvest in
Additional Assets (including by means of an Investment in
Additional Assets by a Restricted Subsidiary with Net
Available Cash received by the Company or another Restricted
Subsidiary) within 270 days from the later of such Asset
Disposition or the receipt of such Net Available Cash;
(C) third, to the extent of the balance of such Net
Available Cash after application in accordance with
clauses (A) and (B) (such balance being the "Excess
Proceeds"), to make an Offer to purchase Securities pursuant
to and subject to the conditions of the following two
paragraphs; provided, however that in connection with any
prepayment, repayment or purchase of Indebtedness pursuant
to clause (A) or (C) above, the Company or such Restricted
Subsidiary shall retire such Indebtedness and shall cause
the related loan commitment (if any) to be permanently
reduced in an amount equal to the principal amount so
prepaid, repaid or purchased. Notwithstanding the foregoing
provisions of this provision, the Company and its Restricted
Subsidiaries shall not be required to apply any Net
Available Cash in accordance with this provision except to
the extent that the aggregate Net Available Cash from all
Asset Dispositions which are not applied in accordance with
this provision exceed $15 million (taking into account
income earned on any Excess Proceeds). Pending application
of Net Available Cash pursuant to this provision, such Net
Available Cash shall be invested in Temporary Cash
Investments.
<PAGE>
47
Upon an Event of Loss incurred by the Company or
any of its Restricted Subsidiaries, the Net Available Cash
received from such Event of Loss shall be applied in the
same manner as proceeds from Asset Dispositions described
above and pursuant to the procedures set forth in Section
4.06(c) below.
(b) In the event of an Asset Disposition or Event
of Loss that requires the purchase of Securities pursuant to
Section 4.06(a)(iv)(C), the Company will be required to
purchase Securities tendered pursuant to an offer by the
Company for the Securities (the "Offer") which offer shall
be in the amount of the Allocable Excess Proceeds (as
defined below), at a purchase price of 100% of their
principal amount plus accrued interest to the Purchase Date
in accordance with the procedures (including prorationing in
the event of over subscription) set forth in the next
paragraph. If the aggregate purchase price of Securities
tendered pursuant to the Offer is less than the Allocable
Excess Proceeds, the Company may use the remaining Net
Available Cash in its general operations and the amount of
Excess Proceeds will be reset to zero. The Company shall
not be required to make an Offer for Securities pursuant to
this provision if the Excess Proceeds are less than $15
million for any particular Asset Disposition or Event of
Loss (which lesser amounts shall be carried forward for
purposes of determining whether an Offer is required with
respect to the Net Available Cash from any subsequent Asset
Disposition or Event of Loss). "Allocable Excess Proceeds"
means the product of (x) the Excess Proceeds and (y) a
fraction, the numerator of which is the aggregate principal
amount of the Securities outstanding on the date of the
Offer and the denominator of which is the sum of the
aggregate principal amount of the Securities outstanding on
the date of the Offer and the aggregate principal amount of
other Indebtedness of the Company outstanding on the date of
the Offer that is pari passu in right of payment with the
Securities and subject to terms and conditions in respect of
Asset Dispositions similar in all material respects to the
covenant described hereunder and requiring the Company to
make an offer to purchase such Indebtedness substantially at
the same time as the Offer.
(c)(1) Promptly, and in any event within 10 days
after the Company becomes obligated to make an Offer, the
Company shall be obligated to deliver to the Trustee and to
send, by first-class mail, to each Holder, a written notice
stating that the Holder may elect to have his Securities
purchased by the Company either in whole or in part (subject
to prorationing as hereinafter described in the event the
Offer is oversubscribed) in integral multiples of $1,000 of
principal amount, at the applicable purchase price. The
notice shall specify a purchase date not less than 30 days
nor more than 60 days after the date of such notice (the
"Purchase Date") and shall contain information concerning
the business of the Company which the Company in good faith
believes will enable such Holders to make an informed
decision (which at a minimum will include (i) the most
recently filed Annual Report on Form 10-K
<PAGE>
48
(including audited consolidated financial statements) of
the Company, the most recent subsequently filed Quarterly
Report on Form 10-Q and any Current Report on Form 8K of
the Company filed subsequent to such Quarterly Report, other
than Current Reports describing Asset Dispositions or Events
of Loss otherwise described in the offering materials (or
corresponding successor reports) (collectively, the
"Reports"), (ii) a description of material developments in
the Company's business subsequent to the date of the latest
of the Reports, and (iii) if material, appropriate pro forma
financial information) and all instructions and materials
necessary to tender Securities pursuant to the Offer,
together with the information contained in the next
following paragraph.
(2) Not later than the date upon which written
notice of an Offer is delivered to the Trustee as provided
below, the Company shall deliver to the Trustee an Officers'
Certificate as to (i) the amount of the Allocable Excess
Proceeds, (ii) the allocation of the Net Available Cash from
the Asset Dispositions or Event of Loss pursuant to which
such Offer is being made and (iii) the compliance of such
allocation with the provisions of the next preceding
paragraph. On such date, the Company shall also irrevocably
deposit with the Trustee or with a paying agent (or, if the
Company is acting as its own paying agent, segregate and
hold in trust) in Temporary Cash Investments an amount equal
to the Allocable Excess Proceeds to be held for payment in
accordance with the provisions of this provision. Upon the
expiration of the period for which the Offer remains open
(the "Offer Period"), the Company shall deliver to the
Trustee the Securities or portions thereof which have been
properly tendered to and are to be accepted by the Company
and which have not been properly withdrawn by the Holder(s)
thereof. The Trustee shall, on the Purchase Date, or as soon
as practicable thereafter, mail or deliver payment to each
tendering Holder in the amount of the purchase price. In
the event that the aggregate purchase price of the
Securities delivered by the Company to the Trustee is less
than the amount of Allocable Excess Proceeds, the Trustee
shall deliver the excess to the Company promptly after the
expiration of the Offer Period.
(3) Holders electing to have a Security purchased
will be required to surrender the Security, with an
appropriate form duly completed, to the Company at the
address specified in the notice at least five Business Days
prior to the Purchase Date. Holders will be entitled to
withdraw their election if the Trustee or the Company
receives not later than three Business Days prior to the
Purchase Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal
amount of the Security which was delivered for purchase by
the Holder and a statement that such Holder is withdrawing
his election to have such Security purchased. If at the
expiration of the Offer Period the aggregate principal
amount of Securities surrendered by Holders exceeds the
amount of Allocable Excess Proceeds,
<PAGE>
49
the Company shall select the Securities to be purchased on
a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Securities in
denominations of $1,000, or integral multiples thereof,
shall be purchased). 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.
(4) At the time the Company delivers Securities
to the Trustee which are to be accepted for purchase, the
Company will also deliver an Officers' Certificate stating
that such Securities are to be accepted by the Company
pursuant to and in accordance with the terms of this
provision. A Security shall be deemed to have been accepted
for purchase at the time the Trustee, directly or through an
agent, mails or delivers payment therefor to the
surrendering Holder.
(d) The Company shall comply, to the extent
applicable, with the requirements of Section 14(e) of the
Exchange Act and any other securities laws or regulations in
connection with the repurchase of Securities pursuant to
this provision. To the extent that the provisions of any
securities laws or regulations conflict with this provision,
the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its
obligations under this provision by virtue thereof.
SECTION 4.07. Limitation on Transactions with
Affiliates. (a) The Company shall not, and shall not
permit any Restricted Subsidiary to, directly or indirectly,
conduct any business, enter into or permit to exist any
transaction (including the purchase, conveyance,
disposition, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of the Company
(an "Affiliate Transaction") unless the terms of such
Affiliate Transaction are (i) set forth in writing, (ii) in
the best interest of the Company or such Restricted
Subsidiary, as the case may be, (iii) as favorable to the
Company or such Restricted Subsidiary, as the case may be,
as those that could be obtained at the time of such
transaction for a similar transaction in arm's-length
dealings with a Person who is not such an Affiliate, and
(iv) with respect to an Affiliate Transaction involving
aggregate payments or value of $1 million or greater, the
Independent Directors have determined in good faith that the
criteria set forth in clauses (ii) and (iii) are satisfied
and have approved the relevant Affiliate Transaction, such
approval to be evidenced by a Board Resolution. The
determinations pursuant to clauses (ii) and (iii) above
shall not require the Board of Directors or the Independent
Directors to obtain independent expert opinions unless, in
the sole judgment of the Board of Directors or the
Independent Directors, the Board of Directors or the
Independent Directors decide to obtain such an opinion.
<PAGE>
50
(b) The provisions of Section 4.07(a) shall not
prohibit (i) any Restricted Payment permitted to be paid
pursuant to Section 4.04, (ii) any issuance of securities,
or other payments, awards or grants in cash, securities or
otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans
approved by the Board of Directors, (iii) loans or advances
to employees in the ordinary course of business in
accordance with past practices of the Company, (iv) the
payment of reasonable fees to directors of the Company and
its Restricted Subsidiaries who are not employees of the
Company or its Restricted Subsidiaries or (v) any
transaction between the Company and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries.
SECTION 4.08. Change of Control. (a) Upon a
Change of Control, each Holder shall have the right to
require that the Company repurchase such Holder's Securities
at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to
the date of purchase, in accordance with the terms
contemplated in Section 4.08(b). In the event that at the
time of such Change of Control the terms of the Bank
Indebtedness or other Senior Indebtedness restrict or
prohibit the repurchase of Securities pursuant to this
provision, then prior to the mailing of the notice to
Holders provided for in the next paragraph below but in any
event within 30 days following any Change of Control, the
Company covenants to (i) repay in full all Bank Indebtedness
or such other Senior Indebtedness or to offer to repay in
full all Bank Indebtedness or such other Senior Indebtedness
and to repay the Bank Indebtedness or such other Senior
Indebtedness of each lender who has accepted such offer
or (ii) obtain the requisite consent under the agreements
governing the Bank Indebtedness or such other Senior
Indebtedness to permit the repurchase of the Securities as
provided for in Section 4.08(b).
(b) Within 30 days following any Change of
Control, the Company shall send, by first-class mail to each
Holder, a notice to each Holder with a copy to the Trustee
stating:
(1) that a Change of Control has occurred and that
such Holder has the right to require the Company to
purchase such Holder's Securities at a purchase price
in cash equal to 101% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date
of purchase;
(2) the circumstances and relevant facts regarding
such Change of Control which the Company in good faith
believes will enable Holders to make an informed
decision (which at a minimum will include information
with respect to pro forma historical income, cash flow
and capitalization, each after
<PAGE>
51
giving effect to such Change of Control, events causing
such Change of Control and the date such Change of
Control is deemed to have occurred);
(3) the purchase date (which shall be no earlier
than 30 days nor later than 60 days from the date such
notice is mailed); and
(4) the instructions determined by the Company,
consistent with this Section, that a Holder must follow
in order to have its Securities purchased, together
with the information contained in Section 4.08(c) (and
including any related materials).
(c) Holders electing to have a Security purchased
will be required to surrender the Security, with an
appropriate form duly completed, to the Company at the
address specified in the notice at least five Business
Days prior to the purchase date. Holders will be
entitled to withdraw their election if the Trustee or
the Company receives not later than three Business Days
prior to the purchase date, a telegram, telex,
facsimile transmission or letter setting forth the name
of the Holder, the principal amount of the Security
which was delivered for purchase by the Holder and a
statement that such Holder is withdrawing his election
to have such Security purchased.
(d) At least one Business Day prior to the
purchase date, all Securities to be purchased by the
Company under this Section shall be delivered to the
Trustee for cancellation, and, at least one Business
Day prior to the purchase date, the Company shall
deposit with the Paying Agent money sufficient to pay
the purchase price plus accrued and unpaid interest, if
any, to the Holders and the Paying Agent shall
immediately pay such money to the Holders.
(e) The Company shall comply, to the extent
applicable, with the requirements of Section 14(e)
of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of
Securities pursuant to this Section. To the extent
that the provisions of any securities laws or
regulations conflict with provisions of this Section,
the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue
thereof.
(f) The Company's obligations to repurchase the
Securities upon a Change of Control will be guaranteed
on a senior subordinated basis by the Guarantor
pursuant to the Rio Guarantee. Such Guarantee will be
subordinated to Senior Indebtedness of Guarantor to the
same extent described in Article 11.
<PAGE>
52
SECTION 4.09. Limitation on Layered Indebtedness.
(a) The Company will not, and will not permit the Guarantor
to, directly or indirectly, Incur any Indebtedness that is
subordinate in right of payment to any other Indebtedness of
the Company or the Guarantor, as the case may be, unless
such Indebtedness is subordinate in right of payment to, or
ranks pari passu with, the Securities in the case of the
Company or the Rio Guarantee in the case of the Guarantor.
(b) The Guarantor will not, directly or
indirectly, Guarantee any Indebtedness of the Company that
is subordinated in right of payment to any other
Indebtedness of the Company unless such Guarantee is
subordinate in right of payment to, or ranks pari passu
with, the Rio Guarantee.
SECTION 4.10. Compliance Certificate. The
Company shall deliver to the Trustee within 120 days after
the end of each fiscal year of the Company an Officers'
Certificate stating that in the course of the performance by
the signers of their duties as Officers of the Company they
would normally have knowledge of any Default and whether or
not the signers know of any Default that occurred during
such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or
proposes to take with respect thereto. The Company also
shall comply with TIA Section 314(a)(4).
SECTION 4.11. Further Instruments and Acts. Upon
request of the Trustee, the Company will execute and deliver
such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively
the purpose of this Indenture.
SECTION 4.12. Limitation on Liens. The Company
shall not, and shall not permit the Guarantor to, directly
or indirectly, create or permit to exist any Lien (other
than Permitted Liens and Liens securing Senior Indebtedness
or Senior Indebtedness of Guarantor, including Attributable
Indebtedness that is Senior Indebtedness or Senior
Indebtedness of Guarantor) on any of its property or assets
(including Capital Stock), whether owned on the date of the
Indenture or thereafter acquired, or any income or profits
therefrom securing any obligation unless contemporaneously
therewith effective provision is made to secure the
Securities equally and ratably with (or prior to) such
obligation for so long as such obligation is so secured.
SECTION 4.13. Limitation on Issuance and Sale of
Capital Stock of Restricted Subsidiaries. The Company will
not permit any Restricted Subsidiary to, directly or
indirectly, issue any Capital Stock other than to the
Company or a Restricted Subsidiary, that shall entitle the
holder of such Capital Stock to a
<PAGE>
53
preference in right of payment in the event of the
liquidation, dissolution or winding-up of such Restricted
Subsidiary or with respect to dividends of such Restricted
Subsidiary.
SECTION 4.14. Ownership of the Guarantor. The
Company will maintain its 100% ownership of the Capital
Stock of the Guarantor.
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer
Assets. Neither the Company nor the Guarantor shall
consolidate with or merge with or into, or convey, transfer
or lease all or substantially all its assets to, any Person,
unless: (i) the resulting, surviving or transferee Person
(the "Successor Company") shall be a corporation organized
and existing under the laws of the United States of America,
any State thereof or the District of Columbia and the
Successor Company (if not the Company or the Guarantor)
shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory
to the Trustee, all the obligations of the Company under the
Securities and the Indenture or the Guarantor under the Rio
Guarantee and the Indenture, as the case may be; (ii)
immediately after giving effect to such transaction on a pro
forma basis (and treating any Indebtedness which becomes an
obligation of the Successor Company or any Restricted
Subsidiary as a result of such transaction as having been
Incurred by the Successor Company or such Restricted
Subsidiary at the time of such transaction), no Default
shall have occurred and be continuing; (iii) immediately
after giving effect to such transaction on a pro forma basis
(and treating any Indebtedness which becomes an obligation
of the Successor Company or any Restricted Subsidiary as a
result of such transaction as having been Incurred by the
Successor Company or such Restricted Subsidiary at the time
of such transaction), the Successor Company would be able to
incur an additional $1.00 of Indebtedness in compliance with
the Consolidated Coverage Ratio limitations set forth in
Section 4.03 hereof, (iv) immediately after giving effect to
such transaction on a pro forma basis (and treating any
Indebtedness which becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such
transaction as having been Incurred by the Successor Company
or such Restricted Subsidiary at the time of such
transaction), the Successor Company shall have Consolidated
Net Worth in an amount which is not less than the
Consolidated Net Worth of the Company immediately prior to
such transaction; and (v) the Company shall have delivered
to the Trustee an Officers'
<PAGE>
54
Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer and such
supplemental indenture (if any) comply with the Indenture.
The Successor Company shall succeed to, and be
substituted for, and may exercise every right and power of,
the Company or the Guarantor, as the case may be, under the
Indenture, but the predecessor Company in the case of a
lease shall not be released from the obligation to pay the
principal of and interest on the Securities.
Notwithstanding the foregoing clauses (ii), (iii)
and (iv), any Restricted Subsidiary may consolidate with,
merge into or transfer all or part of its properties and
assets to the Company.
ARTICLE 6
Default and Remedies
SECTION 6.01. Events of Default. An "Event
of Default" occurs if:
(i) the Company and the Guarantor default in any
payment of interest on any Security when the same
becomes due and payable, and such default continues for
a period of 30 days,
(ii) the Company and the Guarantor (a) default in
the payment of the principal of any Security when the
same becomes due and payable at its Stated Maturity,
upon redemption, upon declaration or otherwise, or
(b) fail to redeem or purchase Securities when required
pursuant to the Indenture or the Securities;
(iii) the Company or the Guarantor fails to comply
with the provisions of Article 5 hereof;
(iv) the Company or the Guarantor, as the case may
be, fails to comply with Sections 4.02, 4.03, 4.04,
4.05, 4.06, 4.07, 4.08, 4.09, 4.12, 4.13, and 4.14
(other than a failure to purchase Securities when
required under Sections 4.06 or 4.08) of the Indenture
and such failure continues for 30 days after the notice
specified below or the Company fails to give the notice
specified below;
(v) the Company or the Guarantor fails to comply
with any of its agreements in the Securities or the
Indenture (other than those referred to in
<PAGE>
55
(i), (ii), (iii) or (iv) above) and such failure
continues for 60 days after the notice specified
below or the Company fails to give the notice
specified below;
(vi) the principal, any premium or accrued and
unpaid interest of Indebtedness of the Company or any
Restricted Subsidiary is not paid within any applicable
grace period after final maturity or is accelerated by
the holders thereof because of a default, the total
amount of such Indebtedness unpaid or accelerated
exceeds $10 million at the time and such default
continues for 10 days,
(vii) the Company or any Restricted Subsidiary
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 any substantial part of its
property; or (d) makes a general assignment for the
benefit of its creditors; or takes any comparable
action under any foreign laws relating to insolvency;
(viii) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that: (a) is
for relief against the Company or any Restricted
Subsidiary in an involuntary case; (b) appoints a
Custodian of the Company or any Restricted Subsidiary
or for any substantial part of its property; or
(c) orders the winding up or liquidation of the Company
or any Restricted Subsidiary; or any similar relief is
granted under any foreign laws and the order or decree
remains unstayed and in effect for 60 days;
(ix) any judgment or decree for the payment of
money in excess of $10 million at the time is entered
against the Company or any Restricted Subsidiary and is
not discharged and either (a) an enforcement proceeding
has been commenced by any creditor upon such judgment
or decree or (b) there is a period of 60 days following
the entry of such judgment or decree during which such
judgment or decree is not discharged, waived or the
execution thereof stayed and, in the case of (a) or
(b), such default continues for 10 days; or
(x) any Gaming License of the Company or any of
its Restricted Subsidiaries is revoked, terminated or
suspended or otherwise ceases to be effective,
resulting in the cessation or suspension of operation
for a period of more than 90 days of the casino
business of any casino hotel owned, leased or operated
directly or indirectly by the Company or any of its
Restricted Subsidiaries (other than any voluntary
relinquishment of a Gaming License if such
relinquishment is, in the reasonable, good faith
judgment of the Board of Directors of the Company
evidenced by a Board Resolution, both desirable in
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56
the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and not disadvantageous
in any material respect to the Holders).
The foregoing will constitute Events of Default
whatever the reason for any such Event of Default and
whether it is voluntary or involuntary or is effected by
operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation of any
administrative or governmental body.
The term "Bankruptcy Law" means Title 11, United
States Code, or any similar Federal or state law for the
relief of debtors. The term "Custodian" means any receiver,
trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (iv) or (v) is not an Event
of Default until the Trustee or the Holders of at least 25%
in principal amount of the Securities notify the Company of
the Default and the Company does not cure such Default
within the time specified after receipt of such notice.
Such notice must specify the Default, demand that it be
remedied and state that such notice is a "Notice of
Default".
The Company shall deliver to the Trustee, within
30 days after the occurrence thereof, written notice in the
form of an Officers' Certificate of any event which with the
giving of notice and the lapse of time would become an Event
of Default under clause (iv), (v), (vi) or (ix), its status
and what action the Company is taking or proposes to take
with respect thereto.
SECTION 6.02. Acceleration. If an Event of
Default (other than an Event of Default specified in
Section 6.01 (vii) or (viii) above with respect to the
Company) occurs and is continuing, the Trustee by notice to
the Company, or the Holders of at least 25% in principal
amount of the Securities by written notice to the Company
and the Trustee, may declare the principal of and accrued
interest on all the Securities to be due and payable. Upon
such a declaration, such principal and interest shall be due
and payable immediately. If an Event of Default specified
in Section 6.01 (vii) or (viii) above with respect to the
Company occurs, the principal of and interest on all the
Securities shall ipso facto become and be immediately due
and payable without any declaration or other act on the part
of the Trustee or any Securityholders. The Holders of a
majority in principal amount of the Securities by written
notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default
have been cured or waived except nonpayment of principal or
interest that has become due solely because of acceleration.
No such rescission shall affect any subsequent Default or
impair any right consequent thereto.
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57
SECTION 6.03. Other Remedies. If an Event of
Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal of or
interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
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 in exercising any right or
remedy accruing upon an Event of Default shall not impair
the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are
cumulative.
SECTION 6.04. Waiver of Past Defaults. The
Holders of a majority in principal amount of the Securities
by written notice to the Trustee may waive an existing
Default and its consequences except (i) a Default in the
payment of the principal of or interest on a Security or
(ii) a Default in respect of a provision that under
Section 9.02 cannot be amended without the consent of each
Securityholder affected. When a Default is waived, it is
deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders
of a majority in principal amount of the Securities may
direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture or, subject to
Section 7.01, that the Trustee determines is unduly
prejudicial to the rights of other Securityholders or would
involve the Trustee in personal liability; provided,
however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the
Trustee shall be entitled to indemnification satisfactory to
it in its sole discretion against all losses and expenses
caused by taking or not taking such action.
SECTION 6.06. Limitation on Suits. A
Securityholder may not pursue any remedy with respect to
this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice
stating that an Event of Default is continuing;
(2) the Holders of at least 25% in principal
amount of the Securities make a written request to the
Trustee to pursue the remedy;
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58
(3) such Holder or Holders offer to the Trustee
reasonable security or indemnity against any loss,
liability or expense;
(4) the Trustee does not comply with the request
within 60 days after receipt of the request and the
offer of security or indemnity; and
(5) the Holders of a majority in principal amount
of the Securities do not give the Trustee a direction
inconsistent with the request during such 60-day
period.
A Securityholder may not use this Indenture to
prejudice the rights of another Securityholder or to obtain
a preference or priority over another Securityholder.
SECTION 6.07. Rights of Holders To Receive
Payment. Notwithstanding any other provision of this
Indenture, the right of any Holder to receive payment of
principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in
the Securities, or to bring suit for the enforcement of any
such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an
Event of Default in payment of interest or principal
specified in Section 6.01(i) or (ii) occurs and is
continuing, the Trustee may recover judgment in its own name
and as trustee of an express trust against the Company for
the whole amount of principal and interest remaining unpaid
(together with interest on such unpaid interest to the
extent lawful) and the amounts provided for in Section 7.07.
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 and, unless prohibited by law
or applicable regulations, may vote on behalf of the Holders
in any election of a trustee in bankruptcy or other Person
performing similar functions, and any Custodian in any such
judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount
due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
its counsel, and any other amounts due the Trustee under
Section 7.07.
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59
SECTION 6.10. Priorities. If the Trustee
collects any money or property pursuant to this Article 6,
it shall pay out the money or property in the following
order:
FIRST: to the Trustee for amounts due
under Section 7.07;
SECOND: to holders of Senior
Indebtedness to the extent required by
Article 10;
THIRD: to Securityholders for amounts due and
unpaid on the Securities for principal and interest,
ratably, without preference or priority of any kind,
according to the amounts due and payable on the
Securities for principal and interest, respectively,
and
FOURTH: to the Company.
The Trustee may fix a record date and payment date
for any payment to Securityholders pursuant to this Section.
At least 15 days before such record date, the Company shall
mail to each Securityholder and the Trustee a notice that
states the record date, the payment date and amount to be
paid.
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 the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws.
The Company (to the extent it may lawfully do so) shall not
at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any
stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the
performance of this Indenture, and the Company (to the
extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and shall not
hinder, delay or impede the execution of any power herein
granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been
enacted.
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60
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee. (a) If an
Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by
this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use
under the circumstances in the conduct of such Person's own
affairs.
(b) Except during the continuance of an Event of
Default: (1) the Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this
Indenture and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and (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 wilful 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; and (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 shall not be liable for interest
on any money received by it except as the Trustee may agree
in writing with the Company.
(f) Money held in trust by the Trustee need not
be segregated from other funds except to the extent required
by law.
(g) No provision of this Indenture shall require
the Trustee to expend or risk its own funds or otherwise
incur financial liability in the performance of any
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61
of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to
believe that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to
it.
(h) Every provision of this Indenture relating to
the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions
of this Section and to the provisions of the TIA.
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. The Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance
on the 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;
provided, however, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel, and the
advice or opinion of counsel with respect to legal matters
relating to this Indenture and the Securities shall be full
and complete authorization and protection from liability in
respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or
opinion of such counsel.
(f) Any request, direction, order or demand of
the Company upon the Trustee shall be sufficiently evidenced
by an Officer's Certificate and any resolution of the Board
of Directors of the Company may be evidenced to the Trustee
by a copy thereof certified by the Secretary or an Assistant
Secretary of the Company.
(g) The Trustee shall not be deemed to have
knowledge or notice of any Default or Event of Default
unless actually known to a Trust Officer or unless a Trust
Officer is notified by any Holder or the Company.
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62
(h) The Trustee shall not be accountable for the
use or application by the Company or any Paying Agent (other
than the Trustee) of Securities or the proceeds thereof, or
any money paid to the Company or any Paying Agent (other
than the Trustee) or upon the direction of the Company or
any Paying Agent (other than the Trustee) under any
provisions hereof.
(i) Except with respect to Section 4.01, the
Trustee shall have no duty to inquire as to the performance
of the Company's covenants in Article 4.
SECTION 7.03. Individual Rights of Trustee. The
Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal
with the Company or its Affiliates with the same rights it
would have if it were not Trustee. ny Paying Agent,
Registrar, co-registrar or co-paying agent may do the same
with like rights. However, the Trustee must comply with
Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee
shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the
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 in any document issued in connection with the
sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default
occurs and is continuing and if it is known to the Trustee,
the Trustee shall mail to each Securityholder notice of the
Default within 90 days after it occurs. Except in the case
of a Default in payment of principal of or interest on any
Security (including payments pursuant to the mandatory
redemption provisions of such Security, if any), the Trustee
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 Securityholders.
SECTION 7.06. Reports by Trustee to Holders. At
the expense of the Company, as promptly as practicable after
each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each
year, the Trustee shall mail to each Securityholder a brief
report dated as of May 15 that complies with TIA Section
313(a). The Trustee also shall comply with TIA Section
313(b).
A copy of each report at the time of its mailing
to Securityholders shall be filed with the SEC and each
stock exchange (if any) on which the Securities are
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63
listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange
and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The
Company shall pay to the Trustee from time to time
reasonable compensation for its services. 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 or made by it, including costs of
collection, in addition to the compensation for its
services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The
Company shall indemnify the Trustee and its agents,
officers, directors and employees for, and hold them
harmless against, any and all loss, liability or expense
(including attorneys' fees) incurred by it in connection
with the administration of this trust and the performance of
its duties hereunder. The Trustee shall notify the Company
promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The
Company shall defend the claim and the Trustee may have
separate counsel and the Company shall pay the fees and
expenses of such counsel. The Company need not reimburse
any expense or indemnify against any loss, liability or
expense incurred by the Trustee through the Trustee's own
wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in
this Section, the Trustee shall have a Lien prior to the
Securities on all money or property held or collected by the
Trustee other than money or property held in trust to pay
principal of and interest on particular Securities.
The Company's payment obligations pursuant to this
Section shall survive the discharge of this Indenture. When
the Trustee incurs expenses after the occurrence of a
Default specified in Section 6.01(vii) or (viii) with
respect to the Company, the expenses are intended to
constitute expenses of administration under the Bankruptcy
Law.
SECTION 7.08. Replacement of Trustee. The
Trustee may resign at any time by so notifying the Company.
The Holders of a majority in principal amount of the
Securities may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. The Company
shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
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64
(3) a receiver or other public officer takes
charge of the Trustee or its property; or
(4) the Trustee otherwise becomes incapable
of acting.
If the Trustee resigns, is removed by the Company
or by the Holders of a majority in principal amount of the
Securities and such Holders do not reasonably promptly
appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event
being referred to herein as the retiring Trustee), the
Company shall promptly appoint a successor Trustee.
A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to
the Company. Thereupon the resignation or removal of the
retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall
mail a notice of its succession to Securityholders. 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.
If a successor Trustee does not take office within
60 days after the retiring Trustee resigns or is removed,
the retiring Trustee or the Holders of 25% in principal
amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10,
any Securityholder may petition any court of competent
jurisdiction for the removal of the Trustee and the appoint
ment of a successor Trustee.
Notwithstanding the replacement of the Trustee
pursuant to this Section, the Company's obligations under
Section 7.07 shall continue for the benefit of the retiring
Trustee.
SECTION 7.09 Successor Trustee by Merger. If
the Trustee consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust
business or assets to, another corporation or banking
association, the resulting, surviving or transferee
corporation or banking association without any further act
shall be the successor Trustee.
In case at the time such successor or successors
by merger, conversion or consolidation to the Trustee shall
succeed to the trusts created by this Indenture any of the
Securities shall have been authenticated but not delivered,
any such
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65
successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such
Securities so authenticated; and in case at that time any of
the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities
either in the name of any predecessor hereunder or in the
name of the successor to the Trustee; and in all such cases
such certificates shall have the full force which it is
anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility, Disqualification. The
Trustee shall at all times satisfy the requirements of TIA
Section 310(a). The Trustee shall have a combined capital
and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee
shall comply with TIA Section 310(b); provided, however,
that there shall be excluded from the operation of TIA
Section 310(b)(1) any indenture or indentures under which
other securities or certificates of interest or
participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth
in TIA Section 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims
Against Company. The Trustee shall comply with 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.
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on
Securities, Defeasance. (a) When (i) the Company delivers
to the Trustee all outstanding Securities (other than
Securities replaced pursuant to Section 2.07) for
cancellation or (ii) all outstanding Securities have become
due and payable, whether at maturity or as a result of the
mailing of a notice of redemption pursuant to Article 3
hereof and the Company irrevocably deposits with the Trustee
funds sufficient to pay at maturity or upon redemption all
outstanding Securities, including interest thereon (other
than Securities replaced pursuant to Section 2.07), and if
in either case the Company pays all other sums payable
hereunder by the Company, then this Indenture shall, subject
to Sections 8.01(c) and 8.06, cease to be of further effect.
The Trustee shall acknowledge satisfaction and discharge of
this Indenture on demand of the Company accompanied by an
Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company.
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66
(b) Subject to Sections 8.01(c), 8.02 and 8.06,
the Company at any time may terminate (i) all its
obligations under the Securities and this Indenture ("legal
defeasance option") or (ii) its obligations under
Sections 4.02 (to the extent that the failure to comply with
such Section 4.02 shall not violate the TIA), 4.03, 4.04,
4.05, 4.06, 4.07, 4.08, 4.09, 4.11, 4.12, 4.13 and 4.14 or
Article 5 and the related operation of Sections 6.01(iii),
(iv), (v), (vi), (ix) and (x) ("covenant defeasance
option"). The Company may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant
defeasance option.
If the Company exercises its legal defeasance
option, payment of the Securities may not be accelerated
because of an Event of Default. If the Company exercises
its covenant defeasance option, payment of the Securities
may not be accelerated because of an Event of Default
specified in Sections 6.01(iii), (iv), (v), (vi), (ix) and
(x) (except to the extent covenants or agreements referenced
in such Sections remain applicable).
Upon satisfaction of the conditions set forth
herein and upon written request of the Company, the Trustee
shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above,
the Company's obligations in Sections 2.03, 2.04, 2.05.
2.06, 2.07, 7.07, 7.08, 8.04, 8.05 and 8.06 shall survive
until the Securities have been paid in full. Thereafter,
the Company's obligations in Sections 7.07, 8.04 and 8.05
shall survive.
SECTION 8.02. Conditions to Defeasance. The
Company may exercise its legal defeasance option or its
covenant defeasance option only if:
(1) the Company irrevocably deposits in trust
with the Trustee money or U.S. Government Obligations
for the payment of principal and interest on the
Securities to maturity or redemption, as the case may
be;
(2) the Company delivers to the Trustee a
certificate from a nationally recognized firm of
independent accountants expressing their opinion that
the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government
Obligations plus any deposited money without investment
will provide cash at such times and in such amounts as
will be sufficient to pay principal and interest when
due on all the Securities to maturity or redemption, as
the case may be;
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67
(3) 123 days pass after the deposit is made and
during the 123-day period no Default specified in
Section 6.01(vii) or (viii) with respect to the Company
occurs which is continuing at the end of the period;
(4) no Default has occurred and is continuing on
the date of such deposit and after giving effect
thereto;
(5) the deposit does not constitute a default
under any other agreement binding on the Company and is
not prohibited by Article 10 or 11;
(6) the Company delivers to the Trustee an Opinion
of Counsel to the effect that the trust resulting from
the deposit does not constitute, or is qualified as, a
regulated investment company under the Investment
Company Act of 1940;
(7) in the case of the legal defeasance option,
the Company shall have delivered to the Trustee an
Opinion of Counsel stating that (i) the Company has
received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the
date of this Indenture there has been a change in the
applicable Federal income tax law, in either case to
the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Securityholders will
not recognize income, gain or loss for Federal income
tax purposes as a result of such defeasance and will be
subject to Federal income tax on the same amounts, in
the same manner and at the same times as would have
been the case if such defeasance had not occurred;
(8) in the case of the covenant defeasance option,
the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the
Securityholders will not recognize income, gain or loss
for Federal income tax purposes as a result of such
covenant defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and
at the same times as would have been the case if such
covenant defeasance had not occurred; and
(9) the Company delivers to the Trustee an
Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent to the defeasance
and discharge of the Securities as contemplated by this
Article 8 have been complied with.
Before or after a deposit, the Company may make
arrangements satisfactory to the Trustee for the redemption
of Securities at a future date in accordance with Article 3.
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68
SECTION 8.03. Application of Trust Money. The
Trustee shall hold in trust money or U.S. Government
Obligations deposited with it pursuant to this Article 8. It
shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal
of and interest on the Securities. Money and securities so
held in trust are not subject to Article 10.
SECTION 8.04. Repayment to Company. The Trustee
and the Paying Agent shall promptly turn over to the Company
upon request any excess money or securities held by them at
any time.
Subject to any applicable abandoned property law,
the Trustee and the Paying Agent shall pay to the Company
upon request any money held by them for the payment of
principal or interest that remains unclaimed for two years,
and, thereafter, Securityholders entitled to the money must
look to the Company for payment as general creditors.
SECTION 8.05. Indemnity for Government
Obligations. The Company shall pay and shall indemnify the
Trustee against any tax, fee or other charge imposed on or
assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government
Obligations.
SECTION 8.06. Reinstatement. If the Trustee or
Paying Agent is unable to apply any money or U.S. Government
Obligations in accordance with this Article 8 by reason of
any legal proceeding or by reason of any order or judgment
of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such
time as the Trustee or Paying Agent is permitted to apply
all such money or U.S. Government Obligations in accordance
with this Article 8; provided, however, that, if the Company
has made any payment of interest on or principal of any
Securities because of the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders
of such Securities to receive such payment
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69
from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders. The
Company, the Guarantor and the Trustee may amend this
Indenture, the Rio Guarantee or the Securities without
notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or
inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in
addition to or in place of certificated Securities;
provided, however, that the uncertificated
Securities are issued in registered form for purposes
of Section 163(f) of the Code or in a manner such
that the uncertificated Securities are described in
Section 163(f)(2)(B) of the Code;
(4) to make any change in Article 10 that would
limit or terminate the benefits available to any holder
of Senior Indebtedness (or Representatives therefor)
under Articles 10 and 11;
(5) to add guarantees with respect to the
Securities or to secure the Securities;
(6) to add to the covenants of the Company for the
benefit of the Holders or to surrender any right or
power herein conferred upon the Company;
(7) to comply with any requirements of the SEC in
connection with qualifying this Indenture under the
TIA; or
(8) to make any change that does not adversely
affect the rights of any Securityholder.
An amendment under this Section may not make any
change that adversely affects the rights under Articles 10
and 11 of any holder of Senior
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70
Indebtedness then outstanding unless the holders of such
Senior Indebtedness (or any group or representative thereof
authorized to give a consent), consent to such change.
After an amendment under this Section becomes
effective, the Company or the Trustee at the Company's
request and expense, shall mail to Securityholders a notice
briefly describing such amendment. The failure to give such
notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this
Section.
SECTION 9.02. With Consent of Holders. The
Company, the Guarantor and the Trustee may amend this
Indenture, the Rio Guarantee or the Securities without
notice to any Securityholder but with the written consent of
the Holders of at least a majority in principal amount of
the Securities, provided, however, that no amendment may he
made to Section 4.08 without the written consent of the
Holders of at least 75% in principal amount of the
Securities. However, without the consent of each
Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders
must consent to an amendment;
(2) reduce the rate of or extend the time for
payment of interest on any Security;
(3) reduce the principal of or extend the Stated
Maturity of any Security;
(4) reduce the premium payable upon the redemption
of any Security or change the time at which any Security
may be redeemed in accordance with Article 3;
(5) make any Security payable in money other than
that stated in the Security;
(6) make any change in Article 10 or 11 that
adversely affects the rights of any Securityholder
under Article 10 or 11; or
(7) make any change in Section 6.04 or 6.07 or
the second sentence of this Section.
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71
It shall not be necessary for the consent of the
Holders under this Section to approve the particular form of
any proposed amendment, but it shall be sufficient if such
consent approves the substance thereof.
An amendment under this Section may not make any
change that adversely affects the rights under Article 10 or
11 of any holder of Senior Indebtedness or Senior
Indebtedness of Guarantor then outstanding unless the
holders of such Senior Indebtedness or Senior Indebtedness
of Guarantor, as the case may be (or any group or
representative thereof authorized to give a consent),
consent to such change.
After an amendment under this Section becomes
effective, the Company, or the Trustee at the Company's
request and expense, shall mail to Securityholders a notice
briefly describing such amendment. The failure to give such
notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this
Section.
SECTION 9.03. Compliance with Trust Indenture
Act. Every amendment to this Indenture or the Securities
shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents
and Waivers. A consent to an amendment or a waiver by a
Holder of a Security shall bind the Holder and every
subsequent Holder of that Security or portion of the
Security that evidences the same debt as the consenting
Holder's Security, even if notation of the consent or waiver
is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to
such Holder's Security or portion of the Security if the
Trustee receives the notice of revocation before the date
the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every
Securityholder.
The Company may, but shall not be obligated to,
fix a record date for the purpose of determining the
Securityholders entitled to give their consent or take any
other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is
fixed, then notwithstanding the immediately preceding
paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to
revoke any consent previously given or to take any such
action, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
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72
SECTION 9.05. Notation on or Exchange of
Securities. If an amendment 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 regarding 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.
Failure to make the appropriate notation or to issue a new
Security shall not affect the validity of such amendment.
SECTION 9.06. Trustee To Sign Amendments. The
Trustee shall sign any amendment authorized pursuant to this
Article 9 if the amendment does not adversely affect the
rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In
signing such amendment the Trustee shall be entitled to
receive indemnity reasonably satisfactory to it and to
receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an
Opinion of Counsel stating that such (i) amendment is
authorized or permitted by this Indenture and that all
conditions precedent to the execution, delivery and
performance of such amendment have been satisfied; (ii) the
Company has all necessary corporate power and authority to
execute and deliver the amendment and that the execution,
delivery and performance of such amendment has been duly
authorized by all necessary corporate action; (iii) the
execution, delivery and performance of the amendment do not
conflict with, or result in the breach of or constitute a
default under any of the terms, conditions or provisions of
(a) the Indenture, (b) the Certificate of Incorporation or
By-Laws of the Company, (c) any law or regulation applicable
to the Company, (d) any material order, writ, injunction or
decree of any court or governmental instrumentality
applicable to the Company or (e) any material agreement or
instrument to which the Company is subject; (iv) such
amendment has been duly and validly executed and delivered
by the Company, and the Indenture together with such
amendment constitutes a legal, valid and binding obligation
of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and
general equitable principles; and (v) the Indenture together
with such amendment complies with the TIA.
SECTION 9.07. Payment for Consent. Neither the
Company nor any Affiliate of the Company shall, directly or
indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment
of any of the terms or provisions of this Indenture or the
Securities unless such consideration is offered to be paid
to all
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73
Holders that so consent, waive or agree to amend in the
time frame set forth in solicitation documents relating to
such consent, waiver or agreement.
ARTICLE 10
Subordination of Securities
SECTION 10.01. Agreement To Subordinate. The
Company agrees, and each Securityholder by accepting a
Security agrees, that the Indebtedness evidenced by the
Securities is subordinated in right of payment, to the
extent and in the manner provided in this Article 10, to the
prior payment of all Senior Indebtedness and that the
subordination is for the benefit of and enforceable by the
holders of Senior Indebtedness. The Securities shall in all
respects rank pari passu with all other Senior Subordinated
Indebtedness of the Company and only Indebtedness of the
Company which is Senior Indebtedness shall rank senior to
the Securities in accordance with the provisions set forth
herein. All provisions of this Article 10 shall be subject
to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy.
Upon any payment or distribution of the assets of the
Company to creditors upon a total or partial liquidation or
a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or
similar proceeding relating to the Company or its property:
(1) holders of Senior Indebtedness shall be
entitled to receive payment in full of the Senior
Indebtedness before Securityholders shall be entitled
to receive any payment of principal of or interest on
the Securities; and
(2) until the Senior Indebtedness is paid in
full, any distribution to which Securityholders would
be entitled but for this Article 10 shall be made to
holders of Senior Indebtedness as their interests may
appear, except that Securityholders may receive shares
of stock and any debt securities that are subordinated
to Senior Indebtedness to at least the same extent as
the Securities.
SECTION 10.03. Default on Senior Indebtedness.
The Company may not pay the principal of or interest on the
Securities or make any deposit pursuant to Section 8.01 and
may not repurchase, redeem or otherwise retire any
Securities (collectively, "pay the Securities") if (i) any
Senior Indebtedness is not paid when due or (ii) any other
default on Senior Indebtedness occurs and the maturity of
such
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74
Senior Indebtedness is accelerated in accordance with its
terms unless, in either case, (x) the default has been cured
or waived and any such acceleration has been rescinded or (y)
such Senior Indebtedness has been paid in full. During the
continuance of any default (other than a default described in
clause (i) or (ii) of the preceding sentence) with respect to
any Senior Indebtedness pursuant to which the maturity
thereof may be accelerated immediately without further notice
(except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Securities for a period
(a "Payment Blockage Period") commencing upon the receipt
by the Company and the Trustee of written notice of such
default from the Representative of any Designated Senior
Indebtedness specifying an election to effect a Payment
Blockage Period (a "Blockage Notice") and ending 179 days
thereafter (or earlier if such Payment Blockage Period is
terminated (i) by written notice to the Trustee and the
Company from the Person or Persons who gave such Blockage
Notice, (ii) by repayment in full of such Senior
Indebtedness or (iii) because the default giving rise to such
Blockage Notice is no longer continuing). Notwithstanding
the provisions described in the immediately preceding
sentence (but subject to the provisions contained in the
first sentence of this Section), unless the holders of such
Senior Indebtedness or the Representative of such holders
shall have accelerated the maturity of such Senior
Indebtedness, the Company may resume payments on the
Securities after such Payment Blockage Period. Not more than
one Blockage Notice may be given in any consecutive 360-day
period, irrespective of the number of defaults with respect
to Senior Indebtedness during such period.
SECTION 10.04. Mandatory Redemption and
Subordination. The provisions described in Sections 10.02
or 10.03 shall not prevent or delay (i) the Company from
redeeming any Securities if required by any Gaming Authority
as described in paragraph 7 of Exhibit A or from otherwise
purchasing any Securities pursuant to any Legal Requirement
relating to the gaming business of the Company and its
Subsidiaries or (ii) the receipt by the Securityholders of
payments of principal and interest on the Securities, as
described under Article 8, from the application of any money
or U.S. Government Obligations held in trust by the Trustee.
SECTION 10.05. Acceleration of Payment of
Securities. If payment of the Securities is accelerated
because of an Event of Default, the Company or the Trustee
shall promptly notify the holders of the Designated Senior
Indebtedness (or their Representatives) of the acceleration.
SECTION 10.06. When Distribution Must Be Paid
Over. If a distribution is made to Securityholders that
because of this Article 10 should not have been made to
them, the Securityholders who receive the distribution shall
hold it in
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trust for holders of Senior Indebtedness and pay it over to
them as their interests may appear.
SECTION 10.07. Subrogation. After all Senior
Indebtedness is paid in full and until the Securities are
paid in full, Securityholders shall be subrogated to the
rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness. A
distribution made under this Article 10 to holders of Senior
Indebtedness which otherwise would have been made to
Securityholders is not, as between the Company and
Securityholders, a payment by the Company on Senior
Indebtedness.
SECTION 10.08. Relative Rights. This Article 10
defines the relative rights of Securityholders and holders
of Senior Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Company and
Securityholders, the obligation of the Company, which
is absolute and unconditional, to pay principal of and
interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from
exercising its available remedies upon a Default,
subject to the rights of holders of Senior Indebtedness
to receive distributions otherwise payable to
Securityholders.
SECTION 10.09. Subordination May Not Be Impaired
by Company. No right of any holder of Senior Indebtedness
to enforce the subordination of the Indebtedness evidenced
by the Securities shall be impaired by any act or failure to
act by the Company or by its failure to comply with this
Indenture.
SECTION 10.10. Rights of Trustee and Paying
Agent. Notwithstanding Section 10.03, the Trustee or Paying
Agent may continue to make payments on the Securities and
shall not be charged with knowledge of the existence of
facts that would prohibit the making of any such payments
unless, not less than two Business Days prior to the date of
such payment, a Trust Officer of the Trustee receives
written notice satisfactory to it that payments may not be
made under this Article 10. The Company, the Registrar or
coregistrar, the Paying Agent, a Representative of holders
of or a holder or holders holding a majority of, Senior
Indebtedness may give the written notice; provided, however,
that, if an issue of Senior Indebtedness has a
Representative, only the Representative may give the notice.
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76
The Trustee in its individual or any other
capacity may hold Senior Indebtedness with the same rights
it would have if it were not Trustee. The Registrar and
coregistrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set
forth in this Article 10 with respect to any Senior
Indebtedness which may at any time be held by it, to the
same extent as any other holder of Senior Indebtedness; and
nothing in Article 7 shall deprive the Trustee of any of its
rights as such holder. Nothing in this Article 10 shall
apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07.
SECTION 10.11. Distribution or Notice to
Representative. Whenever a distribution is to be made or a
notice given to holders of Senior Indebtedness, the
distribution may be made and the notice given to their
Representative (if any).
SECTION 10.12. Article 10 Not To Prevent Events
of Default or Limit Right To Accelerate. The failure to
make a payment pursuant to the Securities by reason of any
provision in this Article 10 shall not be construed as
preventing the occurrence of a Default. Nothing in this
Article 10 shall have any effect on the right of the
Securityholders or the Trustee to accelerate the maturity of
the Securities.
SECTION 10.13. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary,
payments from money or the proceeds of U.S. Government
Obligations held in trust under Article 8 by the Trustee for
the payment of principal of and interest on the Securities
shall not be subordinated to the prior payment of any Senior
Indebtedness or subject to the restrictions set forth in
this Article 10, and none of the Securityholders shall be
obligated to pay over any such amount to the Company or any
holder of Senior Indebtedness of the Company or any other
creditor of the Company.
SECTION 10.14. Trustee Entitled To Rely. Upon
any payment or distribution pursuant to this Article 10, the
Trustee and the Securityholders shall be entitled to
rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred
to in Section 10.02 are pending, (ii) upon a certificate of
the liquidating trustee or agent or other Person making such
payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the
holders of Senior Indebtedness for the purpose of
ascertaining the Persons entitled to participate in such
payment or distribution, the holders of the Senior
Indebtedness and other Indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent
thereto or to this Article 10. In the event that the
Trustee determines, in good faith, that evidence is required
with respect to the right of any Person as a
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77
holder of Senior Indebtedness to participate in any payment
or distribution pursuant to this Article 10, the Trustee may
request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such
Person under this Article 10, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such
Person to receive such payment. The provisions of
Sections 7.01 and 7.02 shall be applicable to all actions or
omissions of actions by the Trustee pursuant to this
Article 10.
SECTION 10.15. Trustee To Effectuate
Subordination. Each Securityholder by accepting a Security
authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the
Securityholders and the holders of Senior Indebtedness
provided in this Article 10 and appoints the Trustee as
attorney-in-fact for any and all such purposes.
SECTION 10.16. Trustee Not Fiduciary for Holders
of Senior Indebtedness. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of Senior Indebtedness
and shall not be liable to any such holders if it shall
mistakenly pay over or distribute to Securityholders or the
Company or any other Person, money or assets to which any
holders of Senior Indebtedness shall be entitled by virtue
of this Article 10 or otherwise.
SECTION 10.17. Reliance by Holders of Senior
Indebtedness on Subordination Provisions. Each
Securityholder by accepting a Security acknowledges and
agrees that the foregoing subordination provisions are, and
are intended to be, an inducement and a consideration to
each holder of any Senior Indebtedness, whether such Senior
Indebtedness was created or acquired before or after the
issuance of the Securities, to acquire and continue to hold,
or to continue to hold, such Senior Indebtedness and such
holder of Senior Indebtedness shall be deemed conclusively
to have relied on such subordination provisions in acquiring
and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
ARTICLE 11
Rio Guarantee; Subordination of Rio Guarantee
SECTION 11.01. Rio Guarantee. Subject to the
provisions of this Article 11, the Guarantor hereby
unconditionally guarantees to each holder and to the
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78
Trustee on behalf of the Holders (i) the due and punctual
payment of principal of and interest on each Security when
and as the same shall become due and payable whether at the
date of maturity or by declaration of acceleration or
otherwise, (ii) the due and punctual payment of interest on
the overdue principal of and interest, if any, on the
Securities, to the extent lawful, and (iii) the due and
punctual performance of all other obligations of the Company
to the Holders or the Trustee, all in accordance with the terms
of the Securities and this Indenture (the "Rio Guarantee").
In case of the failure of the Company punctually to make any
such principal or interest payment, the Guarantor hereby agrees
to cause any such payment to be made punctually when and as
the same shall become due and payable, whether at the date of
maturity or by declaration of acceleration or otherwise, and
as if such payment were made by the Company. The Guarantor
hereby agrees that its obligations hereunder shall be
unconditional, irrespective of and unaffected by the
validity, regularity or enforceability of the Securities or
this Indenture, or of any amendment thereto or hereto, the
absence of any action to enforce the same, the waiver or
consent by any Holder or by the Trustee with respect to any
provisions thereof or of this Indenture, the recovery of any
judgment against the Company or any action to enforce the
same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a
guarantor. The Company hereby waives diligence,
presentment, demand of payment, filing of claims with a
court in the event of merger, insolvency or bankruptcy of
the Company, any right to require a proceeding first against
the Company, protest or notice with respect to the
Securities or the Indebtedness evidenced thereby and all
demands whatsoever, and covenants that the Rio Guarantee
will not be discharged except by complete performance of the
obligations contained in the Securities, in this Indenture
and pursuant to the Rio Guarantee. The Guarantor further
agrees that, as between the Guarantor, on the one hand, and
Holders and the Trustee, on the other hand, (i) for purposes
of the Rio Guarantee, the maturity of the obligations
guaranteed by the Rio Guarantee may be accelerated as
provided in Article 6, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect
of the obligations guaranteed thereby, and (ii) in the event
of any acceleration of such obligations (whether or not due
and payable) shall forthwith become due and payable by the
Guarantor for purposes of the Rio Guarantee.
The Rio Guarantee shall continue to be effective
or shall be reinstated, as the case may be, if at any time
any payment, or any part thereof, of principal of or
interest on any of the Securities is rescinded or must
otherwise be returned by the Holders or the Trustee upon the
insolvency, bankruptcy or reorganization of the Company or
the Guarantor or otherwise, all as though such payment had
not been made.
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79
The Guarantor shall be subrogated to all rights of
the Holders against the Company in respect of any amounts
paid by the Guarantor pursuant to the provisions of the Rio
Guarantee or this Indenture; provided, however, that the
Guarantor shall not be entitled to enforce or to receive any
payments until the principal of and interest on all
Securities issued hereunder shall have been paid in full.
The Rio Guarantee is specifically designated by
the Guarantor as Indebtedness of the Guarantor for purposes
of this Indenture.
SECTION 11.02. Agreement To Subordinate. The
Guarantor agrees, and each Securityholder by accepting a
Security agrees, that the Rio Guarantee is subordinated in
right of payment, to the extent and in the manner provided
in this Article 11, to the prior payment of all Senior
Indebtedness of Guarantor and that the subordination is for
the benefit of and enforceable by the holders of Senior
Indebtedness of Guarantor. The Securities shall in all
respects rank pari passu with all other Senior Subordinated
Indebtedness of Guarantor and only Indebtedness of Guarantor
which is Senior Indebtedness of Guarantor shall rank senior
to the Securities in accordance with the provisions set
forth herein. All provisions of this Article 11 shall be
subject to Section 11.13.
SECTION 11.03. Liquidation, Dissolution,
Bankruptcy. Upon any payment or distribution of the assets
of the Guarantor to creditors upon a total or partial
liquidation or a total or partial dissolution of the
Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Guarantor
or its property:
(1) holders of Senior Indebtedness of Guarantor
shall be entitled to receive payment in full of the
Senior Indebtedness of Guarantor before Securityholders
shall be entitled to receive any payment of principal
of or interest on the Securities pursuant to the Rio
Guarantee; and
(2) until the Senior Indebtedness of Guarantor is
paid in full, any distribution to which Securityholders
would be entitled but for this Article 11 shall be made
to holders of Senior Indebtedness of Guarantor as their
interests may appear, except that Securityholders may
receive shares of stock and any debt securities that
are subordinated to Senior Indebtedness of Guarantor to
at least the same extent as under the Rio Guarantee.
SECTION 11.04. Default on Senior Indebtedness.
The Guarantor may not pay the principal of or interest on
the Securities pursuant to the Rio Guarantee if
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80
(i) any Senior Indebtedness of Guarantor is not paid
when due or (ii) any other default on Senior Indebtedness
of Guarantor occurs and the maturity of such Senior
Indebtedness of Guarantor is accelerated in accordance
with its terms unless, in either case, (x) the default
has been cured or waived and any such acceleration has
been rescinded or (y) such Senior Indebtedness of Guarantor
has been paid in full. During the continuance of any default
(other than a default described in clause (i) or (ii) of
the preceding sentence) with respect to any Senior
Indebtedness of Guarantor pursuant to which the maturity
thereof may be accelerated immediately without further
notice (except such notice as may be required to effect
such acceleration) or the expiration of any applicable
grace periods, the Guarantor may not pay the Securities
for a period (a "Guarantor Payment Blockage Period")
commencing upon the receipt by the Guarantor and the
Trustee of written notice of such default from the
Representative of any Designated Senior Indebtedness
of Guarantor specifying an election to effect a
Guarantor Payment Blockage Period (a "Guarantor Blockage
Notice") and ending 179 days thereafter (or earlier if such
Guarantor Payment Blockage Period is terminated (i) by
written notice to the Trustee and the Guarantor from the
Person or Persons who gave such Guarantor Blockage Notice,
(ii) by repayment in full of such Senior Indebtedness of
Guarantor or (iii) because the default giving rise to such
Guarantor Blockage Notice is no longer continuing).
Notwithstanding the provisions described in the immediately
preceding sentence (but subject to the provisions contained
in the first sentence of this Section 11.04), unless the
holders of such Senior Indebtedness of Guarantor or the
Representative of such holders shall have accelerated the
maturity of such Senior Indebtedness of Guarantor, the
Guarantor may resume payments on the Securities pursuant to
the Rio Guarantee after such Payment Blockage Period. Not
more than one Guarantor Blockage Notice may be given in any
consecutive 360-day period, irrespective of the number of
defaults with respect to Senior Indebtedness of Guarantor
during such period.
SECTION 11.05. Mandatory Redemption and
Subordination. The provisions described in Sections 11.02
or 11.03 shall not prevent or delay (i) the Guarantor from
redeeming any Securities if the Company is so required by
any Gaming Authority as described in paragraph 7 of the Form
of Security attached hereto as Exhibit A or from otherwise
purchasing any Securities pursuant to any Legal Requirement
relating to the gaming business of the Company and its
Subsidiaries or (ii) the receipt by the Securityholders of
payments of principal and interest on the Securities, as
described under Article 8, from the application of any money
or U.S. Government Obligations held in trust by the Trustee.
SECTION 11.06. Acceleration of Payment of
Securities. If payment of the Securities is accelerated
because of an Event of Default, the Company shall
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81
promptly notify the holders of the Designated Senior
Indebtedness of Guarantor (or their Representatives) of
the acceleration.
SECTION 11.07. When Distribution Must Be Paid
Over. If a distribution is made to Securityholders that
because of this Article 11 should not have been made to
them, the Securityholders who receive the distribution shall
hold it in trust for holders of Senior Indebtedness of
Guarantor and pay it over to them as their interests may
appear.
SECTION 11.08. Subrogation. After all Senior
Indebtedness is paid in full and until the Securities are
paid in full, Securityholders shall be subrogated to the
rights of holders of Senior Indebtedness of Guarantor to
receive distributions applicable to Senior Indebtedness of
Guarantor. A distribution made under this Article 11 to
holders of Senior Indebtedness of Guarantor which otherwise
would have been made to Securityholders is not, as between
the Company and Securityholders, a payment by the Guarantor
on Senior Indebtedness of Guarantor.
SECTION 11.09. Relative Rights. This Article 11
defines the relative rights of Securityholders and holders
of Senior Indebtedness of Guarantor. Nothing in this
Indenture shall:
(1) impair, as between the Guarantor and
Securityholders, the obligation of the Guarantor, which
is absolute and unconditional, to pay principal of and
interest on the Securities pursuant to the Rio
Guarantee in accordance with their terms; or
(2) prevent the Trustee or any Securityholder from
exercising its available remedies upon a Default,
subject to the rights of holders of Senior Indebtedness
of Guarantor to receive distributions otherwise payable
to Securityholders.
SECTION 11.10. Subordination May Not Be Impaired
by the Guarantor. No right of any holder of Senior
Indebtedness of Guarantor to enforce the subordination of
the Indebtedness evidenced by the Securities shall be
impaired by any act or failure to act by the Guarantor or by
its failure to comply with this Indenture.
SECTION 11.11. Rights of Trustee and Paying
Agent. Notwithstanding Section 11.04, the Trustee or Paying
Agent may continue to make payments on the Securities and
shall not be charged with knowledge of the existence of
facts that would prohibit the making of any such payments
unless, not less than two Business Days prior to the date of
such payment, a Trust Officer of the Trustee
<PAGE>
82
receives notice satisfactory to it that payments may
not be made under this Article 11. The Guarantor, the
Registrar or co-registrar, the Paying Agent, a
Representative of holders of, or holders holding a
majority of Senior Indebtedness may give the notice;
provided however, that, if an issue of Senior
Indebtedness of Guarantor has a Representative, only the
Representative may give the notice.
The Trustee in its individual or any other
capacity may hold Senior Indebtedness of Guarantor with
the same rights it would have if it were not Trustee.
The Registrar and co-registrar and the Paying Agent may
do the same with like rights. The Trustee shall be
entitled to all the rights set forth in this Article 11
with respect to any Senior Indebtedness of Guarantor
which may at any time be held by it, to the same
extent as any other holder of Senior Indebtedness of
Guarantor; and nothing in Article 7 shall deprive the
Trustee of any of its rights as such holder. Nothing in
this Article 11 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 7.07.
SECTION 11.12. Distribution or Notice to
Representative. Whenever a distribution is to be made or a
notice given to holders of Senior Indebtedness of Guarantor,
the distribution may be made and the notice given to their
Representative (if any).
SECTION 11.13. Article 11 Not To Prevent Events
of Default or Limit Right To Accelerate. The failure to
make a payment pursuant to the Securities by reason of any
provision in this Article 11 shall not be construed as
preventing the occurrence of a Default. Nothing in this
Article 11 shall have any effect on the right of the
Securityholders or the Trustee to accelerate the maturity of
the Securities.
SECTION 11.14. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary,
payments from money or the proceeds of U.S. Government
Obligations held in trust under Article 8 by the Trustee for
the payment of principal of and interest on the Securities
shall not be subordinated to the prior payment of any Senior
Indebtedness or subject to the restrictions set forth in
this Article 11, and none of the Securityholders shall be
obligated to pay over any such amount to the Guarantor or
any holder of Senior Indebtedness of Guarantor or any other
creditor of the Guarantor.
SECTION 11.15. Trustee Entitled To Rely. Upon
any payment or distribution pursuant to this Article 11, the
Trustee and the Securityholders shall be entitled to rely
(i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred
to in Section 11.03 are pending, (ii) upon a certificate of
the liquidating trustee or agent or other Person making such
<PAGE>
83
payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the
holders of Senior Indebtedness of Guarantor for the purpose
of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of the Senior
Indebtedness of Guarantor and other Indebtedness of the
Guarantor, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article 11. In the event that
the Trustee determines, in good faith, that evidence is
required with respect to the right of any Person as a holder
of Senior Indebtedness of Guarantor to participate in any
payment or distribution pursuant to this Article 11, the
Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness of Guarantor held by such Person, the
extent to which such Person is entitled to participate in
such payment or distribution and other facts pertinent to
the rights of such Person under this Article 11, and, if
such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to
the right of such Person to receive such payment. The
provisions of Sections 7.01 and 7.02 shall be applicable to
all actions or omissions of actions by the Trustee pursuant
to this Article 11.
SECTION 11.16. Trustee To Effectuate
Subordination. Each Securityholder by accepting a Security
authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the
Securityholders and the holders of Senior Indebtedness of
Guarantor as provided in this Article 11 and appoints the
Trustee as attorney-in-fact for any and all such purposes.
SECTION 11.17. Trustee Not Fiduciary for Holders
of Senior Indebtedness of Guarantor. The Trustee shall not
be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness of Guarantor and shall not be liable to any
such holders if it shall mistakenly pay over or distribute
to Securityholders or the Guarantor or any other Person,
money or assets to which any holders of Senior Indebtedness
of Guarantor shall be entitled by virtue of this Article 11
or otherwise.
SECTION 11.18. Reliance by Holders of Senior
Indebtedness of Guarantor on Subordination Provisions. Each
Securityholder by accepting a Security acknowledges and
agrees that the foregoing subordination provisions are, and
are intended to be, an inducement and a consideration to
each holder of any Senior Indebtedness of Guarantor, whether
such Senior Indebtedness of Guarantor was created or acquired
before or after the issuance of the Securities, to acquire
and continue to hold, or to continue to hold, such Senior
Indebtedness of Guarantor and such holder of Senior
Indebtedness of Guarantor shall be deemed conclusively to
have
<PAGE>
84
relied on such subordination provisions in acquiring
and continuing to hold, or in continuing to hold, such
Senior Indebtedness of Guarantor.
ARTICLE 12
Miscellaneous
SECTION 12.01. Trust Indenture Act Controls. If
and to the extent that any provision of this Indenture
limits, qualifies or conflicts with the duties imposed by,
or with another provision (an "incorporated provision")
included in this Indenture by operation of, Sections 310 to
318, inclusive, of the TIA, such imposed duties or
incorporated provision shall control.
SECTION 12.02. Notices. Any notice or
communication shall be in writing and delivered in person or
mailed by first-class mail addressed as follows:
if to the Company:
Rio Hotel & Casino, Inc.
3700 West Flamingo Road
Las Vegas, NV 89103
Attention of:
President
Chief Financial Officer
if to the Guarantor:
Rio Hotel & Casino, Inc.
3700 West Flamingo Road
Las Vegas, NV 89103
Attention of:
President
Chief Financial Officer
<PAGE>
85
if to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Attention of: Corporate Trust & Agency Administration
With a copy to:
Squire, Saunders & Dempsey
Two Renaissance Square
40 North Central Avenue, Suite 2700
Attn: Bradley S. Paulson
Phoenix, AZ 85004
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 mailed to a
Securityholder shall be mailed to the Securityholder at the
Securityholder's address as it appears on the registration
books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
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, it is duly given, whether or not the addressee
receives it.
SECTION 12.03. 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 12.04. Certificate and Opinion as to
Conditions Precedent. Upon any request or application by
the Company to the Trustee to take or refrain from taking
any action under this Indenture, the Company shall furnish
to the Trustee:
(1) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee and complying
with Section 12.05 stating that, in
<PAGE>
86
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
(2) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee stating that, in
the opinion of such counsel, all such conditions
precedent have been complied with.
SECTION 12.05. Statements Required in Certificate
or Opinion. Each certificate or opinion with respect to
compliance with a covenant or condition provided for in this
Indenture shall include:
(1) a statement that the individual 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;
(3) a statement that, in the opinion of such
individual, 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 individual, such covenant or condition
has been complied with.
SECTION 12.06. When Securities Disregarded. In
determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver
or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be
disregarded and deemed not to be outstanding, except that,
for the purpose of determining whether the Trustee shall be
protected in relying on any such direction, waiver or
consent, only Securities which the Trustee knows are so
owned shall be so disregarded. Also, subject to the
foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION 12.07. Rules by Trustee, Paying Agent and
Registrar. The Trustee may make reasonable rules for action
by or a meeting of Securityholders. The Registrar and the
Paying Agent may make reasonable rules for their functions.
<PAGE>
87
SECTION 12.08. Legal Holidays. A "Legal Holiday"
is a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the State of New
York. If a payment date is a Legal Holiday, payment shall
be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening
period. If a regular record date is a Legal Holiday, the
record date shall not be affected.
SECTION 12.09. GOVERNING LAW. THIS INDENTURE AND
THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS
OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 12.10. No Recourse Against Others. A
director, officer, employee or stockholder, as such, of the
Company shall not 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. By accepting a Security,
each Securityholder shall waive and release all such
liability. The waiver and release shall be part of the
consideration for the issue of the Securities.
SECTION 12.11. 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 12.12. Multiple Originals. The parties
may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together
represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 12.13. Table of Contents; Headings. The
table of contents, cross-reference and headings of the
Articles and Sections of this Indenture have been inserted
for convenience of reference only, are not intended to be
considered a part hereof and shall not modify or restrict
any of the terms or provisions hereof.
SECTION 12.14. 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.
<PAGE>
88
IN WITNESS WHEREOF, the parties have caused this
Indenture to be duly executed as of the date first written
above.
RIO HOTEL & CASINO, INC.
by /s/ Ronald J. Radcliffe
Name: Ronald J. Radcliffe
Title: Treasurer
RIO PROPERTIES, INC.
by /s/ Ronald J. Radcliffe
Name: Ronald J. Radcliffe
Title: Treasurer
IBJ SCHRODER
BANK & TRUST COMPANY
by /s/ Barbara McCluskey
Name: Barbara McCluskey
Title: Vice President
<PAGE>
EXHIBIT A
[FORM OF FACE OF INITIAL SECURITY)
[Global Securities Legend -- if applicable)
UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSORS NOMINEE
AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE
REVERSE HEREOF.
[RESTRICTED SECURITY LEGEND]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY
NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO
THE THIRD ANNIVERSARY OF THE ISSUANCE HEREOF (OR ANY
PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS
AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE
MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE,
OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY
IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE
<PAGE>
2
MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY),
(3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION
S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED
BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE
REVERSE OF THIS SECURITY), AND, IF SUCH TRANSFER IS BEING
EFFECTED BY CERTAIN TRANSFERORS SPECIFIED IN THE INDENTURE
(AS DEFINED BELOW) PRIOR TO THE EXPIRATION OF THE "40 DAY
RESTRICTED PERIOD" (WITHIN THE MEANING OF RULE 903(c) (3) OF
REGULATION S UNDER THE SECURITIES ACT), A CERTIFICATE WHICH
MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED
BY THE TRANSFEREE TO THE COMPANY AND THE TRUSTEE, (4) TO AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN
RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY)
THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND
NOT FOR DISTRIBUTION, AND A CERTIFICATE IN THE FORM ATTACHED
TO THIS SECURITY IS DELIVERED BY THE TRANSFEREE TO THE
COMPANY AND THE TRUSTEE (PROVIDED THAT CERTAIN HOLDERS
SPECIFIED IN THE INDENTURE MAY NOT TRANSFER THIS SECURITY
PURSUANT TO THIS CLAUSE (4) PRIOR TO THE EXPIRATION OF THE
"40 DAY RESTRICTED PERIOD" (WITHIN THE MEANING OF RULE
903(c)(3) OF REGULATION S UNDER THE SECURITIES ACT)), (5)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER
THE SECURITIES ACT, OR (6) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH
CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES. AN INSTITUTIONAL ACCREDITED
INVESTOR HOLDING THIS SECURITY AGREES THAT IT WILL FURNISH
TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER
INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT
ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE
FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING
THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE
COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION THAT
IS AN
<PAGE>
3
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT AND THAT IS HOLDING
THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT
SATISFYING THE REQUIREMENTS OF PARAGRAPH (o) (2) OF
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT.
<PAGE>
4
CUSIP NO.
No. $
9-1/2% Senior Subordinated Notes Due April 15, 2007
Rio Hotel & Casino, Inc., a Nevada corporation, for
value received, hereby promises to pay to , or
registered assigns, the principal sum of
United States Dollars on .
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
Additional provisions of this Security are set forth
on the other side of this Security.
Dated:
RIO HOTEL & CASINO, INC.
by:_______________________________
President
_________________________________
Secretary
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
IBJ SCHRODER BANK &
TRUST COMPANY,
as Trustee,
certifies [Seal] that this one
of the Securities referred to
in the Indenture.
by:___________________________
Authorized Signatory
<PAGE>
5
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
9-1/2% Senior Subordinated Note Due April 15, 2007
1. Interest
Rio Hotel & Casino, Inc., a Nevada
corporation (such corporation, and its successors and
assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on
the principal amount of this Security at the rate per annum
shown above. The Company will pay interest semiannually on
April 15 and October 15 of each year. Interest on the
Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid,
from February 11, 1997. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. The
Company shall pay interest on overdue principal at the rate
borne by the Securities plus 1% per annum, and it shall pay
interest on overdue installments of interest at the same
rate to the extent lawful.
2. Special Interest
The holder of this Security is entitled to
the benefits of a Registration Agreement, dated as of
February 4, 1997, among the Company and the Initial
Purchasers (the "Registration Agreement").
In the event that either (i) the Exchange
Offer Registration Statement is not filed with the
Commission on or prior to the 60th day following the date of
original issuance of the Securities (ii) the Exchange Offer
Registration Statement is not declared effective prior to
the 150th day following date of original issuance of the
Securities or (iii) the Exchange Offer is not consummated or
a Shelf Registration Statement with respect to the
Securities is not declared effective on or prior to the
180th day following the date of original issuance of the
Securities, interest will accrue (in addition to stated
interest on the Notes) from and including the next day
following each of (a) such 60-day period in the case of
clause (i) above and (b) such 150-day period in the case of
clause (ii) above and (c) such 180-day period in the case of
clause (iii) above. In each case such additional interest
(the "Special Interest") will be payable in cash
semiannually in arrears each April 15, and October 15,
commencing October 15, 1997, at a rate per annum equal to
0.50% of the principal amount of the Securities. The
aggregate amount of Special Interest payable pursuant to the
above provisions will in no event exceed 1.50% per annum of
the principal amount of the Securities. Upon (x) the filing
of the Exchange Offer Registration Statement after the 60-
day period described in clause (i) above, (y) the
effectiveness of the Exchange
<PAGE>
6
Offer Registration Statement after the 150-day period
described in clause (ii) above or (z) the consummation of
the Exchange Offer or the effectiveness of a Shelf
Registration Statement, as the case may be, after the
180-day period described in clause (iii) above, the
Special Interest payable on the Securities from the date
of such filing, effectiveness or consummation, as the
case may be, will cease to accrue and all accrued and
unpaid Special Interest as of the occurrence of (x), (y) or
(z) shall be paid to the holders of the Notes promptly
thereafter. Following the occurrence of (x), (y) or
(z) above, the terms of the Securities shall revert to the
original terms set forth above.
In the event that a Shelf Registration
Statement is declared effective pursuant to the paragraph
preceding the immediately preceding paragraph, if the
Company fails to keep such Registration Statement
continuously effective for the period required by the
Registration Agreement, then from such time as the Shelf
Registration Statement is no longer effective until the
earlier of (i) the date that the Shelf Registration
Statement is again deemed effective, (ii) the date that is
the third anniversary of the Closing or (iii) the date as of
which all of the Securities are sold pursuant to the Shelf
Registration Statement, Special Interest shall accrue at a
rate per annum equal to 0.50% of the principal amount of the
Securities (1.00% thereof if the Shelf Registration
Statement is no longer effective for 30 days or more) and
shall be payable in cash semiannually in arrears each
April 15 and October 15, commencing October 15, 1997.
3. Method of Payment
The Company will pay interest on the
Securities (except defaulted interest) to the Persons who
are registered holders of Securities at the close of
business on the April 1 or October 1 next preceding the
interest payment date even if Securities are concealed after
the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal
and interest in money of the United States of America that
at the time of payment is legal tender for payment of public
and private debts. However, the Company may pay principal
and interest by check payable in such money. It may mail an
interest check to a Holder's registered address.
4. Paying Agent and Registrar
Initially, IBJ Schroder Bank & Trust Company,
a New York corporation ("Trustee"), will act as Paying Agent
and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without notice. The
<PAGE>
7
Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-
registrar.
5. Indenture
The Company issued the Securities under an
Indenture dated as of February 11, 1997 ("Indenture"),
between the Company, Rio Properties, Inc. (the "Guarantor")
and the Trustee. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of the
Indenture (the "Act"). Terms defined in the Indenture and
not defined herein have the meanings ascribed thereto in
the Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the
Act for a statement of those terms.
The Securities are general unsecured
obligations of the Company limited to $125,000,000 aggregate
principal amount (subject to Section 2.07 of the Indenture).
The Indenture imposes certain limitations on the Company,
the Guarantor and the Restricted Subsidiaries, including the
Incurrence of Indebtedness, pay dividends or make other
distributions, make investments, repurchase subordinated
obligations or capital stock, create certain liens (except,
among others, liens securing Senior Indebtedness), enter
into certain transactions with affiliates, sell assets of
the Company or its subsidiaries, issue or sell subsidiary
stock, create or permit to exist restrictions on
distributions from subsidiaries, or enter into certain
mergers and consolidations.
The payment of principal and interest on the
Securities is unconditionally guaranteed on a senior
subordinated and unsecured basis by the Guarantor.
6. Optional Redemption
The Securities may not be redeemed prior to
April 15, 2002. On and after that date, the Company may
redeem the Securities in whole at any time or in part from
time to time at the following redemption prices (expressed
in percentages of principal amount), plus accrued interest
to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due
on the related interest payment date):
if redeemed during the 12-month period beginning
April 15 of the years below.
<PAGE>
8
Year Percentage
2002 104.750%
2003 103.167%
2004 101.583%
and thereafter at 100.000%.
7. Mandatory Disposition or Redemption Pursuant to
Gaming Laws
If a Holder or beneficial owner of a Security
is required to be licensed, qualified or found suitable
under applicable Gaming Laws and is not so licensed,
qualified or found suitable, the Holder shall be obliged, at
the request of the Company, to dispose of such Holder's
Securities within 30 days after receipt of notice of failure
to be found suitable or such earlier date prescribed by any
Gaming Authority (in which event the Company's obligation to
pay interest after the receipt of such notice shall be
limited as provided in such Gaming Laws), and thereafter,
the Company shall have the right to redeem, on the date
fixed by the Company for the redemption of such Securities,
such Holder's Securities at a redemption price equal to the
lower of (i) the price at which such Holder or beneficial
owner acquired the securities without accrued interest, if
any (unless the payment of such interest is permitted by the
applicable Gaming Authority), (ii) the Current Market Price
of the Securities on such redemption date and (iii) the
principal amount of such securities without accrued
interest, if any (unless the payment of such interest is
permitted by the applicable Gaming Authority). The Company
is not required to pay or reimburse any Holder or beneficial
owner of a Security for the costs of licensure or
investigation for such licensure, qualification or finding
of suitability. Any Holder or beneficial owner of a
Security required to be licensed, qualified or found
suitable under Gaming Laws must pay all investigative fees
and costs of the Gaming Authorities in connection with such
qualification or application therefor.
8. Notice of Redemption
Notice of Redemption will be mailed at
least 30 days but not more than 60 days before the
redemption date to each Holder of Securities to be redeemed
at his registered address. Securities in denominations
larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the
redemption price of and accrued interest on all Securities
(or portions thereof) to be redeemed on the redemption date
is deposited with the Paying Agent on or before the
redemption date and certain other conditions are satisfied,
on and after such date interest ceases to accrue on such
Securities (or such portions thereof) called for redemption.
<PAGE>
9
9. Put Provisions
Upon a Change of Control, any Holder of
Securities will have the right, subject to certain
conditions, to cause the Company to repurchase all or any
part of the Securities of such Holder at a repurchase price
equal to 101% of the principal amount of the Securities to
be repurchased plus accrued interest to the date of
repurchase (subject to the right of holders of record in the
relevant record date to receive interest due on the related
interest payment date) as provided in, and subject to the
terms of, the Indenture.
10. Subordination
The Securities are subordinated to Senior
Indebtedness, as defined in the Indenture and the Rio
Guarantee is subordinated to Senior Indebtedness of the
Guarantor, as defined in the Indenture. To the extent
provided in the Indenture, Senior Indebtedness or Senior
Indebtedness of the Guarantor must be paid before the
Securities may be paid. The Company and the Guarantor
agree, and each Securityholder by accepting a Security
agrees, to the subordination provisions contained in the
Indenture and authorized the Trustee to give it effect and
appoints the Trustee as attorney-in-fact for such purpose.
11. Denominations; Transfer; Exchange
The Securities are in registered form without
coupons in denominations of $1,000 and whole multiples of
$1,000. A Holder may transfer or exchange Securities in
accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorse
ments or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The
Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security
not to be redeemed) or any Securities for a period of
15 days before a selection of Securities to be redeemed or
15 days before an interest payment date.
12. Persons Deemed Owners
The registered Holder of this Security may be
treated as the owner of it for all purposes.
<PAGE>
10
13. Unclaimed Money
If money for the payment of principal or
interest remains unclaimed for two years, the Trustee or
Paying Agent shall pay the money back to the Company at its
request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the
money must look only to the Company and not to the Trustee
for payment.
14. Discharge and Defeasance
Subject to certain conditions, the Company at
any time may terminate some or all of its obligations under
the Securities and the indenture if the Company deposits
with payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
15. Amendment, Waiver
Subject to certain exceptions set forth in
the Indenture, (i) the Indenture or the Securities may be
amended with the written consent of the Holders of at least
a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may
be waived with the written consent of the Holders of a
majority in principal amount outstanding of the Securities.
Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company and
the Trustee may amend the Indenture or the Securities to
cure any ambiguity, omission, defect or inconsistency, or to
comply with Article 5 of the Indenture, or to provide for
uncertificated Securities in addition to or in place of
certificated Securities, or to add guarantees with respect
to the Securities or to secure the Securities, or to add
additional covenants or surrender rights and powers
conferred on the Company, or to comply with any request of
the SEC in connection with qualifying the indenture under
the Act, or to make certain changes in the subordination
provisions, or to make any change that does not adversely
affect the rights of any Securityholder.
16. Defaults and Remedies
Under the Indenture, Events of Default
include (i) default for 30 days in payment of interest on
the Securities; (ii) default in payment of principal on the
Securities at maturity, upon redemption pursuant to
paragraph 5 or 6 of the Securities, upon acceleration or
otherwise; or failure by the Company to redeem or purchase
Securities when required; (iii) failure by the Company to
comply with other agreements in the Indenture or the
Securities, in certain cases subject to notice and
<PAGE>
11
lapse of time; (iv) certain accelerations (including
failure to pay within any grace period after final
maturity) of other Indebtedness of the Company if the
amount accelerated (or so unpaid) exceeds $10 million
and continue for 10 days after the required notice to
the Company; (v) certain events of bankruptcy or
insolvency with respect to the Company and any Restricted
Subsidiary; (vi) certain judgments or decrees for the
payment of money in excess of $10 million or (vii) the
revocation, termination or suspension of any Gaming License
of the Company or any of its Restricted Subsidiaries subject
to certain conditions. If an Event of Default (other than
an Event of Default specified in (v) above) occurs and is
continuing, the Trustee or the Holders of at least 25% in
principal amount of the Securities may, by notice to the
Company, declare the principal amount of and accrued
interest on the Securities to be due and payable immediately
upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture
or the Securities except as provided in the Indenture. The
Trustee may refuse to enforce the Indenture or the
Securities unless it receives reasonable indemnity or
security. Subject to certain limitations, Holders of a
majority in principal amount of the Securities may direct the
Trustee in its exercise of any trust or power. The Trustee
may with hold from Securityholders notice of any continuing
Default (except a Default in payment of principal or
interest) if it determines that withholding notice is in the
interest of the Holders.
17. Trustee Dealings with the Company
Subject to certain limitations imposed by the
Act, the Trustee under the Indenture, in its individual or
any other capacity, may become the owner or pledgee of
Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and
may otherwise deal with the Company or its Affiliates with
the same rights it would have if it were not Trustee.
18. No Recourse Against Others
A director, officer, employee or stockholder,
as such, of the Company or the Trustee shall not 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. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the
Securities.
<PAGE>
12
19. Authentication
This Security shall not be valid until an
authorized signatory of the Trustee (or an authenticating
agent) manually signs the certificate of authentication on
the other side of this Security.
20. Abbreviations
Customary abbreviations may be used in the
name of a Securityholder or an assignee, such as TEN COM
(=tenants in common), TEN ENT (=tenants by the entireties),
JT TEN (=joint tenants with rights of survivorship and not
as tenants in common), CUST (=custodian), and U/G/M/A
(=Uniform Gift to Minors Act).
21. CUSIP Numbers
Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures
the Company has caused CUSIP numbers to be printed on the
Securities and has directed the Trustee to use CUSIP numbers
in notices of redemption as a convenience to
Securityholders. No representation is made as to the
accuracy of such numbers either as printed on the Securities
or as contained in any notice of redemption and reliance may
be placed only on the other identification numbers placed
thereon.
The Company will furnish to any
Securityholder upon written request and without charge to
the Securityholder a copy of the Indenture which has in it
the text of this Security in larger type. Requests may be
made to:
Attention of
________________________________________________________
<PAGE>
13
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent
to transfer this Security on the books of the Company. The
agent may substitute another to act for him.
Date:_____________ Your Signature:_________________________
____________________________________________________________
Sign exactly as your name appears on the other side of this
Security.
In connection with any transfer of any of the
Senior Subordinated Securities evidenced by this certificate
occurring prior to the date that is three years after the
later of the date of original issuance of such Senior
Subordinated Securities and the last date, if any, on which
such Senior Subordinated Securities were owned by the
Company or any Affiliate of the Company, the undersigned
confirms that such Senior Subordinated Securities are being
transferred:
CHECK ONE BOX BELOW
(1) [ ] to the Company; or
(2) [ ] pursuant to and in compliance with Rule 144A
under the Securities Act of 1933; or
(3) [ ] pursuant to and in compliance with Regulation
S under the Securities Act of 1933; or
(4) [ ] to an institutional "accredited investor"
(as defined in Schedule 501(a)(1), (2), (3)
or (7) under the Securities Act of 1933)
that has furnished to the Trustee a signed
letter containing certain
<PAGE>
14
representations and agreements (the form of
which letter can be obtained from the
Trustee); or
(5) [ ] pursuant to another available exemption from
the registration requirements of the
Securities Act of 1933.
Unless one of the boxes is checked, the
Trustee will refuse to register any of the Senior
Subordinated Securities evidenced by this certificate in the
name of any person other than the registered holder thereof;
provided, however, that if box (3), (4) or (5) is checked,
the Trustee may require, prior to registering any such
transfer of the Senior Subordinated Securities, such legal
opinions, certifications and other information as the
Company has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in
a transaction not subject to, the registration requirements
of the Securities Act of 1933, such as the exemption
provided by Rule 144 under such Act.
_______________________________
Signature
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that
it is purchasing this Senior Subordinated Security for its
own account or an account with respect to which it exercises
sole investment discretion and that it and any such account
is a "qualified institutional buyer" within the meaning of
Rule 144A under the Securities Act of 1933, and is aware
that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information
regarding the Company as the undersigned has requested
pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in
order to claim the exemption from registration provided by
Rule 144A.
Date:__________________ _______________________________
NOTICE: To be executed by an
executive officer
<PAGE>
15
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global
Security have been made:
Date of Amount Amount Principal Signature
Exchange of decrease of increase Amount [at of authorized
in Principal in Principal Maturity] officer of
Amount [at Amount [at of this Trustee or
Maturity] of Maturity] Global Securities
this Global of this Security Custodian
Security Global following
Security such
decrease or
increase
<PAGE>
16
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased
by the Company pursuant to Section 4.06 or 4.08 of the
Indenture, check the box:
[ ]
If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 4.06
or 4.08 of the Indenture, state the amount:
$
Date:_______________ Your Signature:_______________________
(Sign exactly as your name
appears on the other side
of Security)
Signature Guarantee:________________________________________
(Signature must be guaranteed by a
member firm of the New York Stock
Exchange or a commercial bank or
trust company)
<PAGE>
EXHIBIT B
[FORM OF FACE OF EXCHANGE SECURITY]
[Global Securities Legend -- if applicable]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES
OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSORS NOMINEE
AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE
REVERSE HEREOF.
<PAGE>
2
No.
$
9-1/2% Senior Subordinated Notes Due April 15, 2007
Rio Hotel & Casino, Inc., a Nevada
corporation, for value received, hereby promises to pay to
, or registered assigns, the
principal sum of United States Dollars on
.
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
Additional provisions of this Security are
set forth on the other side of this Security.
Dated:
RIO HOTEL & CASINO, INC.
by:____________________
President
____________________
Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
IBJ SCHRODER BANK &
TRUST COMPANY,
as Trustee, certifies
[Seal] that this is one of
the Securities referred to in the Indenture.
by:__________________________________________
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY]
9-1/2% Senior Subordinated Notes Due April 15, 2007
1. Interest
Rio Hotel & Casino, Inc., a Nevada corporation
(such corporation, and its successors and assigns under the
Indenture hereinafter referred to, being herein called the
"Company"), promises to pay interest on the principal amount
of this Security at the rate per annum shown above. The
Company will pay interest semiannually on April 15 and
October 15 of each year. Interest on the Securities will
accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from February 11,
1997. Interest will be computed on the basis of a 360-day
year of twelve 30-day months. The Company shall pay
interest on overdue principal at the rate borne by the
Securities plus 1% per annum, and it shall pay interest on
overdue installments of interest at the same rate to the
extent lawful.
2. Method of Payment
The Company will pay interest on the Securities
(except defaulted interest) to the Persons who are
registered holders of Securities at the close of business on
the April 1 or October 1 next preceding the interest payment
date even if Securities are concealed after the record date
and on or before the interest payment date. Holders must
surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in
money of the United States of America that at the time of
payment is legal tender for payment of public and private
debts. However, the Company may pay principal and interest
by check payable in such money. It may mail an interest
check to a Holder's registered address.
3. Paying Agent and Registrar
Initially, IBJ Schroder Bank & Trust Company, a
New York corporation ("Trustee"), will act as Paying Agent
and Registrar. The Company may appoint and change any
Paying Agent, Registrar or co-registrar without notice. The
Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-
registrar.
<PAGE>
2
4. Indenture
The Company issued the Securities under an
Indenture dated as of February 11, 1997 ("Indenture"),
between the Company, Rio Properties, Inc. (the "Guarantor")
and the Trustee. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of the
Indenture (the "Act"). Terms defined in the Indenture and
not defined herein have the meanings ascribed thereto in the
Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the
Act for a statement of those terms.
The Securities are general unsecured obligations
of the Company limited to $125,000,000 aggregate principal
amount (subject to Section 2.07 of the Indenture). The
Indenture imposes certain limitations on the Company, the
Guarantor and the Restricted Subsidiaries, including the
Incurrence of Indebtedness, pay dividends or make other
distributions, make investments, repurchase subordinated
obligations or capital stock, create certain liens (except,
among others, liens securing Senior Indebtedness), enter
into certain transactions with affiliates, sell assets of
the Company or its subsidiaries, issue or sell subsidiary
stock, create or permit to exist restrictions on
distributions from subsidiaries, or enter into certain
mergers and consolidations.
The payment of principal and interest on the
Securities is unconditionally guaranteed on a senior
subordinated and unsecured basis by the Guarantor.
5. Optional Redemption
The Securities may not be redeemed prior to April
15, 2002. On and after that date, the Company may redeem
the Securities in whole at any time or in part from time to
time at the following redemption prices (expressed in
percentages of principal amount), plus accrued interest to
the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due
on the related interest payment date):
<PAGE>
3
if redeemed during the 12-month period beginning
April 15 of the years below.
Year Percentage
2002 104.750%
2003 103.167%
2004 101.583%
and thereafter at 100.000%.
6. Mandatory Disposition or Redemption Pursuant to Gaming
Laws
If a Holder or beneficial owner of a Security is
required to be licensed, qualified or found suitable under
applicable Gaming Laws and is not so licensed, qualified or
found suitable, the Holder shall be obliged, at the request
of the Company, to dispose of such Holder's Securities
within 30 days after receipt of notice of failure to be
found suitable or such earlier date prescribed by any Gaming
Authority (in which event the Company's obligation to pay
interest after the receipt of such notice shall be limited
as provided in such Gaming Laws), and thereafter, the
Company shall have the right to redeem, on the date fixed by
the Company for the redemption of such Securities, such
Holder's Securities at a redemption price equal to the lower
of (i) the price at which such Holder or beneficial owner
acquired the securities without accrued interest, if any
(unless the payment of such interest is permitted by the
applicable Gaming Authority), (ii) the Current Market Price
of the Securities on such redemption date and (iii) the
principal amount of such securities without accrued
interest, if any (unless the payment of such interest is
permitted by the applicable Gaming Authority). The Company
is not required to pay or reimburse any Holder or beneficial
owner of a Security for the costs of licensure or
investigation for such licensure, qualification or finding
of suitability. Any Holder or beneficial owner of a
Security required to be licensed, qualified or found
suitable under Gaming Laws must pay all investigative fees
and costs of the Gaming Authorities in connection with such
qualification or application therefor.
7. Notice of Redemption
Notice of Redemption will be mailed at least 30
days but not more than 60 days before the redemption date to
each Holder of Securities to be redeemed at his registered
address. Securities in denominations larger than $1,000 may
be redeemed in part but only in whole multiples of $1,000.
If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to
be redeemed on the redemption date is deposited with the
Paying Agent on or before the
<PAGE>
4
redemption date and certain other conditions are satisfied,
on and after such date interest ceases to accrue on such
Securities (or such portions thereof) called for redemption.
8. Put Provisions
Upon a Change of Control, any Holder of Securities
will have the right, subject to certain conditions, to cause
the Company to repurchase all or any part of the Securities
of such Holder at a repurchase price equal to 101% of the
principal amount of the Securities to be repurchased plus
accrued interest to the date of repurchase (subject to the
right of holders of record in the relevant record date to
receive interest due on the related interest payment date)
as provided in, and subject to the terms of, the Indenture.
9. Subordination
The Securities are subordinated to Senior
Indebtedness, as defined in the Indenture and the Rio
Guarantee is subordinated to Senior Indebtedness of the
Guarantor, as defined in the Indenture. To the extent
provided in the Indenture, Senior Indebtedness or Senior
Indebtedness of the Guarantor must be paid before the
Securities may be paid. The Company and the Guarantor
agree, and each Securityholder by accepting a Security
agrees, to the subordination provisions contained in the
Indenture and authorized the Trustee to give it effect and
appoints the Trustee as attorney-in-fact for such purpose.
10. Denominations; Transfer; Exchange
The Securities are in registered form without
coupons in denominations of $1,000 and whole multiples of
$1,000. A Holder may transfer or exchange Securities in
accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorse
ments or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The
Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security
not to be redeemed) or any Securities for a period of 15
days before a selection of Securities to be redeemed or 15
days before an interest payment date.
11. Persons Deemed Owners
The registered Holder of this Security may be
treated as the owner of it for all purposes.
<PAGE>
5
12. Unclaimed Money
If money for the payment of principal or interest
remains unclaimed for two years, the Trustee or Paying Agent
shall pay the money back to the Company at its request
unless an abandoned property law designates another Person.
After any such payment, Holders entitled to the money must
look only to the Company and not to the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any
time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with
payment of principal and interest on the Securities to
redemption or maturity, as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the
Indenture, (i) the Indenture or the Securities may be
amended with the written consent of the Holders of at least
a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may
be waived with the written consent of the Holders of a
majority in principal amount outstanding of the Securities.
Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company and
the Trustee may amend the Indenture or the Securities to
cure any ambiguity, omission, defect or inconsistency, or to
comply with Article 5 of the Indenture, or to provide for
uncertificated Securities in addition to or in place of
certificated securities, or to add guarantees with respect
to the Securities or to secure the Securities, or to add
additional covenants or surrender rights and powers
conferred on the Company, or to comply with any request of
the SEC in connection with qualifying the indenture under
the Act, or to make certain changes in the subordination
provisions, or to make any change that does not adversely
affect the rights of any Securityholder.
15. Defaults and Remedies
Under the Indenture, Events of Default include (i)
default for 30 days in payment of interest on the
Securities; (ii) default in payment of principal on the
Securities at maturity, upon redemption pursuant to
paragraph 5 or 6 of the Securities, upon acceleration or
other wise, or failure by the Company to redeem or purchase
Securities when required; (iii) failure by the Company to
comply with other agreements in the Indenture or the
Securities, in certain cases subject to notice and
<PAGE>
6
lapse of time; (iv) certain accelerations (including failure
to pay within any grace period after final maturity) of other
Indebtedness of the Company if the amount accelerated (or so
unpaid) exceeds $10 million and continues for 10 days after
the required notice to the Company; (v) certain events of
bankruptcy or insolvency with respect to the Company and any
Restricted Subsidiary; (vi) certain judgments or decrees for
the payment of money in excess of $10 million or (vii) the
revocation, termination or suspension of any Gaming License
of the Company or any of its Restricted Subsidiaries subject
to certain conditions. If an Event of Default (other than
an Event of Default specified in (v) above) occurs and is
continuing, the Trustee or the Holders of at least 25% in
principal amount of the Securities may, by notice to the
Company, declare the principal amount of and accrued
interest on the Securities to be due and payable immediately
upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or
the Securities except as provided in the Indenture. The
Trustee may refuse to enforce the Indenture or the
Securities unless it receives reasonable indemnity or
security. Subject to certain limitations, Holders of a
majority in principal amount of the Securities may direct
the Trustee in its exercise of any trust or power. The
Trustee may with hold from Securityholders notice of any
continuing Default (except a Default in payment of principal
or interest) if it determines that withholding notice is in
the interest of the Holders.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act,
the Trustee under the Indenture, in its individual or any
other capacity, may become the owner or pledgee of
Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and
may other wise deal with the Company or its Affiliates with
the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as
such, of the Company or the Trustee shall not 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. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the
Securities.
<PAGE>
7
18. Authentication
This Security shall not be valid until an author
ized signatory of the Trustee (or an authenticating agent)
manually signs the certificate of authentication on the
other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of
a Securityholder or an assignee, such as TEN COM (=tenants
in common), TEN ENT (=tenants by the entireties), JT TEN
(=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform
Gifts to Minors Act).
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures the
Company has caused CUSIP numbers to be printed on the
Securities and has directed the Trustee to use CUSIP numbers
in notices of redemption as a convenience to
Securityholders. No representation is made as to the
accuracy of such numbers either as printed on the Securities
or as contained in any notice of redemption and reliance may
be placed only on the other identification numbers placed
thereon.
The Company will furnish to any Securityholder
upon written request and without charge to the
Securityholder a copy of the Indenture which has in it the
text of this Security in larger type. Requests may be made
to:
Attention of
________________________________________________
<PAGE>
8
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint
agent to transfer this Security on the books of the Company.
The agent may substitute another to act for him.
__________________________________________________________
Date:_______________ Your Signature:______________________
___________________________________________________________
Sign exactly as your name appears on the other side of this
Security.
<PAGE>
9
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this
Global Security have been made:
Date Amount of Amount of Principal Signature
of decrease increase Amount [at of authorized
Exchange in Principal in Principal Maturity] officer of
Amount [at Amount [at of this Trustee or
Maturity] Maturity] Global Securities
of this of this Security Custodian
Global Global following
Security Security such decrease
or increase
<PAGE>
10
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security
purchased by the Company pursuant to Section 4.06 or 4.08 of
the Indenture, check the box:
[ ]
If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 4.06
or 4.08 of the Indenture, state the amount:
$
Date: _______________ Your Signature:_____________________
(Sign exactly as your
name appears on the other
side of the Security)
Signature Guarantee:________________________________________
(Signature must be guaranteed by a
member firm of the New York Stock
Exchange or a commercial bank or trust
company)
<PAGE>
EXHIBIT C
FORM OF TRANSFER CERTIFICATE
FOR TRANSFER FROM RESTRICTED GLOBAL
SECURITY OR RESTRICTED SECURITY
TO REGULATION S GLOBAL SECURITY
(Transfers pursuant to Section 2.06(a)(ii)
or (v) of the Indenture)
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Re: Rio Hotel & Casino, Inc. 9-1/2% Senior
Subordinated Notes
Due 2007 (the "Securities")
Reference is hereby made to the Indenture dated as
of February 11, 1997 (the "Indenture") between Rio Hotel &
Casino, Inc., as Issuer, Rio Properties, Inc. as Guarantor,
and IBJ Schroder Bank & Trust Company, as Trustee.
Capitalized terms used but not defined herein shall have the
meanings given them in the Indenture.
This letter relates to U.S. $125 million aggregate
principal amount of Securities which are held [in the form
of the Restricted Global Security (CUSIP No. )
with the Depositary)] 1/ in the name of [name of transferor]
(the "Transferor") to effect the transfer of the Securities
in exchange for an equivalent beneficial interest in the
Regulation S Global Security.
In connection with such request, the Transferor
does hereby certify that such transfer has been effected in
accordance with the transfer restrictions set forth in the
Securities and (i) with respect to transfers made in
reliance on Regulation S, does certify that:
(1) the offer of the Securities was not made to a
person in the United States;
(2) the transaction was executed in, on or
through the facilities of a designated offshore
securities market and neither the Transferor nor any
___________________
1/ Insert, if appropriate.
<PAGE>
12
person acting on its behalf knows that the transaction
was prearranged with a buyer in the United States;
(3) no directed selling efforts have been made
in contravention of the requirements of Rule 903(b) or
904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or
scheme to evade the registration requirements of the
United States Securities Act of 1933 (the "Securities
Act");
(ii) with respect to transfers made in reliance on Rule 144
certify that the Securities are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
and (ii) with respect to transfers made in reliance on Rule
144A, that such Securities are being transferred in
accordance with Rule 144A under the Securities Act to a
transferee that the Transferor reasonably believes is
purchasing the Securities for its own account or an account
with respect to which the transferee exercises sole
investment discretion and the transferee and any such
account is a "qualified institutional buyer" within the
meaning of Rule 144A, in a transaction meeting the
requirements of Rule 144A and in accordance with applicable
securities laws of any state of the United States or any
other jurisdiction.
In addition, if the sale is made during a
restricted period and the provisions of Rule 903(c)(2) or
(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in
accordance with the applicable provisions of Rule 903(c)(2)
or (3) or Rule 904(c)(1), as the case may be.
You and the Company are entitled to rely upon this
letter and are irrevocably authorized to produce this letter
or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
[Name of Transferor]
by__________________________
Name:
Title:
Date:
<PAGE>
13
cc: Rio Hotel & Casino, Inc.
3700 West Flamingo Road
Las Vegas, NV 89103
<PAGE>
EXHIBIT D
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM REGULATION S GLOBAL SECURITY OR RESTRICTED
SECURITY TO RESTRICTED GLOBAL SECURITY
(Transfers pursuant to Section 2.06(a)(iii)
or (v) of the Indenture)
IBJ Schroder Bank and Trust Company
One State Street
New York, NY 10004
Re: Rio Hotel & Casino, Inc.
9-1/2% Senior Subordinated Notes Due 2007
(the "Securities")
Reference is hereby made to the Indenture dated as
of February 11, 1997 (the "Indenture") between Rio Hotel &
Casino, Inc., as Issuer, Rio Properties, Inc., as Guarantor,
and IBJ Schroder Bank & Trust Company, as Trustee.
Capitalized terms used but not defined herein shall have the
meanings given them in the Indenture.
This letter relates to U.S. $125 million aggregate
principal amount of Securities which are held [in the form
of the Regulation S Global Security with the Depositary
(CUSIP No. ]1/ in the name of [name of
transferor] (the "Transferor") to effect the transfer of the
Securities in exchange for an equivalent beneficial interest
in the Restricted Global Security.
In connection with such request, and in respect of
such Securities, the Transferor does hereby certify that
such Securities are being transferred in accordance with (i)
the transfer restrictions set forth in the Securities and
(ii) Rule 144A under the United States Securities Act of
1933 to a transferee that the Transferor reasonably believes
is purchasing the Securities for its own account or an
account with respect to which the transferee exercises sole
investment discretion and the transferee and any such
account is a "qualified institutional buyer" within the
meaning of Rule 144A, in
______________________
1/ Insert, if appropriate.
<PAGE>
2
a transaction meeting the requirements of Rule 144A and
in accordance with applicable securities laws of any state
of the United States or any other jurisdiction.
[Name of Transferor],
by______________________________
Name:
Title:
Dated:
cc: Rio Hotel & Casino, Inc.
3700 West Flamingo Road
Las Vegas, NV 89103
<PAGE>
EXHIBIT E
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM GLOBAL SECURITY OR RESTRICTED
SECURITY TO RESTRICTED SECURITY
(Transfers pursuant to Section 2.06(a)(iv)
or Section 2.06(a)(vi) of the Indenture)
IBJ Schroder Bank and Trust Company
One State Street
New York, NY 10004
Re: Rio Hotel & Casino, Inc.
9-1/2% Senior Subordinated Notes Due 2007
(the "Securities")
Reference is hereby made to the Indenture dated as
of February 11, 1997 (the "Indenture") between Rio Hotel &
Casino, Inc., as Issuer, Rio Properties, Inc., as Guarantor,
IBJ Schroder Bank & Trust Company, as Trustee. Capitalized
terms used but not defined herein shall have the meanings
given them in the Indenture.
This letter relates to U.S. $125 million aggregate
principal amount of Securities which are held [in the form
of the [Restricted] [Global] Security (CUSIP No. )
with the Depositary]1/ in the name of [name of transferor]
(the "Transferor") to effect the transfer of the Securities.
In connection with such request, and in respect of
such Securities, the Transferor does hereby certify that
such Securities are being transferred in accordance with (i)
the transfer restrictions set forth in the Securities and
(ii) to a transferee that the Transferor reasonably believes
is an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2). (3) or (7) of Regulation D under the
Securities Act of 1933) and is acquiring at least $100,000
principal amount of Securities for its own account or for
one or more accounts as to which the transferee exercises
sole investment
______________________
1/ Insert, if appropriate.
<PAGE>
2
discretion and (iii) in accordance with applicable
securities laws of any state of the United States or
any other jurisdiction.
[Name of Transferor],
by_____________________________
Name:
Title:
Dated:
cc: Rio Hotel & Casino, Inc.
3700 West Flamingo Road
Las Vegas, NV 89103
<PAGE>
EXHIBIT F
FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE
(Transfers pursuant to Section 2.06(a)(iv)
and Section 2.06(a)(vi)
IBJ Schroder Bank and Trust Company
One State Street
New York, NY 10004
Re: Rio Hotel & Casino, Inc. 9-1/2% Senior
Subordinated Notes
Due 2007 (the "Securities")
Reference is hereby made to the Indenture dated as
of February 11, 1997 (the "Indenture") between Rio Hotel &
Casino, Inc., as Issuer, Rio Properties, Inc., as Guarantor,
and IBJ Schroder Bank & Trust Company, as Trustee.
Capitalized terms used but not defined herein shall have the
meanings given them in the Indenture.
This letter relates to U.S. $125 million aggregate
principal amount of Securities which are held [in the form
of the [Restricted/Regulation S] Global Security (CUSIP No.
) with the Depositary]1/ in the name of [name
of transferor] (the "Transferor") to effect the transfer of
the Securities to the undersigned.
In connection with such request, and in respect of
such Securities, we confirm that:
1. We understand that the Securities have not
been and will not be registered under the U.S.
Securities Act of 1933 (the "Securities Act"), and are
being sold to us in a transaction that is exempt from
the registration requirements of the Securities Act.
2. We are a corporation, partnership or other
entity having such knowledge and experience in
financial and business matters as to be capable of
evaluating the merits and risks of an investment in the
Securities, and we are (or any account for which we are
purchasing under paragraph 4 below is) an institutional
accredited investor as defined in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act, able to bear the
economic risk of our or its investment and can afford
the complete loss of such investment.
______________________
1/ Insert and modify, if appropriate.
<PAGE>
2
3. We are acquiring the Securities for our own
account (or for accounts as to which we exercise sole
investment discretion and have authority to make, and
do make, the statements contained in this letter) and
not with a view to any distribution of the Securities,
subject, nevertheless, to the understanding that the
disposition of our property shall at all times be and
remain within our control.
4. We are, and each account (if any) for which we
are purchasing Securities is, purchasing Securities
having an aggregate principal amount of not less than
$100,000.
5. We understand that (a) the Securities will be
delivered to us in registered form only and that the
certificate delivered to us in respect of the
Securities will bear a legend substantially to the
following effect:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (a) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL
ACCREDITED INVESTOR"), OR (C) IT IS NOT A U.S. PERSON
AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN THREE
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY
RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A)
TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE
144a UNDER THE SECURITIES ACT, (C) TO AN INSTITUTIONAL
ACCREDITED INVESTOR ACQUIRING AT LEAST $100,000
PRINCIPAL AMOUNT OF THE SECURITIES THAT, PRIOR TO SUCH
TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
SECURITY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OR 904
UNDER THE SECURITIES ACT,
<PAGE>
3
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED
BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR
(F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN
THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THE
SECURITIES, THE HOLDER MUST CHECK THE APPROPRIATE AS
SET FORTH ON THE REVISE HEREOF RELATING TO THE MANNER
TO SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE
TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST,
PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE
ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OR THEM MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT
and (b) such certificates will be reissued without the
foregoing legend only in accordance with the terms of
the Indenture.
6. We agree that in the event that at some future
time we wish to dispose of any of the Securities, we
will not do so unless:
(a) the Securities are sold to the
Company or any Subsidiary thereof;
(b) the Securities are sold to a
qualified institutional buyer in compliance with
Rule 144A under the Securities Act;
(c) the Securities are sold to an
institutional accredited investor, as defined in
Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, acquiring at least $100,000
aggregate principal amount of the Securities that,
prior to such transfer, furnishes to the Trustee a
signed letter containing certain representations
and agreements relating to the
<PAGE>
4
restrictions on transfer of the Securities (the
form of which letter can be obtained from such
Trustee);
(d) the Securities are sold outside the
United States in compliance with Rule 903 or Rule
904 under the Securities Act;
(e) the Securities are sold by us
pursuant to Rule 144 under the Securities Act; or
(f) the Securities are sold pursuant to
an effective registration statement under the
Securities Act.
Very truly yours,
[PURCHASER]
By: ______________________
Name:
Title:
Dated:
cc: Rio Hotel & Casino, Inc.
3700 West Flamingo Road
Las Vegas, NV 89103
<PAGE>
